SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                                  ANNUAL REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended                                Commission File Number
   December 31, 1998                                             0-10825

         Exact name of small business issuer as specified in its charter

                           NEW GENERATION FOODS, INC.

State or other jurisdiction of                  IRS Employer
incorporation or organization: Nevada           Identification No.:  36-2972588

                     Address of principal executive offices:

          2001 Marcus Avenue, Suite W290, Lake Success, New York 11042
                          Telephone No.: (516) 327-2400

Securities registered pursuant to Section 12(b) of the Act:  None
Name of each exchange on which registered:  None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of  the Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                    YES X       NO

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-B is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB.

                                    [   ]



<PAGE>

         The  aggregate  market value of the  registrant's  Common Stock held by
non-affiliates  as of March 25, 1999 was $8,147,000  based on the average of the
high and low bid prices of such stock on March 25,  1999 as reported by the NASD
Electronic Bulletin Board Service.1

         The number of shares outstanding of the registrant's Common Stock as of
March 25, 1999 was 5,300,129.

         Registrant's revenues for its most recent fiscal year were $0.


--------
1 Exclusion  of shares held by any person  should not be  construed  to indicate
that such person possesses the power, direct or indirect, to cause the direction
of the  management  or  policies  of the  registrant  or  that  such  person  is
controlled by or under common control with the registrant.



<PAGE>
                               PART I

ITEM 1.  BUSINESS

          New Generation  Foods,  Inc. (the "Company" or "NGF") was organized in
February 1977 under the laws of the State of Nevada and adopted its present name
in August 1977.

         The Company was engaged in the development and sale of nutritional food
products from 1982 until October 22, 1993, when it sold substantially all of its
assets (the "Asset  Sale"),  as  previously  reported.  As a result of the Asset
Sale,  the Company was no longer an operating  company.  From 1994 to 1998,  the
Company had no revenues and its income was derived from  interest and  dividends
and gains on the sale of its assets. The Company's assets from 1994 through 1998
consisted  principally  of cash,  cash  equivalents  and  marketable  investment
securities.

          In  September  1998  the  Company  paid  $60,000  for an  option  (the
"Option") to purchase the assets of the CreditRisk  Monitor  credit  information
service ("CRM") from Market Guide Inc. ("MGI"). The Company exercised the Option
on December  29, 1998 and  completed  the  purchase of the CRM assets  effective
January 19, 1999 for a purchase price of approximately $2,390,000, including the
$60,000  paid for the Option.  The $1.23  million  cash  portion of the purchase
price  was  paid at  closing  and the  balance  is  represented  by two  secured
promissory  notes, one for  approximately  $100,000 and the other for $1,000,000
(together the "MGI Notes").  The $100,000 MGI Note, which bears interest at 8.5%
from the closing date, provides for the deferral of principal amortization until
February  2001. The $1,000,000 MGI Note bears interest at 6% from July 2001, and
provides for the deferral of principal  amortization  until such date. After the
respective  deferrals,  both MGI Notes are then payable over 24 months.  The MGI
Notes are  secured by a first  priority  purchase  money  security  interest  on
substantially all of the assets of the Company.

         The  assets   purchased   include  customer   contracts,   receivables,
equipment, software and intangibles.

         Following  the  closing  of the CRM  purchase,  the  Company  filed the
necessary  assumed name  certificate and commenced doing business under the name
"CreditRiskMonitor.com."  Subject to  shareholder  approval,  the  Company  will
change its corporate name to  "CreditRiskMonitor.com,  Inc." by the end of April
1999 and will apply for a new stock symbol that reflects this new name.

         During  January  1999,  the Company  completed a private  placement  of
1,300,000 shares of its Common Stock to approximately 25 "accredited  investors"
at a purchase price of $2.50 per share, for gross proceeds of $3.25 million (the
"1998 Private  Placement").  The proceeds from the 1998 Private  Placement  were
used to finance the cash portion of the CRM  acquisition  and the remainder will
be used for future working capital needs.

                                                         1

<PAGE>

         For a period of five years  after the  closing of the CRM  acquisition,
MGI has agreed to furnish to the Company the database of credit information used
in the  preparation  of CRM's  credit  analysis  reports,  at no charge  through
December 31, 2000 and at  specified  prices  thereafter,  based on the number of
users per subscriber to the reports.  The agreement is cancelable by the Company
on 90 days' notice.

         MGI also has  agreed not to market  credit  reports  that are  targeted
specifically  to  corporate  credit  personnel,  or to advertise or promote such
products  in any  media  or trade  shows  which  are  targeted  specifically  to
corporate credit personnel,  for a period of five years. In addition,  for a two
year period,  MGI has agreed not to provide its data or information to any other
business for use in reports targeted specifically to corporate credit personnel,
including  a  specified  list  of  CRM  competitors  or  potential  competitors,
including The Dun & Bradstreet Corporation ("D&B").

         The  Company  has agreed not to  compete  with MGI in its other  credit
information  services  for a period  of two  years,  so long as the  Company  is
obtaining its data directly and not from MGI, or for a period of five years,  so
long as the Company is obtaining  its data from MGI. This  restriction  does not
apply, however, if the Company acquires its data from sources other than MGI.

The CreditRisk Monitor Business
-------------------------------

          In  1996,  CRM's  current  management,  all  of  whom  have  extensive
experience in the credit reporting  industry,  approached MGI to explore the use
of MGI's database as the basis for an Internet-based product which would provide
information  specifically  designed for the corporate credit  professional.  MGI
maintains,  collates and provides information on publicly reporting companies to
the securities and investment  communities.  Since no real-time Internet product
existed in this area,  MGI agreed to finance the  development  of such a product
and  formed  the CRM  division  in  September  1996.  CRM  commenced  its  sales
operations,  as a  division  of MGI,  in  April  1997,  when it  introduced  its
Internet-based   credit  information   service  after  an  intensive  period  of
development.

          The  Company  believes  that  CRM  is  the  only  totally  interactive
Internet-based  financial information and news service designed specifically for
corporate credit  professionals.  Its credit risk analysis service is the result
of  management's  extensive  experience  in the  credit  industry  and  on-going
research with respect to corporate credit department information needs. This has
enabled CRM to satisfy the credit industry's  requirements with the most timely,
technologically  advanced,  lowest cost credit information service available. In
the 24 months since CRM's service has been available over the Internet,  CRM has
attracted more than 365 subscribers at an average annual  subscription  price of
slightly  over  $3,500.  CRM  currently  monitors,  for the  purpose  of  credit
evaluation,  approximately  575  U.S.  publicly  held  domestic  retail  chains,
wholesalers and selected manufacturers in various industries. Present plans call
for the coverage to increase to approximately  8,000 companies during the second
quarter of 1999.

                                                         2

<PAGE>

         CRM designs its product for corporate  credit  managers who must decide
whether or not to ship their company's goods to their customers,  thus extending
credit on the  purchase.  If the  purchaser is unable to pay the account when it
comes due, the selling company can suffer  substantial  losses.  The decision to
ship or not to ship  may  have to be made  under  intense  time  pressure,  with
potentially   devastating  results  if  the  manager  has  inaccurate  or  stale
information.

         With the  continuing  downsizing  of corporate  America and the related
reductions in credit departmental budgets and personnel,  these corporate credit
professionals  have to do more  with  less.  Simultaneously,  there  has been an
explosion in the amount of information that has become  available,  resulting in
an overwhelming amount of data and limited time for research and analysis. CRM's
service provides the corporate credit  professional  with a one stop information
service that helps to continuously  monitor the  creditworthiness  of the public
companies  they do  business  with,  in the  shortest  possible  time and with a
minimum of effort. This timesaving is critical where immediate decisions must be
made.

         There is little  hard data on the size of CRM's  market:  The  National
Association of Credit  Management  ("NACM") has about 50,000 members,  but other
industry  observers  believe the number of U.S.  credit  managers  or  personnel
performing  this  function is  substantially  greater.  In  addition,  there are
numerous U.S.  based  companies who do not have a specific  credit  function but
still require credit information.  Since a good deal of CRM's sales solicitation
is by phone and Internet  demonstration  of the product,  it is expected  that a
large overseas market also exists.  In any case, CRM has a large market that has
been minimally penetrated.

         The viability  and potential of CRM's  business is made possible by its
Internet  service  delivery and by what the Company believes to be the following
characteristics:

o        The value of CRM's  service  exceeds  the cost to the  subscriber.  The
         $3,500  yearly  subscriber  cost is small  compared  to the size of the
         possible  loss to the  subscriber  from shipping to a customer and then
         not getting  paid. In addition,  CRM's service  should either reduce or
         hold down costs in the credit  department  because of the time saved in
         researching public company credit risk.

o        CRM's business appears to have counter-cyclical characteristics. If the
         economy  slows or  contracts,  the corporate  credit  manager  function
         should increase in importance  within  corporations,  and products that
         allow  credit  managers  to  perform  their jobs more  efficiently  and
         effectively should gain market share in an expanding market.

o        CRM sells its service for a low yearly renewable subscription cost and,
         therefore,  has a recurring yearly income stream.  The service is not a
         one-time sale but a source of continuing  revenue.  As new features are
         added there should not be  significant  resistance to reasonable  price
         increases.

                                                         3

<PAGE>

o        CRM's service is designed to penetrate the very large market for credit
         information  on  publicly  held  companies  but even this market may be
         small  compared to the need for credit  information  on privately  held
         companies.  CRM  intends to have  available  a product  for  evaluating
         credit risk of privately held companies by the end of the first quarter
         of 2000.

o         Some of  CRM's  basic  cost  structure  is being  reduced.  On a broad
          generic  basis,  computer  hardware,   software,   communications  and
          financial data costs are universally  coming down. CRM has automated a
          significant  amount of the  process  used to create  and  deliver  its
          service;  therefore, its production costs are relatively stable over a
          wide  range of  increasing  revenue.  In  addition,  sales  costs as a
          percentage  of  revenues   should  continue  to  decline  since  sales
          commissions on new subscriptions  (20-35%) are far higher than present
          commissions  on renewals  (5%) and renewal  income will  increase much
          more rapidly then revenues from first-time  sales.  In summary,  CRM's
          margins should increase faster than sales.

o        CRM's business has no inventory, manufacturing or warehouse facilities.
         Thus,  it is not capital  intensive  and high margins  should  generate
         significant  positive cash flow. In addition,  after  consultation with
         its counsel,  the Company has  concluded  that its net  operating  loss
         ("NOL")  carryforwards,  aggregating $13.9 million at December 31, 1998
         and expiring in varying  amounts  through 2018,  should be available to
         shelter taxable income if and when CRM achieves profitability. See "Net
         Operating  Loss  Carryforwards"  and Note 2 to  Consolidated  Financial
         Statements.

o        CRM has  in-place  an  experienced  management  team  that has  equity
         incentives.

o        With few competitors, the price competitive environment for credit risk
         analysis service is not intense.  Primarily,  CRM is competing  against
         D&B, a NYSE and multi-billion  revenue company that has a near monopoly
         for credit services. D&B's service appears to be higher priced and less
         timely  than  the   Company's.   CRM's   service  is  a   technological
         breakthrough  that allows a significant  reduction in the selling price
         of credit risk analysis to subscribers and yet has a low cost structure
         that still allows its low price to be very profitable to the Company.

o        The  Company  purchased  CRM  for a  reasonable  price  with  excellent
         deferred  payment  terms that should not impede  cash flow,  so that it
         should be  possible  to grow the  business  at a rapid rate with little
         need for external capital.

The Company's Goals
-------------------

o         Lowest cost provider.  CRM's  analysis and  preparation of data into a
          form usable by its customers  (corporate credit departments) is nearly
          100% computer driven and

                                                         4

<PAGE>

         minimum incremental  personnel costs are required to broaden the number
         of  companies  analyzed.  CRM's cost  structure  is  believed to be the
         lowest in its industry,  because CRM delivers all of its information to
         its  customers  via the  Internet  and  there is a  seamless  interface
         between the  preparation  of a Company  Report and the delivery of that
         report to CRM's  subscribers.  Whenever CRM's customers  access company
         information  it is  the  most  current  and  comprehensive  information
         available.

o         Lowest  price to  value  received.  CRM  currently  monitors,  for the
          purpose of credit  evaluation,  approximately  575 U.S.  publicly held
          domestic  retail chains,  wholesalers  and selected  manufacturers  in
          various  industries.  Present plans call for this coverage to increase
          to  approximately  8,000 public companies by the end of the first half
          of 1999. CRM's current price for a one-year, one-password subscription
          is  $3,500.  This  price  allows the  subscriber  unlimited  access to
          information  on all companies  contained in the Company's  interactive
          database, consisting of news, financial and credit information. As the
          number of companies  analyzed  expands,  the Company's price advantage
          over competitors should become even more significant.  The increase in
          the number of companies monitored will also dramatically  increase the
          market for CRM's  service,  as many  additional  potential  subscriber
          corporations  will find more of their  customers  analyzed  for credit
          risk.  To  maintain  this  competitive   advantage,   CRM  expects  to
          aggressively  add  additional  proprietary  features  and  information
          sources to its service.

o        Retain  hedge  characteristics.  If the economy  slows down or enters a
         recession,  corporate credit risk will increase and, CRM believes,  the
         credit manager  function  should rise in importance.  Since the cost of
         the  Company's  product is low compared to the size of the losses it is
         designed  to  reduce  and to the cost of  competitive  products,  CRM's
         business and revenues may be counter-cyclical, to a significant extent,
         if U.S. economic growth slows or declines.

o        Broaden coverage to include private companies. CRM's rapid expansion of
         public company coverage will be followed by the expected  initiation of
         CRM's coverage of privately held companies,  beginning  sometime during
         the first quarter of 2000. This private company  coverage should expand
         CRM's  market.  Today,  there is little  useful and timely  information
         available to assist in the credit evaluation of private companies. Both
         CRM's  current  subscribers  and  potential  subscribers  have actively
         encouraged CRM's entry into this field.

o         International  penetration.  Foreign  companies  doing business in the
          U.S. have the same or even greater need than our domestic  subscribers
          have for CRM's credit analysis of U.S. companies. Internationally, the
          Internet   provides  the  same  rapid  and  inexpensive   selling  and
          distribution of CRM's service as has been achieved domestically.




                                                         5

<PAGE>

Important Business Considerations
---------------------------------

o        Customer Base. The Company believes that before a subscriber  purchased
         CRM's  service,   it  had  the  ability  to  evaluate  CRM  versus  its
         competition. Although CRM's present product has only been on the market
         for  approximately two years and as presently  constituted  covers only
         about 575 companies it has developed a diverse and  sophisticated  list
         of subscribers, a partial list of which includes:

                           PARTIAL LIST OF SUBSCRIBERS

Aiwa America                                Monsanto
BIC                                         Osram Sylvania
Bristol-Myers Squibb                        Panasonic
Coca-Cola Foods                             Pepsi-Cola
Colgate Palmolive                           Polygram Group Distributing
Compaq Computer                             Prestone Products
Cosco                                       Procter & Gamble
First Brands                                Rayovac
Fruit of the Loom                           Rhone-Poulenc Rorer
Georgia-Pacific                             Samsung Electronics America
Johnson & Johnson                           Schering Plough
Lever Brothers                              Sony Electronics
Lexmark International                       3Com
Lucent Technologies                         Yamaha Corp. of America


o        Competition.  The Company's principal  competitors are D&B, Information
         Clearinghouse  Incorporated d/b/a F&D Reports ("ICI") and Global Credit
         Services,  Inc.,  some of  which,  including  D&B,  have  significantly
         greater resources than the Company.
         D&B dominates the market for credit reporting services.

         These competitors'  products are either not delivered over the Internet
         and/or are not updated  prior to delivery.  They,  therefore,  lack the
         speed, flexibility and timeliness of

                                                         6

<PAGE>

         CRM's  product.  The Company  believes  that CRM's  product is not only
         superior but it is also much less expensive.

         In  the  market  for  credit  analysis   products  beyond  the  present
         approximately  575 companies  analyzed by CRM, the Company has only one
         serious competitor -- D&B. When the Company expands its CRM coverage to
         approximately  8,000 public companies,  which it plans to accomplish by
         the end of the first half of 1999,  it believes  that the same  product
         and price  advantages CRM has in its 575 company  analyzed market place
         will also exist when CRM competes with D&B in this larger market.

o        Recurring income stream. The annual subscription price of $3,500 is not
         only very low compared to  competitive  products but also to the amount
         of loss  inherent in the credit  exposure of shipping to a customer who
         cannot   pay.   Because   of  the  ease  of  use  and   CRM's   product
         sophistication,  users appear to develop a residual  comfort level that
         acts  to  reduce  the  risk  of  replacement  of  CRM's  service  by  a
         competitive  product.  CRM's  recurring  income  stream should give the
         Company  stability  and  profitability  not  found in a  one-time  sale
         product-based company.

o         Potentials for cost reductions.  The Company foresees  declining costs
          in some important expenses, which should increase net profits from its
          subscription  income  stream.  Computer  and  communication  costs are
          coming down regardless of the Company's management skills. The Company
          believes that the advent of Internet  delivery of telephone calls will
          further  reduce the cost per phone call over the next  several  years,
          and computer  costs per  transaction  should also continue to decline.
          The Company  further  believes that the base of renewal  business will
          grow larger each year and present sales  commission costs for renewals
          (i.e.,  about 5%) are  substantially  lower than for new sales  (i.e.,
          approximately  20-35%).  In addition,  MGI has  contracted  to provide
          financial data to CRM at no cost through December 31, 2000, and at the
          rate of $5.00 per month, per single password subscriber,  from January
          1, 2001 through  December 31, 2003 (MGI's data cost is slightly higher
          for subscribers with more than one password).  In the future, the cost
          of obtaining  public  company  financial data should also continue its
          downward  slide as the SEC works towards its goal of total  electronic
          filing into a database  template.  All these naturally  occurring cost
          reductions will be in addition to the cost reductions achieved through
          servicing  more  accounts  over the  Company's  in-place  fixed costs.
          Another  potential for cost  reduction is the Company's  $13.9 million
          NOL carryforwards  (expiring in varying amounts annually through 2018)
          which,  the Company  believes,  should be available to shelter  future
          taxable income.

o        Dependence  on Internet  Access to Conduct  Business.  CRM's product is
         only distributed over the Internet and,  therefore,  a lack of Internet
         access at a  potential  customer's  site makes it  impossible  for that
         customer to utilize the service.  When CRM started  selling its service
         in April 1997,  the single  largest  sales  impediment  was the lack of
         Internet access at a prospective customer's site. CRM estimates that in
         excess of 60%

                                                         7

<PAGE>

         of all  sales  calls,  in 1997,  encountered  this  block,  but that it
         encountered  lack of Internet  access in 40% of its sales calls  during
         1998.  Most industry  observers  believe that Internet  access,  at the
         company  level,  is  beginning  to  explode as  companies  learn of the
         Internet's utility as a sales,  advertising,  training,  administrative
         and purchasing tool.  These observers  expect Internet  availability to
         reach 80% to 90% of the corporate world in the next few years. There is
         a lag,  however,  between a company  getting  Internet  access  and its
         credit department being hooked into the Internet. It is clear, however,
         that this single  largest  sales block for CRM service is being reduced
         at a rapid rate.

o         Limited Number of Companies Analyzed.  The limited number of companies
          currently  analyzed by CRM's credit risk service -- approximately  575
          public U.S.  companies  (mainly  retailers  and  wholesalers)  -- is a
          substantial  impediment to any sales expansion.  The CRM service sells
          for $3,500 per year and many potential  subscribers do not have enough
          of their customers within CRM's current coverage to justify the $3,500
          cost,  i.e.,  five  customers  covered  for $3,500 is $700 per company
          covered, a high price and a serious sales hurdle. The Company plans to
          add approximately 7,400 companies to its credit coverage by the end of
          the first  half of 1999,  which  would  constitute  more than a 1,390%
          increase from CRM's coverage at December 1998.

         That broadening of corporate credit coverage, combined with an increase
         in the  number  of  corporation's  who  have  Internet  access,  should
         increase CRM's sales potential over the next year.

         The  Company  plans to enter the  credit  risk  monitoring  of  private
         companies  by the end of the  first  quarter  of  2000.  This  category
         presents a proprietary product with greater market potential than CRM's
         present  service for the public company market,  since  meaningful data
         for private as opposed to public companies is scarce. In addition, most
         companies'  exposure to credit risk loss is substantially more frequent
         on credit  extended  to private  versus  public  corporations.  Private
         company credit risk analysis and data, therefore,  has the potential of
         not only  accessing  a larger  market than the public  company  market,
         since the  number of  private  companies  dwarfs  the  number of public
         companies in the U.S.,  but also filling a significant  need for credit
         managers.

Product Development Strategy and Proprietary Technology
-------------------------------------------------------

         The Company's product development strategy is to minimize the amount of
manual labor required to create a company report.  This allows it to continue to
provide higher quality information at a lower price than any of its competitors,
whose products are primarily developed and delivered  manually.  To achieve this
result CRM utilizes  the  following  proprietary  products as part of its report
production process:

o         Proprietary   financial  databases  and  on-demand  report  generation
          system.  The Company's  contract with MGI, its present data  provider,
          gives it exclusive access to

                                                         8

<PAGE>

         MGI  company  data  through  2003.  The  Company  has  converted  MGI's
         financial database to a state-of-the-art relational database so that as
         soon as MGI updates its database  with  information  gathered  from the
         EDGAR  filings of one of the  companies  that CRM  monitors,  a new CRM
         report  can  be   produced.   Because  of  the  nature  of  CRM's  data
         requirements,  several other financial  databases,  in addition to MGI,
         can also be used with only a reasonable  amount of  programming  effort
         required to produce a CRM report. Possible providers of data that could
         be used are  Disclosure,  Inc.,  Media  General,  Inc.,  and Standard &
         Poor's Compustat, a division of The McGraw-Hill Companies, Inc.

         The Company  utilizes CRM's  proprietary  on-demand  report  generation
         system to create a CRM Company Report from CRM's  proprietary  news and
         financial data databases at the time a subscriber  requests the report.
         This means that each report is up to date, unlike competitive  products
         that  are  static  and do  not  change  when  new  information  becomes
         available.

o        Profile  based  reports.  CRM  provides  its users with the  ability to
         create customized profiles of selected companies,  thereby allowing the
         user  to  screen-out   unneeded   information  and  reduce  information
         overload.

o         Proprietary  news  database.  To provide the  broadest  possible  news
          coverage,  CRM has  redistribution  agreements with Federal Filings, a
          Dow Jones Company,  and  Reuters  (to be  activated  during the second
          quarter  of  1999).  CRM's  software  scans  the news  issued by these
          services and selects  those  articles  that meet CRM's  criteria.  CRM
          presently stores, for at least one year in its news database, for each
          article  selected,  the headline,  the entire original  article and an
          abstract,  generally  comprised of the article's first two paragraphs.
          The news is scanned by CRM's news system 24 hours a day,  seven days a
          week.

o        Peer group ratio and graphical analysis system.  Ratios and graphs have
         been  designed  into  CRM's  company  report  specifically  for  credit
         analysis.  CRM graphs contain one measure per graph, plotted over time.
         For each period on the graph, a subscriber will see the highest, lowest
         and the average value of the subject company's peer group together with
         the value for the target company.  CRM subscribers know immediately how
         the target  company ranks and has changed,  over time,  relative to its
         peers.

Marketing and Sales
-------------------

         CRM's  goal  is to  establish  its  service  as the  preeminent  online
financial  information and news service dedicated to credit  professionals doing
business with publicly held and, in the near future,  privately held  companies.
CRM expects to maintain its subscriber base by continuing to provide the highest
quality service so that subscribers  will continue to renew their  subscriptions
each  year.  This  is most  important,  as the  profitability  of a  renewal  is
substantially

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<PAGE>

greater than the profit on an initial sale. The Company's  ultimate success will
depend on the renewal rate of its subscriber base.

         To capture a  significant  percentage  of the market for online  public
company credit information, CRM will continue to use the Internet as the primary
mechanism for distributing its service.  To inform potential  subscribers  about
its  service,   CRM  will  continue  to  use  a  combination   of  direct  mail,
telemarketing,   print  advertising  in  various  trade  journals,   trade  show
representation and speaking engagements before credit associations.

Sales Strategy
--------------

         Once a sales lead is generated,  90% of the selling  effort takes place
on the phone. The Internet  provides the ability for CRM's sales  representative
and the potential subscriber to view our web site simultaneously and a CRM sales
representative  has the ability to demonstrate our service,  in-depth,  while on
the phone with the potential subscriber. Once a password is given out, the sales
representative  will go  online  with the  prospect  and  demonstrate  how CRM's
service is designed to be used.  The potential  subscriber  can then utilize the
service on a trial basis,  and is able to evaluate how the service works and how
it will help their  department.  A trial period usually lasts from 1 to 3 months
before a  potential  subscriber  will make a  decision  as to  whether or not to
purchase a subscription.

Employees
---------

         As of March 25,  1999,  the Company  employed 15 persons  full time and
retained  1  consultant.  None  of  the  Company's  employees  is  covered  by a
collective  bargaining  agreement.  The Company  believes its relations with its
employees to be satisfactory and had suffered no interruption in operations.

         The  Company  has no  retirement,  pension,  profit  sharing or similar
program in effect for its employees, but has adopted stock option plans covering
its employees.

Net Operating Loss Carryforwards
--------------------------------

         At December 31,  1998,  the Company had NOL  carryforwards  aggregating
approximately  $13.9 million,  which, to the extent available under the Internal
Revenue Code of 1986,  as amended (the  "Code"),  may be used to shelter  future
taxable income of the Company, if any. Section 382 provides limits on the amount
of a company's NOL carryforwards which can be applied against its earnings after
an  "ownership  change"  occurs.  Generally,  such a limit is  determined,  with
respect  to the  amount  of NOL  carryforward  to which the  limit  applies,  by
multiplying  the  company's  value at the time of the  ownership  change  by the
published  long-term  tax exempt  interest  rate.  The  resulting  amount is the
maximum that can be offset by NOL  carryforwards in any one year if an ownership
change has occurred. If, however, an ownership

                                                        10

<PAGE>

change  occurs and during  the  following  2-year  period the  Company  does not
continue its historic business, no NOL carryforwards would be available.

         An ownership change occurs if there has been an "owner shift" -- a more
than 50  percentage  point  increase  in stock  ownership  involving  "5-percent
shareholders"  over the lowest percentage of stock of the loss corporation owned
by such shareholders at any time during the testing period (generally, the prior
3 years).  For this  purpose,  in general,  shareholders  that are not 5-percent
shareholders are aggregated and treated as a single 5-percent shareholder.

         The Company  believes  that no owner  shifts or  ownership  changes had
occurred prior to its 1998 Private Placement.  That Private Placement,  however,
resulted  in a sale of  approximately  23% of the  outstanding  Common  Stock to
approximately  25  investors  who are, as a group,  a  "5-percent  shareholder".
Hence, the Private Placement constitutes an "owner shift" of approximately 23%.

         If  subsequent   transactions   were  to  occur   involving   5-percent
shareholders  within the  applicable  three-year  testing  period  following the
Private  Placement,  or any subsequent  three-year testing period, an "ownership
change"  could occur which could cause the loss or  limitation  of the Company's
available NOL carryforwards, pursuant to Section 382.

ITEM 2.  PROPERTIES.

         The Company's principal office is located in approximately 2,500 square
feet of space in an office building  located in Lake Success,  New York which it
has  licensed  from  MGI  through   October  31,  1999  at  a  monthly  cost  of
approximately  $5,900.  CRM has begun to look for and anticipates no significant
difficulty in obtaining at competitive  prices, new space of approximately 4,500
square feet in the immediate vicinity.

ITEM 3.  LEGAL PROCEEDINGS.

         In August 1985, an action was commenced against the Company by a former
employee in the Circuit Court of Cook County,  Illinois County  Department,  Law
Division,  alleging wrongful demotion and wrongful discharge by the Company. The
plaintiff  is  seeking  back pay for the  period  since her  release  as well as
reinstatement  to her  position.  The claim seeks  damages in excess of $15,000,
plus  punitive  damages  in excess of  $15,000.  This  matter  has been  dormant
virtually  since its  inception  and,  while  there has been no  discovery,  the
Company believes that it has meritorious  defenses and that the ultimate outcome
should not have a material adverse impact on the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None during 1998.


                                                        11

<PAGE>

                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS.

         Prior to May 11,  1993,  the  Common  Stock of the  Company  was traded
principally on the NASDAQ  Automated  Quotation System under the symbol NGEN and
also on the Boston  Stock  Exchange  under the symbol  NGF.B or NGF.  During the
second  quarter of 1993,  the Company's  Common Stock was delisted from both the
Boston Stock Exchange and the NASDAQ Automated  Quotation System.  The Company's
Common Stock now trades in the over-the-counter  market "Bulletin Board Service"
under the symbol NGNF.  The following  table sets forth the high and low closing
bid quotations for the Common Stock as reported on the  over-the-counter  market
Bulletin Board Service for each calendar  quarter of 1997 and 1998.  Such market
quotations  reflect  inter-dealer  prices  without  retail  markup,  markdown or
commission and do not necessarily represent actual transactions.

                                    High Bid         Low Bid
                                    --------         -------

1997

         First Quarter              $0.0001          $0.0001
         Second Quarter             $0.0001          $0.0001
         Third Quarter              $0.0001          $0.0001
         Fourth Quarter             $0.0001          $0.0001


1998
         First Quarter              $0.0003          $0.0001
         Second Quarter             $0.0001          $0.0001
         Third Quarter              $0.0001          $0.01
         Fourth Quarter             $7.50            $0.07


         On March 25, 1999, there were  approximately 525 registered  holders of
the Company's Common Stock.

         The Company  has not paid any cash  dividends  on its Common  Stock and
does not anticipate paying any cash dividends in the foreseeable future.  During
1997 the Series A Preferred  Stock and Series B  Preferred  Stock of the Company
were retired.  At the retirement date accrued and unpaid dividends were $787,500
and $111,600,  respectively,  substantially all of which were subsequently paid.
See "Certain  Transactions - Payment of Liquidation  Preferences and Issuance of
Senior Preferred Stock" in Part III below.

                                                        12

<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATION.

         Financial Condition
         -------------------

         From October 1993, when it sold its previous natural foods distribution
business  to  American  Foods (the  "Asset  Sale"),  through the end of 1998 the
Company had no revenues from operations.

         During this period,  the Company received revenues from notes issued to
it in connection with its 1993 Asset Sale.  During 1997 and 1998 the Company was
required,  by the terms of its then outstanding  Series A and Series B Preferred
Stock (which required payment of liquidation preferences upon a sale or transfer
of  substantially  all the  assets  of the  Company)  to pay out the  applicable
liquidation preferences to Flum Partners, the holder of those series.

         As previously reported,  the Company issued to Flum Partners at the end
of 1997 and in the first  quarter of 1998 a total of $1.8 million of cash,  plus
1,100,000 shares of its new Senior Preferred Stock  (convertible  into 3,598,299
shares of Common Stock) in payment of the  liquidation  preferences  and accrued
dividends  on the Series A Preferred  Stock and Series B Preferred  Stock.  This
cash payment effectively dissipated all of the Company's liquid assets as at the
end of 1997 and the share  issuance gave Flum Partners the right to own and vote
90% of the Company's  outstanding equity shares.  See "Certain  Transactions" in
Part III below.

         Jerome Flum's employment contract was terminated  effective December 1,
1997 and he agreed,  for a  twelve-month  period,  to attempt  to  identify  and
consummate a transaction which would increase the value of the Company.

          As  described  under  "Business,"  during  1998 the  Company  located,
investigated  and  negotiated  the purchase of the  CreditRisk  Monitor  ("CRM")
business then owned by Market Guide Inc. ("MGI").  In September 1998 the Company
purchased an option to purchase the assets of the CRM business for approximately
$2,390,000.  It exercised  its option on December  29, 1998 and the  transaction
closed  effective  January 19,  1999.  The terms of the  purchase  price and the
Company's notes issued in connection  therewith are described  under  "Business"
and in the Notes to the Company's Consolidated Financial Statements.

          In order to raise funds to pay the $1.23  million  cash portion of the
purchase  price for the CRM  assets,  the costs of the  acquisition  and to have
sufficient  working  capital to continue to develop and run that  business,  the
Company completed a private placement of 1,300,000 shares on January 19, 1999 of
its Common Stock to approximately 25 "accredited  investors" at a purchase price
of $2.50 per share,  for gross  proceeds of $3.25 million.  Management  believes
that the proceeds of this offering will provide adequate working capital to fund
operating losses of CRM until cash breakeven has been achieved.


                                                        13

<PAGE>

         The  transactions  described  above,  along with the  issuance of 2,000
shares of Common Stock to Flum Partners in November 1998 in consideration of its
provision to the Company of a line of credit and the conversion by Flum Partners
of its Senior  Preferred  shares into Common Stock on or about January 20, 1999,
resulted  in Flum  Partners  owning more than 72% of the  Company's  outstanding
Common Stock (which is its only equity security now outstanding)  after the 1998
Private Placement.

         At December 31, 1998, the Company had cash, cash  equivalents and other
liquid assets of $13,400 compared to $1,400,051 of liquid assets at December 31,
1997, and had working capital of $30,628, compared to working capital of $54,067
at December  31,  1997.  This  reflected  the cash  payment to Flum  Partners in
respect  of the  Series A  Preferred  Stock and Series B  Preferred  Stock.  The
Company has no bank lines of credit or other currently available credit sources.

         Funds from the 1998 Private  Placement  became available to the Company
on or about January 19, 1999, at which date the Company paid the cash portion of
the  purchase  price  for the CRM  assets,  paid the  expenses  of the  purchase
transaction and retained the remaining  proceeds for use as working capital over
the next two years.

         The  purchase  of the CRM  business  in January  1999  transformed  the
Company into an operating  company with revenues from  operations  and increased
its  employee  base  from 1  employee  in 1998 to 15 full time  employees  and 1
consultant as of March 25, 1999.

          During the next 12 months the  Company  plans to expand its  Internet-
based credit reporting  product  substantially,  increasing the number of public
companies  on which it  supplies  credit  reports to its  customers  from 575 to
approximately  8,000  during  the  first  half  of  1999.  The  Company  is also
developing a database and credit  reporting system which will expand its product
line from  Internet  generated  credit  reports on public  companies  to on-line
credit reports on privately held companies as well.

Operations
----------

         1998 vs. 1997 and 1997 vs. 1996

         The Company  terminated its business as a food  manufacturer on October
22, 1993,  when it sold its  operations  in the 1993 Asset Sale. It conducted no
operations  in the fiscal years ended  December 31, 1996,  December 31, 1997 and
December 31, 1998.

         Net loss for the year ended  December 31, 1997 was ($81,049) or ($0.67)
per share, reflecting selling,  general and administrative  expenses,  including
the Chairman's  compensation  expense,  and a loss on investments,  in excess of
interest and dividend income.


                                                        14

<PAGE>

         Net loss for the year ended  December 31, 1998 was ($23,439) or ($0.06)
per share, reflecting selling,  general and administrative expenses in excess of
interest and dividend income. The Company eliminated the Chairman's compensation
expense  when  Mr.  Flum's  employment   contract  was  terminated.   After  the
distribution  of  assets  to  Flum  Partners,  the  Company  had no  substantial
investment income.

Federal Tax Considerations
--------------------------

         The Company has  available net operating  loss  carryforwards  ("NOLs")
which  may be  used  to  reduce  its  Federal  income  tax  liability.  However,
provisions  contained  in the  Internal  Revenue  Code of 1986,  as amended (the
"Code"),  may  impose  substantial  limitations  upon the  Company's  ability to
utilize its NOLs.  For  example,  the  Company  may be subject to the  so-called
"alternative  minimum tax" which does not always permit full utilization of NOLs
otherwise available.

          Limitations  imposed by Section 382 of the Code upon the  availability
of NOLs  would  apply if  certain  changes  were to occur  in  ownership  of the
Company.  Thus, the Company's utilization of its carryforwards in the future may
be deferred and/or reduced if the Company  undertakes  further equity financings
or if certain other changes occur in the ownership of the Common Stock. Finally,
if the Company becomes an investment  company subject to the Investment  Company
Act of 1940,  it will no  longer  be  entitled  to a  deduction  for  NOLs.  See
"Business - Net Operating  Loss  Carryforwards". For  information  regarding the
amounts and expiration  dates of the Company's NOLs, see Note 2 to the Company's
Consolidated Financial Statements.

Year 2000 Planning
------------------

          The Company  has  implemented  a Year 2000  program to ensure that the
Company's and the Company's vendors' and business partners' computer systems and
applications will function properly beyond 1999. The Company's current principal
supplier of data for use in the  preparation  of the Company's  credit  analyses
reports is MGI. Pursuant to the outstanding Database License Agreement,  MGI has
agreed to  furnish  data  which is year 2000  compliant.  The  Company  has also
identified  vendor and business  partner  software with which it  electronically
interacts,  and has requested Year 2000 compliance  certifications.  The Company
has received  assurances from those vendors and business  partners whose systems
are not currently Year 2000 compliant that the necessary  modifications,  or new
versions of software,  will be made  available by 2000. The Company has reviewed
and  tested  all  of its  computers  systems  and  Internet-based  products  and
determined that they are all Year 2000 Compliant. The Company defines "Year 2000
Compliant" as the ability of its hardware and software to recognize and properly
process data beyond December 31, 1999 as well  recognizing that the Year 2000 is
a leap year and that any  calculations  dependent upon knowing this fact will be
performed correctly.  The Company's cost to comply with the Year 2000 initiative
is not expected to be material.

Risks and Other Considerations
------------------------------

          From time to time,  information  provided by the Company or statements
made  by its  employees,  or  information  provided  in  its  filings  with  the
Securities and Exchange Commission may contain forward looking information.  Any
statements  contained  herein  or  otherwise  made  that are not  statements  of
historical fact may be deemed to be forward looking statements. Without limiting
the  foregoing,  the words  "believes",  "expects",  "anticipates",  "plans" and
similar  expressions are intended to identify  forward looking  statements.  The
Company's actual future results may differ  materially from those projections or
statements made in such forward looking information as a result of various risks
and  uncertainties,  including  but not limited to the  following in addition to
those set forth  elsewhere  herein or in other  filings made by the Company with
the Commission:

          CRM is a relatively new venture with a limited  operating  history and
history of significant losses.  There can be no assurances that the Company will
be immediately profitable or will not incur losses in the future.

          The  Company is subject to  competition  from firms that have  greater
financial,  management,  sales and  technical  resources  than the Company.  The
Company's  success also depends to a significant  degree to the contributions of
its  key  management.  The  loss  of  services  of one or more  key  members  of
management could have an adverse affect upon the Company.

          The market  price of the  Company's  common  stock may be  volatile at
times in response to fluctuations of the Company's operating results, changes in
analyst earnings estimates,  market conditions as well as general conditions and
other factors general to the Company.

                                                        15

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The consolidated  financial statements of the Company as of and for the
years  ended  December  31, 1998 and 1997,  together  with the report of Clifton
Gunderson  L.L.C., independent  auditors,  are set forth at pages F-1 to F-18 of
this Report on Form 10-KSB.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.
         
          None.

                                                        16

<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
         PERSONS, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
         ACT.

Directors and Executive Officers
--------------------------------

         The following table sets forth certain  information with respect to the
directors and executive officers of the Company and the period such persons held
their respective positions with the Company.

<TABLE>
<S>                                         <C>               <C>                                     <C>   

Name                                         Age               Principal                               Officer or Director
                                                               Occupation/Position                     Since
                                                               Held with Company                        
                                                             

Jerome S. Flum                               58                Chairman of the                         1983
                                                               Board/President/
                                                               Chief Executive Officer

Lawrence Fensterstock                        48                Senior Vice President                   January 20, 1999

Richard J. James                             59                Director                                1992

Leslie Charm                                 55                Director                                1994
</TABLE>

          The  sole  officer  of the  Company  in 1998 was Mr.  Flum,  Chairman,
President and Chief Executive Officer.

         Jerome S. Flum has been a director  of the Company  since 1983.  He was
appointed  President and Chief Executive  Officer of the Company and Chairman of
the Board of  Directors  in June 1985.  He  resigned  as  President  in 1988 and
resumed that position effective December 1989. Mr. Flum, an attorney,  has been,
for more than five years, the sole General Partner of Flum Partners,  a New York
limited  partnership  which was organized in 1972. Since 1995, Mr. Flum has been
Chairman of China Capital  Corp.,  a privately  held  consulting  and management
company headquartered in Bethesda, Maryland.

         Lawrence Fensterstock became an employee and was elected to his current
offices in January 1999. Prior thereto he had been employed by MGI since 1996 to
assist in the  formation  and  management  of CRM.  From 1993 until 1996, he was
chief operating and financial officer of Information Clearinghouse  Incorporated
d/b/a F&D Reports ("ICI") a credit information  service.  Prior thereto,  he was
vice  president,   controller  and  acting  chief  financial  officer  of  Joyce
International,  Inc.,  a private  entity  formed to acquire the office  products
operations of Litton  Industries.  He is a certified public accountant who began
his career in 1973 with Arthur Andersen & Co.

                                                        17

<PAGE>


     Richard J. James has been a director of the Company  since April 1992.  Mr.
James has been a Manager of Quality  Control in the Camera  Division of Polaroid
Corporation since 1983.

         Leslie Charm has been a director of the Company since  September  1994.
Since 1972, Mr. Charm has been a partner in the firm of Youngman & Charm, a firm
specializing  in assisting  companies  that are  experiencing  operating  and/or
financial problems. From 1977 through 1990, he was the Chairman and President of
Doctor Pet Centers,  Inc., a major  distributor and specialty retail chain. From
1989 to the present, he has been a director of Moto Photo, Inc., a publicly-held
international franchisor of imaging centers.

         The Company's  By-Laws  provide that (a) directors  shall be elected to
hold  office  until  the next  annual  meeting  of  stockholders  and that  each
director,  including  a director  elected to fill a vacancy,  shall hold  office
until the  expiration of the term for which the director was elected and until a
successor  has been  elected,  and (b)  officers  shall hold office  until their
successors  are  chosen by the  Board of  Directors,  except  that the Board may
remove any officer at any time.

Key Employees
-------------

         In addition to the executive  officers and directors  described  above,
the following persons constitute key employees of the Company.

         Albert Fensterstock, age 61, cousin of Lawrence Fensterstock, is one of
the creators of CreditRisk Monitor and is in charge of new product  development,
enhancements  and  modifications  to  CRM's  service.  At CRM,  he  developed  a
bankruptcy  prediction  model that has been  published  by the  Credit  Research
Foundation.  Prior to joining CRM in 1996, he was Managing  Director of ICI from
its inception in November 1992 through  January 1994, and from July 1995 through
August 1996,  where he created F&D Reports and was  responsible  for  day-to-day
operations,  technological  innovation,  product development and product quality
control.

         William H. Gerold,  IV, age 46,  joined the Company in February 1999 as
Vice President of  Information  Technology.  He has over 20 years  experience in
computer  technology  and systems.  For more than six years prior to joining the
Company he was  president  and sole  shareholder  of GudAnuf,  Inc.,  a computer
consulting firm specializing in the financial, human resources and manufacturing
industry segments.

Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's directors and officers, and persons who own more than 10%
of a  registered  class of the  Company's  equity  securities,  to file with the
Securities and Exchange Commission

                                                        18

<PAGE>

("SEC")  initial  reports of  ownership  and reports of changes in  ownership of
Common  Stock and other  equity  securities  of the  Company.  Such  persons are
required by SEC  regulation  to furnish  the Company  with copies of all Section
16(a) reports they file.

         To the Company's knowledge, based solely on its review of the copies of
such  reports   received  by  it  with  respect  to  fiscal  1998,   or  written
representations  from certain reporting  persons,  the Company believes that all
filing  requirements  applicable to its directors,  officers and persons who own
more than 10% of a registered class of the Company's equity securities have been
timely  complied  with,  except for Jerome S. Flum who filed a Form 4 and 5 late
and Flum Partners who filed a Form 4 and 5 late.

ITEM 10. EXECUTIVE COMPENSATION

         The  following  table shows,  for the fiscal  years ended  December 31,
1998,  1997 and 1996,  the  compensation  of the Chief  Executive  Officer.  The
Company had no other executive officers during that period. The table also shows
the compensation of the Company's Senior Vice President,  Lawrence Fensterstock,
who is an  executive  officer  and would have been listed in the table if he had
held that position at the end of 1998. Mr. Fensterstock was named as Senior Vice
President and Assistant Secretary of the Company effective January 20, 1999.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<S>                                 <C>          <C>                   <C>                          <C> 

                                     Annual
                                     Compensation(2)                    Long Term Compensation
                                                                        Number of
Name and Principal                                                      Securities                    All Other
Positions                            Year         Salary                Underlying Options            Compensation

Jerome S. Flum,                      1998         $ -0-(1)              150,000                        None
Chairman, President                  1997         $113,859
and Chief Executive                  1996         $121,506
Officer

Lawrence Fensterstock,               1998         N/A                   150,000                        None
Senior Vice President                1997         N/A
                                     1996         N/A
</TABLE>

(1) Effective December 31, 1997 Mr. Flum's Employment  Agreement was terminated.
See "Related Party Transactions."  Beginning January 20, 1999, Mr. Flum is being
compensated  by the Company at the rate of $150,000 per annum,  of which $90,000
per annum is being  deferred  until such time as the Company  achieves cash flow
breakeven  or until the MGI  Notes  have  been  paid in full,  whichever  occurs
sooner.


                                                        19

<PAGE>

(2) No Bonus or other Annual  Compensation was paid during the past three fiscal
years.

Directors' Fees
---------------

         Commencing September 1994, non-employee directors receive $450 for each
Board of  Directors'  meeting  attended,  up to a maximum  payment of $1,800 per
Director  per calendar  year.  During  1998,  non-qualified  options to purchase
36,000  shares of Common  Stock at a  purchase  price of $.0001  per share  were
granted to each of the two non-employee directors.

Compensation Pursuant to Stock Option Plans
-------------------------------------------

         The  following  table  sets  forth all  stock  options  granted  to the
Company's Chief Executive Officer, who was the only executive officer during the
last  fiscal year and to the  Company's  Senior  Vice  President,  who became an
executive officer on January 20, 1999.

<TABLE>

                              OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)                                               Grant
                                                                                                                     Date
                                        Individual Grants                                                            Value
<S>                         <C>                       <C>                       <C>                <C>              <C> 
                                                                                                                     
                                                       Percent of Total
                             Number of Securities      Options Granted to
                             Underlying Options        Employees in Fiscal      Exercise Basic      Expiration       Present
Name                         Amount (#)                Year                     Price ($/Sh)        Date             Value

Jerome S. Flum,              150,000                   100%                     $.00011(2)          8/25/2003        (3)
Chairman, President and
CEO                                                                                                                  (5)

Lawrence Fensterstock,       150,000                   N/A                      $.00010(4)          8/25/2008        (3)(4)
Senior Vice President                                                                                                (5)
</TABLE>

(1) No stock  appreciation  rights  were  granted to the  executive  officers in
fiscal 1998.

(2) Represents 110% of fair market value at date of grant.

(3) 75,000 of the options  granted to Mr. Flum and all of the options granted to
Mr.  Fensterstock,  are subject to performance  based  compensation as described
below.

(4)  Represents  fair  market  value at date of grant.  Mr.  Fensterstock  was a
consultant to the Company during 1998 and was not an employee.

(5) All options are not exercisable at least until January 2002. The fair market
value of one share of Company Common Stock at December 31, 1998 was $5.00.


                                                        20

<PAGE>

         Pursuant to the 1992  Incentive  Stock Option Plan of the  Company,  on
August 26, 1998 Mr. Flum was granted incentive stock options to purchase 150,000
shares of  Common  Stock,  exercisable  until  August  25,  2003,  at a price of
$.00011,  constituting  110% of the fair market value of the Common Stock on the
date of issuance.

         Non-qualified  options to purchase an  aggregate  of 530,500  shares of
Common  Stock were  granted on August 26, 1998 and  November 11, 1998 subject to
Stockholder  approval of the 1998 Long-Term  Incentive  Plan,  exercisable for a
ten-year term, including options to individuals who were employed as consultants
to the Company in 1998 and became Company  employees in 1999. All of the options
were issued at exercise prices  constituting the fair market price of the Common
Stock on the respective grant dates, subject, however, to the Company's purchase
of the CRM business, which occurred on January 19, 1999.
<TABLE>
<S>                                                     <C>                                 <C>    
                                                                                            EXERCISE PRICE PER
NAME                                                    NUMBER OF SHARES                    SHARE

Lawrence Fensterstock                                   150,000                            .0001

Non-Officer                                             380,500                            .0001
Consultant/Employees

</TABLE>

         Options to purchase  an  additional  72,000  shares  Common  Stock were
issued to non-employee directors.

         In order to minimize the risk of an "owner-shift" which could limit the
availability of the Company's NOL carryforwards,  none of the options, including
the options to non-employee  directors,  will vest or be exercisable,  under any
circumstances,  prior to the  expiration  of three years from the closing of the
1998  Private  Placement,  unless  accelerated  in the  sole  discretion  of the
Company.

         All of  the  530,500  options  (including  those  granted  to  Lawrence
Fensterstock)  and 75,000 of the options  granted to Mr.  Flum may be  exercised
prior to their final two years only in installments  upon the Company  attaining
certain  specified  gross revenue and pre-tax  profit  margin  objectives as set
forth in the table  below,  unless  such  objectives  are  modified  in the sole
discretion  of the Board of  Directors.  In order to achieve  the vesting of the
applicable  percentage  of options at each level,  both the minimum sales amount
and the pre-tax operating margin tests for that level must be met.


                                                        21

<PAGE>

<TABLE>
                                    MINIMUM ANNUAL

<S>                <C>                         <C>                             <C>                         <C>   
                                                                                                        Cumulative
                                                                                Options Vested             Options Vested
                                                 Pre-Tax Operating
   Level             Gross Sales                       Margin
     1                $3 Million                        20%                           6.7%                      6.7%
     2                $4 Million                        23%                           6.7%                      13.4%
     3                $5 Million                        27%                          10.0%                      23.4%
     4                $6 Million                        36%                          10.0%                      33.4%
     5               $7.5 Million                       39%                          13.3%                      46.7%
     6                $9 Million                        42%                          13.3%                      60.0%
     7               $11 Million                        45%                          16.6%                      76.6%
     8               $14 Million                        48%                          16.6%                      93.2%
     9               $17 Million                        48%                           6.8%                     100.0%

</TABLE>

         Notwithstanding  that the  objectives may not have been met in whole or
in part, each of the foregoing  performance-based options will vest in full on a
date which is two years  prior to the  expiration  date of the option or, in the
event of a change  in  control,  will  vest in whole or in part  according  to a
formula based on the value of the Company at the time of such change in control.

ITEM 11. SECURITY HOLDINGS OF PRINCIPAL STOCKHOLDERS AND
         MANAGEMENT

         The  following  table  sets  forth as of  March  25,  1999  information
regarding the  beneficial  ownership of the Company's  voting  securities (i) by
each  person  who is known to the  Company  to be the  owner of more  than  five
percent  of the  Company's  voting  securities,  (ii) by  each of the  Company's
directors, and (iii) by all directors and executive officers of the Company as a
group.  Except as indicated in the following  notes, the owners have sole voting
and investment power with respect to the shares:


                                                        22

<PAGE>
<TABLE>
<S>                                                <C>                                        <C>    
                                                                                               PERCENTAGE OF
                                                    NUMBER OF SHARES                           OUTSTANDING
NAME                                                OF COMMON STOCK(1)                         COMMON STOCK
Flum Partners(2)                                      3,797,128(3)                                71.62%
Jerome S. Flum(1)                                     3,910,353(4)                                73.75%
Richard J. James(1)                                       1,000                                   -----*
Leslie Charm(1)                                           1,000                                   -----*
All directors and officers                             3,912,353(4)                               73.79%
(as a group (4 persons))
*less than 1%
</TABLE>

(1) Does not give  effect to (a) the  issuance  of  options  to  purchase  up to
638,000  shares  of Common  Stock  granted  or to be  granted  to ten  officers,
employees and consultants, (b) options to purchase 150,000 shares granted to Mr.
Flum pursuant to the 1992  Incentive  Stock Option Plan of the Company,  and (c)
options to purchase an aggregate of 36,000  shares  granted to each of the other
directors.  All of the foregoing options are not exercisable  within sixty days.
Includes  2,000 shares of Common Stock issued to Flum Partners in  consideration
of loans to the  Company.  Includes  options to purchase  1,000 shares of Common
Stock  granted  to each of the  non-employee  directors  which  are  immediately
exercisable.

(2) The sole general partner of Flum Partners is Jerome S. Flum, Chairman of the
Board, President and Chief Executive Officer of the Company.

(3) Includes  3,598,299  shares of Common Stock  issued upon the  conversion  on
January 20, 1999 of the Senior Preferred Stock owned by Flum Partners.

(4) Includes  3,797,128 shares owned by Flum Partners,  of which Mr. Flum is the
sole general partner which are also deemed to be beneficially  owned by Mr. Flum
because of his power,  as sole general  partner of Flum Partners,  to direct the
voting of such shares held by the  partnership.  Mr. Flum  disclaims  beneficial
ownership of the shares owned by Flum Partners.  The 3,910,353  shares of Common
Stock, or 73.75% of the outstanding shares of Common Stock (giving effect to the
Senior  Preferred Stock Conversion and the issuance of stock to Investors in the
1998  Private  Placement)  may also be  deemed  to be  owned,  beneficially  and
collectively, by Flum Partners and Mr. Flum, as a "group", within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Act").
Does not include  options to purchase  150,000  shares granted to Mr. Flum under
the 1992 Incentive Stock Option Plan.


                                                        23

<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Transactions
--------------------

Payment of Liquidation Preferences and Issuance of Senior Preferred Stock

         Under  the  terms  of the  Company's  previously  outstanding  Series A
Preferred   Stock  and  Series  B  Preferred   Stock,  a  sale  or  transfer  of
substantially  all of the assets of the Company was deemed to be a  liquidation,
dissolution or winding up of the Company for purposes of determining the payment
of the  liquidation  preferences  on the Series A  Preferred  Stock and Series B
Preferred Stock.  Accordingly,  the 1993 Asset Sale entitled Flum Partners,  the
holder of all of the outstanding Series A Preferred Stock and Series B Preferred
Stock,  to payment of the  applicable  liquidation  preferences  and accrued and
unpaid dividends.

         In  November  1997 Flum  Partners  delivered  a letter  to the  Company
demanding  payment of the  applicable  liquidation  preferences  on the Series A
Preferred  Stock and Series B  Preferred  Stock  ($1,175,000  in the case of the
Series A  Preferred  Stock and  $310,000  in the case of the Series B  Preferred
Stock) and  accrued  and unpaid  dividends  on such  shares.  On the date of the
delivery  of the  demand,  accrued  dividends  on the Series A  Preferred  Stock
amounted  to  $787,500  and accrued  dividends  on the Series B Preferred  Stock
amounted to $111,600.  Accordingly, the aggregate amount payable pursuant to the
demand of Flum Partners was approximately $2,960,000.

         Since Flum Partners is an affiliate of Mr. Jerome Flum, a member of the
Board,  and  because  of  Mr.  Flum's  interest  in  Flum  Partners  and  in the
transaction, the Board formed an Independent Committee consisting of independent
Board members to consider the letter from Flum Partners.

         The  Independent  Committee  met and reviewed the  Company's  financial
situation at such time. The Company had approximately  $1.89 million of cash and
cash  equivalents,  and it was deemed prudent for the Company to maintain a cash
balance of approximately $90,000 for potential claims and other expenses and for
working  capital to enable the  Company to  attempt  to  identify  new  business
opportunities.  Thus,  $1.8  million of cash was  available  for  payment of the
liquidation  preferences  and  accrued  dividends  on the  Series A and Series B
Preferred  Stock,  leaving an unpaid  amount of  approximately  $1.16 million of
cash.

         The  Independent  Committee then engaged in discussions  with Mr. Flum,
representing Flum Partners.  Pursuant to such discussions,  Flum Partners agreed
to  accept,  in payment of the  unpaid  $1.16  million of cash,  shares of a new
series of convertible senior preferred stock ("Senior Preferred Stock"), with an
aggregate liquidation  preference equal to $1.1 million,  which was $60,000 less
than the unpaid  liquidation  preferences and accrued  dividends on the Series A
Preferred Stock and Series B Preferred Stock. The new series of Senior Preferred
Stock did not accrue  dividends,  but was convertible  into 90% of the Company's
Common Stock on a fully-

                                                        24

<PAGE>

diluted basis. The new Senior Preferred Stock was "participating", in that, upon
a  liquidation  or sale of the  Company,  and after the Senior  Preferred  Stock
received its  liquidation  preference,  the Senior  Preferred  Stock would share
ratably with the Common Stock on an "as converted" basis.

         After further  negotiations  with the Independent  Committee,  Mr. Flum
agreed to a termination of his existing Employment  Agreement effective December
1, 1997, saving the Company approximately $190,000 in salary expense through the
end of the  term of such  agreement,  in  consideration  of  which  the  Company
transferred to Mr. Flum an automobile  and computer  equipment with an aggregate
value not exceeding $10,000. Mr. Flum also agreed to continue as Chairman of the
Board and Chief Executive  Officer of the Company,  without pay, on an "at will"
basis.  Mr. Flum also agreed for a twelve month  period,  to attempt to identify
and consummate a transaction which would increase the value of the Company.

         In its  deliberations as to the fairness of the transaction,  the Board
considered the following factors:  (i) Mr. Flum agreed to terminate his existing
Employment  Agreement  with the  Company,  saving the  Company an  aggregate  of
approximately  $190,000 in salary expense; (ii) the Senior Preferred Stock would
not  accrue  dividends,  saving the  Company  approximately  $157,000  in annual
dividends;  (iii) the Senior  Preferred  Stock had a  liquidation  preference of
approximately  $60,000 less than the aggregate  amount payable in respect of the
liquidation  preferences  and accrued  dividends on the Series A Preferred Stock
and  Series B  Preferred  Stock (in this  regard the Board  recognized  that the
Series A and Series B  Preferred  Stock had  aggregate  liquidation  preferences
(plus accrued dividends) of approximately $2.96 million); and (iv) that Mr. Flum
would  attempt  for a period  of twelve  months to  identify  and  consummate  a
transaction  which would  increase the value of the Company.  With regard to the
factors described, the Board recognized that in any such transaction, the Senior
Preferred  Stock  would be  entitled to its  liquidation  preference  before any
distributions to common stockholders. The Independent Committee also noted that,
if it did not accept the proposal of Flum Partners, the Board would be obligated
to pay all of the Company's cash to Flum Partners in partial satisfaction of the
liquidation  preferences,  and then to proceed with the final liquidation of the
Company,  which  would  result  in the  holders  of Common  Stock not  receiving
anything.

         In accordance  with the foregoing,  the Company issued to Flum Partners
at the end of 1997 and in the first quarter of 1998 a total of 1,100,000  shares
of Senior Preferred Stock and $1.8 million of cash in payment of the liquidation
preferences  and accrued  dividends on the Series A Preferred Stock and Series B
Preferred Stock.


                                                        25

<PAGE>

Interest of Certain Persons and Conflicts of Interest
-----------------------------------------------------

         As a consequence of the payment of the  liquidation  preferences of the
Series A  Preferred  Stock  and  Series B  Preferred  Stock,  the  issuance  and
subsequent  conversion of the Senior Preferred Stock, and the purchase of shares
by Flum Partners in the private  placement,  and as described  above,  Jerome S.
Flum, the Chairman of the Board,  Chief  Executive  Officer and President of the
Company,  individually  and through Flum Partners,  beneficially  owns 3,910,353
shares of Common Stock. In addition,  Mr. Flum has been granted  Incentive Stock
Options  ("ISOs") to purchase  150,000 shares of the Common Stock at an exercise
price of $.00011 per share (equal to 110% of the fair market value of the Common
Stock on the date of grant).

Related Party Transactions
--------------------------

         The  Company  entered  into an  employment  agreement  with  Mr.  Flum,
effective  as of July 1,  1992,  which  provided  for Mr.  Flum to  serve as the
Chairman and Chief Executive  Officer of the Company until June 30, 1999, unless
sooner  terminated  by the  Company  for  cause,  or  upon  death  or  permanent
disability.  As more fully described  above, Mr. Flum agreed to a termination of
his Employment Agreement effective December 1, 1997.

         In November 1998,  Flum  Partners,  an investment  limited  partnership
which during 1998 owned 90% of the Company's  outstanding voting shares, and the
general  partner of which is Jerome S. Flum, the Company's  Chairman,  President
and CEO,  provided  the Company  with a line of credit of up to $20,000 of which
only $5,500 was drawn upon. In consideration thereof, the Company issued to Flum
Partners  2,000 shares of Common Stock.  In addition,  Flum  Partners  purchased
160,000  shares of Common Stock as a participant  in the 1998 Private  Placement
and agreed to convert all of its 1,100,000 shares of Senior Preferred Stock into
3,598,299  shares  of Common  Stock on or prior to the  closing  of the  Private
Placement. This conversion was effected as of January 20, 1999.

<PAGE>

ITEM 13. EXHIBITS LIST AND REPORTS ON FORM 8-K
(a) Exhibits

 2        -    Copy of the Asset Purchase Agreement dated December 29, 1998. (9)
 3(1)A    -    Copy of the Company's Restated Articles of Incorporation. (1)
 3(3)B    -    Copy of the Company's Certificate of Amendment to the Articles of
               Incorporation, dated August 31, 1987. (2)
 3(u)C    -    Copy of the Company's By-Laws as amended April 27, 1987. (2)
 3(i)D    -    Certificate of Designations for Series A Preferred Stock,
               together with Certificate of Amendment thereto and Second 
               Certificate  of  Amendment thereto. (3)
 3(i)E    -    Certificate of Designations for Series B Preferred Stock. (4)
 3(i)F    -    Third   Certificate  of  Amendment  of  The  Certificate  of
               Designations of Series A Preferred Stock. (8)
 3(i)G    -    Certificate of Amendment of The Certificate of Designations of
               Series B Preferred Stock. (8)
 3(i)H    -    Certificate of Designations of Senior Preferred Stock. (8)
 10-A     -    Copy of Company's 1992 Stock Option Plan. (7)
 10-B     -    Copy of Company's 1985 SAR and Non-Qualified Stock Option Plan.
               (3)
 10-C     -    Copy of Employment  Agreement  dated as of July 1, 1992 between
               the Company and Jerome Flum. (7)
 10-D     -    Copy of 1988 Amendments to Company's 1985 SAR and Non-Qualified
               Stock Option Plan. (5)
 10-E     -    Letter  Agreement  dated  November  12, 1990 by and between New
               Generation Foods, Inc. and Jerome S. Flum. (6)
 10-F     -    Letter  Agreement  dated  November  27, 1990 by and between New
               Generation Foods, Inc. and Jerome S. Flum. (6)
 10-G     -    Registration  Rights  Agreement  dated November 12, 1990 by and
               between New Generation Foods, Inc. and Jerome S. Flum. (6)
 10-H     -    Letter Agreement dated November 18, 1997 between New  Generation
               Foods, Inc., Flum Partners and Jerome Flum. (8)
 10-I     -    Copy of Company's 1998 Long-Term Incentive Plan.
 11       -    Statements regarding computation of per share earnings.
 21       -    Subsidiaries of the Company.
 27       -    Financial Data Schedule.



                                                        26

<PAGE>

(1)      Filed as an Exhibit to Registrant's Registration Statement on Form S-18
         (File No.1-67055C) and incorporated herein by reference thereto.
(2)      Filed as an Exhibit to Registrant's  Annual Report on Form 10-K for the
         fiscal  year  ending   December   31,  1988  (File  No.   0-10825)  and
         incorporated herein by reference thereto.
(3)      Filed as an Exhibit to Registrant's  Registration Statement on Form S-2
         (File No. 33- 17446) and incorporated herein by reference thereto.
(4)      Filed as an Exhibit to Registrant's  Registration Statement on Form S-8
         (File No. 33- 17446) filed October 25, 1989 and incorporated  herein by
         reference thereto.
(5)      Filed as an Exhibit to Registrant's  Annual Report on Form 10-K for the
         fiscal  year  ending   December   31,  1989  (File  No.   0-10825)  and
         incorporated herein by reference thereto.
(6)      Filed as an Exhibit to Registrant's  Post-Effective Amendment No. 3 to
         Registration  Statement on Form S-3 filed  November 15, 1991 (File No.
         33-17446) and incorporated herein by reference thereto.
(7)      Filed as an Exhibit to  Registrant's  Annual  Report on Form 10-KSB for
         the  fiscal  year  ending  December  31,  1992 (File No.  0-10825)  and
         incorporated herein by reference thereto.
(8)      Filed as an Exhibit to  Registrant's  Annual  Report on Form 10-KSB for
         the  fiscal  year  ending  December  31,  1997 (File No.  0-10825)  and
         incorporated herein by reference.
(9)      Filed as an Exhibit to  Registrant's  Report on Form 8-K dated  January
         19,  1999  (File No.  1-10825)  and  incorporated  herein by  reference
         thereto.


                        DOCUMENTS AVAILABLE UPON REQUEST

         Exhibits 10-I, 11, 21 and 27 are filed with this Form 10-KSB. All other
exhibits  indicated above are available upon request and payment of a reasonable
fee  approximating  the Company's  cost of providing and mailing the exhibits by
writing to:

     Office of the Senior Vice  President,  New  Generation  Foods,  Inc.  d/b/a
CreditRiskMonitor.com,   2001  Marcus  Ave.,   Suite  W290,  Lake  Success,   NY
11042-1011.

(b) Reports on Form 8-K

     The  following  Reports on Form 8-K were filed  during the last  quarter of
     1998:

     Report on Form 8-K dated  December  30,  1998 and filed on January 14, 1999
     reporting  the exercise by the Company of its option to purchase the assets
     of the CreditRisk Monitor credit information service from Market Guide Inc.

                                                        27

<PAGE>
                                      

                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                            PAGE

INDEPENDENT AUDITOR'S REPORT.................................................F-2


FINANCIAL STATEMENTS

         Consolidated Balance Sheets - December 31, 1998 and 1997............F-3

         Consolidated Statements of Operations - Years Ended
              December 31, 1998 and 1997.....................................F-4

         Consolidated Statements of Stockholders' Equity (Deficit) -
              Years Ended December 31, 1998 and 1997.........................F-5

         Consolidated Statements of Cash Flows - Years Ended
              December 31, 1998 and 1997.....................................F-7

         Notes to Consolidated Financial Statements -
              December 31, 1998 and 1997.....................................F-8



                                       F-1


<PAGE>

                          Independent Auditor's Report

The Board of Directors and Stockholders
New Generation Foods, Inc.

We have audited the accompanying  consolidated  balance sheets of New Generation
Foods,  Inc. and  Subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of operations,  stockholders' equity (deficit), and cash
flows for the years then ended. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of New  Generation
Foods,  Inc. and  Subsidiaries as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.


CLIFTON GUNDERSON L.L.C.


Peoria, Illinois
March 17, 1999


                                       F-2


<PAGE>

<TABLE>
<CAPTION>

                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1998 and 1997

                                                                                1998             1997
                                                                                ----             ----
                                     ASSETS
<S>                                                                            <C>               <C> 
CURRENT ASSETS
     Cash and cash equivalents                                                  $       13,400       $  1,400,051
     Purchase option (Note 6)                                                          115,000            -
                                                                                ---------------   ---------------


TOTAL ASSETS                                                                    $      128,400       $  1,400,051
                                                                                ===============   ================


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
     Accounts payable - shareholder                                             $        5,908     $      460,000
     Dividends payable                                                                    -               840,000
     Accrued franchise taxes                                                            45,580             45,200
     Accrued expenses                                                                   46,284                784
                                                                                ---------------   ----------------

                  Total current liabilities                                             97,772          1,345,984
                                                                                ---------------   -----------------


REDEEMABLE CONVERTIBLE VOTING
     SENIOR PREFERRED STOCK, $.01 par
     value (stated at liquidation value of $1.00 per
     share).  Authorized 1,100,000 shares; issued
     and outstanding 1,100,000 shares (Note 3)                                       1,100,000          1,100,000
                                                                                ---------------   ----------------


STOCKHOLDERS' EQUITY (DEFICIT) (Notes 3 and 4)
     Cumulative Convertible Voting Preferred Stock, $.01
         par value:
         Series A.  Authorized 2,333,333 shares; no shares
              issued and outstanding                                                         -                  -
         Series B (stated at liquidation value of $1.00 per
              share).  Authorized 350,000 shares; no shares
              issued and outstanding                                                         -                  -
     Common stock, $.01 par value.  Authorized 25,000,000
         shares; issued and outstanding 399,830                                          3,998              3,998
     Additional paid-in capital                                                     22,818,930         22,818,930
     Retained deficit                                                              (23,892,300)       (23,868,861)
                                                                                ---------------   ----------------

                  Total stockholders' equity (deficit)                              (1,069,372)        (1,045,933)
                                                                                ---------------   ----------------


TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY (DEFICIT)                                                           $      128,400   $      1,400,051
                                                                                ===============   ================
</TABLE>
                    
These consolidated  financial  statements should be read only in connection with
the accompanying notes to consolidated financial statements.


                                       F-3


<PAGE>


                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     Years Ended December 31, 1998 and 1997


<TABLE>
<CAPTION>
                                                                                          1998            1997
                                                                                          ----            ----
<S>                                                                                 <C>             <C>    
OPERATING EXPENSES
     Selling, general, and administrative                                            $     28,216    $      48,347
     Chairman's compensation expense                                                           -           113,859
                                                                                     ------------    -------------
                  Total operating expenses                                                 28,216          162,206
                                                                                     ------------    --------------
                  Operating loss                                                          (28,216)        (162,206)
                                                                                     ------------    -------------


OTHER INCOME (DEDUCTIONS)
     Interest and dividend income                                                           7,700           96,790
     Gain (loss) on investments                                                                 2          (15,633)
                                                                                     ------------    -------------
                                                                                            7,702           81,157
                                                                                     ------------    --------------
                  Loss before income taxes                                                (20,514)         (81,049)

INCOME TAXES (Note 2)                                                                       2,925               -
                                                                                     ------------     ------------
NET LOSS                                                                             $    (23,439)   $     (81,049)
                                                                                     ============    =============

NET LOSS PER SHARE (Note 5)
     Basic                                                                           $   (0.06)      $   (0.67)
                                                                                     =========       =========
     Dilutive                                                                        $   (0.06)      $   (0.67)
                                                                                     =========       =========
</TABLE>


These consolidated  financial  statements should be read only in connection with
the accompanying notes to consolidated financial statements.

                                       F-4


<PAGE>


<TABLE>
<CAPTION>



                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                     Years Ended December 31, 1998 and 1997


                                                                                           Preferred Stock
                                                                                              Series A
                                                                                       Shares           Amount
<S>                                                                                  <C>             <C>    

BALANCE AT DECEMBER 31, 1996                                                           2,333,333      $1,750,000

     Redemption and conversion of preferred stock (Note 3)                            (2,333,333)     (1,750,000)
     Preferred stock dividends (Note 3)                                                       -              -
     Net loss for year ended December 31, 1997                                                -              -
                                                                                   -------------   --------------


BALANCE AT DECEMBER 31, 1997  
                                                                                              -              -
     Net loss for year ended December 31, 1998                                                -              -
                                                                                   -------------   --------------


BALANCE AT DECEMBER 31, 1998                                                                  -    $         -
                                                                                   =============   ==============

</TABLE>
                                       F-5


<PAGE>

<TABLE>
<CAPTION>
<S>    

        Preferred Stock                                      Additional           Retained              Total
           Series B                   Common Stock             Paid-in            Earnings          Stockholders'
     Shares        Amount          Shares       Amount         Capital            (Deficit)            Equity
     ------        ------          ------       ------         -------            ---------            ------
     <C>         <C>               <C>         <C>           <C>              <C>                 <C>

      310,000     $  310,000       399,830     $  3,998      $22,818,930        $(22,936,481)        $1,946,447

     (310,000)      (310,000)           -            -                  -                  -         (2,060,000)
           -              -             -            -                  -           (851,331)          (851,331)
           -              -             -            -                  -            (81,049)           (81,049)
  -----------   ------------   -----------     --------    ---------------   -----------------           -------


           -              -        399,830        3,998       22,818,930         (23,868,861)        (1,045,933)

           -              -             -            -                  -            (23,439)           (23,439)
  -----------   ------------   -----------     --------    ---------------   -----------------           -------


           -    $         -        399,830     $  3,998    $  22,818,930     $   (23,892,300)      $ (1,069,372)
  ===========   ============   ===========     ========    ===============   =================       ===========
</TABLE>

These consolidated  financial  statements should be read only in connection with
the accompanying notes to consolidated financial statements.

                                       F-6


<PAGE>
<TABLE>
<CAPTION>

                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 1998 and 1997


                                                                                        1998             1997
                                                                                        ----             ----
<S>                                                                                <C>             <C>  
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                                       $     (23,439)  $      (81,049)
                                                                                    -------------   --------------
     Adjustments to reconcile net loss to net cash used in
         operating activities:
         Depreciation                                                                          -             5,330
         Loss on sale or maturity of marketable investment securities                          -             5,429
         Change in assets and liabilities:
              Receivables                                                                      -            17,274
              Accounts payable (trade), accrued compensation,
                  accrued franchise taxes, and accrued expenses                          (408,212)         (10,327)
                                                                                    -------------   --------------
                  Total adjustments                                                      (408,212)          17,706
                                                                                    -------------   --------------

                  Net cash used in operating activities                                  (431,651)         (63,343)
                                                                                    -------------   --------------


CASH FLOWS FROM INVESTING ACTIVITIES
     Acquisition of purchase option                                                      (115,000)              -
                                                                                    -------------   -------------

                  Net cash used in investing activities                                  (115,000)              -
                                                                                    -------------   -------------


CASH FLOWS FROM FINANCING ACTIVITIES
     Dividends paid                                                                      (840,000)              -
     Redemption of preferred stock                                                             -          (500,000)
                                                                                    -------------   --------------

                  Net cash used in financing activities                                  (840,000)        (500,000)
                                                                                    -------------   --------------


NET DECREASE IN CASH AND CASH EQUIVALENTS                                              (1,386,651)        (563,343)


CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                          1,400,051        1,963,394
                                                                                    -------------   --------------


CASH AND CASH EQUIVALENTS AT END OF YEAR                                            $      13,400   $    1,400,051
                                                                                    =============   ==============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION
     Cash paid during the year for taxes                                            $       2,925   $           -
                                                                                    =============   =============


SUPPLEMENTAL DISCLOSURE OF NONCASH
     FINANCING ACTIVITIES
     Partial conversion of Preferred Stock, Series A, to
         Senior Preferred Stock                                                     $          -    $    1,100,000
                                                                                    =============   ==============


REDEMPTION OF PREFERRED STOCK, SERIES B,
     AND REMAINING SERIES A THROUGH
     ACCOUNTS PAYABLE - SHAREHOLDER                                                 $          -    $      460,000
                                                                                    =============   ==============
</TABLE>

These consolidated  financial  statements should be read only in connection with
the accompanying notes to consolidated financial statements.

                                       F-7


<PAGE>


                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)    Organization and Description of Business

New Generation  Foods, Inc. (the "Company") is a publicly traded company engaged
in the  active  search  for  acquisition  opportunities  which  have  attractive
valuations and which meet its financial acquisition criteria.

(b)    Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned  subsidiaries,  Spicer's International,  Inc. and NGF Services,
Inc. All significant intercompany balances and transactions have been eliminated
in consolidation.

(c)    Use of Estimates in Preparing Financial Statements

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

(d)    Cash Equivalents

The  Company   considers  all  highly  liquid  debt  instruments  with  original
maturities of three months or less to be cash equivalents.

(e)    Income Taxes

Deferred income taxes are provided on temporary  differences  between  financial
statement  and income  tax  reporting.  Temporary  differences  are  differences
between the amounts of assets and liabilities  reported for financial  statement
purposes  and their tax bases.  Deferred  tax  liabilities  are  recognized  for
temporary  differences  that will be  taxable  in  future  years'  tax  returns.
Deferred  tax assets  are  recognized  for  temporary  differences  that will be
deductible in future  years' tax returns and for  operating  loss and tax credit
carryforwards. Deferred tax assets are reduced by a valuation allowance if it is
deemed more likely than not that some or all of the deferred tax assets will not
be realized.

(f)    Earnings (Loss) Per Share

Earnings  (loss) per share is computed  under the  provisions  of  Statement  of
Financial  Accounting  Standards ("SFAS") No. 128, Earnings Per Share, which was
adopted  retroactively by the Company at December 31, 1997.  Amounts reported as
earnings (loss) per share for each of the two years in the period ended December
31, 1998 reflect the earnings  (loss)  available  to  stockholders  for the year
divided by the weighted average of common shares outstanding during the period.


                                       F-8


<PAGE>


                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g)    Stock Option Plans

The  Company  accounts  for its  stock  option  plans  in  accordance  with  the
provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees,  and related  interpretations.  As such, compensation
expense would be recorded on the date of grant only if the current  market price
of the underlying  stock exceeded the exercise price. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and provide the pro forma
disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation.

(h)    Fair Value of Financial Instruments

The Company believes the recorded value of cash and cash  equivalents,  purchase
option,  accounts  payable,  dividends  payable,  accrued  franchise  taxes, and
accrued expenses  approximates fair value because of the short maturity of these
financial instruments.


NOTE 2 - INCOME TAXES

Components of income tax expense for 1998 are as follows:

                                             Federal       State        Total

Current                                  $      -      $  2,925     $   2,925
Deferred                                        -            -             -
                                          ---------     --------     --------

Total                                    $      -      $  2,925     $   2,925
                                         =========     ========     =========

The actual tax expense for 1998 and 1997 differs from the "expected" tax expense
for those years  (computed  by applying the  applicable  United  States  federal
corporate tax rate to income (loss) before income taxes) as follows:

                                                         1998            1997
                                                         ----            ----

Computed "expected" benefit                      $     (6,975)   $     (27,557)
Expiration of net operating loss carryforward         760,920          652,937
Expiration of investment tax carryforward              21,000            8,877
Underaccrual of prior year taxes                        2,925               -
Decrease in valuation allowance                      (774,143)        (633,605)
Other                                                    (802)            (652)
                                                  ------------    -------------

Income tax expense                               $      2,925    $          -
                                                   ============    ============


                                       F-9


<PAGE>


                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 2 - INCOME TAXES (CONTINUED)

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets at December 31, 1998 and 1997 are as follows:

                                                    1998              1997
                                                    ----              ----
Deferred tax assets:
     Net operating loss carryforwards       $    4,724,640   $    5,478,012
     Investment tax credit carryforwards            35,000           55,771
     Alternative minimum tax carryforward            6,655            6,655
                                            --------------   --------------
    
     Total gross deferred tax assets             4,766,295          5,540,438

Less valuation allowance                        (4,766,295)        (5,540,438)
                                                -----------       ------------

Net deferred tax assets                      $           -    $           -
                                              ==============   =============

A valuation  allowance  is provided to reduce the deferred tax assets to a level
which, more likely than not, will be realized.  The net deferred assets reflects
management's  estimate  of  the  amount  which  will  be  realized  from  future
profitability which can be predicted with reasonable certainty.

The net change in the total valuation allowance for the years ended December 31,
1998 and 1997 was a decrease of $774,143 and $633,605, respectively.

At December  31,  1998,  the Company has net  operating  loss  carryforwards  as
follows which are available to offset future  federal  taxable  income,  if any,
through  2018.  The Company  also has  investment  tax credit  carryforwards  as
follows  which are  available to reduce future  federal  income  taxes,  if any,
through 2000.
<TABLE>
<CAPTION>
<S>     
                     Net                                 Investment                                 Year of
               Operating Loss                            Tax Credit                               Expiration
              <C>                                      <C>                                       <C>   

              $     2,332,000                           $    16,000                                1999
                    3,436,000                                19,000                                2000
                    1,750,000                                    -                                 2001
                    1,434,000                                    -                                 2002
                    1,512,000                                    -                                 2003
                    1,131,000                                    -                                 2004
                      805,000                                    -                                 2005
                      547,000                                    -                                 2006
                      574,000                                    -                                 2007
                      238,000                                    -                                 2008
                      114,000                                    -                                 2017
                       23,000                                    -                                 2018
              ---------------                           -----------

              $    13,896,000                           $    35,000
              ===============                           ===========

</TABLE>
                                      F-10


<PAGE>





                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 3 - PREFERRED STOCK

During 1987, 5,000,000 shares of preferred stock $.01 par value, were authorized
by the stockholders.

The sale or transfer of substantially all of the assets of the Company is deemed
to be a  liquidation,  dissolution or winding-up of the Company for the purposes
of determining  when the  liquidation  preference of the holders of the Series A
and Series B Preferred Stock is to be paid.  Accordingly,  upon  consummation of
the sale of  substantially  all of the  Company's  assets in October  1993,  the
holders of the Series A and Series B  Preferred  Stock were  entitled to receive
preference in liquidation  before any  distribution to the holders of the common
stock.

(a)    Senior Preferred Stock

On November  17, 1997,  the Company  received a letter from the holder of all of
the  shares of the  Series A and  Series B  Preferred  Stock,  a related  party,
demanding payment of the liquidation  preference and accrued dividends  relative
to  those  shares.  The  total  amount  payable  pursuant  to  this  demand  was
approximately $2,959,000. On November 18, 1997, the Company's Board of Directors
approved  settlement of this demand by issuing  $1,100,000  of Senior  Preferred
Stock,  agreeing  to pay  $1,800,000  in cash,  and  agreeing  to give  computer
equipment and a Company car to the shareholder. Also, as part of the settlement,
the Chief Executive Officer of the Company, who was also a representative of the
shareholder,  agreed to terminate his existing  employment  agreement  effective
December 1, 1997. At December 31, 1997, there was $1,300,000 of cash owed to the
shareholder for this settlement which was paid during 1998.

During 1997,  1,100,000  shares of Senior  Preferred  Stock were  authorized and
issued.  Each share of the Senior Preferred Stock was convertible into 3.2711808
common  shares  based upon a ratio  utilizing a  conversion  price of $.3057 per
share.  The ratio was determined by dividing  $1.00 by the  conversion  price in
effect at the time of conversion. The conversion price was subject to adjustment
in  certain  events,  including  the  issue  or  sale  of  common  stock  or any
convertible securities,  rights, or related rights for a consideration per share
of common stock less than the conversion  price in effect  immediately  prior to
the issuance of such common stock or convertible securities,  rights, or related
rights.   In  such  event,   the  conversion  price  would  be  reduced  to  the
consideration  per share of common stock paid in connection with the issuance of
common  stock or any  convertible  securities,  rights,  or related  rights.  At
December 31, 1998, the Senior  Preferred  Stock was convertible in the aggregate
into 3,598,299  common shares and was converted in full during January 1999. The
Senior Preferred Stock had a liquidation preference of $1.00 per share.

Each holder of shares of Senior  Preferred  Stock was  entitled to the number of
votes  equal to the number of shares of common  stock into which such  shares of
Senior  Preferred  Stock could be converted  and had voting  rights equal in all
respects to those of the common stock into which the Senior  Preferred Stock was
convertible on the record date for the vote in question.


                                      F-11


<PAGE>


                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 3 - PREFERRED STOCK (CONTINUED)

(a)    Senior Preferred Stock (Continued)

The holders of the Senior Preferred Stock were entitled to receive  dividends at
the same rate as dividends  (other than dividends  paid in additional  shares of
common stock) were paid with respect to the common stock (treating each share of
Senior  Preferred  Stock as being equal to the number of shares of common  stock
into which each share of Senior Preferred Stock was then convertible).

The Senior  Preferred  Stock was  redeemable  at the option of the  holders of a
minimum of one-half of the  aggregate  number of shares  then  outstanding.  The
redemption price of the Senior Preferred Stock was equal to the sum of (i) $1.00
per share (as  adjusted  for any stock  dividends,  combination,  or splits with
respect to such  shares) and (ii) any  accumulated  and unpaid  dividends on any
such share of Senior  Preferred Stock. The redemption value at December 31, 1998
was $1,100,000.

(b)    Series A Preferred Stock

During  1988,  2,333,333  shares  of  Series  A  Cumulative  Convertible  Voting
Preferred  Stock (Series A Preferred  Stock) were  authorized  and issued.  Each
share of the Series A  Preferred  Stock was  convertible  into  .0297625  common
shares based upon a ratio  utilizing a conversion  price of $25.20 per share, as
adjusted,  plus an amount of Special Conversion  Shares,  calculated each June 1
through June 1, 1992,  based on an amount per share of Series A Preferred  Stock
of $0.0675 per annum, divided by the then conversion price. The conversion price
was $25.20 at June 1, 1997.  The  conversion  price was subject to adjustment in
certain events,  including the issue or sale of common stock for a consideration
per share  less than the  lesser of the  conversion  price or 80  percent of the
market  price  immediately  prior to such  issue or sale  (except  for  Series A
Preferred Stock  conversion,  exercise of warrants,  options,  or similar rights
outstanding on the date the Series A Preferred Stock was issued).

Each share of Series A Preferred  Stock had voting  rights equal in all respects
to those of the  common  stock  into  which  the  Series A  Preferred  Stock was
convertible on the record date for the vote in question.

Dividends  on the Series A Preferred  Stock were payable  annually  each June 1,
commencing  June 1,  1993,  to holders  of record on the May 1st  preceding  the
dividend  payment  date.  Dividends  were to be paid upon the  discretion of the
Board;  however,  if not paid, the dividends were  cumulative from June 1, 1992.
Dividends  were to be paid at the rate of  $0.0675  per  share per year and were
payable in cash.

During 1997, the Series A Preferred  Stock was retired.  At the retirement  date
unpaid dividends were $787,500, a majority of which were paid during 1998.


                                      F-12


<PAGE>


                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 3 - PREFERRED STOCK (CONTINUED)

(c)    Series B Preferred Stock

During 1989,  350,000 shares of Series B Preferred Stock,  $.01 par value,  were
authorized by the Board of Directors.  During 1989,  310,000  shares of Series B
Cumulative  Convertible  Voting  Preferred Stock (Series B Preferred Stock) were
issued. Each share of the Series B Preferred Stock was convertible into .0294125
common  shares  based upon a ratio  utilizing a  conversion  price of $34.00 per
share, as adjusted,  plus an amount of Special Conversion Shares,  calculated on
June 1, 1990 and on each June 1  thereafter  through  June 1, 1993,  based on an
amount per share of Series B Preferred  Stock of $.09 per annum,  divided by the
then  conversion  price.  The  conversion  price was $34.00 at June 1, 1997. The
conversion  price was subject to  adjustment  in certain  events,  including the
issue or sale of  common  stock  for a  consideration  per  share  less than the
conversion  price or less than an amount equal to 80 percent of the market price
immediately  prior to such  issue or sale  (except  for  conversion  of Series B
Preferred Stock,  any other series of preferred stock of the Corporation  issued
prior to the  issuance of the Series B Preferred  Stock;  exercise of  warrants,
options or similar rights  outstanding on the date the Series B Preferred  Stock
was issued).

Each share of Series B Preferred  Stock had voting  rights equal in all respects
to those of the  common  stock  into  which  the  Series B  Preferred  Stock was
convertible on the record date for the vote in question.

Dividends  on the Series B Preferred  Stock were payable  annually  each June 1,
commencing  June 1,  1994,  to holders  of record on the May 1st  preceding  the
dividend  payment  date.  Dividends  were to be paid upon the  discretion of the
Board;  however,  if not paid, the dividends were  cumulative from June 1, 1993.
Dividends  were to be paid at the  rate of $.09  per  share  per  year  and were
payable in cash,  provided  that  during the period  ended  December 1, 1996 the
holders of a majority of the Series B Preferred  Stock could  elect,  in lieu of
entitlement to a cash  dividend,  to cause the Company to increase the number of
Special  Conversion  Shares in the annual amounts described above. This election
was not exercised.

During 1997, the Series B Preferred  Stock was retired.  At the retirement  date
unpaid dividends were $111,600, a majority of which were paid during 1998.


NOTE 4 - COMMON STOCK, STOCK OPTIONS, AND STOCK APPRECIATION RIGHTS

(a)    Common Stock

At December 31, 1998,  4,354,049 shares of the Company's authorized common stock
were reserved for issuance under stock option plans and Senior  Preferred  Stock
(convertible) outstanding.

                                      F-13


<PAGE>


                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 4 - COMMON STOCK, STOCK OPTIONS, AND STOCK APPRECIATION RIGHTS (CONTINUED)

(b)    Stock Options and Stock Appreciation Rights

The Company has three stock option plans,  the 1998  Long-Term  Incentive  Plan,
which was adopted by the Company's  Board of Directors on August 26, 1998 and is
subject to stockholder approval within one year from the adoption date, the 1992
Incentive  Stock Option Plan,  and the 1985 SAR and  Non-Qualified  Stock Option
Plan.

The 1998  Long-Term  Incentive  Plan  authorizes  the grant of  incentive  stock
options,   non-qualified  stock  options,   stock  appreciation  rights  (SARs),
restricted stock, bonus stock, and performance shares to employees, consultants,
and  non-employee  directors of the Company.  The total number of the  Company's
shares that may be awarded under this plan is 1,500,000  shares of common stock.
At December  31,  1998,  there were options  outstanding  for 602,500  shares of
common  stock under this plan.  The  exercise  price of each option shall not be
less  than  the fair  market  value of the  common  stock at the date of  grant.
Options expire on the date determined, but not more than ten years from the date
of  grant.  The plan  shall  terminate  ten years  from the date of  stockholder
approval.

The Company's 1992 Incentive Stock Option Plan authorizes the grant of incentive
stock  options to employees of the  Company.  The total number of the  Company's
shares that may be issued or transferred  pursuant to options  granted under the
Incentive  Stock Option Plan, as amended,  is 150,000 shares of common stock. At
December 31, 1998,  there were 150,000 options  outstanding for shares of common
stock under this plan.  The exercise price of each option shall not be less than
the fair market value of the common stock at the date of grant.  Options  expire
on the date  determined,  but not more than ten years from the date of grant. No
option may be  exercised  unless the holder is then an employee of the  Company,
provided that such exercise may be made for no more than three months  following
termination  of  employment  or one year after death while  being  employed.  No
options may be granted under this plan after June 12, 2002.

The Company's 1985 SAR and Non-Qualified  Stock Option Plan authorizes the grant
of stock incentives in the form of stock options and stock  appreciation  rights
to key service  personnel  of the  Company.  The total  number of the  Company's
shares that may be issued or transferred  pursuant to stock  incentives  granted
under the plan, as amended,  is 62,500  shares of common stock.  At December 31,
1998, there were options outstanding for 3,250 shares of common stock under this
plan. The plan authorizes the grant of two categories of stock incentives:

(1)    Stock  Options.  The exercise  price of each option is  determined by the
       Board of Directors.  Options expire on the date determined,  but not more
       than ten years from the date of grant.

(2)    Stock  Appreciation  Rights.  Stock  appreciation  rights  (SARs)  may be
       granted in one of three forms:


                                      F-14


<PAGE>

                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 4 - COMMON STOCK, STOCK OPTIONS, AND STOCK APPRECIATION RIGHTS (CONTINUED)

(b)    Stock Options and Stock Appreciation Rights (Continued)

              i) In combination with any option granted under the plan, in which
              event the  exercise  of the SAR has the  effect of  canceling  the
              related option,  and exercise of the related option has the effect
              of canceling the related SAR;

              ii) Independently of a stock option; or

              iii) In  addition to a stock  option,  entitling  the  optionee to
              exercise the SAR and, in addition,  either to exercise the related
              stock  option or  surrender  it and  receive in return a number of
              shares  equal to the excess of the fair market value of the option
              shares on the date of exercise over the option price.

No stock incentives may be granted under this Plan after September 20, 1995.

There have been no transactions with respect to the Company's stock appreciation
rights  during the years ended  December  31,  1998 and 1997,  nor are there any
stock appreciation rights outstanding at December 31, 1998 and 1997.

Transactions  with  respect to the  Company's  stock  option plans for the years
ended December 31, 1998 and 1997 are as follows:

                                                                       Weighted
                                                                       Average
                                                    Number             Exercise
                                                    of Shares          Price

Outstanding at December 31, 1996 and 1997             3,250       $    .90412
Granted during 1998 pursuant to:
     1992 Incentive Stock Option Plan               150,000            .00011
     1998 Long-Term Incentive Plan (subject
         to stockholder approval)                   602,500            .00010
                                                 -----------       ===========

Outstanding at December 31, 1998                    755,750       $    .00399
                                                 ===========       ===========


                                      F-15


<PAGE>


                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


 NOTE 4 - COMMON STOCK, STOCK OPTIONS, AND STOCK APPRECIATION RIGHTS (CONTINUED)

(b)    Stock Options and Stock Appreciation Rights (Continued)

The  following  is  summary   information  about  the  Company's  stock  options
outstanding at December 31, 1998:

  Number of Shares             Exercise Price               Expiration Date
  ----------------             --------------               ---------------

     1,250                     $     2.18750                 March 19, 2003
   150,000                     $      .00011                 August 25, 2003
    72,000                     $      .00010                 August 25, 2004
     2,000                     $      .10200                 September 14, 2004
   505,000                     $      .00010                 August 25, 2008
    25,500                     $      .00010                 November 11, 2008
  --------

   755,750
   =======

At both December 31, 1998 and 1997, the number of options  exercisable was 3,250
and the weighted-average exercise price of those options was $.90412.

The  Company  has  adopted  the  disclosure-only  provisions  of SFAS  No.  123,
Accounting  for Stock-  Based  Compensation,  but applies APB Opinion No. 25 and
related  interpretations  in accounting  for its option plan. If the Company had
elected to recognize  compensation  cost for the plan based on the fair value at
the grant dates for awards under the plan consistent with the method  prescribed
by SFAS No.  123,  the effect on net loss and loss per share would not have been
significant.


NOTE 5 - EARNINGS (LOSS) PER SHARE

The following  table sets forth the  computation  of basic and diluted  earnings
(loss) per share:
<TABLE>
<S>                                                                                <C>             <C> 
                                                                                        1998             1997
                                                                                        ----             ----

Net earnings (loss)                                                                 $    (23,439)   $     (81,049)
Dividends on cumulative preferred stock                                                       -          (185,400)
                                                                                    ------------     -------------

Net earnings (loss) applicable to common stock                                      $    (23,439)   $    (266,449)
                                                                                    =============    =============

Basic average common shares outstanding                                                  399,830          399,830
                                                                                    =============    =============

Earnings (loss) per share - basic                                                   $      (0.06)    $      (0.67)
                                                                                    =============    =============

Earnings (loss) per share - dilutive                                                $      (0.06)    $      (0.67)
                                                                                    =============    =============
</TABLE>

The effect of dilutive securities  (convertible  preferred stock and options) is
anti-dilutive  for 1998 and 1997,  therefore,  basic and dilutive loss per share
are the same for those years.


                                      F-16


<PAGE>


                  NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 6 - PURCHASE OPTION

In September 1998, the Company  entered into an option  agreement (the "Purchase
Option")  to  purchase  the  assets of the  CreditRisk  Monitor  ("CRM")  credit
information  service from Market Guide Inc.  ("MGI").  CRM is an Internet  based
service  providing credit reports to corporate  personnel on retailing and other
companies  incorporating  MGI developed  financial  information,  peer and trend
analysis,  news, alert notifications,  and other vital information.  The Company
paid $60,000 for the Purchase  Option in addition to paid and accrued legal fees
totaling  $55,000.  On  December  29,  1998,  the  Company  notified  MGI of its
intention to exercise this Purchase Option, which was consummated on January 19,
1999 (see Note 7).


NOTE 7 - SUBSEQUENT EVENTS

On January 19, 1999, the Company  exercised its option to purchase the assets of
CRM. The assets purchased included customer contracts,  receivables,  equipment,
software,  and  intangibles.  The net present  value of the  purchase  price was
approximately  $2,180,000 (inclusive of the $60,000 paid for the Purchase Option
in September  1998),  of which $1.23 million was paid at closing and the balance
is represented by two secured  promissory notes (one for approximately  $100,000
and the other for $790,000,  net of $210,000  discount).  These promissory notes
provide for the deferral of principal  amortization until February 2001 (for the
$100,000  note which bears  interest at 8.5 percent) and July 2001 (for the $1.0
million note which bears  interest at 6 percent),  respectively.  Both notes are
then  payable  over 24 months and are  secured by the CRM assets  purchased  and
substantially  all other assets of the Company.  The $1.0 million note  provides
for no interest  through  June 30, 2001,  while the other note  provides for the
deferral of interest until debt servicing commences.

Concurrently,  New Generation  completed a private placement of 1,300,000 shares
of its common stock to  approximately  25  "accredited  investors" at a purchase
price of $2.50 per share, for gross proceeds of $3.25 million. The proceeds from
this offering were used to finance the cash portion of the CRM  acquisition  and
the remainder will be used for future working capital needs.

In anticipation of the exercise of the option,  in November 1998, Flum Partners,
a related party,  provided the Company with a line of credit of up to $20,000 of
which only  $5,500 was drawn upon and,  in  consideration  thereof,  the Company
agreed to issue to Flum Partners 2,000 shares of common stock.  As a participant
in the private  placement,  Flum  Partners  purchased  160,000  shares of common
stock.  In addition,  as a condition  to the private  placement,  Flum  Partners
agreed to convert all of its  1,100,000  shares of senior  preferred  stock into
3,598,299  shares  of common  stock on or prior to the  closing  of the  private
placement. This conversion was effected as of January 19, 1999.

This  acquisition will be accounted for using the purchase method of accounting.
Accordingly,  a portion of the purchase  price will be allocated to net tangible
and intangible  assets acquired based on their estimated fair values.  A portion
will also be allocated to in-process research and development projects that have
not reached  technological  feasibility and have no probable  alternative future
uses which will be  expensed  in the first  quarter of 1999.  The balance of the
purchase  price will be recorded as goodwill,  which will be  amortized  over 20
years.



                                      F-17


<PAGE>

                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


NOTE 7 - SUBSEQUENT EVENTS (CONTINUED)

The following  unaudited pro forma summary presents the consolidated  results of
operations as if the acquisition  had been made at the beginning of 1998.  These
results do not  purport to be  indicative  of what would have  occurred  had the
acquisition  actually  been made as of January 1, 1998 or the results  which may
occur in the future.

Revenues                                               $        809,563
                                                       =================
Net earnings (loss)                                    $     (1,364,651)
                                                        ================
Earnings (loss) per share - basic                           $     (0.26)
                                                             ===========
Earnings (loss) per share - dilutive                        $     (0.26)
                                                             ===========

Earnings (loss) per share was computed on a pro forma basis giving effect to the
issuance of 1,300,000  common shares,  the conversion of the 1,100,000 shares of
redeemable  preferred  stock into 3,598,299  common shares,  and the issuance of
2,000  common  shares to Flum  Partners.  All of these stock  transactions  were
related to the acquisition.

Pending  shareholder  approval,   the  Company  plans  to  change  its  name  to
CreditRiskMonitor.com,  Inc. and apply for a new stock symbol that reflects this
new name.

This information is an integral part of the accompanying  consolidated financial
statements.

                                      F-18


<PAGE>

                                                    SIGNATURES


                  Pursuant  to the  requirements  of  Section 13 or 15(d) of the
Securities  Exchange Act of 1934,  the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereto duly authorized.


                                                  NEW GENERATION FOODS, INC.



                                                  By:/s/ Jerome Flum
                                                     ----------------
                                                     Jerome Flum
                                                     Chairman of the Board and
                                                     Chief Executive Officer
                                                     March 31, 1999

                            
<PAGE>

                                                 POWER OF ATTORNEY


                  KNOW ALL  PERSONS BY THESE  PRESENTS  that each  person  whose
signature  appears below  constitutes  and appoints  Jerome S. Flum and David I.
Schaffer his true and lawful  attorney-in-fact,  with full power of substitution
and resubstitution,  to act for him and in his name, place and stead, in any and
all  capacities  to sign any and all  amendments  to this Annual  Report on Form
10-KSB,  and to file the same with all exhibits thereto,  and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
each of said  attorneys-in-fact  and agents,  full power and authority to do and
perform  each and every act and thing  requisite  or necessary to be done in and
about the  premises,  and fully to all intents and purposes as he might or could
do  in  person,   hereby   ratifying  and  confirming  all  that  each  of  such
attorneys-in-fact and agents, or his substitute or substitutes,  may lawfully do
or cause to be done by virtue thereof.

                  Pursuant to the requirements of the Securities Exchange Act of
1934,  this  report has been  signed by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


         Name              Position                             Date



/s/ Jerome S. Flum         Chairman of the Board and            March 31, 1999
------------------         Chief Executive Officer
Jerome S. Flum             


/s/ Lawrence Fensterstock  Senior Vice President, Assistant     March 31, 1999
-------------------------  Secretary and Principal Accounting 
Lawrence Fensterstock      Officer
                                                                           


/s/ Leslie Charm           Director                             March 31, 1999
----------------
Leslie Charm


/s/ Richard J. James       Director                              March 31, 1999
--------------------
Richard J. James


                            
<PAGE>

EXHIBIT 10-I
  


                           NEW GENERATION FOODS, INC.
                           d/b/a CreditRiskMonitor.com

                          1998 LONG-TERM INCENTIVE PLAN

         1. Purposes of the Plan. The purposes of this 1998 Long-Term  Incentive
Plan are to attract and retain the best  available  personnel  for  positions of
substantial  responsibility,  to  provide  additional  incentive  to  Employees,
Consultants and Non-Employee  Directors of the Company and its Subsidiaries,  to
promote the success of the Company's  business and to align the interests of the
Company's  stockholders and the recipients of awards under this Plan. Any one or
a combination of the following awards (collectively "Awards" and individually an
"Award") may be made under this Plan:  (i) Options to purchase  shares of Common
Stock in the form of Incentive  Stock Options or  Non-Qualified  Stock  Options,
(ii) SARs in the form of Tandem SARs or  Free-Standing  SARs, (iii) Stock Awards
in the form of Restricted Stock or Bonus Stock, and (iv) Performance Shares.

         2.  Definitions. As used herein, the following definitions shall apply:

               "Administrator"   means  the  Board  or  any  of  its  Committees
               appointed pursuant to Section 4.

               "Affiliate"  of any  Person  shall  be  any  other  Person  which
               controls, is controlled by, or is under common control with, such
               Person.  As  used  herein,  "control"  shall  be the  possession,
               directly  or  indirectly,  of the  power to  direct  or cause the
               direction of the  management  and  policies of a Person,  whether
               through the  ownership  of voting  securities,  by  contract,  or
               otherwise.

               "Agreement"  shall  have the  meaning  provided  in  Section  9.3
               hereof.

               "Award" shall have the meaning provided in Section 1 hereof.

               "Board" means the Board of Directors of the Company.

               "Bonus  Stock"  shall mean  shares of Common  Stock which are not
               subject to a Restriction Period or Performance Measures.

               "Bonus Stock Award" shall mean an award of Bonus Stock under this
               Plan.

               "Code" means the Internal Revenue Code of 1986, as amended.

               "Change in Control"  shall have the  meaning  provided in Section
               9.8 hereof.

               "Committee"  means  the  Committee  appointed  by  the  Board  of
               Directors in  accordance  with  Section 4 of the Plan.


                            
<PAGE>

               "Common  Stock" means the Common  Stock,  par value $.01,  of the
               Company.

               "Company    means   New    Generation    Foods,    Inc.,    d/b/a
               CreditRiskMonitor. com, a Nevada corporation.

               "Consultant"  means any  person,  including  an  advisor,  who is
               engaged  by the  Company or any  Parent or  Subsidiary  to render
               services and is compensated  for such services,  and any director
               of the  Company  whether  compensated  for such  services or not,
               provided that if and in the event the Company registers any class
               of any equity  security  pursuant to the  Exchange  Act, the term
               Consultant  shall  thereafter  not include  directors who are not
               compensated  for their services or are paid only a director's fee
               by the Company.

               "Continuous  Status  as an  Employee"  means the  absence  of any
               interruption or termination of the employment relationship by the
               Company or any Subsidiary. Continuous Status as an Employee shall
               not be  considered  interrupted  in the case of: (i) sick  leave;
               (ii) military leave; (iii) any other leave of absence approved by
               the Board,  provided  that such leave is for a period of not more
               than ninety (90) days, unless reemployment upon the expiration of
               such  leave is  guaranteed  by  contract  or  statute,  or unless
               provided  otherwise  pursuant to Company policy adopted from time
               to time;  or (iv) in the case of transfers  between  locations of
               the  Company or between  the  Company,  its  Subsidiaries  or its
               successor.

               "Employee"  means any person,  including  officers and directors,
               employed  by the  Company  or any  Parent  or  Subsidiary  of the
               Company.  The  payment of fees by the  Company  for a  director's
               services  as  director  shall  not be  sufficient  to  constitute
               "employment" by the Company.

               "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
               amended.

               "Fair Market  Value" means,  as of any date,  the value of Common
               Stock determined as follows.

               (i) If the  Common  Stock  is  listed  on any  established  stock
               exchange or a national market system including without limitation
               the NASDAQ  ("Nasdaq")  National  Market System,  its Fair Market
               Value  shall be the  closing  sales  price for such stock (or the
               closing bid, if no sales were reported,  as quoted on such system
               or exchange,  or the exchange with the greatest volume of trading
               in Common  Stock,  for the last  market  trading day prior to the
               time of  determination) as reported in The Wall Street Journal or
               such other source as the Administrator deems reliable;

               (ii) If the Common Stock is quoted on the Nasdaq  National Market
               System or regularly quoted by a recognized  securities dealer but
               selling  prices are not reported,  its Fair Market Value shall be
               the

                            
<PAGE>


               mean  between  the high bid and low asked  prices  for the Common
               Stock or;

               (iii) In the  absence  of an  established  market  for the Common
               Stock,  the Fair Market Value thereof shall be determined in good
               faith by the Administrator.

               "Free-Standing  SAR"  shall  mean an SAR  which is not  issued in
               tandem with,  or by reference to, an Option,  which  entitles the
               holder thereof to receive, upon exercise,  shares of Common Stock
               (which may be Restricted  Stock),  cash or a combination  thereof
               with an  aggregate  value  equal to the excess of the Fair Market
               Value of one share of Common  Stock on the date of exercise  over
               the base price of such SAR, multiplied by the number of shares of
               Common Stock with respect to which such SARs are exercised.

               "Incentive  Stock Option" means an Option  intended to qualify as
               an incentive  stock  option  within the meaning of Section 422 of
               the Code.

               "Non-Employee  Director"  shall mean any  director of the Company
               who is not an Employee of the Company.

               "Non-Qualified  Stock  Option"  means an Option not  intended  to
               qualify as an Incentive Stock Option.

               "Option" means a stock option granted pursuant to the Plan.

               "Optioned Stock" means the Common Stock subject to an Option.

               "Optionee"  means an  Employee  or  Consultant  who  receives  an
               Option.

               "Parent" means a "parent  corporation",  whether now or hereafter
               existing, as defined in Section 424(e) of the Code.

               "Participant"  means a person to whom an Award is  granted  under
               the Plan.

               "Performance  Measures"  shall mean the criteria and  objectives,
               established by the Committee, which shall be satisfied or met (i)
               as a condition  to the  exercisability  of all or a portion of an
               Option  or  SAR,  or  (ii)  as a  condition  to  the  grant  of a
               Restricted   Stock  Award,   or  (iii)   during  the   applicable
               Restriction  Period or  Performance  Period as a condition to the
               holder's receipt, in the case of a Restricted Stock Award, of the
               shares of Common Stock  subject to such award.  Such criteria and
               objectives  may  include  criteria   selected  by  the  Committee
               including,  but not limited to, one or more of the following: the
               attainment by a share of Common Stock of a specified  Fair Market
               Value for a specified period of time,  earnings per share, return
               on   capital   employed,   return  to   stockholders   (including
               dividends),  return on equity, earnings of the Company, revenues,
               profit margins,  market share, cash flow or cost reduction goals,
               or any  combination  of the foregoing.  If the Committee  desires
               that compensation

                            
<PAGE>


               payable pursuant to any award subject to Performance  Measures be
               "qualified performance-based  compensation" within the meaning of
               Section  162(m) of the Code,  the  Performance  Measures shall be
               established  by the  Committee no later than the end of the first
               quarter of the Performance  Period (or such other time designated
               by the Internal Revenue Service).

               "Performance  Period"  shall  mean  a  period  designated  by the
               Committee during which the Performance  Measures  applicable to a
               Performance Share Award shall be measured.

               "Performance  Share"  shall  mean a  right,  contingent  upon the
               attainment of specified  Performance  Measures within a specified
               Performance  Period, to receive one share of Common Stock,  which
               may be  Restricted  Stock,  or in lieu  thereof,  the Fair Market
               Value of such Performance Share in cash.

               "Performance  Share  Award"  shall  mean an award of  Performance
               Shares under the Plan.

               "Permanent and Total Disability" shall have the meaning set forth
               in Section 22(e)(3) of the Code or any successor thereto.

               "Plan" means this 1998 Long-Term Incentive Plan.

               "Restricted  Stock"  shall mean shares of Common  Stock which are
               subject to a Restriction Period.

               "Restricted  Stock Award" shall mean an award of Restricted Stock
               under this Plan.

               "Restriction  Period"  shall  mean  a  period  designated  by the
               Committee  during which the Common Stock  subject to a Restricted
               Stock  Award  may not be sold,  transferred,  assigned,  pledged,
               hypothecated  or otherwise  encumbered  or disposed of, except as
               provided in this Plan or the Agreement relating to such award.

               "SAR"  shall  mean a  stock  appreciation  right  which  may be a
               Free-Standing SAR or a Tandem SAR.

               "Securities Act" means the Securities Act of 1933, as amended.

               "Share"  means  a share  of the  Common  Stock,  as  adjusted  in
               accordance with Section 9.7 of the Plan.

               "Stock  Award"  shall mean a  Restricted  Stock  Award or a Bonus
               Stock Award.

               "Subsidiary"  means a  "subsidiary  corporation",  whether now or
               hereafter existing, as defined in Section 424(f) of the Code.

                           
<PAGE>


               "Tandem  SAR" shall mean an SAR which is granted in tandem  with,
               or by reference to, an option  (including a  Non-Qualified  Stock
               Option  granted  prior to the date of  grant of the  SAR),  which
               entitles the holder thereof to receive, upon exercise of such SAR
               and  surrender  for  cancellation  of all or a  portion  of  such
               option,  shares of Common Stock (which may be Restricted  Stock),
               cash or a  combination  thereof with an aggregate  value equal to
               the excess of the Fair Market  Value of one share of Common Stock
               on the  date of  exercise  over  the  base  price  of  such  SAR,
               multiplied  by the  number of shares of Common  Stock  subject to
               such option, or portion thereof, which is surrendered.

               "Tax Date" shall have the meaning set forth in Section 9.5.

               "Ten Percent  Holder" shall have the meaning set forth in Section
               6.1.1.

         3. Stock Subject to the Plan.  Subject to the  provisions of Section of
the Plan, the maximum  aggregate number of shares which may be awarded under the
Plan is 1,500,000  shares of Common  Stock.  The shares may be  authorized,  but
unissued, or reacquired Common Stock, including without limitation any shares of
Common Stock which are subject to an Option,  an SAR, a Performance  Share Award
or a Restricted  Stock Award, and which were not issued prior to the expiration,
termination or  cancellation  of the Option,  SAR or Performance  Share Award or
which were forfeited upon the forfeiture of a Restricted Stock Award.

         4.  Administration  of the Plan. The Plan shall be  administered by (i)
the Board if the Board may administer the Plan in compliance  with paragraph (d)
of Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3") or any successor
thereto,  or (ii) a Committee  designated by the Board to  administer  the Plan,
which  Committee  shall be constituted in such a manner as to permit the Plan to
comply with paragraph (d) of Rule 16b-3.  Once  appointed,  such Committee shall
continue to serve in its  designated  capacity until  otherwise  directed by the
Board.  From time to time the Board may increase the size of the  Committee  and
appoint additional  members thereof,  remove members (with or without cause) and
appoint new members in substitution  therefor,  fill vacancies,  however caused,
and remove all members of the Committee and thereafter  directly  administer the
Plan, all to the extent permitted by paragraph (d) of Rule 16b-3.

                  4.1 Powers of the Administrator.  Subject to the provisions of
the Plan and in the case of a Committee,  the specific  duties  delegated by the
Board to such  Committee,  the  Administrator  shall have the authority,  in its
discretion:

               (i) to determine the Fair Market Value of the Common Stock;

               (ii)  to  select  the  Employees,  Consultants  and  Non-Employee
               Directors  to  whom  Awards  from  time to  time  may be  granted
               hereunder;

               (iii) to determine  whether and to what extent Awards are granted
               hereunder,  including  vesting  arrangements  (including  without
               limitation, in respect of a Change of Control);

               (iv) to  determine  the  number of  shares of Common  Stock to be
               covered by each such Award granted hereunder;


                             
<PAGE>


               (v) to approve the Agreement for use under the Plan;

               (vi) upon a Change in Control, to determine whether to accelerate
               the vesting of any Awards granted hereunder;

               (vii) to determine  the terms and  conditions,  not  inconsistent
               with the terms of the Plan, of any Award granted hereunder; and

               (viii) to reduce the  exercise  price of any Option or base price
               of an SAR to the  then  current  Fair  Market  Value  if the Fair
               Market Value of the Common  Stock  covered by such Option or such
               SAR shall  have  declined  since the date the  Option  was or SAR
               granted.

          4.2  Non-Employee  Directors.  In granting any Awards to  Non-Employee
Directors,  the  Administrator  shall be required to comply with the  applicable
procedures, if any, set forth in Rule 16b-3 under the Exchange Act.

          4.3 Effect of Administrator's Decision. All decisions,  determinations
and interpretations of the Administrator shall be final and binding.

     5. Eligibility. All Employees, Consultants and Non-Employee Directors shall
be eligible to participate in this Plan. All  Participants  shall be selected by
the Committee.

     6. Stock Options and Stock  Appreciation  Rights.  6.1 Stock  Options.  The
Committee  may, in its  discretion,  grant Options to purchase  shares of Common
Stock to such eligible persons as may be selected by the Committee. Each Option,
or  portion  thereof,  that  is  not  an  Incentive  Stock  Option,  shall  be a
Non-Qualified Stock Option. Each Option shall be granted within ten years of the
effective  date of this Plan. To the extent that the aggregate Fair Market Value
(determined  as of the date of grant) of shares of Common  Stock with respect to
which Options  designated as Incentive  Stock  Options are  exercisable  for the
first time by a  participant  during any  calendar  year (under this Plan or any
other plan of the  Company,  or any  Parent or  Subsidiary)  exceeds  the amount
(currently  $100,000)  set  forth in the Code,  such  Options  shall  constitute
Non-Qualified  Stock Options.  The terms of each Option granted by the Committee
shall be embodied in an Agreement.

     Options shall be subject to the following  terms and  conditions  and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:

          6.1.1  Number of Shares and  Purchase  Price.  The number of shares of
Common  Stock  subject to an Option and the  purchase  price per share of Common
Stock  purchasable  upon  exercise  of the  Option  shall be  determined  by the
Committee;  provided, however, that the purchase price per share of Common Stock
purchasable  upon  exercise of an Incentive  Stock Option shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date of grant of
such  Option;  provided  further,  that if an  Incentive  Stock  Option shall be
granted to any person  who, at the time such  Option is  granted,  owns  capital
stock possessing more than ten percent of the total combined voting power of all
classes of capital stock of the Company (or of any Parent or Subsidiary) (a "Ten
Percent  Holder"),  the  purchase  price per share of Common  Stock shall be the
price  (currently  110% of Fair Market  Value)  required by the Code in order to
constitute an Incentive Stock Option.

                            
<PAGE>


          6.1.2 Option  Period and  Exercisability.  The period  during which an
Option may be exercised shall be determined by the Committee; provided, however,
that no Incentive Stock Option shall be exercised later than ten years after its
date of grant;  provided  further,  that if an  Incentive  Stock Option shall be
granted to a Ten Percent  Holder,  such Option shall not be exercised later than
five  years  after its date of grant.  The  Committee  may,  in its  discretion,
establish Performance Measures which shall be satisfied or met as a condition to
the  grant of an  Option  or to the  exercisability  of all or a  portion  of an
Option. The Committee shall determine whether an Option shall become exercisable
in cumulative or non-cumulative installments and in part or in full at any time.
An exercisable Option, or portion thereof, may be exercised only with respect to
whole shares of Common Stock.

          6.1.3  Method of Exercise.  An Option may be  exercised  (i) by giving
written  notice to the Company  specifying  the number of whole shares of Common
Stock  to  be  purchased  and  accompanied  by  payment  therefor  in  full  (or
arrangement made for such payment to the Company's  satisfaction)  either (A) in
cash, (B) in shares of Common Stock having a Fair Market Value, determined as of
the date of exercise, equal to the aggregate purchase price payable by reason of
such exercise, (C) by authorizing the Company to withhold whole shares of Common
Stock which would  otherwise be delivered  upon  exercise of the Option having a
Fair Market Value, determined as of the date of exercise, equal to the aggregate
purchase  price  payable  by  reason  of  such  exercise,   (D)  in  cash  by  a
broker-dealer  acceptable  to the Company to whom the Optionee has  submitted an
irrevocable notice of exercise or (E) a combination of (A), (B) and (C), in each
case to the extent set forth in the  Agreement  relating to the Option,  (ii) if
applicable,  by  surrendering to the Company any Tandem SARs which are cancelled
by reason of the exercise of the Option and (iii) by executing such documents as
the Company may reasonably request.  The Committee shall have sole discretion to
disapprove of an election  pursuant to any of clauses (B)-(E) and in the case of
an Optionee  who is subject to Section 16 of the  Exchange  Act, the Company may
require that the method of making such payment be in compliance  with Section 16
and the rules and  regulations  thereunder.  Any  fraction  of a share of Common
Stock which would be required to pay such  purchase  price shall be  disregarded
and the remaining amount due shall be paid in cash by the holder. No certificate
representing  Common  Stock shall be  delivered  until the full  purchase  price
therefor has been paid.

          6.1.4  Non-Employee  Directors.  Any Options  granted to  Non-Employee
Directors shall be Non-Qualified Options.

          6.2 Stock  Appreciation  Rights.  The Committee may, in its direction,
grant SARs to such  eligible  persons as may be selected by the  Committee.  The
Agreement  relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.

          SARs shall be subject to the following  terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:

          6.2.1 Number of SARs and Base Price.  The number of SARs subject to an
award  shall be  determined  by the  Committee.  Any  Tandem  SAR  related to an
Incentive  Stock  Option  shall be granted at the same time that such  Incentive
Stock Option is granted and the base price thereof  shall be the purchase  price
per share of Common

                            
<PAGE>

          Stock of the related Option.  The base price of a Free-Standing SAR or
an SAR granted in tandem with, or by reference to, a Non-Qualified  Stock Option
shall be determined by the Committee;  provided,  however,  that such base price
shall  not be less  than  100% of the Fair  Market  Value of one share of Common
Stock on the date of grant of such SAR.

          6.2.2 Exercise Period and Exercisability. The Agreement relating to an
award of SARs  shall  specify  whether  such  award may be  settled in shares of
Common Stock  (including  shares of  Restricted  Stock) or cash or a combination
thereof.  The  period  for the  exercise  of an SAR shall be  determined  by the
Committee;  provided,  however, that no Tandem SAR shall be exercised later than
the  expiration,  cancellation,  forfeiture or other  termination of the related
Option.  The Committee may, in its discretion,  establish  Performance  Measures
which shall be satisfied or met as a condition to the  exercisability of an SAR.
The Committee shall  determine  whether an SAR may be exercised in cumulative or
non-cumulative  installments  and in part or in full at any time. An exercisable
SAR, or portion  thereof,  may be  exercised,  in the case of a Tandem SAR, only
with respect to whole shares of Common Stock and, in the case of a Free-Standing
SAR,  only with  respect to a whole number of SARs.  If an SAR is exercised  for
shares of Restricted  Stock, a certificate  or  certificates  representing  such
Restricted Stock shall be issued in accordance with Section 7.2.3 and the holder
of such Restricted  Stock shall have such rights of a stockholder of the Company
as  determined  pursuant to Section  7.2.4.  Prior to the exercise of an SAR for
shares of Common Stock, including Restricted Stock, the holder of such SAR shall
have no rights as a  stockholder  of the Company  with  respect to the shares of
Common Stock subject to such SAR.

          6.2.3 Method of Exercise.  A Tandem SAR may be exercised (i) by giving
written  notice to the  Company  specifying  the  number of whole SARs which are
being  exercised,  (ii) by  surrendering  to the Company  any Options  which are
cancelled  by reason of the  exercise  of the Tandem SAR and (iii) by  executing
such documents as the Company may reasonably request. A Free-Standing SAR may be
exercised  (i) by giving  written  notice to the  Company  specifying  the whole
number of SARs which are being exercised and (ii) by executing such documents as
the Company may reasonably request.

     6.3 Termination of Employment.

          6.3.1 Disability.  Subject to Section 6.3.6 and Section 9.8 and unless
otherwise  specified in the Agreement  relating to an Option or SAR, as the case
may be, if the  employment  with the  Company  of the holder of an Option or SAR
terminates by reason of Permanent and Total Disability, each Option and SAR held
by such holder shall be  exercisable  only to the extent that such Option or SAR
is exercisable on the effective date of such holder's  termination of employment
and may  thereafter  be  exercised  by  such  holder  (or  such  holder's  legal
representative or similar person) until the earlier to occur of (i) the date set
forth in the Agreement  relating to such Option or SAR after the effective  date
of such holder's  termination of employment and (ii) the expiration  date of the
term of such Option or SAR.

          6.3.2 Retirement.  Subject to Section 6.3.6 and Section 9.8 and unless
otherwise  specified in the Agreement  relating to an Option or SAR, as the case
may be, if the  employment  with the  Company  of the holder of an Option or SAR
terminates  by reason of retirement on or after age 55, each Option and SAR held
by such holder shall be  exercisable  only to the extent that such Option or SAR
is exercisable on the effective date of such holder's  termination of employment
and  may   thereafter  be  exercised  by  suchholder  (or  such  holder's  legal
representative or similar
                             
<PAGE>

person)  until the  earlier to occur of (i) the date set forth in the  Agreement
relating  to such  Option  or SAR  after  the  effective  date of such  holder's
termination  of  employment  and  (ii) the  expiration  date of the term of such
Option or SAR.

          6.3.3  Death.  Subject to  Section  6.3.6 and  Section  9.8 and unless
otherwise  specified in the Agreement  relating to an Option or SAR, as the case
may be, if the  employment  with the  Company  of the holder of an Option or SAR
terminates by reason of death,  each Option and SAR held by such holder shall be
exercisable  only to the extent  that such Option or SAR is  exercisable  on the
date of  death  and may  thereafter  be  exercised  by such  holder's  executor,
administrator, legal representative,  beneficiary or similar person, as the case
may be,  until the  earlier to occur of (i) the date set forth in the  Agreement
relating to such  Option or SAR after the date of death and (ii) the  expiration
date of the term of such Option or SAR.

          6.3.4 Other Termination.  Subject to Section 6.3.6 and Section 9.8 and
unless otherwise specified in the Agreement relating to an Option or SAR, as the
case may be, if the  employment  with the  Company of the holder of an Option or
SAR is terminated by the Company for Cause or is voluntarily  terminated by such
holder, each Option and SAR held by such holder shall terminate automatically on
the effective date of such holder's  termination  of  employment.  "Cause" shall
mean the conviction of a felony or  misdemeanor,  failure to abide by reasonable
requests of the Company's Chief Executive Officer, the failure to perform duties
as determined by the Company's Chief Executive Officer, any act of dishonesty or
violation of any statutory or common law duty of loyalty to the Company.

          Subject  to  Section  6.3.6  and  Section  9.8  and  unless  otherwise
specified in the Agreement  relating to an Option or SAR, as the case may be, if
the employment with the Company of the holder of an Option or SAR terminates for
any reason other than Permanent and Total Disability, retirement on or after age
55,  death,  Cause or  voluntary  termination,  each Option and SAR held by such
holder  shall be  exercisable  only to the  extent  that  such  Option or SAR is
exercisable on the effective date of such holder's termination of employment and
may   thereafter   be  exercised  by  such  holder  (or  such   holder's   legal
representative or similar person) until the earlier to occur of (i) the date set
forth in the Agreement  relating to such Option or SAR after the effective  date
of such holder's  termination of employment and (ii) the expiration  date of the
term of such Option or SAR.

          6.3.5 Death  Following  Termination of Employment.  Subject to Section
6.3.6 below and  Section 9.8 and unless  otherwise  specified  in the  Agreement
relating  to an Option or SAR, as the case may be, if the holder of an Option or
SAR dies during the period of  exercisability  of such  Option or SAR  following
termination  of  employment  for  any  reason  other  than  Cause  or  voluntary
termination,  each Option and SAR held by such holder shall be exercisable  only
to the extent that such Option or SAR, as the case may be, is exercisable on the
date of such  holder's  death and may  thereafter  be  exercised by the holder's
executor, administrator, legal representative, beneficiary or similar person, as
the case may be,  until  the  earlier  to occur of (i) the date set forth in the
Agreement  relating  to such  Option or SAR after the date of death and (ii) the
expiration date of the term of such Option or SAR.
                             
<PAGE>

          6.3.6 Termination of Employment - Incentive Stock Options.  Subject to
Section  9.8, if the  employment  with the  Company of a holder of an  Incentive
Stock  Option  terminates  by reason of  Permanent  and Total  Disability,  each
Incentive  Stock Option  (including  any related Tandem SAR) held by such holder
shall be  exercisable  only to the extent that such Option or SAR is exercisable
on the  effective  date of  such  holder's  termination  of  employment  and may
thereafter be exercised by such holder (or such holder's legal representative or
similar person) until the earlier to occur of (i) the date which is one year (or
such  shorter  period as set forth in the  Agreement  relating to such Option or
SAR) after the effective  date of such holder's  termination  of employment  and
(ii) the expiration date of the term of such Incentive Stock Option.

          Subject to Section 9.8, if the employment with the Company of a holder
of an Incentive Stock Option  terminates by reason of retirement on or after age
55, each Incentive Stock Option  (including any related Tandem SAR) held by such
holder  shall be  exercisable  only to the  extent  that  such  Option or SAR is
exercisable on the effective date of such holder's termination of employment and
may thereafter be exercised by such holder (or holder's legal  representative or
similar person) until the earlier to occur of (i) the date which is three months
(or such shorter period as set forth in the Agreement relating to such Option or
SAR) after the effective  date of such holder's  termination  of employment  and
(ii) the expiration date of the term of the Incentive Stock Option.

          Subject to Section  9.8,  if the  employment  with the  Company of the
holder of an  Incentive  Stock  Option  terminates  by  reason  of  death,  each
Incentive  Stock Option  (including  any related Tandem SAR) held by such holder
shall be exercisable  (only to the extent that such Option or SAR is exercisable
on the date of death, and may thereafter be exercised by such holder's executor,
administrator, legal representative,  beneficiary or similar person, as the case
may be,  until the  earlier to occur of (i) the date  which is three  months (or
such shorter  period set forth in the Agreement  relating to such Option or SAR)
after  the  date of  death  and  (ii)  the  expiration  date of the term of such
Incentive Stock Option.

          If the employment with the Company of the holder of an Incentive Stock
Option is  terminated by the Company for Cause or is  voluntarily  terminated by
such holder, each Incentive Stock Option (including any related Tandem SAR) held
by such holder  shall  terminate  automatically  on the  effective  date of such
holder's  termination  of employment.  If the  employment  with the Company of a
holder of an  Incentive  Stock  Option  terminates  for any  reason  other  than
Permanent and Total Disability,  retirement on or after age 55, death,  Cause or
voluntary termination, each Incentive Stock Option (including any related Tandem
SAR) held by such holder shall be exercisable  only to the extent such Option is
exercisable on the effective date of such holder's termination of employment and
may   thereafter   be  exercised  by  such  holder  (or  such   holder's   legal
representative  or similar  person)  until the  earlier to occur of (i) the date
which is three  months  (or such  shorter  period as set forth in the  Agreement
relating  to such  Option or SAR)  after  the  effective  date of such  holder's
termination  of  employment  and  (ii)  the  expiration  date of the term of the
Incentive Stock Option.

          If the holder of an  Incentive  Stock  Option dies during the one-year
period (or such shorter  period as set forth in the  Agreement  relating to such
Option or SAR)  following  termination  of employment by reason of Permanent and
Total  Disability or if the holder of an Incentive  Stock Option dies during the
three-month period (or such
                           

<PAGE>

shorter  period as set forth in the  Agreement  relating  to such Option or SAR)
following  termination  of  employment  for any reason other than  Permanent and
Total Disability,  Cause or voluntary  termination,  each Incentive Stock Option
(including any related Tandem SAR) held by such holder shall be exercisable only
to the extent such Option is  exercisable  on the date of the holder's death and
may  thereafter  be  exercised by the holder's  executor,  administrator,  legal
representative,  beneficiary or similar person until the earlier to occur of (i)
the date which is one year (or such shorter period as set forth in the Agreement
relating to such Option or SAR) after the date of death and (ii) the  expiration
date of the term of such Incentive Stock Option.

     7. Stock Awards.
        -------------

     7.1 The  Committee  may,  in its  discretion,  grant  Stock  Awards to such
eligible persons as may be selected by the Committee. Grants of Restricted Stock
Awards may be  conditioned  upon the  attainment of  Performance  Measures.  The
Agreement  relating to a Stock Award shall specify  whether the Stock Award is a
Restricted Stock Award or Bonus Stock Award.

     7.2 Stock Awards shall be subject to the following terms and conditions and
shall contain such additional terms and conditions,  not  inconsistent  with the
terms of this Plan, as the Committee shall deem advisable.

          7.2.1 Number of Shares and Other Terms. The number of shares of Common
Stock  subject  to a  Restricted  Stock  Award  or  Bonus  Stock  Award  and the
Performance  Measures (if any) and Restriction Period applicable to a Restricted
Stock Award shall be determined by the Committee.

          7.2.2 Vesting and Forfeiture.  The Agreement  relating to a Restricted
Stock Award shall provide,  in the manner  determined by the  Committee,  in its
discretion,  and subject to the  provisions of this Plan, for the vesting of the
shares of Common  Stock  subject  to such  award  (i) if  specified  Performance
Measures are satisfied or met during the specified Restriction Period or (ii) if
the holder of such award maintains  Continuous  Status as an Employee during the
specified Restricted Period and for the forfeiture of the shares of Common Stock
subject to such award (x) if specified Performance Measures are not satisfied or
met during the specified  Restriction  Period or (y) if the holder of such award
does  not  maintain  Continuous  Status  as an  Employee  during  the  specified
Restriction  Period.  Bonus Stock Awards shall not be subject to any Performance
Measures or Restriction Periods.

          7.2.3 Share Certificates. During the Restriction Period, a certificate
or certificates representing a Restricted Stock Award shall be registered in the
holder's  name and may bear a legend,  in  addition  to any legend  which may be
required pursuant to Section 9.6, indicating that the ownership of the shares of
Common Stock  represented by such  certificate  is subject to the  restrictions,
terms and  conditions of this Plan and the Agreement  relating to the Restricted
Stock Award. All such certificates shall be deposited with the Company, together
with stock  powers or other  instruments  of  assignment  (including  a power of
attorney),  each  endorsed  in blank with a  guarantee  of  signature  if deemed
necessary or appropriate, which would permit transfer to the Company of all or a
portion of the shares of Common Stock subject to the  Restricted  Stock Award in
the event such award is forfeited in whole or in part.  Upon  termination of any
applicable  Restriction Period (and the satisfaction or attainment of applicable
Performance

                             
<PAGE>

Measures), or upon the grant of a Bonus Stock Award, in each case subject to the
Company's  right to require payment of any taxes in accordance with Section 9.5,
a certificate or certificates  evidencing  ownership of the requisite  number of
shares of Common Stock shall be delivered to the holder of such award.

          7.2.4 Rights With Respect to Restricted Stock Awards. Unless otherwise
set forth in the Agreement  relating to a Restricted Stock Award, and subject to
the terms and conditions of a Restricted  Stock Award,  the holder of such award
shall  have all  rights as a  stockholder  of the  Company,  including,  but not
limited  to,  voting  rights,  the right to receive  dividends  and the right to
participate  in any capital  adjustment  applicable to all holders Common Stock;
provided,  however,  that a distribution with respect to shares of Common Stock,
other than a distribution in cash, shall be deposited with the Company and shall
be subject to the same  restrictions  as the shares of Common Stock with respect
to which such distribution was made.

          7.2.5 Awards to Certain Executive Officers.  Notwithstanding any other
provision  of this  Section  7, and only to the extent  necessary  to ensure the
deductibility  of the award to the Company,  and provided the  Company's  Common
Stock is registered  under Section 12 of the Exchange Act, the Fair Market Value
of the number of shares of Common  Stock  subject to a  Restricted  Stock  Award
granted to a "covered employee" within the meaning of Section 162(m) of the Code
shall not exceed the maximum amount  permissible under Section 162(m) (i) at the
time of grant in the case of an award granted upon the attainment of Performance
Measures and (ii) the earlier of (x) the date on which restrictions lapse in the
case of a  Restricted  Stock  Award  with  restrictions  which  lapse  upon  the
attainment  of  Performance  Measures,  and (y) the  date  the  holder  makes an
election under Section 83(b) of the Code.

     7.3  Termination  of  Employment.  Subject to Section 9.8, all of the terms
relating to a Restricted  Stock Award, or any cancellation or forfeiture of such
Restricted  Stock Award upon a termination of employment with the Company of the
holder  of such  Restricted  Stock  Award,  whether  by  reason  of  Disability,
retirement,  death or other  termination,  shall be set  forth in the  Agreement
relating to such Restricted Stock Award.

     8. Performance Share Awards.
       
          8.1  Performance  Share Awards.  The  Committee may in its  discretion
grant  Performance  Share Awards to such eligible  persons as may be selected by
the Committee.

          8.2 Terms of Performance Share Awards.  Performance Share Awards shall
be  subject  to the  following  terms  and  conditions  and shall  contain  such
additional terms and conditions,  not inconsistent  with the terms of this Plan,
as the Committee shall deem advisable.

          8.2.1  Number of  Performance  Shares and  Performance  Measures.  The
number of  Performance  Shares subject to any award and the  Performance  Period
applicable to such award shall be determined by the Committee.

          8.2.2 Vesting and Forfeiture.  The Agreement relating to a Performance
Share Award shall provide,  in the manner  determined by the  Committee,  in its
discretion,  and subject to the provisions of this Plan, for the vesting of such
award,  if  specified  Performance  Measures  are  satisfied  or met  during the
specified Performance Period, and

                            
<PAGE>


for the  forfeiture  of such award,  if specified  Performance  Measures are not
satisfied or met during the specified Performance Period.

          8.2.3  Settlement of Vested  Performance  Share Awards.  The Agreement
relating to a Performance  Share Award (i) shall specify  whether such award may
be settled in shares of Common Stock (including  shares of Restricted  Stock) or
cash or a combination  thereof and (ii) may specify  whether the holder  thereof
shall  be  entitled  to  receive,  on a  current  or  deferred  basis,  dividend
equivalents,  and, if  determined  by the  Committee,  interest on any  deferred
dividend  equivalents,  with  respect  to the  number of shares of Common  Stock
subject to such  award.  If a  Performance  Share  Award is settled in shares of
Restricted  Stock, a certificate or  certificates  representing  such Restricted
Stock shall be issued in  accordance  with Section  7.2.3 and the holder of such
Restricted  Stock  shall have such  rights of a  stockholder  of the  Company as
determined  pursuant to Section 7.2.4.  Prior to the settlement of a Performance
Share Award in shares of Common Stock, including Restricted Stock, the holder of
such award shall have no rights as a stockholder  of the Company with respect to
the shares of Common Stock subject to such award.

          8.2.4 Awards to Certain Executive Officers.  Notwithstanding any other
provision  of this  Section  8,  and  only to the  extent  necessary  to  ensure
deductibility  of any payment  under an award made by the Company,  and provided
that the Company's  Common Stock is registered  under Section 12 of the Exchange
Act, the maximum amount payable upon the attainment of the Performance  Measures
applicable  to an award  granted to any  employee  who is a  "covered  employee"
within the  meaning of  Section  162(m) of the Code at the time of such  payment
shall be as set forth in Section 162(m) of the Code.

     9.  General.  

          9.1 Effective  Date and Term of Plan.  This Plan shall be submitted to
the  stockholders  of the Company for  approval  and shall  become  effective on
approval  thereof.  This Plan shall terminate ten (10) years after its effective
date unless terminated earlier by the Board.  Termination of this Plan shall not
affect the terms or conditions of any award granted prior to termination.

          Awards  hereunder  may be made at any  time on or  after  the  date of
adoption of this Plan by the Board,  subject to approval by the  stockholders of
the  Company as  provided  above,  and prior to the  termination,  of this Plan,
provided that no award may be made later than ten (10) years after the effective
date  of  this  Plan.  In the  event  that  this  Plan  is not  approved  by the
stockholders  of the Company,  this Plan and any awards  hereunder shall be void
and of no force or effect.

          9.2  Amendments.  The  Board  may  amend  this  Plan as it shall  deem
advisable,  subject to any  requirement  of  stockholder  approval  required  by
applicable  law, rule or regulation  including Rule 16b-3 under the Exchange Act
and Section 162(m) of the Code;  provided,  however,  that no amendment shall be
made  without  stockholder  approval if such  amendment  would (a)  increase the
maximum number of shares of Common Stock  available for issuance under this Plan
(subject to Section 9.7), (b) effect any change inconsistent with Section 422 of
the Code or (c) extend the term of this Plan. No amendment may impair the rights
of a holder of an outstanding Award without the consent of such holder.


                            
<PAGE>

          9.3  Agreement.  For each  Award  under the Plan,  the  Company  shall
furnish a Notice of Grant to the recipient thereof and shall cause the recipient
to enter  into an  Agreement  with  respect  thereto,  unless  and to the extent
otherwise  determined  by the  Administrator.  The form of  Notice  of Grant and
Agreement with respect to a Stock Option shall be in  substantially  the form of
Exhibits  "A" and "B" hereto,  respectively,  with such  changes  therein as the
Administrator may determine from time to time,  consistent with the terms of the
Plan.  The form Notice of Grant and  Agreement  with  respect to any other Award
shall be as determined from time to time by the  Administrator,  consistent with
the terms of the Plan. No Award shall be valid until an Agreement is executed by
the Company and the  recipient of such Award and,  upon  execution by each party
and delivery of the  Agreement to the Company,  such Award shall be effective as
of the effective date set forth in the Agreement.

          9.4 Non-Transferability of Stock Options, SARs and Performance Shares.
No Option,  SAR or  Performance  Share shall be  transferable  other than (i) by
will,  the  laws  of  descent  and   distribution  or  pursuant  to  beneficiary
designation  procedures  approved by the Company or (ii) as otherwise  permitted
under Rule 16b-3 under the Exchange Act as set forth in the  Agreement  relating
to such award. Each Option, SAR or Performance Share may be exercised or settled
during the participant's  lifetime only by the holder or the holder's  guardian,
legal  representative  or similar  person,  or any such  transferee as permitted
under Rule  16b-3 as  aforesaid.  Except as  permitted  by the second  preceding
sentence,  no  Option,  SAR  or  Performance  Share  may be  sold,  transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process.  Upon any attempt to so sell, transfer,  assign,  pledge,  hypothecate,
encumber or otherwise  dispose of any Option,  SAR or  Performance  Share,  such
award and all rights thereunder shall immediately become null and void.

          9.5 Tax  Withholding.  The  Company  shall have the right to  require,
prior to the  issuance or delivery of any shares of Common  Stock or the payment
of any cash pursuant to an award made  hereunder,  payment by the holder of such
award of any  federal,  state,  local or other taxes which may be required to be
withheld or paid in  connection  with such award.  An Agreement may provide that
(i) the  Company  shall  withhold  whole  shares of  Common  Stock  which  would
otherwise  be  delivered  to a holder,  having an  aggregate  Fair Market  Value
determined  as of the date the  obligation  to withhold  or pay taxes  arises in
connection  with an award (the "Tax Date"),  or withhold an amount of cash which
would otherwise be payable to a holder,  in the amount  necessary to satisfy any
such obligation or (ii) the holder may satisfy any such obligation by any of the
following means: (A) a cash payment to the Company,  (B) delivery to the Company
of shares of Common Stock having an aggregate  Fair Market Value,  determined as
of the Tax Date,  equal to the amount  necessary to satisfy any such obligation,
(C) authorizing the Company to withhold whole shares of Common Stock which would
otherwise be delivered  having an aggregate Fair Market Value,  determined as of
the Tax Date, or withhold an amount of cash which would  otherwise be payable to
a holder,  equal to the amount necessary to satisfy any such obligation,  (D) in
the  case of the  exercise  of an  Option,  a cash  payment  by a  broker-dealer
acceptable  to the Company to whom the  Optionee has  submitted  an  irrevocable
notice of exercise or (E) any  combination  of (A), (B) and (C), in each case to
the extent set forth in the Agreement relating to the award; provided,  however,
that the  Committee  shall have sole  discretion  to  disapprove  of an election
pursuant  to any of  clauses  (B)-(E)  and that in the  case of a holder  who is
subject to Section 16 of the  Exchange  Act,  the Company  may require  that the
method of satisfying such an obligation be in compliance with Section 16 and the
rules and regulations thereunder.  An Agreement may provide for shares of Common
Stock to be  delivered  or withheld  having an  aggregate  Fair Market  Value in
excess of the minimum amount required

                            
<PAGE>


to be  withheld,  but not in excess of the amount  determined  by  applying  the
holder's  maximum  marginal  tax rate.  Any  fraction of a share of Common Stock
which would be required to satisfy such an obligation  shall be disregarded  and
the remaining amount due shall be paid in cash by the holder.

          9.6  Restrictions  on  Shares.  Each  Award  shall be  subject  to the
requirement  that if at any  time  the  Company  determines  that  the  listing,
registration  or  qualification  of the shares of Common  Stock  subject to such
award upon any securities  exchange or under any law, or the consent or approval
of any  governmental  body,  or the taking of any other  action is  necessary or
desirable  as a condition  of, or in  connection  with,  the  delivery of shares
thereunder,   such  shares   shall  not  be  delivered   unless  such   listing,
registration,  qualification,  consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. Each
Award  shall be subject  to any  further  restriction  upon the  acquisition  or
disposition  of Common Stock subject to such Award which may be set forth in the
Certificate  of  Incorporation  or By-Laws of the  Company,  whether  adopted or
effective before or after the making of such Award.

          The Company may require that certificates  evidencing shares of Common
Stock  delivered  pursuant to any Award bear a legend  indicating that the sale,
transfer  or other  disposition  thereof by the holder is  prohibited  except in
compliance  with the  Securities Act and the rules and  regulations  thereunder,
and/or  (ii) except in  compliance  with the  Certificate  of  Incorporation  or
By-Laws of the Company.

          9.7  Adjustment.  In the event of any  stock  split,  stock  dividend,
recapitalization,  reorganization, merger, consolidation,  combination, exchange
of shares,  liquidation,  spin-off or other similar change in  capitalization or
event, or any  distribution to holders of Common Stock other than a regular cash
dividend,  the number and class of  securities  available  under this Plan,  the
number  and class of  securities  subject  to each  outstanding  Option  and the
purchase price per security,  the terms of each  outstanding SAR, the number and
class of securities  subject to each  outstanding  Stock Award, and the terms of
each  outstanding  Performance  Share  shall be  appropriately  adjusted  by the
Committee,  such  adjustments to be made in the case of outstanding  Options and
SARs without an increase in the aggregate  purchase  price or base price,  other
than  an  increase  resulting  from  rounding.  The  decision  of the  Committee
regarding any such adjustment  shall be final,  binding and  conclusive.  If any
such adjustment would result in a fractional  security being (i) available under
this Plan, such fractional security shall be disregarded,  or (ii) subject to an
award  under this Plan,  the  Company  shall pay the  holder of such  award,  in
connection  with the first  vesting,  exercise or settlement  of such award,  in
whole or in part, occurring after such adjustment,  an amount in cash determined
by  multiplying  (i) the  fraction  of such  security  (rounded  to the  nearest
hundredth)  by (ii) the  excess,  if any,  of (A) the Fair  Market  Value on the
vesting,  exercise or  settlement  date over (B) the exercise or base price,  if
any, of such award.

          9.8 Change in Control.

          (a) Except as set forth in  Section  9.8(c)  below or unless  provided
          otherwise in the  Agreement,  a Change in Control of the Company shall
          not  result  in (i)  any  outstanding  Options  and  SARs  immediately
          becoming exercisable in full, (ii) the lapse of any Restriction Period
          applicable to any outstanding  Restricted Stock Award, (iii) the lapse
          of any Performance  Period  applicable to any outstanding  Performance
          Share and (iv) the deemed  satisfaction  of any  Performance  Measures
          applicable to any outstanding Restricted Stock Award and

                             
<PAGE>


          to any outstanding Performance Share. Unless provided otherwise in the
          Agreement,  in the  event  of a  merger  of the  Company  with or into
          another  corporation  in which the Company is not the survivor,  there
          shall be no requirement for an Award to be substituted for or assumed,
          and such Award shall  terminate as of the date of the merger,  and the
          grantee  shall have no claim  against  the  Company,  its  officers or
          directors,  the  successor  corporation  or its officers or directors.
          Nothing  contained  herein shall  prohibit the Board or the  Committee
          from  accelerating  the vesting of any Awards upon the occurrence of a
          Change of  Control.  Any good faith  determination  by the Board as to
          whether a Change in Control  within the  meaning of this  Section  has
          occurred shall be conclusive and binding on the Participants.

          (b) "Change in Control" shall mean:

          (1) the acquisition by any  individual,  entity or group (a "Person"),
          including  any  "person"  within the  meaning of Section  13(d)(3)  or
          14(d)(2) of the  Exchange  Act,  of  beneficial  ownership  within the
          meaning of Rule 13d-3  promulgated  under the Exchange  Act, of 50% or
          more of either (i) the then outstanding  shares of common stock of the
          Company (the "Outstanding  Company Common Stock") or (ii) the combined
          voting  power  of the  then  outstanding  securities  of  the  Company
          entitled  to  vote   generally  in  the  election  of  directors  (the
          "Outstanding Company Voting Securities");  provided that the following
          acquisitions  shall  not  constitute  a  Change  in  Control:  (A) any
          acquisition  directly  from the  Company  (excluding  any  acquisition
          resulting  from the exercise of a conversion or exchange  privilege in
          respect of outstanding  convertible or exchangeable  securities),  (B)
          any  acquisition  by the Company,  (C) any  acquisition by an employee
          benefit plan (or related trust) sponsored or maintained by the Company
          or any corporation  controlled by the Company,  or (D) any acquisition
          by  any   corporation   pursuant  to  a   reorganization,   merger  or
          consolidation  involving  the  Company,  if,  immediately  after  such
          reorganization,  merger  or  consolidation,  each  of  the  conditions
          described in clauses  (i),  (ii) and (iii) of  subsection  (3) of this
          Section 9.8(b) shall be satisfied; provided, however, that in no event
          shall a Change in Control be deemed to have occurred with respect to a
          Participant if that  Participant  is part of a purchasing  group which
          consummates a Change in Control  transaction.  A Participant  shall be
          deemed  "part of a  purchasing  group" for  purposes of the  preceding
          sentence if it is an equity  Participant  or has been  identified as a
          potential  equity  Participant  or has  agreed  to  become  an  equity
          Participant in the purchasing company or group, except for (x) passive
          ownership  of less than  three  (3%)  percent  of the shares or voting
          securities  of the  purchasing  Company or  companies  comprising  the
          purchasing group, or (y) such other ownership of equity  participation
          in the purchasing company or group which is otherwise not deemed to be
          significant,  as  determined  prior  to the  Change  in  Control  by a
          majority of the disinterested Directors.

          (2)  individuals  who, as of the date hereof,  constitute the Board of
          Directors (the  "Incumbent  Board") cease for any reason to constitute
          at least  two-thirds of such Board;  provided that any  individual who
          becomes a director of the Company  subsequent to the date hereof whose
          election,  or nomination  for election by the Company's  stockholders,
          was nominated  and approved by the Board of Directors  shall be deemed
          to have been a member of the Incumbent  Board;  and provided  further,
          that no individual who was initially elected as a

                             
<PAGE>

          director  of the  Company  as a  result  of an  actual  or  threatened
          election contest,  as such terms are used in Rule 14a-11 of Regulation
          14A  promulgated  under  the  Exchange  Act,  or any  other  actual or
          threatened  solicitation of proxies or consents by or on behalf of any
          Person  other than the Board  shall be deemed to have been a member of
          the  Incumbent  Board and such person  shall not  thereafter  become a
          member of the  Incumbent  Board unless  approved by  two-thirds of the
          members of the then Incumbent Board;

          (3) approval by the  stockholders of the Company of a  reorganization,
          merger or consolidation  unless,  in any such case,  immediately after
          such reorganization, merger or consolidation, (i) more than 60% of the
          then outstanding  shares of common stock of the corporation  resulting
          from such reorganization, merger or consolidation and more than 60% of
          the combined voting power of the then  outstanding  securities of such
          corporation entitled to vote generally in the election of directors is
          then   beneficially   owned,   directly  or  indirectly,   by  all  or
          substantially  all  of  the  individuals  or  entities  who  were  the
          beneficial  owners,  respectively,  of the Outstanding  Company Common
          Stock and the Outstanding Company Voting Securities  immediately prior
          to such  reorganization,  merger or consolidation and in substantially
          the same  proportions  relative  to each  other  as  their  ownership,
          immediately prior to such reorganization,  merger or consolidation, of
          the  Outstanding  Company  Common  Stock and the  Outstanding  Company
          Voting Securities,  as the case may be, (ii) no Person (other than the
          Company,  any employee  benefit plan (or related  trust)  sponsored or
          maintained  by the  Company  or the  corporation  resulting  from such
          reorganization, merger or consolidation (or any corporation controlled
          by the Company) and any Person which beneficially  owned,  immediately
          prior to such  reorganization,  merger or  consolidation,  directly or
          indirectly, 50% or more of the Outstanding Company Common Stock or the
          Outstanding   Company   Voting   Securities,   as  the  case  may  be)
          beneficially  owns,  directly or  indirectly,  50% or more of the then
          outstanding  shares of common stock of such corporation or 50% or more
          of the combined  voting power of the then  outstanding  securities  of
          such  corporation  entitled  to  vote  generally  in the  election  of
          directors and (iii) at least a majority of the members of the Board of
          Directors of the corporation resulting from such reorganization merger
          or  consolidation  were members of the Incumbent  Board at the time of
          the  execution  of the  initial  agreement  or  action of the Board of
          Directors providing for such  reorganization  merger or consolidation;
          or

          (4)  approval  by the  stockholders  of the  Company  of (i) a plan of
          complete liquidation or dissolution of the Company or (ii) the sale or
          other  disposition  of all or  substantially  all of the assets of the
          Company other than to a corporation with respect to which, immediately
          after  such sale or other  disposition,  (A) more than 60% of the then
          outstanding  shares of common  stock  thereof and more than 60% of the
          combined  voting  power of the  then  outstanding  securities  thereof
          entitled  to vote  generally  in the  election  of  directors  is then
          beneficially  owned,  directly or indirectly,  by all or substantially
          all of the  individuals  and entities who were the beneficial  owners,
          respectively  of  the   Outstanding   Company  Common  Stock  and  the
          Outstanding  Company Voting Securities  immediately prior to such sale
          or  other  disposition  and  in  substantially  the  same  proportions
          relative to each other as their ownership,  immediately  prior to such
          sale or other disposition, of the Outstanding Company Common Stock and
          the Outstanding

                             

<PAGE>

          Company  Voting  Securities,  as the case may be, (B) no Person (other
          than the Company,  an Exempt  Person,  any  employee  benefit plan (or
          related  trust)  sponsored  or  maintained  by  the  Company  or  such
          corporation  (or any  corporation  controlled  by the Company) and any
          Person which  beneficially  owned,  immediately  prior to such sale or
          other  disposition,  directly  or  indirectly,  50%  or  more  of  the
          Outstanding  Company  Common Stock or the  Outstanding  Company Voting
          Securities,  as the  case  may  be)  beneficially  owns,  directly  or
          indirectly, 50% or more of the then outstanding shares of common stock
          thereof  or 50% or more  of the  combined  voting  power  of the  then
          outstanding  securities  thereof  entitled  to vote  generally  in the
          election  of  directors  and (C) at least a majority of the members of
          the Board of Directors  thereof were members of the Incumbent Board at
          the time of the  execution  of the initial  agreement or action of the
          Board providing for such sale or other disposition.

          Notwithstanding  anything in this Section  9.8(b) to the contrary,  an
          event or occurrence (or a series of events or occurrences) which would
          otherwise constitute a Change in Control under the foregoing shall not
          constitute a Change in Control for purposes of this Plan if the Board,
          by majority vote,  determines that a Change in Control does not result
          therefrom;  but only if Incumbent  Directors  constitute a majority of
          the directors voting in favor of such determination. Further, an event
          or occurrence (or a series of events or  occurrences)  which would not
          otherwise  constitute a Change in Control under the foregoing shall be
          deemed to  constitute a Change in Control for purposes of this Plan if
          the Board, by majority vote,  determines that a Change in Control does
          result  therefrom;  but  only  if  Incumbent  Directors  constitute  a
          majority of the  directors  voting in favor of such  determination.  A
          determination  by directors  under the  provisions  of this  paragraph
          shall be made solely for  purposes of this Plan and shall not directly
          or indirectly affect any determination or analysis of whether a change
          in control results for any other purpose.  Any determination made with
          respect to whether a change in control  results  for  purposes  of any
          other  plan or  agreement  of the  Company  shall  have no effect  for
          purposes of this Plan.

          (c) (1)  Notwithstanding  any contrary  provision of this Section 9.8,
          upon the  occurrence  of a Change  in  Control  at any time  after the
          second  anniversary  of the date of grant of any Award  hereunder  and
          before the earlier to occur of (i) the expiration date of the Award or
          (ii) the sixth anniversary of such date of grant, and if in connection
          with such Change in Control  consideration  is or is to be paid to the
          Company or its shareholders, whether in cash, notes or other property,
          then, to the extent set forth in Subsection (c)(2) below,  Options and
          SARs shall  immediately  become  exercisable,  the Restriction  Period
          shall lapse with respect to any  outstanding  Restricted  Stock Award,
          the  Performance  Period shall lapse with  respect to any  outstanding
          Performance  Share  and  the  Performance  Measures  shall  be  deemed
          satisfied with respect to any outstanding  Restricted  Stock Award and
          Performance  Share (the  occurrence  of such  condition  of  immediate
          exercisability, lapse of a Restriction Period or Performance Period or
          deemed  satisfaction  of a Performance  Measure  hereinafter  called a
          "Vesting").

          (2) An Award shall Vest as provided in Section 9.8(c)(1) above as to a
          specified  percentage  of the  outstanding  Award,  including  in such
          percentage  all Awards,  if any,  which may have  Vested  prior to the
          Change in Control,

                            
<PAGE>

          whether or not then exercised,  based on (i) the "Market Value" of the
          Company at the time of and giving effect to the Change in Control, and
          (ii) the number of full years  which  have  elapsed  since the date of
          grant of the Award at the time of the Change in Control,  as set forth
          in the following table, which may be modified if deemed appropriate by
          the Administrator:

<TABLE>
<S>                          <C>                              <C>                        <C>    

    No. of Years                               Market Value
                                          At Least But Less Than                           Percentage Vesting

         2                      $60,000,000                    $ 90,000,000                        30%
                                $90,000,000                    $120,000,000                        50%
                               $120,000,000                    $150,000,000                        75%
                               $150,000,000                                                       100%
     3 or more                 $120,000,000                    $150,000,000                        20%
                               $150,000,000                    $180,000,000                        30%
                               $180,000,000                    $210,000,000                        40%
                               $210,000,000                    $240,000,000                        50%
                               $240,000,000                    $270,000,000                        60%
                               $270,000,000                    $300,000,000                        70%
                               $300,000,000                    $330,000,000                        80%
                               $330,000,000                    $360,000,000                        90%
                               $360,000,000                                                       100%
</TABLE>

          (3)  As  used  herein,  "Market  Value"  shall  be  determined  by (i)
          calculating the aggregate  consideration being paid in connection with
          the Change in Control,  (ii)  calculating the aggregate  percentage of
          the Company as to which Control is being  Changed,  (iii) dividing (i)
          by (ii) to determine the consideration  being paid for each percentage
          point of the Company, and (iv) multiplying the amount of (iii) by 100.
          By way of example, if 75% of the outstanding shares of voting stock of
          the Company is being  acquired by a purchaser  for  $150,000,000,  the
          Market  Value  would be  $200,000,000  ($150,000,000  divided  by 75 =
          $2,000,000 x 100 = $200,000,000).  Any good faith determination by the
          Board as to the Market Value within the meaning of this Section  shall
          be conclusive and binding on the Participants.

          9.9 No Right of Participation or Employment.  No person shall have any
right  to  participate  in this  Plan.  Neither  this  Plan nor any  award  made
hereunder shall confer upon any person any right to continued  employment by the
Company any  Subsidiary  or any affiliate of the Company or affect in any manner
the right of the  Company,  any  Subsidiary  or any  affiliate of the Company to
terminate the employment of any person at any time without liability hereunder

                            
<PAGE>


          9.10  Rights  as  Stockholder.  No  person  shall  have any right as a
stockholder  of the Company  with respect to any shares of Common Stock or other
equity  security  of the Company  which is subject to an Award  unless and until
such  person  becomes a  stockholder  of record  with  respect to such shares of
Common Stock or equity security.

          9.11 Governing Law. This Plan,  each Award and the related  Agreement,
and all  determinations  made and actions taken pursuant thereto,  to the extent
not otherwise  governed by the Code or the laws of the United  States,  shall be
governed  by the  laws of the  State  of  Nevada  and  construed  in  accordance
therewith without giving effect to principles of conflicts of laws.


          9.12  Conditions  Upon  Issuance  of  Shares.  As a  condition  to the
exercise of an Option or the issuance of any shares of Common  Stock  subject to
an Award, the Company may require the person exercising such Option or receiving
such shares to represent  and warrant at the time of any such  exercise that the
shares of Common Stock are being  purchased  only for investment and without any
present  intention  to sell or  distribute  such  shares  if, in the  opinion of
counsel for the Company,  such a representation  is necessary or required by any
of the aforementioned relevant provisions of law.

          The inability of the Company to obtain  authority  from any regulatory
body having jurisdiction,  which authority is deemed by the Company's counsel to
be  necessary  to the lawful  issuance  and sale of any  shares of Common  Stock
hereunder,  shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.

          9.13 Reservation of Shares. The Company, during the term of this Plan,
will at all times  reserve  and keep  available  such number of shares of Common
Stock as shall be sufficient to satisfy the requirements of the Plan.

                             
<PAGE>


                                                                  EXHIBIT 11
                                                                  ----------

                   NEW GENERATION FOODS, INC. AND SUBSIDIARIES


Net Loss Per Share
------------------

Net loss per share - basic is computed by dividing  net loss less  dividends  on
preferred  stock by the  weighted  average  number of  shares  of  common  stock
outstanding  during  each  year.  Net loss per share - diluted  is  computed  by
dividing net income by the weighted average number of shares of common stock and
the number of additional  common shares that would have been  outstanding if the
dilutive potential common shares had been issued.  The computation  excludes the
effect  of  dilutive  potential  securities  (convertible  preferred  stock  and
options) because their inclusion would have had an antidilutive effect.

                           Loss Per Share Computation
                 For the Years Ended December 31, 1998 and 1997
<TABLE>
<S>                                                                               <C>               <C>    

                                                                                          1998            1997
                                                                                          ----            ----

Net loss                                                                             $     23,439    $       81,049
Dividends on cumulative preferred stock                                                        -            185,400
                                                                                     ------------    --------------
Net loss applicable to common stock                                                  $     23,439    $      266,449
                                                                                     ============    ==============
Basic average common shares outstanding                                                   399,830           399,830
                                                                                     ============    ==============
Loss per share - basic and dilutive                                                  $       0.06    $         0.67
                                                                                     ============    ==============
</TABLE>                        

<PAGE>


                                                             EXHIBIT 21
                                                             ----------


                                 SUBSIDIARIES OF
                           NEW GENERATION FOODS, INC.


NAME                             STATE OF                      % OF OWNERSHIP
----                             INCORPORATION                 BY NEW GENERATION
                                 -------------                 FOODS, INC.
                                                               -----------

Spicer's International, Inc.       Nevada                        100%

NGF Services, Inc.                 New York                      100%