**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-KSB/A**





Amendment
      No. 3


x **ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      year ended December 31, 2005





o  **TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      transition period from ______ to _______





*Commission
      file number 0-24623*





**NEW
                GENERATION HOLDINGS, INC.**(Exact
                name of registrant as specified in its
                charter)




Delaware
            
            13-4056896(State
                or other jurisdiction of incorporation)
            
            (IRS
                employer identification no.)




c/o
                245 Park Avenue
              New
                York, New York 10167Address
                of principal executive offices) (Zip
                Code)




Issuer's
      telephone number: (212) 792-4030




**Securities
      registered pursuant to Section 12(b) of the Exchange Act:**


Title
                of each class
            
            Name
                  of each exchange on which registeredNone
            
            None





**Securities
      registered pursuant to Section 12(g) of the Act:**





Common
      Stock, par value $.001 per share





Check
      whether the issuer (1) 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. x Yes o No





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B is not contained herein, and no disclosure will be contained, to the best
      of
      registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). x Yes o No





The
      issuer's consolidated revenues from continuing operations for the year ended
      December 31, 2005 were $0.





As
      of April 7, 2006, the issuer had 46,829,960 shares of Common
      Stock, par value $0.001 per share, outstanding. The aggregate value of the
      common stock of the Company held by non-affiliates as of April 5, 2006 was
      approximately $13,330,420.





**Transitional
      Small Business Disclosure Format YES**  o  **NO**  x












**PART
      I**





**FORWARD-LOOKING
      STATEMENTS**





When
      used
      in this Form 10-KSB, in filings by the Company with the Securities and Exchange
      Commission (the "SEC"), in the Company's press releases or other public or
      stockholder communications, or in oral statements made with the approval of
      an
      authorized executive officer of the Company, the words or phrases "would be,"
      "will allow," "intends to," "will likely result," "are expected to," "will
      continue," "is anticipated," "estimate," "project," or similar expressions
      are
      intended to identify "forward-looking statements" within the meaning of the
      Private Securities Litigation Reform Act of 1995.





The
      Company cautions readers not to place undue reliance on any forward looking
      statements, which speak only as of the date made, are based on certain
      assumptions and expectations which may or may not be valid or actually occur,
      and which involve various risks and uncertainties. The Company's actual results
      for future periods could differ materially from those anticipated or
      projected.





Unless
      otherwise required by applicable law, the Company does not undertake, and
      specifically disclaims any obligation, to update any forward-looking statements
      to reflect occurrences, developments, unanticipated events or circumstances
      after the date of such statement.


-1-




**EXPLANATORY
        NOTE**
 
 This
        Amendment No. 3 on Form 10-KSB/A (“Amendment No. 3”) amends the Annual
        Report of New Generation Holdings, Inc. (the “Company”) on Form 10-KSB for the
        fiscal year ended December 31, 2005, as filed with the Securities and Exchange
        Commission on April 11, 2006 (the “Original Filing”). This Amendment
        No.  3 is being filed for the purpose of correcting errors in
        accounting for and disclosing the beneficial conversion feature
        embedded in a
        convertible note as a liability as of the date of issuance instead of equity.
  We
        have
        not updated the information contained herein for events occurring subsequent
        to
        April 11, 2006, the filing date of the Original Filing.




**ITEM
      1. DESCRIPTION OF BUSINESS.**





**BUSINESS**





New
      Generation Holdings, Inc. ("We," "Us," "NGH" or the "Company") is a Delaware
      corporation founded in 1999. Our shares were publicly traded on the Nasdaq
      OTC:BB under the symbol "NGPX" until May 23, 2003 at which time our shares
      were
      delisted from the OTC:BB as a result of our failure to timely file our Form
      10-KSB for the year ended December 31, 2002. Our business went completely
      dormant in the beginning of 2003 due to a lack of liquidity and we did not
      have
      sufficient resources to make our public filings. Since that time, we have raised
      limited funds which have enabled us to complete our public filings and to invest
      in research and development in an attempt to commercialize our plastic
      technology. Our independent auditors recently completed audits for the years
      ended December 31, 2002, December 31, 2003, December 31, 2004 and December
      31,
      2005 and as of January 23, 2006, we have been current in our public filings.
      Soon after the filing of this Form 10-KSB, we intend to file with the SEC proxy
      materials for the purposes of, among other things, electing directors, selecting
      the Company's independent auditors and approving a "spinoff" of our wholly owned
      subsidiary, New Generation Plastic, Inc. to our stockholders (as discussed
      in
      greater detail under the heading "Spin-off " below).




We
      had
      hoped to build shareholder value through the operation of two separate and
      distinct business focuses: (a) the expansion and operation of a mainframe
      computer software development business through our wholly owned subsidiary
      New
      Generation Partners, Inc.; and (b) the continued commercialization of our
      patented plastic processing technology through our wholly-owned subsidiary,
      New
      Generation Plastic, Inc. During the period December 2000 through February 2001,
      the Company acquired Minerva Softcare N.V., a company formed under the laws
      of
      the country of Belgium, and its wholly owned subsidiaries, Case Belgium N.V.,
      Case Nederland B.V., and Case France S.A (the "Minerva Group"). The Minerva
      Group was an integrated technology infrastructure solutions provider, which
      specialized in developing and marketing data warehousing, life cycle management
      and data modeling platforms and solutions. The Minerva Group's operations were
      principally located in Belgium, with its other significant operations in France,
      the United Kingdom, and the Netherlands. Due to a lack of liquidity caused
      by
      declining sales and an overall downturn in worldwide demand for software,
      Minerva could no longer profitably sell its software. Minerva entered into
      a
      master license agreement with Ikan Finanz AG as of December 31, 2002 pursuant
      to
      which it licensed substantially all of its proprietary software in exchange
      for
      certain royalty payments upon sales made by Ikan or any sublicensee. Ikan also
      agreed to employ most of Minerva's then existing employees. Ikan failed to
      make
      any sales of Minerva software in the first quarter of 2003 and we were forced
      to
      cease Minerva's operations toward the end of the first quarter of 2003
      culminating with a liquidation of Minerva Softcare N.V. under the bankruptcy
      laws of the Country of Belgium in April of 2003. At approximately the same
      time,
      we suspended all of our business operations due to a lack of liquidity and
      accordingly failed to timely file our annual report on Form 10-KSB for the
      year
      ended December 31, 2002 and all subsequent quarterly and annual reports prior
      to
      this Form 10-KSB. We have since raised limited funds and filed our annual
      reports for the years ended December 31, 2002, December 31, 2003, December
      31,
      2004 and all of our quarterly reports through and including the period ended
      September 30, 2005, and we are now current in our filings.





**NEW
      GENERATION PLASTIC BUSINESS**





New
      Generation Plastic, Inc. ("NGP"), a Delaware Corporation, our wholly owned
      subsidiary, is the owner of a patented plastic blending technology that enables
      the production of homogeneous, commercially usable polymers from a varied stream
      of otherwise incompatible waste plastic or virgin plastic feedstock (the "NGP
      Process"). We believe that the NGP Process technology is unique in its ability
      to combine mixed plastic, including blending different polymers that are
      normally incompatible, into homogenous compounds (the "NGP Compounds") by means
      of a purely mechanical process. These NGP Compounds are created without the
      use
      of costly additives, known as compatibilizers, which are typically used to
      link
      non-compatible resins.


-2-





We
      have
      prepared a model business plan for a plant that will process Computer Scrap
      (CS)
      using the NGP Process for potential investors and/or joint venture partners
      to
      assess the feasibility of the Computer Scrap application.





We
      hope
      to contract with a third party that has sufficient resources to commercially
      exploit our existing technology or to raise sufficient capital to enable us
      to
      exploit our technology, but have not had more than preliminary discussions
      with
      any potential venture partners.





**SPINOFF**





In
      order
      to allow our management to focus all of their time and attention on our plastic
      business, ,we intend to file proxy materials with the SEC for the purpose of
      seeking stockholder approval for the "spinoff" of NGP to our stockholders,
      among
      other things. As currently contemplated, each of our stockholders would receive
      one share of NGP Common Stock, par value, $.0001 for each share of our Common
      Stock held by such stockholder. Upon approval of the "spinoff," NGP is expected
      to become a public company.





**PATENTS**





The
      NGP
      Process is currently protected by U.S. Patent Number 6,107,400 and European
      Patent Number 92907183.5-2307.





**RESEARCH
      AND DEVELOPMENT**





In
      2004,
      we spent approximately $180,000 on research and development. In 2005, we spent
      approximately $712,000 on research and development.




**NUMBER
      OF EMPLOYEES**





As
      of
      December 31, 2005 we had two employees, Jacques Mot our Chief Executive Officer
      and Patrick Sulzer our Chief Operating Officer. Prior to January 1, 2005, Mr.
      Mot served as a consultant.





**DEPENDENCE
      ON KEY CUSTOMERS; MAJOR SUPPLIERS**





We
      do not
      yet have any customers or suppliers and are therefore not dependent on any
      customer or supplier.





**COST
      OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS**





We
      currently have no costs associated with compliance with environmental
      regulations; however, there can be no assurances that we will not incur such
      costs in the future to the extent we exploit our plastic
      technology.




**ITEM
      2. DESCRIPTION OF PROPERTIES.**





**LOCATION
      AND DESCRIPTION OF PROPERTIES**





We
      have a
      month to month oral lease for approximately 150 square feet of office space
      located at 14, Rue du Rhône CH-1204, Geneva, Switzerland. We also pay
      approximately $430 per month for use of a conference room, on an as needed
      basis, at 245 Park Avenue, New York, NY.


-3-




**ITEM
      3. LEGAL PROCEEDINGS.**




In
        December 2001, a former Director of Minerva filed a complaint against Minerva
        in
        Belgium. The complaint alleges a breach of employment contract and reimbursement
        of certain expenses. In 2001, the Company recorded a pre-tax charge of $77,000
        to reserve for this claim and other related costs. At December 31, 2005,
        the
        remaining liability for this obligation was $77,000 and has been classified
        as
        an accrued expense in the consolidated balance sheet. Although we have recorded
        the potential liability in our financial statements, we consider the likelihood
        of an adverse outcome to be remote.
  In
        November 2001, Minerva filed a criminal complaint against the same former
        director mentioned in the prior paragraph for use of forgery, attempt of
        fraud,
        misuse of trust, and misuse of company's assets. The case is pending preliminary
        investigation by the Court.
  The
        Company may become subject to other legal proceedings and claims, which arise
        in
        the ordinary course of its business. Although occasional adverse decisions
        or
        settlements may occur, the Company believes that the final disposition of
        such
        matters should not have a material adverse affect on its financial position,
        results of operations or liquidity. We are a defendant in certain actions
        brought by certain of our creditors which we have accrued as liabilities
        on our
        financial statements. Except for such actions, as of December 31, 2005, we
        are
        not a party to any legal proceedings or claims.




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





None





**PART
      II**




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





**MARKET
      INFORMATION**





Our
      business went completely dormant in the beginning of 2003 due to a lack of
      liquidity and we did not have sufficient resources to make our public filings.
      Since that time, we have raised limited funds which have enabled us to complete
      our public filings and to invest in research and development in an attempt
      to
      commercialize our plastic technology. Our independent auditors recently
      completed audits for the years ended December 31, 2002, December 31, 2003,
      December 31, 2004 and December 31, 2005 and we have been current in our public
      filings since January 23, 2006. Commencing on May 23, 2003 our shares were
      delisted from the OTC Bulletin Board based upon our failure to timely file
      our
      annual report on Form 10-KSB for the year ended December 31, 2002 and prices
      for
      our common stock are now quoted on the "pink sheets." The following table sets
      forth for the periods indicated the high and low bid quotations for our common
      stock for the period from January 1, 2004 through December 31, 2005. These
      quotations reflect inter-dealer prices, without retail mark-up, markdown or
      commission, and may not necessarily represent actual transactions.





**High**
            ****
            **Low**4th
                Quarter 2005, ended 12/31/05
            
            $
            0.34
            
            $
            0.303rd
                Quarter 2005, ended 9/30/05
            
            $
            0.38
            
            $
            0.172nd
                Quarter 2005, ended 6/30/05
            
            $
            0.23
            
            $
            0.141st
                Quarter 2005, ended 3/31/05
            
            $
            0.24
            
            $
            0.174th
                Quarter 2004, ended 12/31/04
            
            $
            0.25
            
            $
            0.103rd
                Quarter 2004, ended 9/30/04
            
            $
            0.40
            
            $
            0.152nd
                Quarter 2004, ended 6/30/04
            
            $
            0.40
            
            $
            0.081st
                Quarter 2004, ended 3/31/04
            
            $
            0.25
            
            $
            0.01





**DIVIDEND
      POLICY**





We
      have
      not paid any dividends since our inception. We do not anticipate paying
      dividends on our common stock in the foreseeable future but plan to retain
      earnings, if any, for the operation and expansion of our business.





**HOLDERS**





There
      were 170 stockholders of record of the Company's common stock as of December
      31,
      2005.




-4-




**RECENT
      SALES OF UNREGISTERED SECURITIES**





(a)
            During
                the year ended December 31, 2005, we sold a total of 19,873,150 shares
                of
                our common stock and warrants to purchase an additional 16,748,150
                shares
                of our common stock to non-U.S. investors in reliance upon Regulation
                S.
                The warrants have an exercise price of $0.35 per share and expire
                three
                years from the date of issuance. In connection with such sales, we
                received a total of $1,987,315. Of this amount, 2,806,000 shares
                of common
                stock and warrants to purchase an additional 2,806,000 shares of
                common
                stock were issued during the fourth quarter. We received a total
                of
                approximately $280,600 in connection with the sale of shares and
                warrants
                in the fourth quarter of 2005.(b)
            None.(c)
            The
                following table provides information about purchases by us and our
                affiliated purchasers during the year ended December 31, 2005 of
                equity
                securities that are registered by us pursuant to Section 12 of the
                Securities Exchange Act of 1934:


ISSUER
      PURCHASES OF EQUITY SECURITIES


**Period**
            ****
            **(a)**
              **Total
                Number of Shares (or Units) Purchased)**
            ****
            **(b)**
              **Average
                Price Paid per Share (or Unit)**
            ****
            **(c)**
              **Total
                Number of Shares (or Units)Purchased as Part of Publicly Announced Plans or Programs
                (1)**
            ****
            **(d)**
              **Maximum
                Number (or Approximate Dollar Value) of Shares (or Units)that May Yet Be Purchased Under the Plans or Programs
                (1)**10/01/05-10/31/05
            
            
            
            
            
            0
            
            $
            0
            
            
            
            
            
            0
            
            
            
            
            
            011/01/05-11/30/05
            
            
            
            
            
            0
            
            $
            0
            
            
            
            
            
            0
            
            
            
            
            
            012/01/05-12/30/05
            
            
            
            
            
            0
            
            $
            0
            
            
            
            
            
            0
            
            
            
            
            
            0




**ITEM
      6.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.**





Statements
      included in this Plan of Operations, and in future filings by the company with
      the Securities and Exchange Commission, in the company's press releases and
      in
      oral statements made with the approval of an authorized executive officer which
      are not historical or current facts are "forward-looking statements" and are
      subject to certain risks and uncertainties that could cause actual results
      to
      differ materially from historical earnings and those presently anticipated
      or
      projected. You are cautioned not to place undue reliance on any such
      forward-looking statements, which speak only as of the date made. The following
      important factors, among others, in some cases have affected and in the future
      could affect the company's actual results and could cause the company's actual
      financial performance to differ materially from that expressed in any
      forward-looking statement: (i) the extremely competitive conditions that
      currently exist in the market for companies similar to the company and (ii)
      lack
      or resources to maintain the company's good standing status and requisite
      filings with the Securities and Exchange Commission. The foregoing list should
      not be construed as exhaustive and the company disclaims any obligation
      subsequently to revise any forward-looking statements to reflect events or
      circumstances after the date of such statements or to reflect the occurrence
      of
      anticipated or unanticipated events. The following discussion should be read
      in
      conjunction with our financial statements and their explanatory notes included
      as part of this annual report.




-5-




**CRITICAL
      ACCOUNTING POLICIES**





The
      preparation of our consolidated financial statements in conformity with
      accounting principles generally accepted in the United States requires us to
      make estimates and judgments that affect our reported assets, liabilities,
      revenues, and expenses, and the disclosure of contingent assets and liabilities.
      We base our estimates and judgments on historical experience and on various
      other assumptions we believe to be reasonable under the circumstances. Future
      events, however, may differ markedly from our current expectations and
      assumptions. While there are a number of significant accounting policies
      affecting our consolidated financial statements; we believe the following
      critical accounting policies involve the most complex, difficult and subjective
      estimates and judgments:





**Use
      of Estimates**





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the amounts reported in the consolidated financial statements and
      accompanying disclosures. Although these estimates are based on management's
      best knowledge of current events and actions the Company may undertake in the
      future, actual results may differ from those estimates.





**Foreign
      Currency Translation**





The
      Company translates the foreign currency financial statements of its foreign
      subsidiaries in accordance with the requirements of Statement of Financial
      Accounting Standards No. 52, "Foreign Currency Translation." Assets and
      liabilities are translated at current exchange rates, and related revenue and
      expenses are translated at average exchange rates in effect during the period.
      Resulting translation adjustments are recorded as a separate component in
      stockholders' equity. Foreign currency translation gains and losses are included
      in the statement of income.





**Going
      Concern**





We
      are
      currently in the process of implementing our business plan for developing and
      marketing our NGP Process. At present, we have insufficient capital on hand
      to
      fund our operations through 2006. There can be no assurance that upon
      implementing our new business plan, we will be successful or that we will start
      producing sufficient revenues to maintain our operations. The foregoing matters
      raise substantial doubt about our ability to continue as a going
      concern.





**MANAGEMENT'S
      PLAN OF OPERATION**





The
      following discussion and analysis provides information which our management
      believes to be relevant to an assessment and understanding of our results of
      operations and financial condition. This discussion should be read together
      with
      our financial statements and the notes to financial statements, which are
      included in this report.





**Overview**





The
      post
      September 11, 2001 worldwide economic malaise has wrought severe consequences
      on
      the capital markets in general and likewise on NGH. The private equity market's
      focus has shifted from seed and second phase financings to financings for more
      established companies with revenue and profitability. The amount of risk capital
      available for investments in ventures like NGH has dropped to about 10% of
      the
      capital that was available in 1999 and 2000.


-6-




Despite
      the state of the market, NGH attempted to make a private placement during May,
      June and July of 2002 through the investment-banking firm M.H. Meyerson (MHM)
      in
      New York. The purpose was to raise US $5,500,000, in order to refinance New
      Generation Partners Inc., and its subsidiary Minerva Softcare NV/SA (Minerva)
      as
      well as building the first NGP eWaste factory. MHM failed in its efforts and
      NGH
      decided to terminate them in the fall of 2002. Thereafter, NGH decided to focus
      on developing industrial and personal relationships with alternative finance
      strategies.





One
      of
      the main concerns for NGH was the Minerva activity, because it was suffering
      a
      great deal due to the collapse of the IT market. Several efforts were made
      to
      create a reseller relationship with IBM and other IT industry leaders. NGH
      hired
      a consulting group in Canada that consisted of previous top executives from
      IBM,
      and directed them to strengthen the relationship with IBM and other
      organizations. Unfortunately, after 4 months of negotiations, just when Minerva
      was about to receive an EMEA (Europe, Middle-East, Asia) reseller agreement
      from
      IBM, IBM acquired Rational Corporation, which was the main competitor to
      Minerva's product. The failure to attain a foothold with IBM combined with
      the
      fact that several other large software sales never closed, caused Minerva's
      management to find alternative solutions. In order to reduce its operating
      cost
      to a minimum, Minerva sold the rights to develop, maintain and sell its products
      to another corporation, Ikan AG. The licensee hired 22 of the Minerva people
      and
      agreed to pay royalties on sales of the products. Sales never materialized
      and
      no royalties were paid, and Minerva management was obliged to file for
      bankruptcy according to the laws of Belgium.





In
      December, 2002, due to the lack of liquidity and decreased sales, the Minerva
      Group began winding down its operations. Subsequently, the Minerva Group ceased
      operating and on April 7, 2003 was forced into an involuntary receivership
      under
      the laws of the Country of Belgium. The Belgium Court appointed a Trustee to
      oversee the Minerva liquidation and foreclosed on substantially all of its
      assets. As a result of the placement of the Minerva Group into an involuntary
      receivership and liquidation, the Company's control of the Minerva Group ceased,
      and accordingly, the Company has deconsolidated the Minerva Group as of April
      7,
      2003 by reducing consolidated accumulated deficit in the amount of the net
      liabilities of the Minerva Group of $3,882,801.





We
      are
      now pursuing a new business plan related to NGP and the NGP Process described
      below. Accordingly, the operating activities prior to April 8, 2003 have been
      reported as discontinued operations on the Company’s consolidated statement of
      operations. We are now considered to be in the development stage as defined
      by
      Statement of Financial Accounting Standards (“SFAS”) No. 7, “ *Accounting
      and reporting by Development Stage Enterprises* ”.





**NGP
      and the NGP Process (TM)**





We
      own
      and develop patented and proprietary plastic blending (NGP(TM)) technology,
      whereby various kinds of plastic can be mixed without the use of expensive
      chemical additives. The uniqueness of this blending technology stems from its
      potential cost-effective applications in many fields of the plastic industry
      from the recycling of computer scrap to the creation of new thermo plastic
      compound and, in conjunction with saw dust, to the creation of new versions
      of
      wood plastic.





Our
      mission is to commercialize the technology through applications in the virgin
      plastic markets (polymer alloys) and the plastic recycling sector (recycling
      of
      obsolete computer and other electronic equipment).





We
      believe our patented proprietary process, the NGP(TM) technology, is capable
      of
      producing homogeneous, commercially usable polymer end products from mixed
      virgin plastic and/or recycled waste plastic without chemical additives, or
      so-called compatibilizers which link non-compatible resins.


-7-




**RESULTS
      OF OPERATIONS**





**YEAR
      ENDED DECEMBER 31, 2005 COMPARED TO THE YEAR ENDED DECEMBER 31,
      2004**





Operating
      losses from continuing operations increased from $620,770 in 2004 to $4,743,560
      in 2005. The increase of $4,122,790 was primarily the result of an increase
      of
      $1,939,213 in general and administrative expenses, from $411,442 in 2004 to
      $2,350,655 in 2005, and an increase in research and development expenses of
      $532,806, from $179,118 in 2004 to $711,924 in 2005. The increase in general
      and
      administrative expense results primarily from increased consulting expenses
      and
      professional fees. The increases in these areas is attributable to the continued
      implementation of our NGP business strategy, costs incurred in bringing our
      public filings current, and increased costs in raising additional equity to
      enable us to revive the business operations of our plastic subsidiary. Increased
      research and development expenses are a direct result of our continuing
      development of the NGP Process.





We
      also
      incurred non-cash financing and interest costs of $1,675,981 during 2005, with
      no comparable costs in the 2004 year. These costs are comprised of the change
      in
      fair value of a warrant liability of $922,677 and the amortization of debt
      discount of $753,304.





**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      December 31, 2005, we had a deficiency in working capital of $2,755,893. For
      the
      year ended December 31, 2005, we generated a net cash flow deficit from
      operating activities of $1,950,910 consisting primarily of a net loss of
      $4,743,560, adjusted for a net change in liabilities of $1,095,569 and equity
      based compensation expense of $21,100 and non-cash financial charges of
      $1,675,981. We have funded our operations through the sale of our common stock
      through private placements. We do not have sufficient capital resources to
      meet
      projected cash flow deficits and will continue to rely on debt and equity
      funding. If we are unable to raise additional capital through debt or equity
      financings, on terms acceptable to us, and are not successful in generating
      sufficient liquidity from operations, then this lack of financing would have
      a
      material adverse effect on our business, results of operations, liquidity and
      financial condition.





We
      have
      relied mostly on advances from stockholders and sales of our common stock.
      There
      is no assurance that the stockholders will continue to provide sufficient funds
      for us to successfully continue our operations. Therefore, we will need
      additional capital to continue our operations and will endeavor to raise funds
      through the sale of equity shares and revenues from operations.





During
      the year ended December 31, 2005, we raised $1,932,715 in exchange for the
      issuance of 19,327,150 shares of common stock (and warrants to purchase an
      additional 16,748,150 shares of common stock at a purchase price of $0.35 per
      share exercisable for a period of three years) in a Regulation S offering to
      foreign investors that commenced in April of 2004. Subsequent to December 31,
      2005, we raised an additional $132,800 approximately, giving effect to exchange
      rates, in exchange for the issuance of 1,328,000 shares of Common Stock (and
      warrants to purchase an additional 1,328,000 shares of Common Stock at a
      purchase price of $0.35 per share exercisable for a period of three years)
      in
      our Regulation S offering; however, we currently have no commitments for
      additional financing and there is no guarantee that we will be successful in
      raising additional required funds.





There
      can
      be no assurance that we will generate revenues from operations or obtain
      sufficient capital on acceptable terms, if at all. Failure to obtain such
      capital or generate such operating revenues would have an adverse impact on
      our
      financial position and results of operations and ability to continue as a going
      concern. Our operating and capital requirements during the next fiscal year
      and
      thereafter will vary based on a number of factors, including the level of sales
      and marketing activities for our plastic services and products. There can be
      no
      assurance that additional private or public financings including debt or equity
      financing, will be available as needed, or, if available, on terms favorable
      to
      us. Any additional equity financing may be dilutive to stockholders and such
      additional equity securities may have rights, preferences or privileges that
      are
      senior to those of our existing common stock.





Furthermore,
      debt financing, if available, will require payment of interest and may involve
      restrictive covenants that could impose limitations on our operating
      flexibility. Our failure to successfully obtain additional future funding may
      jeopardize our ability to continue our business and operations.


-8-




If
      we
      raise additional funds by issuing equity securities, existing stockholders
      may
      experience a dilution in their ownership. In addition, as a condition to giving
      additional funds to us, future investors may demand, and may be granted, rights
      superior to those of existing stockholders.





**OUR
      FINANCIAL RESULTS MAY BE AFFECTED BY FACTORS OUTSIDE OF OUR
      CONTROL**





Our
      future operating results may vary significantly from quarter to quarter due
      to a
      variety of factors, many of which are outside our control. Our anticipated
      expense levels are based, in part, on our estimates of future revenues but,
      may
      vary from what we expect. We may be unable to adjust spending rapidly enough
      to
      compensate for any unexpected revenues shortfall. Accordingly, any significant
      shortfall in revenues in relation to our planned expenditures would materially
      adversely affect our business, operating results, and financial
      condition.





We
      cannot
      predict with certainty our revenues and operating results. Further, we believe
      that period-to-period comparisons of our operating results are not necessarily
      a
      meaningful indication of future performance.





**EMPLOYEES**





As
      of
      December 31, 2005, we had 2 employees, Jacques Mot, our Chief Executive Officer
      and Patrick Sulzer, our Chief Operating Officer. Prior to January 1, 2005,
      Mr.
      Mot served as a consultant. As we grow, we will need to attract an unknown
      number of qualified employees. This projected increase in personnel is dependent
      upon our generating revenues and obtaining sources of financing. There is no
      guarantee that we will be successful in raising the funds required or generating
      revenues sufficient to fund the projected increase in the number of
      employees.





**BUSINESS
      CONCENTRATION**





During
      the year ended December 31, 2005, the Company recognized no revenues from
      continuing operations, and accordingly had no relationships with customers
      from
      continuing operations.





**RECENT
      ACCOUNTING PRONOUNCEMENTS**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      SFAS No.153, “ *Exchanges
      of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for
      Nonmonetary Transactions* ”.
       The amendments made by Statement 153 are based on the principle that
      exchanges of nonmonetary assets should be measured based on the fair value
      of
      the assets exchanged.  Further, the amendments eliminate the narrow
      exception for nonmonetary exchanges of similar productive assets and replace
      it
      with a broader exception for exchanges of nonmonetary assets that do not have
      commercial substance.  Previously, Opinion 29 required that the
      accounting for an exchange of a productive asset for a similar productive asset
      or an equivalent interest in the same or similar productive asset should be
      based on the recorded amount of the asset relinquished.  Opinion 29
      provided an exception to its basic measurement principle (fair value) for
      exchanges of similar productive assets.  The FASB believes that exception
      required that some nonmonetary exchanges, although commercially substantive,
      be
      recorded on a carryover basis.  By focusing the exception on exchanges that
      lack commercial substance, the FASB believes this statement produces financial
      reporting that more faithfully represents the economics of the transactions.
       SFAS 153 is effective for nonmonetary asset exchanges occurring in
      fiscal periods beginning after June 15, 2005.  Earlier
      application is permitted for nonmonetary asset exchanges occurring in fiscal
      periods beginning after the date of issuance.  The provisions of
      SFAS 153 shall be applied prospectively.  We have evaluated the impact
      of the adoption of SFAS 153, and do not believe the impact will be
      significant to the company’s overall results of operations or financial
      position.


-9-





In
      December 2004, the FASB issued SFAS No.123 (revised 2004), “ *Share-Based
      Payment* ”.
       SFAS 123(R) will provide investors and other users of financial
      statements with more complete and neutral financial information by requiring
      that the compensation cost relating to share-based payment transactions be
      recognized in financial statements.  That cost will be measured based on
      the fair value of the equity or liability instruments issued.
  SFAS 123(R) covers a wide range of share-based compensation
      arrangements including share options, restricted share plans, performance-based
      awards, share appreciation rights, and employee share purchase plans.
  SFAS 123(R) replaces FASB Statement No. 123, “ *Accounting
      for Stock-Based Compensation* ”,
      and
      supersedes APB Opinion No. 25, “ *Accounting
      for Stock Issued to Employees* ”.
      SFAS 123, as originally issued in 1995, established as preferable a
      fair-value-based method of accounting for share-based payment transactions
      with
      employees.  However, that statement permitted entities the option of
      continuing to apply the guidance in Opinion 25, as long as the footnotes to
      financial statements disclosed what net income would have been had the
      preferable fair-value-based method been used.  Public entities (other than
      those filing as small business issuers) will be required to apply
      SFAS 123(R) as of the first interim or annual reporting period that begins
      after June 15, 2005. SFAS 123(R) is applicable for NGH effective
      the first interim period that starts after December 15, 2005. NGH has
      evaluated the impact of the adoption of SFAS 123(R), and believes that the
      impact may be significant to the company’s future overall results of operations
      and financial position.





In
      December 2004 the FASB issued two Staff Positions—FSP FAS 109-1, *Application
      of FASB Statement 109 “Accounting for Income Taxes” to the Tax Deduction on
      Qualified Production Activities Provided by the American Jobs Creation Act
      of 2004,* and FSP
      FAS 109-2 *Accounting
      and Disclosure Guidance for the Foreign Earnings Repatriation Provision within
      the American Jobs Creation Act of 2004.* Neither
      of these affected the Company as it does not participate in the related
      activities.




In
      January 2003, the FASB issued FASB Interpretation No. (“FIN”) 46,
“Consolidation of Variable Interest Entities” (“FIN 46”). In
      December 2003, FIN 46 was replaced by FASB interpretation
      No. 46(R) “Consolidation of Variable Interest Entities”. FIN 46(R)
      clarifies the application of Accounting Research Bulletin No. 51,
“Consolidated Financial Statements,” to certain entities in which equity
      investors do not have the characteristics of a controlling financial interest
      or
      do not have sufficient equity at risk for the entity to finance its activities
      without additional subordinated financial support from other parties.
      FIN 46(R) requires an enterprise to consolidate a variable interest entity
      if that enterprise will absorb a majority of the entity’s expected losses, is
      entitled to receive a majority of the entity’s expected residual returns, or
      both. FIN 46(R) is effective for entities being evaluated under
      FIN 46(R) for consolidation no later than the end of the first reporting
      period that ends after March 15, 2004. The Company does not currently
      have any variable interest entities that will be impacted by adoption of
      FIN 46(R).





In
      March 2005, the staff of the SEC issued Staff Accounting Bulletin
      No. 107 (“ *SAB 107* ”).
      The
      interpretations in SAB 107 express views of the staff regarding the
      interaction between SFAS 123(R) and certain SEC rules and regulations and
      provide the staff’s views regarding the valuation of share-based payment
      arrangements for public companies.  In particular SAB 107 provides
      guidance related to share-based payment transactions with nonemployees, the
      transition from public entity status, valuation methods (including assumptions
      such as expected volatility and expected term), the accounting for certain
      redeemable financial instruments issued under share-based payment arrangements,
      the classification of compensation expense, non-GAAP financial measures,
      first-time adoption of SFAS 123(R) in an interim period, capitalization of
      compensation cost related to share-based payment arrangements, the accounting
      for income tax effects of share-based payment arrangements upon adoption of
      SFAS 123(R), the modification of employee share options prior to adoption
      of SFAS 123(R) and disclosures in Management’s Discussion and Analysis
      subsequent to adoption of SFAS 123(R).





In
      May 2005, the FASB issued SFAS No. 154, “ *Accounting
      Changes and Error Corrections* ”
      (“SFAS 154”) which replaces Accounting Principles Board
      Opinions No. 20 “ *Accounting
      Changes* ”
and
      SFAS No. 3, “ *Reporting
      Accounting Changes in Interim Financial Statements-An Amendment of APB Opinion
      No. 28* ”.
       SFAS 154 provides guidance on the accounting for and reporting of
      accounting changes and error corrections.  It establishes retrospective
      application, or the latest practicable date, as the required method for
      reporting a change in accounting principle and the reporting of a correction
      of
      an error.  SFAS 154 is effective for accounting changes and
      corrections of errors made in fiscal years beginning after
      December 15, 2005 and is required to be adopted by NGH in the first
      quarter of 2006.  NGH has evaluated the effect that the adoption of
      SFAS 154 will have on its results of operations and financial condition and
      does not expect it to have a material impact.


-10-





**Product
      Research and Development**





The
      Company, we anticipate expending approximately $350,000 of available cash
      (subject to receipt of additional financing) towards research and development
      activities during the next twelve (12) months in connection with the further
      testing and development of our BT 30 machine and our industrial size
      machine.





**Acquisition
      of Plant and Equipment and Other Assets**





We
      do not
      anticipate the sale of any material property , plant or equipment during the
      next 12 months. We do not anticipate the acquisition of any material property,
      plant or equipment during the next 12 months.





**INFLATION**





In
      our
      opinion, inflation has not had a material effect on our financial condition
      or
      results of our operations.





**TRENDS,
      RISKS AND UNCERTAINTIES**





We
      have
      sought to identify what we believe to be the most significant risks to our
      business, but we cannot predict whether, or to what extent, any of such risks
      may be realized nor can we guarantee that we have identified all possible risks
      that might arise. Investors should carefully consider all of such risk factors
      before making an investment decision with respect to our common
      stock.





**CAUTIONARY
      FACTORS THAT MAY AFFECT FUTURE RESULTS**





We
      provide the following cautionary discussion of risks, uncertainties and possible
      inaccurate assumptions relevant to our business and our products. These are
      factors that we think could cause our actual results to differ materially from
      expected results. Other factors besides those listed here could adversely affect
      us.





**POTENTIAL
      FLUCTUATIONS IN QUARTERLY OPERATING RESULTS**





Our
      quarterly operating results may fluctuate significantly in the future as a
      result of a variety of factors, most of which are outside our control,
      including: the demand for products or services we may develop; seasonal trends
      in purchasing, the amount and timing of capital expenditures and other costs
      relating to the development of our products; price competition or pricing
      changes in the industry; technical difficulties or system downtime; general
      economic conditions, and economic conditions specific to the consumer plastics
      recycling industry. Our quarterly results may also be significantly impacted
      by
      the impact of the accounting treatment of acquisitions, financing transactions
      or other matters. Particularly at our early stage of development, such
      accounting treatment can have a material impact on the results for any quarter.
      Due to the foregoing factors, among others, it is likely that our operating
      results will fall below our expectations or those of investors in some future
      quarter.




**DEPENDENCE
      UPON MANAGEMENT**





Our
      future performance and success are dependant upon the efforts and abilities
      of
      our management. To a very significant degree, we are dependent upon the
      continued services of Jacques Mot, our president and chief executive officer
      and
      Patrick Sulzer, our Chief Operating Officer. If we lost the services of Mr.
      Mot
      and/or Mr. Sulzer before we could get qualified replacements, that loss could
      materially adversely affect our business. We do not maintain key man life
      insurance on either Mr. Mot or Mr. Sulzer.


-11-




**LACK
      OF INDEPENDENT DIRECTORS**





We
      do not
      have a majority of independent directors on our board of directors and we cannot
      guarantee that our board of directors will have a majority of independent
      directors in the future. In the absence of a majority of independent directors,
      our executive officers, which are also principal stockholders and directors,
      could establish policies and enter into transactions without independent review
      and approval thereof. This could present the potential for a conflict of
      interest between our stockholders and us generally and the controlling officers,
      stockholders or directors.





**LIMITATION
      OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS**





Our
      officers and directors are required to exercise good faith and high integrity
      in
      our management affairs. Our articles of incorporation provide, however, that
      our
      officers and directors shall have no liability to our stockholders for losses
      sustained or liabilities incurred which arise from any transaction in their
      respective managerial capacities unless they violated their duty of loyalty,
      did
      not act in good faith, engaged in intentional misconduct or knowingly violated
      the law, approved an improper dividend or stock repurchase, or derived an
      improper benefit from the transaction. Our articles and bylaws also provide
      for
      the indemnification by us of the officers and directors against any losses
      or
      liabilities they may incur as a result of the manner in which they operate
      our
      business or conduct the internal affairs, provided that in connection with
      these
      activities they act in good faith and in a manner that they reasonably believe
      to be in, or not opposed to, our best interests, and their conduct does not
      constitute gross negligence, misconduct or breach of fiduciary
      obligations.





**MANAGEMENT
      OF POTENTIAL GROWTH**





Subject
      to receipt of financing, we hope to experience rapid growth, which, if achieved,
      will place a significant strain on our managerial, operational, and financial
      systems resources. To accommodate our current size and manage growth, we must
      continue to implement and improve our financial strength and our operational
      systems, and expand.





There
      is
      no guarantee that we will be able to effectively manage the expansion of our
      operations, or that our, systems, procedures or controls will be adequate to
      support our expanded operations or that we will be able to obtain facilities
      to
      support our growth. Our inability to effectively manage our future growth would
      have a material adverse effect on us.




**INSUFFICIENT
      AUTHORIZED SHARES**




We
      do not
      have sufficient authorized shares of our common stock to issue shares upon
      exercise of outstanding warrants. Each warrant contains a covenant that we
      will keep available sufficient authorized shares to permit exercise of such
      warrant. Accordingly, if holders of outstanding warrants exercised such
      warrants, we would not be able to satisfy our obligations under such warrants.
      We intend to submit proxy materials to the SEC in the very near future for
      the
      purpose of, among other things, increasing the number of authorized shares
      of
      our common stock, however, there are no assurances that our stockholders will
      approve such increase.





**LIMITED
      MARKET DUE TO PENNY STOCK**





Our
      stock
      differs from many stocks, in that it is a "penny stock." The Securities and
      Exchange Commission has adopted a number of rules to regulate "penny stocks."
      These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3,
      15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934,
      as
      amended. Because our securities probably constitute "penny stock" within the
      meaning of the rules, the rules would apply to our securities and us. The rules
      may further affect the ability of owners of our stock to sell their securities
      in any market that may develop for them. There may be a limited market for
      penny
      stocks, due to the regulatory burdens on broker-dealers. The market among
      dealers may not be active. Investors in penny stock often are unable to sell
      stock back to the dealer that sold them the stock. The mark-ups or commissions
      charged by the broker-dealers may be greater than any profit a seller may make.
      Because of large dealer spreads, investors may be unable to sell the stock
      immediately back to the dealer at the same price the dealer sold the stock
      to
      the investor. In some cases, the stock may fall quickly in value. Investors
      may
      be unable to reap any profit from any sale of the stock, if they can sell it
      at
      all. Stockholders should be aware that, according to the Securities and Exchange
      Commission Release No. 34- 29093, the market for penny stocks has suffered
      in
      recent years from patterns of fraud and abuse. These patterns
      include:


-12-


Control
      of the market for the security by one or a few broker-dealers that are often
      related to the promoter or issuer;





Manipulation
      of prices through prearranged matching of purchases and sales and false and
      misleading press releases; “boiler room” practices involving high pressure sales
      tactics and unrealistic price projections by inexperienced sales persons;
      excessive and undisclosed bid-ask differentials and markups by selling
      broker-dealers; and the wholesale dumping of the same securities by promoters
      and broker-dealers after prices have been manipulated to a desired level, along
      with the inevitable collapse of those prices with consequent investor
      losses.





Furthermore,
      the “penny stock” designation may adversely affect the development of any public
      market for our shares of common stock or, if such a market develops, its
      continuation. Broker-dealers are required to personally determine whether an
      investment in "penny stock" is suitable for customers. Penny stocks are
      securities (i) with a price of less than five dollars per share; (ii) that
      are
      not traded on a "recognized" national exchange; (iii) whose prices are not
      quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must
      still
      meet requirement (i) above); or (iv) of an issuer with net tangible assets
      less
      than $2,000,000 (if the issuer has been in continuous operation for at least
      three years) or $5,000,000 (if in continuous operation for less than three
      years), or with average annual revenues of less than $6,000,000 for the last
      three years. Section 15(g) of the Exchange Act, and Rule 15g-2 of the Commission
      require broker-dealers dealing in penny stocks to provide potential investors
      with a document disclosing the risks of penny stocks and to obtain a manually
      signed and dated written receipt of the document before effecting any
      transaction in a penny stock for the investor's account. Potential investors
      in
      our common stock are urged to obtain and read such disclosure carefully before
      purchasing any shares that are deemed to be "penny stock." Rule 15g-9 of the
      Commission requires broker-dealers in penny stocks to approve the account of
      any
      investor for transactions in such stocks before selling any penny stock to
      that
      investor.





This
      procedure requires the broker-dealer to (i) obtain from the investor information
      concerning his financial situation, investment experience and investment
      objectives; (ii) reasonably determine, based on that information, that
      transactions in penny stocks are suitable for the investor and that the investor
      has sufficient knowledge and experience as to be reasonably capable of
      evaluating the risks of penny stock transactions; (iii) provide the investor
      with a written statement setting forth the basis on which the broker-dealer
      made
      the determination in (ii) above; and (iv) receive a signed and dated copy of
      such statement from the investor, confirming that it accurately reflects the
      investor's financial situation, investment experience and investment objectives.
      Compliance with these requirements may make it more difficult for the Company's
      stockholders to resell their shares to third parties or to otherwise dispose
      of
      them.





**THE
      TRADING PRICE OF OUR COMMON STOCK MAY DECREASE DUE TO FACTORS BEYOND OUR
      CONTROL.**





The
      trading price of the common stock is subject to significant fluctuations in
      response to numerous factors, including:





Variations
      in anticipated or actual results of operations;





Announcements
      of new products or technological innovations by us or our
      competitors;





Changes
      in earnings estimates of operational results by analysts;





Results
      of product demonstrations.





Inability
      of market makers to combat short positions on the stock;





Inability
      of the market to absorb large blocks of stock sold into the market;





Comments
      about us or our markets posted on the Internet.




-13-




Moreover,
      the stock market from time to time has experienced extreme price and volume
      fluctuations, which have particularly affected the market prices for emerging
      growth companies and which often have been unrelated to the operating
      performance of the companies. These broad market fluctuations may adversely
      affect the market price of our common stock. If our stockholders sell
      substantial amounts of their common stock in the public market, the price of
      our
      common stock could fall. These sales also might make it more difficult for
      us to
      sell equity or equity related securities in the future at a price we deem
      appropriate.





**WE
      PAY NO DIVIDENDS**





We
      have
      never declared nor paid cash dividends on our capital stock. We currently intend
      to retain any earnings for funding growth however these plans may change
      depending upon capital raising requirements.




**QUANTITATIVE
      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**





We
      believe that we do not have any material exposure to interest or commodity
      risks. We are exposed to certain economic and political changes in international
      markets where we compete, such as inflation rates, recession, foreign ownership
      restrictions, and trade policies and other external factors over which we have
      no control.





Our
      financial results are quantified in U.S. dollars and a majority of our
      obligations and expenditures with respect to our operations are incurred in
      euros, with the balance in U.S. dollars and Swiss franc. Our functional currency
      has been the euro. In the past the majority of our revenues were derived from
      the business operations of our wholly owned subsidiaries, the Minerva Group,
      whose operations were conducted in euros. Although we do not believe we
      currently have any materially significant market risks relating to our
      operations resulting from foreign exchange rates, due to our limited operations,
      our lack of revenue and that the erou and Swiss franc are not highly
      inflational, if we enter into financing or other business arrangements
      denominated in currency other than the U.S. dollars, variations in the exchange
      rate may give rise to foreign exchange gains or losses that may be
      significant.





We
      currently have no material long-term debt obligations. We do not use financial
      instruments for trading purposes and we are not a party to any leverage
      derivatives.





The
      Company's independent certified public accountant has stated in their report
      included in this Annual Report that the Company has incurred operating losses
      from its inception , and that the Company is dependent upon management's ability
      to develop profitable operations. These factors among others may raise
      substantial doubt about the Company's ability to continue as a going
      concern.





We
      anticipate raising any necessary capital from outside investors coupled with
      bank or mezzanine lenders. As of the date of this report, we have not entered
      into any negotiations with any third parties to provide such
      capital.





**RECENT
      DEVELOPMENTS**





Corporate
      Recapitalization and Reorganization of Company




We
      entered into a Debt Exchange Agreement with our president and chief executive
      officer, Jacques Mot and our wholly owned subsidiary New Generation Plastic,
      Inc. dated as of the December 7, 2005. Pursuant to the Debt Exchange Agreement,
      we issued Mr. Mot a Convertible Promissory Note in the original principal amount
      of $753,304 representing outstanding amounts owed to him under his Consulting
      Agreement through December 31, 2004. The Convertible Promissory Note bears
      interest at a rate of 10% per annum, is payable on demand and is convertible
      at
      the option of Mr. Mot into shares of our Preferred Stock, or into shares of
      NGP
      Preferred Stock, subject to stockholder approval of the "spinoff" of NGP. The
      conversion rate under the note is $1.507 per share of Preferred Stock (whether
      NGH or NGP) and each share of Preferred Stock is convertible into 73 shares
      of
      Common Stock subject to adjustment for stock splits, stock dividends or similar
      transactions. Accordingly, if Mr. Mot converts the entire amount outstanding
      under the Convertible Promissory Note as of the date of issuance into shares
      of
      NGH Preferred Stock, he would own 37,690,506 shares of Common Stock (including
      the 100,000 shares and currently exercisable options to purchase 1,100,000
      shares he owned prior to the issuance of the Convertible Promissory Note)
      representing approximately 34% of the Company on a fully diluted basis or
      approximately 45% of the Company assuming exercise of Mr. Mot's options, but
      excluding options and/or warrants held by all other stockholders. Similarly,
      if
      our stockholders approve the "spinoff" of NGP and Mr. Mot elects to convert
      the
      entire amount outstanding under the Convertible Promissory Note into NGP
      Preferred Stock, he would own 37,690,506 shares of NGP Common Stock representing
      approximately 34% on fully diluted basis or approximately 45% assuming
      exercise of Mr. Mot's options, but excluding options and/or warrants held by
      all
      other stockholders. We intend to file a proxy statement with the SEC seeking
      approval of the “spinoff”, among other things, after filing this Form 10-KSB for
      the year ended December 31, 2005.


-14-





Processing
      of plastic polymers





During
      the second quarter of 2004 we were able to reactivate the NGP BT 30 machine,
      which had been in storage since mid 2002, due to lack of operating capital.
      Since then, we have engaged HPB Equipment, located in Beligneux/France to
      warehouse and store the NGP BT 30 prototype machine. We have also engaged an
      engineer on a consulting basis in order to operate the machinery and develop
      further testing for clients within the plastic industry. NGP has also recently
      built its first industrial size machine, with a capacity of 350KG per hour,
      or
      2,400 Tons annually.




The
      Company has been able to raise funds through a private placement in Europe,
      which is ongoing. The use of proceeds are to update all SEC filings, reactivate
      the NGP BT 30, retain plastic engineering professionals as well as hiring
      executives on management level and to build the first NGP 350KG commercially
      viable machine and plant.





Consulting
      Arrangements





Pursuant
      to an engagement letter with Robert Scherne, CPA, P.C. dated February 10, 2006,
      we retained Robert Scherne as our interim Chief Financial Officer on a
      consulting basis. Pursuant to the terms of the engagement letter, we pay Robert
      Scherne, CPA, P.C. at an hourly rate of $150 per hour, $90 of which is payable
      in cash and $60 of which is payable in restricted shares of our common stock.
      The amount of common stock due to Mr. Scherne is determined on a monthly basis
      by dividing $60 per billed hour by 50% of our average trading price for the
      prior ninety days. Mr. Scherne's engagement may be terminated by either party
      upon notice to the other party.





On
      March
      15, 2006, we executed a Consulting Agreement with Patrick Hellinckx relating
      to
      the provision of advice regarding financing options. Although this Agreement
      was
      executed in March, certain of the services were performed in 2005. Pursuant
      to
      this Consulting Agreement, we paid Mr. Hellinckx $7,800 and agreed to issue
      226,300 shares of our common stock (or at our option shares of NGP Common Stock
      provided that the "spinoff" of NGP has occurred on or prior to December 31,
      2006) and warrants to purchase an additional 226,300 shares of our common stock
      (or at our option shares of NGP Common Stock provided that the "spinoff" of
      NGP
      has occurred on or prior to December 31, 2006) which shares and warrants have
      been accrued on our December 31, 2005 balance sheet. The warrants have an
      exercise price of $0.35 per share and expire five years from the date of
      issuance. The Consulting Agreement expires on December 31, 2006.





On
      March
      15, 2006, we executed a Consulting Agreement with Volader Corp. relating to
      the
      provision of advice regarding financing options. Although this Agreement was
      executed in March, certain of the services were performed in 2005. Pursuant
      to
      this Consulting Agreement, we paid Volader $27,180 and agreed to issue 714,847
      shares of our common stock (or at our option shares of NGP Common Stock provided
      that the "spinoff" of NGP has occurred on or prior to December 31, 2006) and
      warrants to purchase an additional 714,847 shares of our common stock (or at
      our
      option shares of NGP Common Stock provided that the "spinoff" of NGP has
      occurred on or prior to December 31, 2006) which shares and warrants have been
      accrued on our December 31, 2005 balance sheet. The warrants have an exercise
      price of $0.35 per share and expire five years from the date of issuance. The
      Consulting Agreement expires on December 31, 2006.





On
      March
      15, 2006, we executed a Consulting Agreement with Polymer Consulting relating
      to
      the provision of advice regarding financing options. Although this Agreement
      was
      executed in March, certain of the services were performed in 2005. Pursuant
      to
      this Consulting Agreement, we paid Polymer Consulting $153,399.70 and agreed
      to
      issue 801,487 shares of our common stock (or at our option shares of NGP Common
      Stock provided that the "spinoff" of NGP has occurred on or prior to December
      31, 2006) and warrants to purchase an additional 801,487 shares of our common
      stock (or at our option shares of NGP Common Stock provided that the "spinoff"
      of NGP has occurred on or prior to December 31, 2006) which shares and warrants
      have been accrued on our December 31, 2005 balance sheet. The warrants have
      an
      exercise price of $0.35 per share and expire five years from the date of
      issuance. The Consulting Agreement expires on December 31, 2006.





On
      March
      15, 2006, we executed a Consulting Agreement with Clanders Investors relating
      to
      the provision of advice regarding financing options. Although this Agreement
      was
      executed in March, certain of the services were performed in 2005. Pursuant
      to
      this Consulting Agreement, we agreed to issue Clanders Investors 136,950 shares
      of our common stock (or at our option shares of NGP Common Stock provided that
      the "spinoff" of NGP has occurred on or prior to December 31, 2006) and warrants
      to purchase an additional 136,950 shares of our common stock (or at our option
      shares of NGP Common Stock provided that the "spinoff" of NGP has occurred
      on or
      prior to December 31, 2006) which shares and warrants have been accrued on
      our
      December 31, 2005 balance sheet. The warrants have an exercise price of $0.35
      per share and expire five years from the date of issuance. The Consulting
      Agreement expires on December 31, 2006.


-15-





On
      March
      15, 2006, we executed a Consulting Agreement with Jan Rasschaert relating to
      the
      provision of advice regarding financing options. Although this Agreement was
      executed in March, certain of the services were performed in 2005. Pursuant
      to
      this Consulting Agreement, we agreed to issue Mr. Rasschaert 100,400 shares
      of
      our common stock (or at our option shares of NGP Common Stock provided that
      the
      "spinoff" of NGP has occurred on or prior to December 31, 2006) and warrants
      to
      purchase an additional 100,400 shares of our common stock (or at our option
      shares of NGP Common Stock provided that the "spinoff" of NGP has occurred
      on or
      prior to December 31, 2006) which shares and warrants have been accrued on
      our
      December 31, 2005 balance sheet. The warrants have an exercise price of $0.35
      per share and expire five years from the date of issuance. The Consulting
      Agreement expires on December 31, 2006.





**OFF-BALANCE
      SHEET ARRANGEMENTS**





We
      do not
      have any off-balance sheet arrangements.




**ITEM
      7. FINANCIAL STATEMENTS**





The
      following financial statements are included herewith. The Company's audited
      Financial Statements as of and for the fiscal year ended December 31, 2005
      and
      December 31, 2004.




**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





None.





**ITEM
      8A. CONTROLS AND PROCEDURES**





The
      Company maintains disclosure controls and procedures (as defined in Rule
      13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as
      amended) that are designed to ensure that information required to be disclosed
      in our periodic reports filed under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the SEC's rules
      and
      forms, and that such information is accumulated and communicated to our
      management, including our principal executive/financial officer, to allow timely
      decisions regarding required disclosure.




As
      of
      December 31, 2005, our management carried out an evaluation under the
      supervision of our Chief Executive Officer and our Chief Financial Officer
      of
      the effectiveness of the design and operation of our system of disclosure
      controls and procedures pursuant to the Securities Exchange Act.





As
      previously disclosed in a Current Report on Form 8-K , which we filed on
      November 15, 2006 and as described in our Explanatory Note to this Form 10-K/A
      and Note E to our accompanying consolidated financial statements, as a result
      of
      comments raised by the Division of Corporate Finance of the Securities &
Exchange Commission (the “Commission”), we determined that accounting errors
      were made in connection with accounting for and disclosing the beneficial
      conversion feature embedded in a
      convertible note as a liability as of the date of issuance instead of equity.
      As
      a result, we have determined, as of December 31, 2005, that our disclosure
      controls were not effective.





Based
      on
      the impact of the aforementioned accounting error, we determined to restate
      our
      consolidated financial statements as of December 31, 2005 and 2004 and the
      years
      then ended and the period April 7, 2003 (date of inception as a development
      state) through December 31, 2005.





Subsequent
      to the date of the financial statements, we implemented the following remedial
      measures to address the identified material weaknesses.





·
            We
                reviewed all convertible securities to identify any securities that
                may
                have embedded beneficial conversion features





·
            We
                have improved the supervision and training of our accounting staff
                to
                understand and implement applicable accounting requirements, policies
                and
                procedures applicable to the accounting and disclosure of convertible
                securities.




Changes
      in Disclosure Controls and Procedures




There
        were no changes in our internal controls over financial reporting that occurred
        during the year ended December 31, 2005 that have materially affected, or
        are reasonably likely to materially affect, our internal control over financial
        reporting.


-16-




**ITEM
      8B. OTHER INFORMATION**





Material
      Definitive Agreements





We
      entered into a Debt Exchange Agreement with our president and chief executive
      officer, Jacques Mot and our wholly owned subsidiary New Generation Plastic,
      Inc. dated as of December 7, 2005. Pursuant to the Debt Exchange Agreement,
      we
      issued Mr. Mot a Convertible Promissory Note in the original principal amount
      of
      $753,304 representing outstanding amounts owed to him under his Consulting
      Agreement. The Convertible Promissory Note bears interest at a rate of 10%
      per
      annum, is payable on demand and is convertible at the option of Mr. Mot into
      shares of our Preferred Stock, or into shares of NGP Preferred Stock, subject
      to
      stockholder approval of the "spinoff" of NGP. The conversion rate under the
      note
      is $1.507 per share of Preferred Stock (whether NGH or NGP ) and each share
      of
      Preferred Stock is convertible into 73 shares of Common Stock subject to
      adjustment for stock splits, stock dividends or similar transactions.
      Accordingly, if Mr. Mot converts the entire amount outstanding under the
      Convertible Promissory Note as of the date of issuance into shares of NGH
      Preferred Stock, he would own 37,690,506 shares of Common Stock (including
      the
      100,000 shares and currently exercisable options to purchase 1,100,000 shares
      he
      owned prior to the issuance of the Convertible Promissory Note) representing
      approximately 34% of the Company on a fully diluted basis or approximately
      45%
      of the Company assuming exercise of Mr. Mot's options, but excluding options
      and/or warrants held by all other stockholders. Similarly, if our stockholders
      approve the "spinoff" of NGP and Mr. Mot elects to convert the entire amount
      outstanding under the Convertible Promissory Note into NGP Preferred Stock,
      he
      would own 37,690,506 shares of NGP Common Stock representing approximately
      34%
      on a fully diluted basis for approximately 45% assuming exercise of Mr. Mot's
      options, but excluding options and/or warrants held by all other
      stockholders.




**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS COMPLIANCE
      WITH
      SECTION 16(a)**




**MANAGEMENT**





The
      following table sets forth the names, ages and positions of our executive
      officers and directors as of December 31, 2005:





**Name**
            
            **Age**
            
            **Position
                and Offices with the Company**Jacques
                Mot
            
            49
            
            Chairman
                of the Board of DirectorsMarcel
                Rokegem
            
            56
            
            DirectorPatrick
                Sulzer
            
            31
            
            Chief
                Operating Officer


-17-




Jacques
      Mot served as the Chairman of the Board, President and CEO from April of 1999
      to
      January 24, 2000 and again from February 2002 until the present. Mr. Mot was
      also a Director of Argenta & Magnum Management Company Ltd. - - Gibraltar, a
      company that was engaged in providing financial advisory services. From 1987
      to
      1992, Mr. Mot was the General Manager and Director of Iesa Investissements
      S.A.,
      a portfolio management and investment company, where he handled portfolio and
      investment management on a confidential basis. Mr. Mot attended the University
      of Lausanne, Switzerland studying economics from 1976-1979.





Marcel
      Rokegem has served as a Director since 1999. As of 1991 he acted as an
      independent investment consultant. From 1987 to 1991 he was co-founding partner
      and director of Euro Suisse Securities, a member of the London Stock Exchange.
      From 1982 to 1987 he was co-founding partner and director of Jesup and Lamont
      International, an affiliate of Jesup and Lamont Securities Co., a member of the
      New York Stock Exchange and one of the oldest Wall Street firms. Prior to that
      Mr. Rokegem was partner in charge of the international department of Biard,
      Hombergen, Pringiers and Co., a member of the Brussels Stock Exchange. He
      started his career with Kredietbank in Brussels where he was responsible for
      international equity trading and sales. He attended the Antwerp Jesuit
      University where he studied AES (Applied Economic Science). He is a diploma
      holder from I.S.M.A. and is an officially recognized insurance
      consultant.





Patrick
      Sulzer has served as Chief Operating Officer since April 2005. He acted as
      an
      independent consultant to NGP during the six months prior to taking an official
      position with the Company. From August 2002 until November 2004, he worked
      as
      Logistics & Operations Manager for TechnoMarine group, an international
      watch company with offices in Europe, USA and Asia. Prior to that Mr Sulzer
      was
      an auditor with PriceWaterhouseCoopers. He graduated from Oxford Brookes
      University in 2001 (BA 2:1) where he studied Finance & Management. In
      addition, he attended two years the University of Fribourg where he studied
      law.




SECTION
      16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE




Jacques
      Mot did not timely file his Form 4 with respect to the Convertible Promissory
      Note issued to him on December 7, 2005.





**CODE
      OF ETHICS POLICY**





We
      have
      not adopted a code of ethics that applies to our principal executive officer,
      principal financial officer, principal accounting officer or controller or
      persons performing similar functions as we have not had the financial resources
      to do so and our businesses had until recently been dormant.




**ITEM
      10. EXECUTIVE COMPENSATION**





The
      following table sets forth information regarding compensation paid by us to
      our
      Chief Executive Officer and our Chief Operating Officer.




**SUMMARY
      COMPENSATION TABLE**


**Annual
                Compensation**
            ****
            **Long-Term
                Compensation**
            ****
            
            ********
            
            ****
            
            ****
            
            ****
            
            ****
            **Awards**
            ****
            **Payouts**
            ****
            
            ********
            
            ****
            
            ****
            
            ****
            
            ****
            
            ****
            **Securities**
            ****
            
            ****
            
            ********
            
            ****
            
            ****
            
            ****
            **Other**
            ****
            **Restricted**
            ****
            **Underlying**
            ****
            
            ****
            
            ********
            
            ****
            
            ****
            
            ****
            **Annual**
            ****
            **Stock**
            ****
            **Options/**
            ****
            **LTIP**
            ****
            **All
                Other**
            ********
            
            ****
            **Salary**
            ****
            **Bonus**
            ****
            **Compensation**
            ****
            **Award(s)**
            ****
            **SARs**
            ****
            **Payouts**
            ****
            **Compensation**
            ******Name
                and Principal Position**
            ****
            **Year**
            ****
            **($)**
            ****
            **($)**
            ****
            **($)**
            ****
            **(#)**
            ****
            **(#)**
            ****
            **($)**
            ****
            **($)**Jacques
                Mot,
            
            
            2003
            
            $
            324,000Cheif
            
            
            2004
            
            $
            324,000Executive
                Officer
            
            
            2005
            
            $
            324,000Patrick
              Sulzer,
            
            
            2003
            
            
            —Chief
            
            
            2004
            
            
            —Operating
                Officer
            
            
            2005
            
            $
            96,500




**Employment
      Agreements**





We
      entered into a Consulting Agreement with Jacques Mot dated July 5, 2000 pursuant
      to which Mr. Mot receives $27,000.00 per month for his services to the Company.
      The Agreement has a one (1) year term with automatic renewal unless terminated
      by either party. As of January 1, 2005, Mr. Mot became an employee of the
      Company and he receives the same compensation as he received under his
      Consulting Agreement.





**Compensation
      of Directors**





Currently
      members of our Board of Directors do not receive any compensation for service
      on
      our Board. We expect that a compensation plan for Directors will be adopted
      in
      the future and Directors are eligible to receive options under our existing
      stock incentive plan.


-18-





**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT.**





The
      following table sets forth, certain information, as of December 31, 2005,
      regarding beneficial ownership of our common stock by





-
            each
                stockholder known by us to be the beneficial owner of more than five
                percent (5%) of the outstanding shares of our common
                stock;





-
            each
                of our directors;





-
            each
                of the named executive officers;
                and





-
            all
                of our current executive officers and directors as a
                group.




**Name
                of**
            ****
            **Number
                of Shares**
            ****
            
            ******Beneficial
                Owner**
            ****
            **Beneficially
                Owned(1)**
            ****
            **Percent
                of Class (1)**Icare
                BVBA(2)
            
            
            
            
            
            3,715,119
            
            
            
            
            
            8.1
            %Rapide
                BVBA(3)
            
            
            
            
            
            3,715,119
            
            
            
            
            
            8.1
            %Jacques
                Mot(4)
            
            
            
            
            
            1,200,000
            
            
            
            
            
            2.5
            %Marcel
                Rokegem
            
            
            
            
            
            50,000
            
            
            
            
            
            0.1
            %Alfons
                de Maeseneir(5)
            
            
            
            
            
            9,579,000
            
            
            
            
            
            18
            %Lombard
                Odier Darier Hentsch & CIE(6)
            
            
            
            
            
            8,570,000
            
            
            
            
            
            16All
                Executive Officers and Directors
            
            
            
            
            
            1,250,000
            
            
            
            
            
            2.5







(1)
            Shares
                of common stock subject to warrants or other instruments currently
                exercisable or exercisable within 60 days of the date hereof are
                deemed
                outstanding for computing the number of shares beneficially owned
                and the
                percentage of outstanding shares of the class held by a person holding
                such warrants, but are not deemed outstanding for computing the percentage
                of any other person.(2)
            Includes
                shares owned by Icare BVBA (3,648,658) and Robert Jordaens
                (66,461).(3)
            Includes
                shares owned by Rapide BVBA (3,648,658) and Rene de Vleeschauwer
                (66,461).(4)
            Includes
                1,100,000 vested options to purchase common stock @ $1.18 per share
                and
                100,000 shares of common stock.




**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**





We
      entered into a Debt Exchange Agreement with our president and chief executive
      officer, Jacques Mot and our wholly owned subsidiary New Generation Plastic,
      Inc. dated as of December 7, 2005. Pursuant to the Debt Exchange Agreement,
      we
      issued Mr. Mot a Convertible Promissory Note in the original principal amount
      of
      $753,304 representing outstanding amounts owed to him under his Consulting
      Agreement. The Convertible Promissory Note bears interest at a rate of 10%
      per
      annum, is payable on demand and is convertible at the option of Mr. Mot into
      shares of our Preferred Stock, or into shares of NGP Preferred Stock, subject
      to
      stockholder approval of the "spinoff" of NGP. The conversion rate under the
      note
      is $1.507 per share of Preferred Stock (whether NGH or NGP ) and each share
      of
      Preferred Stock is convertible into 73 shares of Common Stock subject to
      adjustment for stock splits, stock dividends or similar transactions.
      Accordingly, if Mr. Mot converts the entire amount outstanding under the
      Convertible Promissory Note as of the date of issuance into shares of NGH
      Preferred Stock, he would own 37,690,506 shares of Common Stock (including
      the
      100,000 shares and currently exercisable options to purchase 1,100,000 shares
      he
      owned prior to the issuance of the Convertible Promissory Note) representing
      approximately 34% of the Company on a fully diluted basis or approximately
      45%
      of the Company assuming exercise of Mr. Mot's options, but excluding options
      and/or warrants held by all other stockholders. Similarly, if our stockholders
      approve the "spinoff" of NGP and Mr. Mot elects to convert the entire amount
      outstanding under the Convertible Promissory Note into NGP Preferred Stock,
      he
      would own 37,690,506 shares of NGP Common Stock representing approximately
      34%
      on a fully diluted basis for approximately 45% assuming exercise of Mr. Mot's
      options, but excluding options and/or warrants held by all other
      stockholders.




-19-





The
      landlord for the Elewjit, Belgium office was Tequila NV an entity owned and
      controlled by Rene De Vleeschauwer and Robert Jordaens (the former owners of
      Minerva and more than 5% shareholders). Minerva vacated the premises in early
      2003 as a result of its bankruptcy.





In
      2002,
      we received loans from Jacques Mot, our Chairman and chief executive officer
      in
      amounts totaling $200,000. The loans are evidenced by a demand promissory note
      in favor of Mr. Mot dated December 31, 2002.




**ITEM
      13. EXHIBITS LIST**





(a)
            The
                following documents are filed as part of this
                Form:





Financial
      Statements. See index of Financial Statements on page F-1 at the beginning
      of
      the attached Financial Statements.





(b)
            Exhibits





++(3)
            (i)
            Amended
                and Restated Certificate of Incorporation++
            (ii)
            By-Laws++(4)
            (i)
            Specimen
                Certificate for Common Stock++
            (ii)
            Form
                of Warrant at $6.00 expiring 2 years after Commencement
                Date++
            (iii)
            Form
                of Warrant at $12.00 expiring March 5, 2004++
            (iv)
            Form
                of Warrant at $12.00 expiring February 24, 2004^
            (v)
            Form
                of Warrant at $8.00 expiring 2 years after Commencement
                Date******
            (vi)
            Form
                of Warrant at $0.35 expiring 3 years after issuance
                date++(10)
            (i)
            Employment
                Agreement of Paul Hokfelt dated January 25, 2000+
            (ii)
            Line
                of Credit Agreement dated as of April 15, 1999+
            (iii)
            Consulting
                Agreement of Jacques Mot dated as of April 15, 1999.^
            (iv)
            Strategic
                Collaboration Agreement dated as of March 31, 2000 by and between
                the
                Company and New Generation Partners, Inc., on one hand, and Double
                Impact,
                Inc., on the other.^
            (v)
            Share
                Transfer Agreement dated as of March 31, 2000 by and among Bachkine
&
                Meyer Industries, S.A., Double Impact, Inc. and the
                Company.^
            (vi)
            Termination
                Agreement dated as of April 15, 2000 by and between the Company and
                BAMI
                Consulting, S.A.^
            (vii)
            Subscription
                Agreement dated as of April 10, 2000 by and between the Company and
                Gauk
                Holding, Inc.^
            (viii)
            Subscription
                Agreement dated as of April 10, 2000 by and between the Company and
                Mercer
                International S.A.(ix)
            (Reserved)#
            (x)
            Form
                of Subscription Agreement#
            (xi)
            Amendment
                to Line of Credit Agreement, dated July 15, 2000, between the Company
                and
                Bachkine & Meyer Industries, S.A.**
            (xii)
            Loan
                Retirement Agreement dated as of November 13, 2000 by and between
                the
                Company and Bachkine & Meyer Industries SA.**
            (xiii)
            Consulting
                Fee Conversion Agreement dated as of November 13, 2000 by and between
                the
                Company and BAMI Consulting, Inc.***
            (xiv)
            Share
                Exchange Agreement dated as of December 29, 2000 by and among the
                Company
                and New Generation Partners, Inc., on one hand, and Icare BVBA, Rapide
                BVBA, Rene De Vleeschauwer and Robert Jordaens.****
            (xv)
            Share
                Exchange Agreement dated as of February 28, 2001 by and among the
                Company
                and New Generation Partners, Inc., on one hand, and Icare BVBA, Rapide
                BVBA, Rene De Vleeschauwer and Robert Jordaens.+++
            (xvi)
            Consulting
                Agreement by and between New Generation Holdings, Inc and Jacques
                Mot
                dated as of July 5, 2000.*
            (xvii)
            Master
                License Agreement between Minerva Softcare NV and Ikan Finanz AG
                effective
                as of December 31, 2002*
            (xviii)
            Demand
                Promissory Note in favor of Jacques Mot dated December 31,
                2002.##
            (xix)
            Form
                of Subscription Agreement for 2004 Regulation S
                Offering*****
            (xx)
            Subscription
                Agreement between the Company and Alfons de Maeseneir##
            (xxii)
            Debt
                Exchange Agreement among New Generation Holdings, Inc. New Generation
                Partners, Inc. and Jacques Mot dated as of December 7,
                2005.##
            (xxiii)
            Convertible
                Promissory Note in favor of Jacques Mot dated December 7,
                2005******
            (xxiv)
            Engagement
                Letter between New Generation Holdings, Inc. and Robert S. Scherne,
                CPA,
                PC dated February 10, 2006.******
            (xxv)
            Consulting
                Agreement between New Generation Holdings, Inc. and Clanders Inv.
                Ltd.
                dated March 15, 2006.******
            (xxvi)
            Consulting
                Agreement between New Generation Holdings, Inc. and Patrick
                Hellinckx dated March 15, 2006.******
            (xxvii)
            Consulting
                Agreement between New Generation Holdings, Inc. and Jan Rasschaert
                dated
                March 15, 2006.******
            (xxviii)
            Consulting
                Agreement between New Generation Holdings, Inc. and Polymer
                Consulting Limited dated March 15, 2006.******
            (xxix)
            Consulting
                Agreement between New Generation Holdings, Inc. and Volarder Corp.
                Ltd. dated March 15, 2006.##
            (21)
            Subsidiaries
                of the Registrant(31.1)
            Certificate
                pursuant to section 302 of the Sarbanes-Oxley Act of
                2002.(32.1)
            Certificate
                pursuant to section 906 of the Sarbanes-Oxley Act of
                2002.





+
            Incorporated
                by reference to the Company's Form 10-QSB for the period ending June
                30,
                1999 filed on August 23, 1999.++
            Incorporated
                by reference to the Company's Form 10-KSB for the period beginning
                April
                15, 1999 and ending December 31, 1999 filed on March 30,
                2000.^
            Incorporated
                by reference to the Company's Form 10-QSB for the period ending March
                31,
                2000 filed on May 23, 2000.#
            Incorporated
                by reference to the Company's Form 10-QSB for the period ending June
                30,
                2000 filed on August 30, 2000.*
            Incorporated
                by reference to the Company's Form 10-KSB for the year ended December
                31,
                2002 filed on February 15, 2004.**
            Incorporated
                by reference to the Company's Form 10-QSB for the period ending September
                30, 2000 filed on November 21, 2000.***
            Incorporated
                by reference to the Company's Form 8-K filed on February 28,
                2001****
            Incorporated
                by reference to the Company's Form 8-K filed on March 12,
                2001*****
            Incorporated
                by reference to the Company’s Form 8-K filed on May 12,
                2005******
            Incorporated
                  by reference to the Company's Form 10-KSB for year ended December
                  31, 2005
                  filed on April 11, 2006+++
            Incorporated
                by reference to the Company's Form 10-KSB for year ended December
                31, 2000
                filed on April 16, 2001##
            Incorporated
                by reference to the Company's Form 10-KSB for year ended December
                31, 2004
                filed on December 7, 2005




-20-




**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




**PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**





The
      following is a summary of the fees billed to New Generation Holdings, Inc.
      by
      Russell Bedford Stefanou Mirchandani LLP for professional services rendered
      for
      the fiscal years ended December 31, 2005 and 2004:




**Fee
                Category**
            
            **Fiscal
                2005 Fees**
            ****
            **Fiscal
                2004 Fees**Audit
                Fees
            
            $
            37,802
            
            $
            10,381Audit-Related
                Fees
            
            
            —
            
            
            —Tax
                Fees
            
            
            —
            
            
            —All
                Other Fees
            
            
            —
            
            
            —Total
                Fees
            
            $
            37,802
            
            $
            10,381




AUDIT
      FEES. Consists of fees billed for professional services rendered for the audit
      of New Generation Holdings, Inc.'s consolidated financial statements and review
      of the interim consolidated financial statements included in quarterly reports
      and services that are normally provided by Russell Bedford Stefanou Mirchandani
      LLP in connection with statutory and regulatory filings or
      engagements.





AUDIT-RELATED
      FEES. Consists of fees billed for assurance and related services that are
      reasonably related to the performance of the audit or review of New Generation
      Holding, Inc.'s consolidated financial statements and are not reported under
      "Audit Fees." [There were no Audit-Related services provided in fiscal 2005
      or
      2004. ]





TAX
      FEES.
      Consists of fees billed for professional services for tax compliance, tax advice
      and tax planning. [There were no tax services provided in fiscal 2005 or
      2004.]





ALL
      OTHER
      FEES. Consists of fees for products and services other than the services
      reported above. There were no management consulting services provided in fiscal
      2005 or 2004.





**POLICY
      ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES
      OF
      INDEPENDENT AUDITORS**





The
      Company currently does not have a designated Audit Committee, and accordingly,
      the Company's Board of Directors' policy is to pre-approve all audit and
      permissible non-audit services provided by the independent auditors. These
      services may include audit services, audit-related services, tax services and
      other services. Pre-approval is generally provided for up to one year and any
      pre-approval is detailed as to the particular service or category of services
      and is generally subject to a specific budget. The independent auditors and
      management are required to periodically report to the Company's Board of
      Directors regarding the extent of services provided by the independent auditors
      in accordance with this pre-approval, and the fees for the services performed
      to
      date. The Board of Directors may also pre-approve particular services on a
      case-by-case basis.




-21-





**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the Company has caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**NEW
                GENERATION HOLDINGS, INC.**
              **(Registrant)**By:
            /s/ Jacques
              MotJacques
                Mot
              *(Chief
                Presiding Officer)*




In
      accordance with the Exchange Act, this report has been signed below on January
      19, 2007 by the following persons in the capacities indicated:




By:
            /s/ Jacques
              MotJacques
                Mot
              Director
                and CEO
              (Principal
                Executive Officer)


By:
            /s/ Robert
              ScherneRobert
                Scherne
              Interim
                Chief Financial Officer
              (Principal
                Financial and Accounting Officer) By:
            /s/ Marcel
              RokegemMarcel
                Rokegem
              Director


-22-




**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FINANCIAL
      STATEMENTS AND SCHEDULES**





**DECEMBER
      31, 2005 AND 2004**





**FORMING
      A PART OF ANNUAL REPORT**


**PURSUANT
      TO THE SECURITIES EXCHANGE ACT OF 1934**





**NEW
      GENERATION HOLDINGS, INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**





**INDEX
      TO FINANCIAL STATEMENTS**




**Page**Report
                of Independent Registered Certified Public Accounting Firm
            F-2Consolidated
                Balance Sheet at December 31, 2005 (Restated)
            F-3Consolidated
                Statements of Losses and Comprehensive Losses for the two years ended
                December 31, 2005 and 2004 and for the period April 7, 2003 (date
                of
                inception as a development stage enterprise) to December 31,
                2005
            F-4Consolidated
                Statement of Deficiency in Stockholders' Equity for the two years
                ended
                December 31, 2005 and for the period April 7, 2003 (date of inception
                as a
                development stage enterprise) to December 31, 2005
                (Restated)
            F-5Consolidated
                Statements of Cash Flows for the two years ended December 31, 2005
                and
                2004 and for the period April 7, 2003 (date of inception as a development
                stage enterprise) to December 31, 2005
            F-6Notes
                to Consolidated Financial Statements
            F-7
                - F-15


F-1





**REPORT
      OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING
      FIRM**





The
      Board
      of Directors


New
      Generation Holdings, Inc.


New
      York,
      New York





We
      have
      audited the accompanying consolidated balance sheet of New Generation Holdings,
      Inc. and subsidiaries ("Company"), development stage Company, as of December
      31,
      2005, and the related consolidated statements of losses, comprehensive loss,
      deficiency in stockholders' equity and cash flows for each of the two years
      in
      the period ended December 31, 2005 and for the period April 7, 2003 (date of
      inception as a development stage enterprise) to December 31, 2005. 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 standards of the Public Company
      Accounting Oversight Board (United States of America). Those standards require
      that we plan and perform the audit to obtain reasonable assurance about whether
      the financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of New Generation
      Holdings, Inc. as of December 31, 2005, and the consolidated results of its
      operations and its cash flows for each of the two years in the period ended
      December 31, 2005 and from April 7, 2003 (date of inception as a development
      stage enterprise ) to December 31, 2005 in conformity with generally accepted
      accounting principles in the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note A to the
      financial statements, the Company has suffered recurring losses from operations
      that raise substantial doubt about its ability to continue as a going concern.
      Management's plans in regard to these matters are also described in Note A.
      The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.




As
      discussed in Note L, the Company has restated the
      consolidated balance sheet as of December 31, 2005.




/s/
      RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP





Russell
      Bedford Stefanou Mirchandani LLP


Certified
      Public Accountants




New
      York,
      New York


April
      5,
      2006 except for Note L, as to which date is November 29, 2006




F-2




**NEW
      GENERATION HOLDINGS, INC.**


**CONSOLIDATED
      BALANCE SHEET**


DECEMBER
      31, 2005


(Restated)




AssetsCurrent
                assets:Cash
            
            $
            2,946Liabilities
                and Deficiency in Stockholders' EquityCurrent
                liabilities:Accounts
                payable and accrued expenses:
            
            $
            2,005,535Convertible
                note payable, stockholder
            
            
            753,304Total
                current liabilities
            
            
            2,758,839Warrant
                derivatives
            
            
            5,198,643Total
                liabilities
            
            
            7,957,482Deficiency
                in stockholders' equity:Preferred
                stock, par value $.001 per share; 1,000,000 shares
                authorized,none
                issued and outstanding
            
            
            —Common
                stock, par value $.001 per share; 50,000,000 shares
                authorized,46,116,960
                shares issued and outstanding
            
            
            46,119Additional
                paid-in capital
            
            
            28,615,458Stock
                subscriptions
            
            
            131,300Other
                comprehensive income
            
            
            28,969Accumulated
                deficit prior to development stage
            
            
            (31,081,731
            )Deficit
                accumulated during the development stage
            
            
            (5,694,651
            )Total
                deficiency in stockholders' equity
            
            
            (7,954,536
            )Total
                liabilities and deficiency in stockholders' equity
            
            $
            2,946




See
      accompanying notes to consolidated financial statements


F-3




**NEW
      GENERATION HOLDINGS, INC.**


**CONSOLIDATED
      STATEMENTS OF LOSSES AND COMPREHENSIVE LOSSES**




****
            
            ****
            **Cumulative
                Period**
            ********
            
            ****
            
            ****
            **from
                April 7, 2003**
            ********
            
            ****
            
            ****
            **(date
                of inception**
            ********
            
            ****
            
            ****
            **as
                a development**
            ********
            
            ****
            
            ****
            **stage
                enterprise) to**
            ********
            **Years
                ended December 31,**
            ****
            **December
                31,**
            ********
            **2005**
            ****
            **2004**
            ****
            **2005**Operating
                expenses:General
                and administrative expenses
            
            $
            2,350,655
            
            $
            411,442
            
            $
            3,014,838Depreciation
                and amortization
            
            
            —
            
            
            30,210
            
            
            107,790Research
                and development
            
            
            711,924
            
            
            179,118
            
            
            891,042Total
              operating expenses
            
            
            3,062,579
            
            
            620,770
            
            
            4,013,670Loss
                from operations
            
            
            (3,062,579
            )
            
            (620,770
            )
            
            (4,013,670
            )Change
                in value of warrant liability
            
            
            (922,677
            )
            
            —
            
            
            (922,677
            )Interest
                expense
            
            
            (758,304
            )
            
            —
            
            
            (758,304
            )Loss
                before provision for income taxes
            
            
            (4,743,560
            )
            
            (620,770
            )
            
            (5,694,651
            )Provision
                for income taxes
            
            
            —
            
            
            —
            
            
            —Net
                loss
            
            $
            (4,743,560
            )
            $
            (620,770
            )
            $
            (5,694,651
            )Net
                loss per common share, basic and diluted
            
            $
            (0.12
            )
            $
            (0.03
            )Weighted
                average shares outstanding
            
            
            38,114,030
            
            
            23,264,740Comprehensive
                loss:Net
                loss
            
            $
            (4,743,560
            )
            $
            (620,770
            )Foreign
                currency translation gain
            
            
            14,586
            
            
            14,383Comprehensive
                loss
            
            $
            (4,728,974
            )
            $
            (606,387
            )




See
      accompanying notes to consolidated financial statements


F-4





**NEW
      GENERATION HOLDINGS, INC.**


**CONSOLIDATED
      STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY**


**FOR
      THE**  **PERIOD
      APRIL 7, 2003 (DATE OF INCEPTION AS A DEVELOPMENT STAGE ENTERPRISE )
      THROUGH**


**DECEMBER
      31, 2005**


(Restated)




****
            
            ****
            
            ****
            
            ****
            **Accumulated
                Deficit**
            ****
            
            ****
            
            ********
            
            ****
            
            ****
            **Additional**
            ****
            **Common**
            ****
            **Prior
                to**
            ****
            **During**
            ****
            **Other**
            ****
            
            ********
            **Common
                Stock**
            ****
            **Paid-in**
            ****
            **Stock**
            ****
            **Development**
            ****
            **Development**
            ****
            **Comprehensive**
            ****
            **Stockholders'**
            ********
            ****
            ****
            ****
            ****
            **Capital**
            ****
            **Subscribed**
            ****
            **Stage**
            ****
            **Stage**
            ****
            **Income**
            ****
            **Deficiency**Balance,
                December 31, 2002
            
            
            21,056,690
            
            $
            21,059
            
            $
            29,636,051
            
            $
            —
            
            $
            (34,634,693
            )
            $
            —
            
            $
            
            
            
            —
            
            $
            (4,977,583
            )Disposition
                of previously controlledwholly
                and majority owned subsidiaries,net
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            3,882,801
            
            
            —
            
            
            
            
            
            —
            
            
            3,882,801Net
                loss from January 1, 2003 toApril
                7, 2003
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (329,839
            )
            
            —
            
            
            
            
            
            —
            
            
            (329,839
            )Balance,
                April 7, 2003
            
            
            21,056,690
            
            
            21,059
            
            
            29,636,051
            
            
            —
            
            
            (31,081,731
            )
            
            —
            
            
            
            
            
            —
            
            
            (1,424,621
            )Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (330,321
            )
            
            
            
            
            —
            
            
            (330,321
            )Balance,
                December 31, 2003
            
            
            21,056,690
            
            
            21,059
            
            
            29,636,051
            
            
            —
            
            
            (31,081,731
            )
            
            (330,321
            )
            
            
            
            
            —
            
            
            (1,754,942
            )Sale
                of common stock
            
            
            6,500,120
            
            
            6,500
            
            
            643,514
            
            
            —
            
            
            —
            
            
            —
            
            
            
            
            
            —
            
            
            650,014Common
                stock subscribed
            
            
            —
            
            
            —
            
            
            —
            
            
            54,600
            
            
            —
            
            
            —
            
            
            
            
            
            —
            
            
            54,600Shares
                physically issued
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            
            
            
            —
            
            
            —Currency
                translation adjustment
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            
            
            
            14,383
            
            
            14,383Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (620,770
            )
            
            
            
            
            —
            
            
            (620,770
            )Balance,
                December 31, 2004
            
            
            27,556,810
            
            
            27,559
            
            
            30,279,565
            
            
            54,600
            
            
            (31,081,731
            )
            
            (951,091
            )
            
            
            
            
            14,383
            
            
            (1,656,715
            )Sale
                of common stock
            
            
            18,014,150
            
            
            18,014
            
            
            1,783,401
            
            
            —
            
            
            —
            
            
            —
            
            
            
            
            
            —
            
            
            1,801,415Warrants
                issued for services
            
            
            —
            
            
            —
            
            
            21,100
            
            
            —
            
            
            —
            
            
            —
            
            
            
            
            
            —
            
            
            21,100Shares
                physically issued
            
            
            546,000
            
            
            546
            
            
            54,054
            
            
            (54,600
            )
            
            —
            
            
            —
            
            
            
            
            
            —
            
            
            —Common
                stock subscribed
            
            
            
            
            
            
            
            
            
            
            
            131,300
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            131,300Beneficial
                conversion feature
            
            
            —
            
            
            —
            
            
            753,304
            
            
            —
            
            
            —
            
            
            —
            
            
            
            
            
            —
            
            
            753,304Reclassification
                of warrants to liabilities
            
            
            —
            
            
            —
            
            
            (4,275,966
            )
            
            —
            
            
            —
            
            
            —
            
            
            
            
            
            —
            
            
            (4,275,966
            )Currency
                translation adjustment
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            
            
            
            14,586
            
            
            14,586Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (4,743,560
            )
            
            
            
            
            —
            
            
            (4,743,560
            )Balance,
                December 31, 2005
            
            
            46,116,960
            
            $
            46,119
            
            $
            28,615,458
            
            $
            131,300
            
            $
            (31,081,731
            )
            $
            (5,694,651
            )
            $
            
            
            
            28,969
            
            $
            (7,954,536
            )




See
      accompanying notes to consolidated financial statements


F-5




**NEW
      GENERATION HOLDINGS, INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**




****
            
            ****
            **Cumulative
                Period**
            ********
            
            ****
            
            ****
            **from
                April 7, 2003**
            ********
            
            ****
            
            ****
            **(date
                of inception**
            ********
            
            ****
            
            ****
            **as
                a development**
            ********
            
            ****
            
            ****
            **stage
                enterprise) to**
            ********
            **Years
                ended December 31,**
            ****
            **December
                31,**
            ********
            **2005**
            ****
            **2004**
            ****
            **2005**Cash
                flows from operating activities:Net
                loss
            
            $
            (4,743,560
            )
            $
            (620,770
            )
            $
            (5,694,651
            )Adjustments
                to reconcile net loss to netcash
                used in operating activities:Warrants
                issued for services
            
            
            21,100
            
            
            —
            
            
            21,100Amortization
                of debt discount
            
            
            753,304
            
            
            
            
            
            753,304Change
                in value of warrant liability
            
            
            922,677
            
            
            
            
            
            922,677Depreciation
            
            
            —
            
            
            30,211
            
            
            107,790Increase
                (decrease) in liabilities:Accounts
                payable
            
            
            1,095,569
            
            
            (121,879
            )
            
            1,226,432Cash
                used in operating activities
            
            
            (1,950,910
            )
            
            (712,438
            )
            
            (2,663,348
            )Cash
                flows from financing activities:Proceeds
                from sale of common stock
            
            
            1,932,715
            
            
            704,610
            
            
            2,637,325Effect
                of exchange rate changes on cash
            
            
            14,586
            
            
            14,383
            
            
            28,969Net
                (decrease) increase in cash
            
            
            (3,609
            )
            
            6,555
            
            
            2,946Cash,
                beginning of period
            
            
            6,555
            
            
            —
            
            
            —Cash,
                end of period
            
            $
            2,946
            
            $
            6,555
            
            $
            2,946Supplemental
                Disclosure of Cash Flow Information:Cash
                paid during the period for interest
            
            $
            —
            
            
            —
            
            
            —Cash
                paid during the period for taxes
            
            $
            —
            
            
            —
            
            
            —Warrants
                issued in exchange for services
            
            $
            21,100
            
            
            —
            
            $
            21,100Non-Cash
                Financing Activities:In
                December 2005 the Company issued a convertible promissorynote
                to a stockholder in the amount of $753,304 as payment ofcertain
                amounts due to him.The
                Company has recorded a debt discount related to the beneficialconversion
                feature in the amount of $753,304 related to thenote
                described above.




See
      accompanying notes to consolidated financial statements





F-6




**NEW
      GENERATION HOLDINGS, INC.**


**(A
      Development Stage Company)**




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**DECEMBER
      31, 2005 AND 2004**





**NOTE
      A - SUMMARY OF ACCOUNTING POLICIES**





A
      summary
      of the significant accounting policies applied in the preparation of the
      accompanying consolidated financial statements follows.





**Business
      and Basis of Presentation**





New
      Generation Holdings, Inc. ( *we* ” *,
      “us”,* “ *our
      company* ”
or *“NGH”* ), was
      formed under the laws of the State of Delaware in 1999. We are a development
      stage company, as defined by Statement of Financial Accounting Standards No.
      7
      ("SFAS No. 7") , and we are currently developing, through our wholly owned
      subsidiary, a proprietary technology designed to process two or more discrete
      plastic polymers. The technology is in the final stages of testing and, when
      testing is completed, the technology will be marketed primarily in the United
      States.




To
      date,
      the Company has generated no sales revenues, has incurred expenses and has
      sustained losses. Consequently, its operations are subject to all the risks
      inherent in the establishment of a new business enterprise. For the period
      from
      entering the development stage on April 7, 2003 through December 31, 2005,
      the
      Company has accumulated losses of $5,694,651.





The
      consolidated financial statements include the accounts of NGH and our domestic
      and foreign subsidiaries that are more than 50% owned and controlled. All
      significant intercompany transactions and balances have been eliminated in
      the
      consolidated financial statement.




**Restatement**
 
 The
        accompanying balance sheet as of December 31, 2005 and the accompanying
        statement of deficiency in stockholders' equity have been restated to
        reclassify a beneficial conversion feature related to the convertible note
        described in Note I from a liability to additional paid in capital. The
        result of the restatement is to decrease liabilities by $753,304 and to increase
        additional paid-in capital by a like amount. There is no effect on net loss
        or loss per share (see Note L).


**Going
      Concern**





The
      financial statements have been prepared on a going concern basis, and do not
      reflect any adjustments related to the uncertainty surrounding our recurring
      losses or accumulated deficit





We
      have
      had substantial net losses of $4,743,560 and $620,770 for the years ended
      December 31, 2005 and 2004, respectively and have a stockholders' deficiency
      of
      $7,954,536 at December 31, 2005. These factors raise substantial doubt about
      our
      ability to continue as a going concern. The significant increase in the net
      loss
      for the year ended December 31, 2005 is the result of our expanded activities,
      primarily in the development of our technology.





The
      continuation of the company as a going concern is dependent on our ability
      to
      develop revenues and to obtain additional financing from outside sources.
      Management is also attempting to secure ongoing revenue relationships for our
      products. We are currently developing, through our wholly subsidiary, a
      proprietary technology designed to process two or more discrete plastic
      polymers. The technology is in the final stages of testing and, when testing
      is
      completed, the technology will be marketed primarily in the United
      States.





**Use
      of Estimates**





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the amounts reported in the consolidated financial statements and
      accompanying disclosures. Although these estimates are based on management's
      best knowledge of current events and actions the Company may undertake in the
      future, actual results may differ from those estimates.




F-7




**Liquidity**





As
      reflected in the accompanying consolidated financial statements, the Company
      incurred net losses of $4,743,560 and $620,770 for the years ended December
      31,
      2005 and 2004, respectively, and has an accumulated deficit of $36,776,382
      as of
      December 31, 2005. In addition, the Company's current liabilities exceeded
      its
      current assets by $2,755,893 as of December 31, 2005. Consequently, its
      operations are subject to all risks inherent in the establishment of a new
      business enterprise.




**Foreign
      Currency Translation**





The
      Company translates the foreign currency financial statements of its foreign
      subsidiaries in accordance with the requirements of Statement of Financial
      Accounting Standards No. 52, "Foreign Currency Translation." Assets and
      liabilities are translated at current exchange rates, and related revenue and
      expenses are translated at average exchange rates in effect during the period.
      Resulting translation adjustments are recorded as a separate component in
      stockholders' equity. Foreign currency translation gains and losses are included
      in the statement of income.





**Income
      Taxes**





Deferred
      income taxes are provided using the asset and liability method for financial
      reporting purposes in accordance with the provisions of Statements of Financial
      Standards No. 109, "Accounting for Income Taxes". Under this method, deferred
      tax assets and liabilities are recognized for temporary differences between
      the
      tax bases of assets and liabilities and their carrying values for financial
      reporting purposes, and for operating loss and tax credit carryforwards.
      Deferred tax assets and liabilities are measured using enacted tax rates
      expected to apply to taxable income in the years in which those temporary
      differences are expected to be removed or settled. The effect on deferred tax
      assets and liabilities of a change in tax rates is recognized in the
      consolidated statements of operations in the period that includes the enactment
      date.





**Cash
      and Cash Equivalents**





Cash
      equivalents are comprised of highly liquid investments with maturity of three
      months or less when purchased. We maintain our cash in bank deposit accounts,
      which at times, may exceed insured limits. We have not experienced any losses
      in
      such account.





**Concentrations
      of Credit Risk**





Financial
      instruments and related items, which potentially subject the Company to
      concentrations of credit risk, consist primarily of cash and cash equivalents.
      The Company places its cash and temporary cash investments with credit quality
      institutions. At times, such investments may be in excess of applicable
      government mandated insurance limits.





**Fair
      Value of Financial Instruments**





SFAS
      No.
      107, "Disclosures About Fair Value of Financial Instruments," requires
      disclosure of the fair value of certain financial instruments. The carrying
      value of cash and cash equivalents, accounts payable and short-term borrowings,
      as reflected in the balance sheets, approximate fair value because of the
      short-term maturity of these instruments.





**Product
      Development Costs**





Product
      development costs include expenses incurred by the company for research, design
      and development of the Company's proprietary technology.


F-8




**Advertising**





We
      charge
      the costs of advertising to expense as incurred. For the years ended December
      31, 2005 and 2004, we incurred no advertising costs.





**Stock
      Based Compensation**





Stock
      Based Compensation— SFAS No. 123, “Accounting for Stock-Based
      Compensation,” establishes and encourages the use of the fair value based method
      of accounting for stock-based compensation arrangements under which compensation
      cost is determined using the fair value of stock-based compensation determined
      as of the date of the grant or the date at which the performance of the services
      is completed and is recognized over the periods in which the related services
      are rendered. The statement also permits companies to elect to continue using
      the current intrinsic value accounting method specified in Accounting Principles
      Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,”
to account for stock-based compensation to employees. We have elected to use
      the
      intrinsic value based method for grants to our employees and directors and
      have
      disclosed the pro forma effect of using the fair value based method to account
      for our stock-based compensation to employees.





We
      use
      the fair value method for equity instruments granted to non-employees and use
      the Black Scholes model for measuring the fair value. The stock based fair
      value
      compensation is determined as of the date of the grant or the date at which
      the
      performance of the services is completed (measurement date) and is recognized
      over the periods in which the related services are rendered.





Pro
      Forma
      Information




Employee
      and Director Common Share Purchase Options - There were no equity instruments
      granted to employees during the years ended December 31, 2005 and 2004 and,
      therefore, pro forma financial information has not been presented.





**Reclassifications**





Certain
      reclassifications have been made in prior years' financial statements to conform
      to classifications used in the current year.





**Comprehensive
      Income**





Statement
      of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
      Income," establishes standards for reporting and displaying of comprehensive
      income, its components and accumulated balances. Comprehensive income is defined
      to include all changes in equity except those resulting from investments by
      owners and distributions to owners. Among other disclosures, SFAS 130 requires
      that all items that are required to be recognized under current accounting
      standards as components of comprehensive income be reported in a financial
      statement that is displayed with the same prominence as other financial
      statements. Comprehensive income includes gains and losses on foreign currency
      translation adjustments and is included as a component of stockholders'
      equity.





**Loss
      Per Share**





We
      use
      SFAS No. 128, “Earnings Per Share” for calculating the basic and diluted
      loss per share. We compute basic loss per share by dividing net loss and net
      loss attributable to common shareholders by the weighted average number of
      common shares outstanding. Diluted loss per share is computed similar to basic
      loss per share except that the denominator is increased to include the number
      of
      additional common shares that would have been outstanding if the potential
      shares had been issued and if the additional shares were dilutive. Common
      equivalent shares are excluded from the computation of net loss per share if
      their effect is anti-dilutive.




F-9




Per
      share
      basic and diluted net loss amounted to $0.12 for the year ended December
      31, 2005 and $0.03 for the year ended December 31, 2004. For the years
      ended December 31, 2005 and 2004, 63,838,776 potential
      shares and 10,600,120 potential shares, respectively, were excluded from
      the shares used to calculate diluted earnings per share as their inclusion
      would
      reduce net loss per share.




**Recent
      Accounting Pronouncements**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      SFAS No.153, “ *Exchanges
      of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for
      Nonmonetary Transactions* ”.
       The amendments made by Statement 153 are based on the principle that
      exchanges of nonmonetary assets should be measured based on the fair value
      of
      the assets exchanged.  Further, the amendments eliminate the narrow
      exception for nonmonetary exchanges of similar productive assets and replace
      it
      with a broader exception for exchanges of nonmonetary assets that do not have
      commercial substance.  Previously, Opinion 29 required that the
      accounting for an exchange of a productive asset for a similar productive asset
      or an equivalent interest in the same or similar productive asset should be
      based on the recorded amount of the asset relinquished.  Opinion 29
      provided an exception to its basic measurement principle (fair value) for
      exchanges of similar productive assets.  The FASB believes that exception
      required that some nonmonetary exchanges, although commercially substantive,
      be
      recorded on a carryover basis.  By focusing the exception on exchanges that
      lack commercial substance, the FASB believes this statement produces financial
      reporting that more faithfully represents the economics of the transactions.
       SFAS 153 is effective for nonmonetary asset exchanges occurring in
      fiscal periods beginning after June 15, 2005.  Earlier
      application is permitted for nonmonetary asset exchanges occurring in fiscal
      periods beginning after the date of issuance.  The provisions of
      SFAS 153 shall be applied prospectively.  We have evaluated the impact
      of the adoption of SFAS 153, and do not believe the impact will be
      significant to the company’s overall results of operations or financial
      position.





In
      December 2004, the FASB issued SFAS No.123 (revised 2004), “ *Share-Based
      Payment* ”.
       SFAS 123(R) will provide investors and other users of financial
      statements with more complete and neutral financial information by requiring
      that the compensation cost relating to share-based payment transactions be
      recognized in financial statements.  That cost will be measured based on
      the fair value of the equity or liability instruments issued.
  SFAS 123(R) covers a wide range of share-based compensation
      arrangements including share options, restricted share plans, performance-based
      awards, share appreciation rights, and employee share purchase plans.
  SFAS 123(R) replaces FASB Statement No. 123, “ *Accounting
      for Stock-Based Compensation* ”,
      and
      supersedes APB Opinion No. 25, “ *Accounting
      for Stock Issued to Employees* ”.
      SFAS 123, as originally issued in 1995, established as preferable a
      fair-value-based method of accounting for share-based payment transactions
      with
      employees.  However, that statement permitted entities the option of
      continuing to apply the guidance in Opinion 25, as long as the footnotes to
      financial statements disclosed what net income would have been had the
      preferable fair-value-based method been used.  Public entities (other than
      those filing as small business issuers) will be required to apply
      SFAS 123(R) as of the first interim or annual reporting period that begins
      after June 15, 2005. SFAS 123(R) is applicable for NGH effective
      the first interim period that starts after December 15, 2005. NGH has
      evaluated the impact of the adoption of SFAS 123(R), and believes that the
      impact may be significant to the company’s future overall results of operations
      and financial position.





In
      December 2004 the FASB issued two Staff Positions—FSP FAS 109-1, *Application
      of FASB Statement 109 “Accounting for Income Taxes” to the Tax Deduction on
      Qualified Production Activities Provided by the American Jobs Creation Act
      of 2004,* and FSP
      FAS 109-2 *Accounting
      and Disclosure Guidance for the Foreign Earnings Repatriation Provision within
      the American Jobs Creation Act of 2004.* Neither
      of these affected the Company as it does not participate in the related
      activities.




In
      January 2003, the FASB issued FASB Interpretation No. (“FIN”) 46,
“Consolidation of Variable Interest Entities” (“FIN 46”). In
      December 2003, FIN 46 was replaced by FASB interpretation
      No. 46(R) “Consolidation of Variable Interest Entities”. FIN 46(R)
      clarifies the application of Accounting Research Bulletin No. 51,
“Consolidated Financial Statements,” to certain entities in which equity
      investors do not have the characteristics of a controlling financial interest
      or
      do not have sufficient equity at risk for the entity to finance its activities
      without additional subordinated financial support from other parties.
      FIN 46(R) requires an enterprise to consolidate a variable interest entity
      if that enterprise will absorb a majority of the entity’s expected losses, is
      entitled to receive a majority of the entity’s expected residual returns, or
      both. FIN 46(R) is effective for entities being evaluated under
      FIN 46(R) for consolidation no later than the end of the first reporting
      period that ends after March 15, 2004. The Company does not currently
      have any variable interest entities that will be impacted by adoption of
      FIN 46(R).


F-10





In
      March 2005, the staff of the SEC issued Staff Accounting Bulletin
      No. 107 (“ *SAB 107* ”).
      The
      interpretations in SAB 107 express views of the staff regarding the
      interaction between SFAS 123(R) and certain SEC rules and regulations and
      provide the staff’s views regarding the valuation of share-based payment
      arrangements for public companies.  In particular SAB 107 provides
      guidance related to share-based payment transactions with nonemployees, the
      transition from public entity status, valuation methods (including assumptions
      such as expected volatility and expected term), the accounting for certain
      redeemable financial instruments issued under share-based payment arrangements,
      the classification of compensation expense, non-GAAP financial measures,
      first-time adoption of SFAS 123(R) in an interim period, capitalization of
      compensation cost related to share-based payment arrangements, the accounting
      for income tax effects of share-based payment arrangements upon adoption of
      SFAS 123(R), the modification of employee share options prior to adoption
      of SFAS 123(R) and disclosures in Management’s Discussion and Analysis
      subsequent to adoption of SFAS 123(R).





In
      May 2005, the FASB issued SFAS No. 154, “ *Accounting
      Changes and Error Corrections* ”
      (“SFAS 154”) which replaces Accounting Principles Board
      Opinions No. 20 “ *Accounting
      Changes* ”
and
      SFAS No. 3, “ *Reporting
      Accounting Changes in Interim Financial Statements-An Amendment of APB Opinion
      No. 28* ”.
       SFAS 154 provides guidance on the accounting for and reporting of
      accounting changes and error corrections.  It establishes retrospective
      application, or the latest practicable date, as the required method for
      reporting a change in accounting principle and the reporting of a correction
      of
      an error.  SFAS 154 is effective for accounting changes and
      corrections of errors made in fiscal years beginning after
      December 15, 2005 and is required to be adopted by NGH in the first
      quarter of 2006.  NGH has evaluated the effect that the adoption of
      SFAS 154 will have on its results of operations and financial condition and
      does not expect it to have a material impact.




**NOTE
      B - INTANGIBLE ASSETS**





The
      costs
      and accumulated amortization of intangible assets at December 31, 2005 and
      2004
      are summarized as follows:




Patents
                and related costs
            
            $
            517,199Accumulated
                amortization
            
            
            (517,199
            )Intangible
                assets, net
            
            $
            —




Amortization
      expense included as a charge to income amounted to $30,210 in the year ended
      December31, 2004.





**NOTE
      C -CAPITAL STOCK**





The
      Company is authorized to issue 50,000,000 shares of common stock with a par
      value of $.001 per share. As of December 31, 2005 the Company has issued and
      outstanding 46,116,960 shares of common stock. The Company is also authorized
      to
      issue 1,000,000 shares of preferred stock with a par value of $.001 per share.
      There were no preferred shares outstanding at December 31, 2005 or
      2004.





During
      the year ended December 31, 2005 we sold 19,873 150 shares of common stock
      for
      proceeds of $1,987,315. In addition to the shares, we issued 16,748,150 common
      share purchase warrants, exercisable at $0.35 per share for a period of two
      years.





During
      2005 we issued 200,000 common stock purchase warrants for services. The warrants
      are exercisable immediately at an exercise price of $0.25 per share and expire
      if unexercised in three years. The warrants have been valued at $21,100 using
      the Black-Sholes option pricing model with the following assumptions:
      (1) dividend yield of 0%; (2) expected volatility of 60%,
      (3) risk-free interest rate of 3%, and (4) expected life
      of 3 years.





During
      the year ended December 31, 2004 we sold 6,500,120 shares of common stock for
      proceeds of $650,012. In addition to the shares, we issued 6,500,120 common
      share purchase warrants, exercisable at $0.35 per share for a period of two
      years.





Since
      we
      do not have sufficient authorized shares to enable the exercise of our
      outstanding common stock purchase warrants, we have reclassified the fair value
      of the warrants as a liability on the balance sheet at December 31, 2005 (See
      Note J).


F-11




**NOTE
      D- WARRANTS AND STOCK OPTIONS**





**Employee
      Stock Options**





Transactions
      involving stock options issued to employees are summarized as
      follows:





**2005**
            ****
            **2004**
            ********
            **Number**
            ****
            **Weighted
                Average Exercise Price**
            ****
            **Number**
            ****
            **Weighted
                Average Exercise Price**Outstanding
                at beginning of the period
            
            
            4,100,000
            
            $
            1.33
            
            
            4,100,000
            
            $
            1.33Granted
                during the period
            
            
            —
            
            
            —
            
            
            —
            
            
            —Exercised
                during the period
            
            
            —
            
            
            —
            
            
            —
            
            
            —Terminated
                during the period
            
            
            (400,000
            )
            
            1.75
            
            
            —
            
            
            —Outstanding
                at end of the period
            
            
            3,700,000
            
            $
            1.29
            
            
            4,100,000
            
            $
            1.33Exercisable
                at end of the period
            
            
            3,700,000
            
            $
            1.29
            
            
            4,100,000
            
            $
            1.33




**Warrants**





Transactions
      involving the Company's warrant issuance are summarized as follows:





**2005**
            ****
            **2004**
            ********
            **Number**
            ****
            **Weighted
                Average Exercise Price**
            ****
            **Number**
            ****
            **Weighted
                Average Exercise Price**Outstanding
                at beginning of the period
            
            
            6,500,120
            
            $
            0.35
            
            
            3,308,217
            
            $
            6.00Granted
                during the period
            
            
            16,948,150
            
            
            0.35
            
            
            6,500,120
            
            
            0.35Exercised
                during the period
            
            
            —
            
            
            —
            
            
            —
            
            
            —Terminated
                during the period
            
            
            —
            
            
            —
            
            
            (3,308,217
            )
            
            6.00Outstanding
                at end of the period
            
            
            23,448,270
            
            
            0.35
            
            
            6,500,120
            
            $
            0.35Exercisable
                at end of the period
            
            
            23,448,270
            
            
            0.35
            
            
            6,500,120
            
            $
            0.35





Since
      we
      do not have sufficient authorized shares to enable the exercise of our
      outstanding common stock purchase options and warrants, we have reclassified
      the
      fair value of the options and warrants as a liability on the balance sheet
      at
      December 31, 2005 (See Note J).


F-12


The
      number and weighted average exercise prices of options and warrants outstanding
      as of December 31, 2005 is as follows:





**Range
                of Exercise Prices**
            ****
            **Remaining**
              **Number**
              **Outstanding**
            ****
            **Weighted
                Average**
              **Contractual
                Life**
              **(Years)**
            ****
            **Weighted
                Average**
              **Exercise
                Price**$0.25
            
            
            200,000
            
            
            
            
            
            2.3
            
            $
            0.25$0.35
            
            
            23,248,270
            
            
            
            
            
            2.5
            
            $
            0.35$1
                - $2
            
            
            3,650,000
            
            
            
            
            
            1.2
            
            $
            1.19$7
                - $10
            
            
            50,000
            
            
            
            
            
            1.2
            
            $
            8.50




**NOTE
      E - INCOME TAXES**





The
      Company has adopted Financial Accounting Standard No. 109 which requires the
      recognition of deferred tax liabilities and assets for the expected future
      tax
      consequences of events that have been included in the financial statement or
      tax
      returns. Under this method, deferred tax liabilities and assets are determined
      based on the difference between financial statements and tax bases of assets
      and
      liabilities using enacted tax rates in effect for the year in which the
      differences are expected to reverse. Temporary differences between taxable
      income reported for financial reporting purposes and income tax purposes are
      insignificant.





For
      income tax reporting purposes, the Company's aggregate unused net operating
      losses approximate $5,100,000 which expire through 2025, subject to limitations
      of Section 382 of the Internal Revenue Code, as amended. The deferred tax asset
      related to the carryforward is approximately $1,785,000. The Company has
      provided a valuation reserve against the full amount of the net operating loss
      benefit, because in the opinion of management based upon the earning history
      of
      the Company, it is more likely than not that the benefits will not be
      realized.





Components
      of deferred tax assets as of December 31, 2005 are as follows:





Non
                Current:Net
                operating loss carryforward
            
            $
            1,785,000Valuation
                allowance
            
            
            (1,785,000
            )Net
                deferred tax asset
            
            $
            —





**NOTE
      F - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**





Accounts
      payable and accrued liabilities at December 31, 2005 are as
      follows:


**2005**Accounts
                payable
            
            $
            241,421Accrued
                expenses
            
            
            1,764,114Total
            
            $
            2,005,535





Included
      in accrued expenses is an unsecured loan in the principal amount of $200,000
      due
      the President of the Company (see Note J).




F-13


**NOTE
      G - CONTINGENCIES AND COMMITMENTS**





**Litigation**




In
      December 2001, a former Director of Minerva filed a complaint against Minerva
      in
      Belgium. The complaint alleges a breach of employment contract and reimbursement
      of certain expenses. In 2001, the Company recorded a pre-tax charge of $77,000
      to reserve for this claim and other related costs. At December 31, 2005, the
      remaining liability for this obligation was $77,000 and has been was classified
      as an accrued expense in the consolidated balance sheet. Although we have
      recorded the potential liability in our financial statements, we consider the
      likelihood of an adverse
      outcome to be remote.





In
      November 2001, Minerva filed a criminal complaint against the same former
      director mentioned in the prior paragraph for use of forgery, attempt of fraud,
      misuse of trust, and misuse of company's assets. The case is pending preliminary
      investigation by the Court.





The
      Company may become subject to other legal proceedings and claims, which arise
      in
      the ordinary course of its business. Although occasional adverse decisions
      or
      settlements may occur, the Company believes that the final disposition of such
      matters should not have a material adverse effect on its financial position,
      results of operations or liquidity. We are a defendant in certain actions
      brought by certain of our creditors which we have accrued as liabilities in
      our
      financial statements. Except for such actions, as of December 31, 2005, we
      are
      not a party to any legal proceedings or claims.





**NOTE
      H - RELATED PARTY TRANSACTIONS**





During
      the year ended December 31, 2002 the Company's President advanced funds to
      the
      Company for working capital purposes in the form of a non-interest bearing
      unsecured promissory note payable on demand. The net amount of the advances
      due
      the Company's President at December 31, 2004 is $200,000 and is included in
      accrued expenses (see Note H).





**NOTE
      I- CONVERTIBLE NOTE PAYABLE TO RELATED PARTY**





The
      Company entered into a Debt Exchange Agreement with its president and chief
      executive officer, Jacques Mot and its wholly owned subsidiary New Generation
      Plastic, Inc. dated as of the December 7, 2005. Pursuant to the Debt Exchange
      Agreement, we issued Mr. Mot a Convertible Promissory Note in the original
      principal amount of $753,304 representing outstanding amounts owed to him under
      his Consulting Agreement through December 31, 2004. The Convertible Promissory
      Note bears interest at a rate of 10% per annum, is payable on demand and is
      convertible at the option of Mr. Mot into shares of our Preferred Stock, or
      into
      shares of NGP Preferred Stock, subject to stockholder approval of the "spinoff"
      of NGP. The conversion rate under the note is $1.507 per share of Preferred
      Stock (whether NGH or NGP) and each share of Preferred Stock is convertible
      into
      73 shares of Common Stock subject to adjustment for stock splits, stock
      dividends or similar transactions. Accordingly, if Mr. Mot converts the entire
      amount outstanding under the Convertible Promissory Note as of the date of
      issuance into shares of NGH Preferred Stock, he would own 37,690,506 shares
      of
      Common Stock (including the 100,000 shares and currently exercisable options
      to
      purchase 1,100,000 shares he owned prior to the issuance of the Convertible
      Promissory Note) representing approximately 34% of the Company on a fully
      diluted basis or approximately 45% of the Company assuming exercise of Mr.
      Mot's
      options, but excluding options and/or warrants held by all other stockholders.
      Similarly, if our stockholders approve the "spinoff" of NGP and Mr. Mot elects
      to convert the entire amount outstanding under the Convertible Promissory Note
      into NGP Preferred Stock, he would own 37,690,506 shares of NGP Common Stock
      representing approximately 34% on fully diluted basis or approximately 45%
      assuming exercise of Mr. Mot's options, but excluding options and/or warrants
      held by all other stockholders.





As
      the
      note is convertible at a discount to market at the date of issue, the Company
      has determined that there is a beneficial conversion feature associated with
      the
      debt in the amount of $753,304. The note is accounted for as convertible debt
      in
      the accompanying consolidated balance sheet and the embedded conversion option
      has not been accounted for as a separate derivative. Since the note is due
      upon
      demand this amount has been charged to interest expense as of the date issued.




F-14


**NOTE
      J - WARRANT AND DERIVATIVE LIABILITIES**




As
      disclosed in Note C, we do not have sufficient authorized common shares
      available to enable the exercise of outstanding options and warrants. Any
      increase in authorized shares is subject to shareholder approval. Accordingly,
      the Company can not be assured that there will be adequate authorized shares
      to
      settle all contractual obligations under the option and warrant agreements
      outstanding.




Accordingly,
      in accordance with the provisions of EITF 00-19, "Accounting for Derivative
      Financial Instruments Indexed to and Potentially Settled in a Company's Own
      Stock" the Company has reviewed all instruments previously recorded as permanent
      equity under EITF 00-19. As of August 30, 2005, the initial date on which we
      had
      insufficient shares to settle all contractual obligations under option and
      warrant agreements outstanding, a $735,200 fair value of instruments previously
      recorded as permanent equity was recorded as a liability based upon fair values
      computed under a Black Scholes model with the following assumptions:
      (1) dividend yield of 0% (2) expected volatility of 146%
      (3) risk-free interest rate of 4% and (4) expected life and exercise
      prices consistent with each individual instrument.




Additionally,
      during October through December 2005, the $1,770,382 fair value of
      instruments previously recorded as permanent equity was recorded as a liability
      based upon fair values computed under a Black Scholes model with the following
      assumptions: (1) dividend yield of 0% (2) expected volatility of 146%
      (3) risk-free interest rate of 4.4% and (4) expected life and exercise
      prices consistent with each individual instrument. The fair values of new
      instruments issued during this period have been classified as liabilities as
      of
      the date of issue. This amount aggregated $1,770,383 computed under a Black
      Scholes model with the following assumptions: (1) dividend yield of 0%
      (2) expected volatility of 146% (3) risk-free interest rate of 4.4%
      and (4) expected life and exercise prices consistent with each individual
      instrument.




At
      December 31, 2005 the fair value of each instrument was again computed
      under a Black Scholes model with the following assumptions: (1) dividend
      yield of 0% (2) expected volatility of 146% (3) risk-free interest
      rate of approximately 4% and (4) expected life and exercise prices
      consistent with each individual instrument. These calculations resulted in
      an
      aggregate value of derivative instruments of approximately $5,199,000. As a
      result, for the year ended December 31, 2005 the Company recorded
      approximately $923,000 as a charge to Change in value of Warrant
      Liability.





**NOTE
      K - SUBSEQUENT EVENTS**





Subsequent
      to the date of the financial statements, the Company issued 1,328,000 shares
      of
      common stock and warrants to purchase an additional 1,328,000 shares of
      common stock in exchange for $132,800 in connection with a private placement
      of
      its restricted common stock and warrants under Regulation S.




**NOTE
        L - RESTATEMENT OF FINANCIAL STATEMENTS**
 
 The
        Company has restated its financial statements for the year ended December
        31,
        2005 to correct the following error in the financial statements previously
        filed:
 
 ·
              The
                  Company erroneously recorded the beneficial conversion feature
                  embedded in
                  the Convertible Note described in Note I as a liability as of the
                  date of
                  issuance instead of equity.
 
 The
        net
        effect of the correction of this error was to:
 
 ·
              Decrease
                  liabilities by $753,304 and to increase additional paid in capital
                  by a
                  like amount as of December 31,
                  2005.
 
 The
        correction of the error has resulted in no change in the Company’s reported
        Consolidated Statement of Losses and Comprehensives Losses or Consolidated
        Statement of Cash Flows for the year ended December 31, 2005.
 
 However,
        the restatement did affect the individual components of the Company’s Balance
        Sheet as reported on its Consolidated Balance Sheet as of December 31,
        2005.
 
 Following
        are reconciliations of the Company’s restatement of the Consolidated Balance
        Sheet as of December 31, 2005.
 
 December
                  31, 2005(As
                  Restated)
              
              (As
                  Reported)AssetsCash
              
              $
              2,946
              
              $
              2,946Liabilities
                  and Deficiency in Stockholders’ EquityAccounts
                  payable and accrued expenses
              
              
              2,005,535
              
              
              2,005,535Convertible
                  Note Payable- Stockholder
              
              
              753,304
              
              
              753,304Current
                  liabilities
              
              
              2,758,839
              
              
              2,758,839Embedded
                  conversion liability
              
              
              —
              
              
              753,304Warrant
                  derivatives
              
              
              5,198,643
              
              
              5,198,643Preferred
                  stock
              
              
              —
              
              
              —Common
                  stock
              
              
              46,119
              
              
              46,119Additional
                  Paid in Capital
              
              
              28,615,458
              
              
              27,862,154Stock
                  subscriptions
              
              
              131,300
              
              
              131,300Other
                  Comprehensive Income
              
              
              28,969
              
              
              28,969Accumulated
                  deficit prior to development stage
              
              
              (31,081,731
              )
              
              (31,081,731
              )Deficit
                  accumulated during the development stage
              
              
              (5,694,651
              )
              
              (5,694,651
              )Total
                  deficiency in stockholders equity
              
              
              (7,954,536
              )
              
              (8,707,840
              )$
              2,946
              
              $
              2,946




F-15