**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
 
 
 **FORM
        10-KSB**
 
 
 x**ANNUAL
        REPORT UNDER
        SECTION 13 OR 15(d) OF THE**
 **SECURITIES
        EXCHANGE ACT OF 1934**
 
 For
        the
        year ended December 31, 2004
 
 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:**
  Name
                  of each exchange onTitle
                  of each class
              
              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. o Yes x 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, 2004 were $0.
 
 As
        of
        December 31, 2004 the issuer had 27,556,810 shares
        of
        Common Stock, par value $.001 per share, outstanding. The aggregate value
        of the
        common stock of the Company held by non-affiliates as of December 31, 2004
        was
        $3,595,800. As of November 23,
        2005,
        the issuer had 46,116,960 shares of Common Stock, par value $.001 per share,
        outstanding.
 
 **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.
 
 **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. Our independent auditors
        recently completed audits for the years ended December 31, 2002, December
        31,
        2003 and December 31, 2004. We intend to file our quarterly reports for the
        periods ended March 31, 2005, June 30, 2005 and September 30, 2005, in the
        near
        future at which point we will be current in our public filings. We then 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 "New Generation
        Plastic Business" below).
  -2-
 
 We
        had
        hoped to build shareholder value through the operation of two (2) 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,
        the Company suspended all of its business operations due to a lack of liquidity
        and accordingly failed to timely file its annual report on Form 10-KSB for
        the
        year ended December 31, 2002 and all subsequent quarterly and annual reports.
        The Company has since raised limited funds and filed it's annual reports
        for the
        years ended December 31, 2002 and December 31, 2003 and all of its quarterly
        reports through and including the period ended September 30, 2004. As discussed
        above, the Company anticipates filing its remaining delinquent filings in
        the
        near future at which point the Company will be current in its filings. The
        Company's business operations remain dormant; however, the Company has been
        able
        to raise limited funds for the purposes of filing all delinquent public filings
        and attempting to commercialize the Company's plastic technology through
        one or
        more joint ventures or by raising additional capital.
 
 **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.
 
 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.
 
 Once
        we
        are current in our public filings, we intend to seek stockholder approval
        for
        the "spinoff" of NGP to our stockholders. As currently contemplated, each
        of our
        stockholders would receive one share of NGP Common Stock, par value, $.0001
        for
        each share of NGH 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**
 
 Prior
        to
        2002, NGP had been engaged in internal and external research and development
        efforts aimed at bringing our technology to a commercially viable stage.
        In
        2002, due to our lack of liquidity, all research and development was terminated.
        We did not engage in any research and development in 2003 or 2004.
  -3-
 
 **NUMBER
        OF EMPLOYEES**
 
 As
        of
        December 31, 2004 we had no employees. As of January 1, 2005, the Company
        is
        employing Jacques Mot as its Chief Executive Officer and Patrick Sulzer as
        its
        Chief Operating Officer. Mr. Mot previously was a consultant to the Company.
 
 **DISCONTINUED
        BUSINESS**
 
 As
        of
        December 31, 2002, we had significantly curtailed our operations in our computer
        business due to continuing losses and a lack of liquidity and our plastic
        business continued to be dormant. In the first quarter of 2003 our computer
        operations ceased with the involuntary liquidation of Minerva Softcare under
        the
        bankruptcy laws of Belgium.
 
 **DEPENDENCE
        ON KEY CUSTOMERS; MAJOR SUPPLIERS**
 
 The
        Company is dormant and is therefore not dependent on any customer or supplier.
 
 **COST
        OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS**
 
 The
        Company currently has no costs associated with compliance with environmental
        regulations as its operations are dormant. 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**
 
 As
        of
        December 31, 2004, the Company did not own or lease any property.
 
 **ITEM
        3. LEGAL PROCEEDINGS.**
 
 In
        the
        ordinary course of business, we may be involved in legal proceedings from
        time
        to time. Although occasional adverse decisions or settlements may occur,
        we
        believe that the final disposition of such matters will not have material
        adverse effect on our financial position, results of operations or liquidity.
        We
        will seek to minimize disputes but recognize the inevitability of legal action
        in today’s business environment as an unfortunate price of conducting
        business.
 
 **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.
        Our independent auditors recently completed audits for the years ended December
        31, 2002, December 31, 2003 and December 31, 2004. Upon filing of this Form
        10-KSB, and our quarterly reports for the year 2005, we will be current in
        our
        public filings and we intend to timely file our annual report for the year
        ended
        December 31, 2005. 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, 2003 through December 31, 2004. These quotations reflect
        inter-dealer prices, without retail mark-up, markdown or commission, and
        may not
        necessarily represent actual transactions.
  -4-
 
 High
              
              Low4th
                  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
              
              $
              0.014th
                  Quarter 2003, ended 12/31/03
              
              $
              0.08
              
              $
              0.013rd
                  Quarter 2003, ended 9/30/03
              
              $
              0.01
              
              $
              0.000132nd
                  Quarter 2003, ended 6/30/03
              
              $
              0.25
              
              $
              0.011st
                  Quarter 2003, ended 3/31/03
              
              $
              0.05
              
              $
              0.01
 
 **DIVIDEND
        POLICY**
 
 No
        dividends have been paid by the Company since its 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 158 stockholders of record of the Company's common stock as of December
        31,
        2004.
 
 **RECENT
        SALES OF UNREGISTERED SECURITIES**
 
 (a)
                (i)
                    During the year ended December 31, 2004, the Company sold a total
                    of
                    6,500,120 shares of its common stock and warrants to purchase
                    an
                    additional 6,500,120 shares of its 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, the Company received a total of approximately
                    $704,610
                    giving effect to exchange rates.
 
 (ii)
                  On March 31, 2005, we issued to WBEMS 2005, LLC a Warrant to purchase
                  200,000 shares of our common stock exercisable for a period of
                  three years
                  at an exercise price of $0.25 per share in reliance upon the exemption
                  provided by Section 4(2) of the Securities Act. WBEMS 2005, LLC
                  is 100%
                  owned by the principals of our outside legal counsel, Westerman
                  Ball
                  Ederer Miller & Sharfstein, LLP (“WBEMS”), and the warrant were issued
                  (the approximate fair market value) as additional compensation
                  for legal
                  services rendered. WBEMS and/or its affiliates own 130,000 shares
                  in
                  addition to the warrant.
 
 (b)
              None.
   -5-
  (c)
                The
                    following table provides information about purchases by us and
                    our
                    affiliated purchasers during the year ended December 31, 2004
                    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)10/01/04-10/31/04
              
              
              0
              
              $
              0
              
              
              0
              
              
              011/01/04-11/30/04
              
              
              0
              
              $
              0
              
              
              0
              
              
              012/01/04-12/30/04
              
              
              0
              
              $
              0
              
              
              0
              
              
              0
 
 **ITEM
        6. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF
        OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003**
 
 **MANAGEMENT'S
        DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.**
 
 Statements
        included in this Management's Discussion and Analysis of Financial Condition
        and
        Results 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.
 
 **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:
 
 o
              Business
                  Combinations
 
 o
              Goodwill
                  and intangible asset impairment
  o
              Stock-based
                  compensation.
  -6-
 
 **BUSINESS
        COMBINATIONS**
 
 The
        Financial Accounting Standards Board (FASB) issued Statement of Financial
        Accounting Standards ("SFAS") No. 141, Business Combinations, which established
        accounting and reporting standards for business combinations and requires
        that
        all business combinations be accounted for by the purchase method. Under
        the
        purchase method of accounting, the cost, including transaction costs, is
        allocated to the underlying net assets, based on their respective estimated
        fair
        values. The excess of the purchase price over the estimated fair values of
        the
        net assets acquired is recorded as goodwill.
 
 The
        judgments made in determining the estimated fair values and expected useful
        lives assigned to each class of assets and liabilities acquired can
        significantly impact net income. For example, different classes of assets
        will
        have useful lives that differ. Consequently, to the extent a longer-lived
        asset
        is ascribed greater value under the purchase method than a shorter-lived
        asset,
        there may be less amortization recorded in a given period.
 
 Determining
        the fair value of certain assets and liabilities acquired is subjective in
        nature and often involves the use of significant estimates and assumptions.
        We
        use a one-year period following the consummation of acquisitions to finalize
        estimates of the fair values of assets and liabilities acquired. Two areas,
        in
        particular, that require significant judgment are estimating the fair values
        and
        related useful lives of identifiable intangible assets. While there are a
        number
        of different methods used in estimating the value of acquired intangibles,
        there
        are two approaches primarily used: the discounted cash flow and market
        comparison approaches. Some of the more significant estimates and assumptions
        inherent in the two approaches include: projected future cash flows (including
        timing); discount rate reflecting the risk inherent in the future cash flows;
        perpetual growth rate; determination of appropriate market
 
 comparables;
        and the determination of whether a premium or a discount should be applied
        to
        comparables. Most of the foregoing assumptions are made based on available
        historical information.
 
 **GOODWILL
        AND INTANGIBLE ASSET IMPAIRMENT**
 
 We
        adopted Statement of Financial Accounting Standards No. 142-Goodwill and
        Other
        Intangible Assets (SFAS 142) during the quarter ended June 30, 2002. Under
        SFAS
        142, goodwill and other intangible assets with indefinite useful lives are
        no
        longer amortized, but are tested for impairment on an annual basis and between
        annual tests if an event occurs or circumstances change that would more likely
        than not reduce the fair value of the asset below its carrying value amount.
        Events or circumstances which could trigger an impairment review include
        a
        significant adverse change in the business climate, an adverse action or
        assessment by a regulator, unanticipated competition, a loss of key personnel,
        significant changes in the manner of our use of the acquired assets or the
        strategy for our overall business, or significant negative industry or economic
        trends.
 
 Our
        principal consideration in determining impairment includes the strategic
        benefit
        to the Company of the particular assets as measured by undiscounted current
        and
        future operating income of the specified group of assets and expected
        undiscounted cash flows. Should impairment be identified, a loss would be
        reported to the extent that the carrying value of the asset exceeds the fair
        value as determined by discounted future cash flows.
 
 Upon
        adoption of FAS 142 in the second quarter of 2002, the Company recorded a
        one-time, non- cash charge of approximately $15 million to reduce the carrying
        value of its goodwill. Such charge is non-operational in nature and is reflected
        as a cumulative effect of an accounting change in the accompanying consolidated
        statement of operations. In calculating the impairment charge, the fair value
        of
        the impaired reporting unit was estimated at the fair value of assets underlying
        the business, thereby eliminating the goodwill element entirely.
 
 Purchased
        intangible assets are carried at cost less accumulated amortization.
        Amortization is computed over the estimated useful lives of the respective
        assets, generally two to five years.
  -7-
 
 
 **MANAGEMENT'S
        PLAN OF OPERATION**
 
 **General**
 
 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.
 
 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. Therefore NGH decided to focus
        on
        developing industrial and personal relationships with alternative finance
        strategies.
 
 Minerva.
        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 a maximum, 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.
 
 **NGP
        and the NGP Process (TM)**
 
 The
        company owns and develops 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.
 
 The
        company's 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).
 
 The
        Company believes its 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.
  -8-
 
 **RESULTS
        OF OPERATIONS**
 
 **YEAR
        ENDED DECEMBER 31, 2004 COMPARED TO THE YEAR ENDED DECEMBER 31, 2003**
 
 **CONTINUING
        OPERATIONS**
 
 Operating
        losses from continuing operations increased from $439,381 in 2003 to $ 620,770
        in 2004. The increase of $181,389 was a result of an increase of $254,619
        in
        general and administrative expenses from $335,941 in 2003 to $590,560 in
        2004,
        which reflected increased expenses as management attempted to raise additional
        funds to enable the Company to make its delinquent public filings and attempt
        to
        revive the business operations of it's plastic subsidiary. Depreciation and
        amortization expenses decreased from $103,440 in 2003 to $30,210 in 2004,
        a
        reduction of $73,230. This decrease was a result of the Company adopting
        SFAS
        142 Goodwill and Other Intangible Assets in 2002.
 
 **DISCONTINUED
        OPERATIONS**
 
 On
        December 10, 2002, we decided to discontinue operations of the Minerva Group
        of
        companies, our principal operating wholly owned subsidiaries and classified
        their operating results as discontinued operations. On March 4, 2003, the
        Minerva Group of companies was forced into receivership in Brussels, Belgium.
        For the years ended December 31, 2004 and 2003, the Company's results from
        the
        discontinued operations were as follows:
 
 2004
              
              2003Revenues
              
              $
              –
              
              $
              129,059Net
                  Loss
              
              $
              –
              
              $
              (220,799
              )
 From
        its
        acquisition, the Minerva Group was not profitable.
  **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 As
        of
        December 31, 2004, we had a deficiency in working capital of $1,656,715.
        For the
        year ended December 31, 2004, we generated a net cash flow deficit from
        operating activities of $698,055 consisting primarily of comprehensive losses
        of
        $606,387, adjusted for a net change in liabilities of $121,879 and depreciation
        and amortization expense of $30,210. By adjusting our operations and development
        to the level of capitalization, we believe we have sufficient capital resources
        to meet projected cash flow deficits. However, if during that period or
        thereafter, we are not successful in generating sufficient liquidity from
        operations or in raising sufficient capital resources, on terms acceptable
        to
        us, this could 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 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, 2004, we raised $704,610 in exchange for the
        issuance of 6,500,120 shares of common stock (and warrants to purchase an
        additional 6,500,120 shares of common stock at a purchase price of $0.35
        per
        share) in a Regulation S offering to foreign investors that commenced in
        April
        of 2004. Subsequent to December 31, 2004, we raised an additional $1,856,015
        approximately, giving effect to exchange rates, in exchange for the issuance
        of
        18,560,150 shares of Common Stock (and warrants to purchase an additional
        15,435,150 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.
  -9-
 
 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 financing 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.
 
 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, 2004, we had no employees. As of January 1, 2005, Jacques Mot,
        our
        Chief Executive Officer and Patrick Sulzer, our Chief Operating Officer are
        our
        only employees. 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, 2004, the Company recognized no revenues from
        continuing operations, and accordingly had no relationships with customers
        from
        continuing operations.
 
 **RECENT
        ACCOUNTING PRONOUNCEMENTS**
 
 **SFAS
          123R** .
          On
          March 31, 2004 the Financial Accounting Standards Board (“FASB”) issued its
          exposure draft, “Share-Based Payments”, which is a proposed amendment to SFAS
          123. The exposure draft would require all share-based payments to employees,
          including grants of employee stock options and purchases under employee
          stock
          purchase plans, to be recognized in the statement of operations based on
          their
          fair value. The FASB issued the final standard in December 2004 that is
          effective for public companies for interim and annual periods beginning
          after
          June 15, 2005. The Company has not yet assessed the impact of adopting
          this new
          standard.
 
 **FAS
          129-1** .
          In
          April 2004, the FASB issued FASB Staff Position (FSP) 129-1, “Disclosure
          Requirements under SFAS 129, “ *Disclosure
          of Information about Capital Structure* ,”
          Relating to Contingently Convertible Securities.” The FSP interprets how the
          disclosure provisions of SFAS 129 apply to contingently convertible securities
          and their potentially dilutive effect on earnings per share. The Company
          is in a
          loss position for the three and nine months ended October 2, 2004, therefore,
          adoption of this FSP did
          not
          have a material effect on the Company’s financial position, results of
          operations, or cash flows.
 
 **EITF
          04-08** .
          In
          September 2004, the Emerging Issues Task Force issued EITF 04-08 "The Effect
          of
          Contingently Convertible Debt on Diluted Earnings Per Share." EITF 04-08
          requires companies to include in diluted earnings per share, on the if-converted
          method, any shares of our common stock into which debt of the Company may
          be
          converted, regardless of whether the conversion threshold has been met.
          The
          Company adopted this standard as of September 2004. The Company has reported
          per
          share losses for all periods contained in this report. Since inclusion
          of
          additional shares would be anti-dilutive, no change to the Company’s historical
          results is required, therefore, adoption of this EITF did not have a material
          effect on the Company’s financial position, results of operations, or cash
          flows.
 -10-
 
 **SFAS
          151.** In
          November 2004, the Financial Accounting Standards Board (FASB) issued
          SFAS 151, Inventory Costs— an amendment of ARB No. 43, Chapter 4. This
          Statement amends the guidance in ARB No. 43, Chapter 4, “Inventory
          Pricing,” to clarify the accounting for abnormal amounts of idle facility
          expense, freight, handling costs, and wasted material (spoilage).
          Paragraph 5 of ARB 43, Chapter 4, previously stated that
“. . . under
          some circumstances, items such as idle facility expense, excessive spoilage,
          double freight, and rehandling costs may be so abnormal as to require treatment
          as current period charges. . . .” This Statement requires that those items be
          recognized as current-period charges regardless of whether they meet the
          criterion of “so abnormal.” In addition, this Statement requires that allocation
          of fixed production overheads to the costs of conversion be based on the
          normal
          capacity of the production facilities. This Statement is effective for
          inventory
          costs incurred during fiscal years beginning after June 15, 2005. The
          Company does not anticipate that the implementation of this standard will
          have a
          material impact on its financial position, results of operations or cash
          flows.
  **SFAS
          152.** In
          December 2004, the FASB issued SFAS No.152, “Accounting for Real Estate
          Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67” (“SFAS
          152) The amendments made by Statement 152 This Statement amends FASB Statement
          No. 66, Accounting for Sales of Real Estate, to reference the financial
          accounting and reporting guidance for real estate time-sharing transactions
          that
          is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
          Estate Time-Sharing Transactions. This Statement also amends FASB Statement
          No.
          67, Accounting for Costs and Initial Rental Operations of Real Estate Projects,
          to state that the guidance for (a) incidental operations and (b) costs
          incurred
          to sell real estate projects does not apply to real estate time-sharing
          transactions. The accounting for those operations and costs is subject
          to the
          guidance in SOP 04-2. This Statement is effective for financial statements
          for
          fiscal years beginning after June 15, 2005. with earlier application encouraged.
          The Company does not anticipate that the implementation of this standard
          will
          have a material impact on its financial position, results of operations
          or cash
          flows.
  **SFAS
          123R.** On
          December 16, 2004, the Financial Accounting Standards Board (“FASB”)
          published Statement of Financial Accounting Standards No. 123 (Revised
          2004), Share-Based Payment (“SFAS 123R”). SFAS 123R requires that compensation
          cost related to share-based payment transactions be recognized in the financial
          statements. Share-based payment transactions within the scope of SFAS 123R
          include stock options, restricted stock plans, performance-based awards,
          stock
          appreciation rights, and employee share purchase plans. The provisions
          of SFAS
          123R are effective as of the first interim period that begins after
          June 15, 2005. Accordingly, the Company will implement the revised
          standard
          in the third quarter of fiscal year 2005. Currently, the Company accounts
          for
          its share-based payment transactions under the provisions of APB 25, which
          does
          not necessarily require the recognition of compensation cost in the financial
          statements. The Company does not anticipate that the implementation of
          this
          standard will have a material impact on its financial position, results
          of
          operations or cash flows **.**
  **SFAS
          153.** On
          December 16, 2004, FASB issued Statement of Financial Accounting
          Standards
          No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion
          No. 29, Accounting for Nonmonetary Transactions (“ SFAS 153”). This
          statement amends APB Opinion 29 to eliminate the exception for nonmonetary
          exchanges of similar productive assets and replaces it with a general exception
          for exchanges of nonmonetary assets that do not have commercial substance.
          Under SFAS
          153,
          if a nonmonetary exchange of similar productive assets meets a
          commercial-substance criterion and fair value is determinable, the transaction
          must be accounted for at fair value resulting in recognition of any gain
          or
          loss. SFAS
          153
          is effective for nonmonetary transactions in fiscal periods that begin
          after
          June 15, 2005. The Company does not anticipate that the implementation
          of
          this standard will have a material impact on its financial position, results
          of
          operations or cash flows.
 **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.
  -11-
 
 **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
        only employee. If we lost the services of Mr. Mot before we could get qualified
        replacements, that loss could materially adversely affect our business. We
        do
        not maintain key man life insurance on any Mr. Mot.
 
 **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.
 
 **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
        foreign currencies. 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, 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.
 
 As
        discussed by our accountants in the audited financial statements included
        in
        Item 7 of our Annual Report on Form 10-KSB, our revenue is currently
        insufficient to cover its costs and expenses. The management anticipates
        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**
 
 Processing
        of plastic polymers
 
 During
        the second quarter of 2004 we have been able to reactivate the NGP BT 30
        machine, which had been in storage since mid 2002, due to lack of operating
        capital. Since then, an engineer has been retained on a consulting basis
        in
        order to operate the machinery and develop further testing for clients within
        the plastic industry. NGP is executing several research programs for various
        industry leaders and government agencies. 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 NGP 350KG first commercially
        viable machine and plant.
  -14-
 
 Corporate
        Restructure Recapitalization and Reorganization of Company
  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.
 
 Minerva
        Group Companies Bankruptcies
 
 As
        far as
        Minerva is concerned, significant efforts were made during 2002 in order
        to
        close a distribution agreement with IBM and others. Unfortunately this never
        occurred, as IBM acquired a major competitor to Minerva's product, Rational
        Corporation, and the existing pipeline at Minerva didn't come through due
        to the
        world-wide economic slowdown.
 
 In
        an
        attempt to salvage its investment in Minerva, the Company entered into a
        Master
        License Agreement ("License Agreement") with Ikan Finanz AG ("Ikan"), a company
        formed under the laws of the country of Switzerland, in December 2002. Ikan
        also
        acquired most of Minerva' personnel.
 
 The
        license granted to Ikan the exclusive use of certain proprietary intellectual
        property owned and developed by Minerva, in exchange for the acquisition
        of
        certain assets (consisting primarily of office and computer equipment and
        peripherals), assumption of certain trade debts, and continued employment
        of
        most Minerva personnel, in exchange for stipulated royalty payments based
        upon
        sales of the Minerva licensed product.
 
 Unfortunately
        Ikan did not sell any Minerva licensed products and produce any royalties
        in
        time and management of Minerva was forced by local statute to file for
        involuntary bankruptcy in April of 2003, according to the laws of Belgium.
 
 As
        a
        result of the bankruptcy, the License Agreement was voided.
 
 **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, 2004
        and
        December 31, 2003.
 
 **ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE**
 
 None.
  -15-
 
 **ITEM
        8A. CONTROLS AND PROCEDURES**
 
 As
        of
        December 31, 2004, we conducted an evaluation, under the supervision and
        with
        the participation of our chief executive officer and chief financial officer,
        of
        our disclosure controls and procedures (as defined in Rules 13a-15(e) of
        the
        Exchange Act). Based on their evaluation, our CEO/CFO have concluded that
        our
        disclosure controls and procedures need improvement and were not adequately
        effective as of December 31, 2004 to ensure timely reporting with the Securities
        and Exchange Commission. Our management is in the process of identifying
        deficiencies with respect to our disclosure controls and procedures and
        implementing corrective measures, which include the establishment of new
        internal policies related to financial reporting.
 
 Changes
        in internal controls: There were no changes in internal controls over financial
        reporting, known to the Chief Executive Officer or Chief Financial Officer
        that
        occurred during the period covered by this report that has materially affected,
        or is likely to materially effect, the Company's internal control over financial
        reporting.
 
 **ITEM
        8B. OTHER INFORMATION**
 
 Material
        Definitive Agreement
 
 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, 2004:
 
 Name
              
              Age
              
              Position
                  and Offices with the CompanyJacques
                  Mot
              
              48
              
              Chairman
                  of the Board of DirectorsMarcel
                  Rokegem
              
              55
              
              Director
  -16-
  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.
 
 SECTION
        16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
 To
        the
        Company's knowledge each of Jacques Mot, Marcel Rokegem, Icare BVBA and Rapide
        BVBA failed to file any necessary filings under Section 16(a) of the Securities
        Act during the period 2002 to 2004.
 
 **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 have been dormant.
 
 **ITEM
        10. EXECUTIVE COMPENSATION**
 
 The
        following table sets forth information regarding compensation paid by us
        to our
        Chairman and Chief Executive Officer, as well as officers of the Company
        who
        were paid at a rate in excess of $100,000 per annum for the year ended December
        31, 2004.
 
 **SUMMARY
        COMPENSATION TABLE**
 Annual
                  Compensation
              
              Long-Term
                  CompensationAwards
              
              PayoutsSecuritiesOther
              
              Restricted
              
              UnderlyingAnnual
              
              Stock
              
              Options/
              
              LTIP
              
              All
                  OtherSalary
              
              Bonus
              
              Compensation
              
              Award(s)
              
              SARs
              
              Payouts
              
              CompensationName
                  and Principal Position
              
              Year
              
              ($)
              
              ($)
              
              ($)
              
              (#)
              
              (#)
              
              ($)
              
              ($)Jacques
                  Mot, Chairman
              
              
              2002
              
              $
              388,060
              *
              
              
              
              
              
              
              
              
              
              
              1,100,0002003
              
              $
              324,000
              *2004
              
              $
              324,000
 
 *
              Salaries
                  accrued, but not paid due to the Company's lack of liquidity.
   -17-
  **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.
 
 **ITEM
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.**
 
 The
        following table sets forth, certain information, as of December 31, 2004,
        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 SharesBeneficial
                  Owner
              
              Beneficially
                  Owned(1)
              
              Percent
                  of Class (1)Icare
                  BVBA(2)
              
              
              3,715,119
              
              
              13.48
              %Rapide
                  BVBA(3)
              
              
              3,715,119
              
              
              13.48
              %Jacques
                  Mot(4)
              
              
              1,200,000
              
              
              4.19
              %Marcel
                  Rokegem
              
              
              50,000
              
              
              0.18
              %All
                  executive officers and directors
                  as a group
              
              
              1,250,000
              
              
              4.36
              %
 
 (1)
              Shares
                  of common stock subject to warrants 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.
                  Except as indicated by footnote, and subject to community property
                  laws
                  where applicable, the persons named in the table have sole voting
                  and
                  investment power with respect to all shares of common stock shown
                  as
                  beneficially owned by them.
 (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.**
 
 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.
  -18-
 
 **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)
   -19-
  #
              (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(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, 2000
                  filed on April 16, 2001
 
 **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, 2004 and 2003:
 Fee
                  Category
              
              Fiscal
                  2004 Fees
              
              Fiscal
                  2003 FeesAudit
                  Fees
              
              $
              10,381.25
              
              $
              0Audit-Related
                  Fees
              
              
              –
              
              
              –Tax
                  Fees
              
              
              –
              
              
              –All
                  Other Fees
              
              
              –
              
              
              –Total
                  Fees
              
              $
              10,381.25
              
              $
              0
   -20-
 
 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 2004
        or
        2003.
 
 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 2004 or 2003.
 
 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
        2004 or 2003.
 
 **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 December
        7, 2005 by the following persons in the capacities indicated:
 
 By:
              /s/ Jacques
                MotJacques
                  Mot
                Director and CEO
                (Principal Executive
                  Officer)
  By:
                /s/ Jacques
                  MotJacques
                    Mot
                  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, 2004 AND 2003**
 
 **FORMING
        A PART OF ANNUAL REPORT**
 **PURSUANT
        TO THE SECURITIES EXCHANGE ACT OF 1934**
 **NEW
        GENERATION HOLDINGS, INC.**
 
 **INDEX
        TO FINANCIAL STATEMENTS**
 PageReport
                  of Independent Registered Certified Public Accounting Firm
              F-2Consolidated
                  Balance Sheet at December 31,
                  2004
              F-3Consolidated
                  Statements of Losses and Comprehensive Losses for
                  the two years ended December 31, 2004 and 2003
              F-4Consolidated
                  Statement Deficiency in Stockholders' Equity for
                  the two years ended December 31, 2004
              F-5Consolidated
                  Statements of Cash Flows for the two years ended
                  December 31, 2004 and 2003
              F-6Notes
                  to Consolidated Financial
                  Statements
              F-7
                  - F-19
 
 
 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") as of December 31, 2004, 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, 2004. 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, 2004, and the consolidated results of its
        operations and its cash flows for each of the two years in the period ended
        December 31, 2004 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 K 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
        K. The
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty.
 
 
 /s/
        RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
 
 Russell
        Bedford Stefanou Mirchandani LLP
 Certified
        Public Accountants
 
 
 New
        York,
        New York
 November
        17, 2005
  F-2
 
 **NEW
        GENERATION HOLDINGS, INC.**
 **CONSOLIDATED
        BALANCE SHEET**
 DECEMBER
        31, 2004
 **ASSETS****CURRENT
                  ASSETS:**Cash
                  and cash equivalents
              
              $
              6,555Total
                  current assets
              
              
              6,555$
              6,555**LIABILITIES
                  AND DEFICIENCY IN STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES:**Accounts
                  payable and accrued liabilities (Notes H and J)
              
              $
              1,663,270Total
                  current liabilities
              
              
              1,663,270Commitments
                  and contingencies (Note I)DEFICIENCY
                  IN STOCKHOLDERS' EQUITY (Note C).Preferred
                  stock, $0.001 par value; 1,000,000 shares authorized, none issued
                  or
                  outstanding
              
              
              –Common
                  stock, $0.001 par value; 50,000,000 shares authorized, 27,556,810
                  shares
                  issued and outstanding at December 31, 2004
              
              
              27,559Additional
                  paid-in capital
              
              
              30,279,565Stock
                  Subscriptions
              
              
              54,600Accumulated
                  deficit
              
              
              (32,032,822
              )Accumulated
                Other 
                Comprehensive Income
              
              
              14,383Total
                  deficiency in stockholders' equity
              
              
              (1,656,715
              )$
              6,555
 See
        accompanying notes to consolidated financial statements
 
  F-3
  **NEW
        GENERATION HOLDINGS, INC.**
 **CONSOLIDATED
        STATEMENTS OF LOSSES AND COMPREHENSIVE
        LOSSES**
 Year
                  Ended
              
              Year
                  EndedDecember
                  31, 2004
              
              December
                  31, 2003OPERATING
                  EXPENSES:General
                  and administrative
              
              $590,560
              
              $335,941Depreciation
                  and amortization
              
              30,210
              
              103,440Total
                  Operating Expenses
              
              (620,770)
              
              (439,381)Loss
                  from operations
              
              (620,770)
              
              (439,381)Loss
                  before income taxes, discontinued operations and cumulative effect
                  of
                  accounting change
              
              (620,770)
              
              (439,381)Income
                  taxes (benefit)
              
              –
              
              –Loss
                  before discontinued operations and cumulative effect of accounting
                  change
              
              (620,770)
              
              (439,381)Loss
                  from discontinued operations, net of tax
              
              –
              
              (220,779)Loss
                  before cumulative effect of accounting change
              
              (620,770)
              
              (660,160)Cumulative
                  effect of accounting change
              
              –
              
              --Net
                  loss
              
              $(620,770)
              
              $(660,160)Loss
                  per common share (basic and assuming dilution)
              
              $
              (0.03
              )
              $
              (0.03
              )Continuing
                  Operations
              
              
              (0.03
              )
              
              (0.02
              )Discontinued
                  Operations
              
              
              –
              
              
              (0.01
              )Basic
                  and diluted weighted average number of shares used to compute net
                  loss per
                  common share
              
              
              23,264,740
              
              
              21,056,690COMPREHENSIVE
                  LOSS:Net
                  loss
              
              $
              (620,770
              )
              $
              (660,160
              )Foreign
                  currency translation (loss) gain
              
              
              14,383
              
              
              –COMPREHENSIVE
                  LOSS
              
              $
              (606,387
              )
              $
              (660,160
              )
 See
        accompanying notes to consolidated financial statements
  
 F-4
 
 **NEW
        GENERATION HOLDINGS, INC.**
 **CONSOLIDATED
          STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY**
 **FOR
        THE TWO YEARS ENDED DECEMBER 31, 2004**
 AccumulatedAdditional
              
              
              
              
              
              otherCommon
                  Stock
              
              paid-in
              
              Accumulated
              
              Stock
              
              comprehensiveShares
              
              Amount
              
              capital
              
              deficit
              
              Subscription
              
              income
              
              TotalBalance
                  at December 31, 2002
              
              
              21,056,690
              
              $
              21,059
              
              $
              29,636,051
              
              $
              (34,634,693
              )
              $
              –
              
              $
              –
              
              $
              (4,977,583
              )Disposition
                  of previously controlled wholly and majority owned subsidiaries,
                  net
              
              
              –
              
              
              –
              
              
              –
              
              
              3,882,801
              
              
              –
              
              
              –
              
              
              3,882,801Currency
                  translation adjustment
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –Net
                  Loss
              
              
              –
              
              
              –
              
              
              –
              
              
              (660,160
              )
              
              –
              
              
              –
              
              
              (660,160
              )Balance
                  at December 31, 2003
              
              
              21,056,690
              
              $
              21,059
              
              $
              29,636,051
              
              $
              (31,412,052
              )
              $
              --
              
              $
              --
              
              $
              (1,754,942
              )Issuance
                  of Common Stock
              
              
              6,500,120
              
              
              6,500
              
              
              643,514
              
              
              –
              
              
              –
              
              
              –
              
              
              650,014Stock
                  Subscriptions
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              54,600
              
              
              –
              
              
              54,600Currency
                  translation adjustment
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              –
              
              
              14,383
              
              
              14,383Net
                  Loss
              
              
              –
              
              
              –
              
              
              –
              
              
              (620,770
              )
              
              –
              
              
              –
              
              
              (620,770
              )Balance
                  at December 31, 2004
              
              
              27,556,810
              
              $
              27,559
              
              $
              30,279,565
              
              $
              (32,032,822
              )
              $
              54,600
              
              $
              14,383
              
              $
              (1,656,715
              )
 See
        accompanying notes to consolidated financial statements
 
 
 F-5
  **NEW
        GENERATION HOLDINGS, INC.**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 Year
                  Ended
              
              Year
                  EndedDecember
                  31,
              
              December
                  31,2004
              
              2003CASH
                  FLOWS FROM OPERATING ACTIVITIES:Loss
                  for the year from continuing operations
              
              $
              (606,387
              )
              $
              (439,381
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Loss
                  from discontinued operations
              
              
              –
              
              
              (220,779
              )Net
                  loss
              
              
              (606,387)
              
              
              (660,160)Depreciation
                  and amortization
              
              
              30,210
              
              
              103,440INCREASE
                  (DECREASE) IN CASH RESULTING FROM CHANGES IN:Change in
                  accounts payable and accrued expenses, net
              
              
              (121,879
              )
              
              526,720Net
                  cash used in operating activities
              
              
              (698,055
              )
              
              (30,000
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:(Purchase)
                  disposal of property, plant and equipment, net
              
              
              –
              
              
              30,000Net
                  cash provided by (used in) investing activities
              
              
              –
              
              
              30,000CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from issuance of common stock
              
              
              704,610
              
              
              –Net
                  cash provided by financing activities
              
              
              704,610
              
              
              –Net
                  increase in cash and cash equivalents
              
              
              6,555
              
              
              0Cash
                  and cash equivalents at beginning of period
              
              
              0
              
              
              0Cash
                  and cash equivalents at end of period
              
              $
              6,555
              
              $
              0SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOW INFORMATION:Cash
                  paid during the year for interest
              
              $
              –
              
              $
              –Cash
                  paid during the year for income taxes
              
              
              –
              
              
              –
 See
        accompanying notes to consolidated financial statements
  F-6
  **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **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. (the "Company"), was formed under the laws of the
        State of Delaware in 1999. The Company is currently inactive with no significant
        operations and is seeking to develop and market within Europe, through its
        wholly subsidiary, a proprietary technology designed to process two or more
        discrete plastic polymers.
 
 The
        consolidated financial statements include the accounts of the Company, and
        domestic and foreign subsidiaries that are more than 50% owned and controlled.
        Investments in affiliates in which the Company has the ability to exercise
        significant influence, but not control, are accounted for by the equity method.
        All other investments in affiliates are carried at cost. All significant
        intercompany transactions and balances have been eliminated in the consolidated
        financial statement&
 
 **Discontinued
        Operations and Deconsolidation**
 
 Through
        December, 2003, the Company was also engaged, through a group of wholly and
        majority- subsidiaries, 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", or "Minerva"),
        in
        the development of mainframe computer system software solutions in the life
        cycle management, data warehousing and data modeling sectors in Europe. The
        Minerva Group's operations were principally located in Belgium, with its
        other
        significant operations in France, the United Kingdom, and the Netherlands.
 
 In
        December, 2003, 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. Accordingly, the Minerva Group's results have been accounted for
        as a
        discontinued operation and all periods shown have been restated to reflect
        discontinued operations accounting.
 
 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 retained earnings (deficit) in the amount of
        the
        net liabilities of the Minerva Group of $3,882,801.
   F-7
 **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)**
 
 The
        consolidated financial statements have been restated to present the Minerva
        Group's operations as a discontinued operation. Operating results of
        discontinued operations for the period January 1, 2004 through April 7, 2004
        and
        the year ended December 31, 2004 and 2003 are summarized as follows:
  2004
              
              2003Net
                  sales
              
              $
              –
              
              $
              129,059Income
                  (loss) before income taxes
              
              
              –
              
              
              (220,779
              )Income
                  taxes (benefit)
              
              
              –
              
              
              –Net
                  income (loss)
              
              $
              –
              
              $
              (220,779
              )
 **Going
        Concern**
 
 The
        financial statements have been prepared on a going concern basis, and do
        not
        reflect any adjustments related to the uncertainty surrounding the Company's
        recurring losses or accumulated deficit
 
 **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-8
  **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)**
 
 **Liquidity**
 
 As
        reflected in the accompanying consolidated financial statements, the Company
        incurred net losses of $606,387 and $660,160 for the years ended December
        31,
        2004 and 2003, respectively, and has an accumulated deficit of $32,032,822
        as of
        December 31, 2004. In addition, the Company's current liabilities exceeded
        its
        current assets by $1,656,715 as of December 31, 2004. 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.
 
 **Revenue
        Recognition**
 
 For
        revenue from products and services, the Company recognizes revenue in accordance
        with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
        Statements" ("SAB 101"). SAB 101 requires that four basic criteria must be
        met
        before revenue can be recognized: (1) persuasive evidence of an arrangement
        exists; (2) delivery has occurred or services have been rendered; (3)
        the
        selling price is fixed and determinable; and (4) collectibility is reasonably
        assured. Determination of criteria (3) and (4) are based on management's
        judgments regarding the fixed nature of the selling prices of the products
        delivered/services rendered and the collectibility of those amounts. Provisions
        for discounts and rebates to customers, estimated returns and allowances,
        and
        other adjustments are provided for in the same period the related sales are
        recorded. The Company defers any revenue for which the product has not been
        delivered or services has not been rendered or is subject to refund until
        such
        time that the Company and the customer jointly determine that the product
        has
        been delivered or services has been rendered or no refund will be required.
 
 
  F-9
  **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)**
 
 **Revenue
        Recognition (Continued)**
 
 On
        December 17, 2003, the SEC staff released Staff Accounting Bulletin (SAB)
        No.
        104, Revenue Recognition. The staff updated and revised the existing revenue
        recognition in Topic 13, Revenue Recognition, to make its interpretive guidance
        consistent with current accounting guidance, principally EITF Issue No. 00-21,
        "Revenue Arrangements with Multiple Deliverables." Also, SAB 104 incorporates
        portions of the Revenue Recognition in Financial Statements - Frequently
        Asked
        Questions and Answers document that the SEC staff considered relevant and
        rescinds the remainder. The company's revenue recognition policies are
        consistent with this guidance; therefore, this guidance will not have an
        immediate impact on the company's consolidated financial statements.
 
 **Investments**
 
 The
        Company's investments in associated companies are accounted for under the
        equity
        method if the Company has the ability to exercise significant influence over
        the
        operating and financial policies of the investees, otherwise by the cost
        method.
        Under the cost method, the Company's share of the earnings and losses of
        such
        companies is not included in the consolidated statements of operations. In
        general, the Company applies the equity method to investments where it owns
        20%
        or more of the outstanding voting stock of the investee.
 
 **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.
 
 
  F-10
  **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)**
 
 **Cash
        and Cash Equivalents**
 
 Cash
        and
        cash equivalents comprise cash on hand and deposits held at call with banks
        and
        are carried in the balance sheet at cost.
 
 **Long-Lived
        Assets**
 
 The
        Company has adopted Statement of Financial Accounting Standards No. 144 (SFAS
        144). The Statement requires that long-lived assets and certain identifiable
        intangibles held and used by the Company be reviewed for impairment whenever
        events or changes in circumstances indicate that the carrying amount of an
        asset
        may not be recoverable. Events relating to recoverability may include
        significant unfavorable changes in business conditions, recurring losses,
        or a
        forecasted inability to achieve break-even operating results over an extended
        period. The Company evaluates the recoverability of long-lived assets based
        upon
        forecasted undiscounted cash flows. Should an impairment in value be indicated,
        the carrying value of intangible assets will be adjusted, based on estimates
        of
        future discounted cash flows resulting from the use and ultimate disposition
        of
        the asset. SFAS No. 144 also requires assets to be disposed of be reported
        at
        the lower of the carrying amount or the fair value less costs to sell.
 
 **Concentrations
        of Credit Risk**
 
 Financial
        instruments and related items, which potentially subject the Company to
        concentrations of credit risk, consist primarily of cash, cash equivalents
        and
        trade receivables. 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 limit. Concentrations of credit
        risk
        with respect to trade receivables are limited to the large number of customers
        comprising the Company's customer base. The Company's customers are concentrated
        primarily in Europe and it periodically reviews its trade receivables in
        determining its allowance for doubtful accounts. There was no allowance for
        doubtful accounts at December 31, 2004.
 
 **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 receivable, accounts payable
        and
        short-term borrowings, as reflected in the balance sheets, approximate fair
        value because of the short-term maturity of these instruments.
 
 
  F-11
  **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)**
 
 **Product
        Development Costs**
 
 Product
        development costs include expenses incurred by the Company for research,
        design
        and development of the Company's proprietary technology. For the years ended
        December 31, 2004 and 2003, product development costs were not material to
        the
        consolidated statement of operations.
 
 **Advertising**
 
 The
        Company follows the policy of charging the costs of advertising to expenses
        incurred. For the years ended December 31, 2004 and 2003, advertising costs
        were
        not material to the consolidated statement of operations.
 
 **Stock
        Based Compensation**
 
 In
        December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
        Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
        amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide
        alternative methods of transition for a voluntary charge to the fair value
        based
        method of accounting for stock-based employee compensation. In addition,
        this
        statement amends the disclosure requirements of SFAS No. 123 to require
        prominent disclosures in both annual and interim financial statements about
        the
        method of accounting for stock-based employee compensation and the effect
        of the
        method used on reported results. The Company has chosen to continue to account
        for stock-based compensation using the intrinsic value method prescribed
        in APB
        Opinion No. 25 and related interpretations. Accordingly, compensation expense
        for stock options is measured as the excess, if any, of the fair market value
        of
        the Company's stock at the date of the grant over the exercise price of the
        related option. The Company has adopted the annual disclosure provisions
        of SFAS
        No. 148 in its financial reports for the years ended December 31, 2003 and
        2004
        and for subsequent periods.
 
 Had
        compensation costs for the Company's stock options been determined based
        on the
        fair value at the grant dates for the awards, the Company's net loss and
        losses
        per share would have been as follows (transactions involving stock options
        issued to employees and Black-Scholes model assumptions are presented in
        Note
        D):
 
 2004
              
              2003Net
                  loss - as reported
              
              $
              (620,770
              )
              $
              (660,160
              )Add:
                  Total stock based employee compensation expense as reported under
                  intrinsic value method (APB. No. 25)
              
              
              –
              
              
              –Deduct:
                  Total stock based employee compensation expense as reported under
                  fair
                  value based method (SFAS No. 123)
              
              
              –
              
              
              (–
              )Net
                  loss - Pro Forma
              
              $
              (620,770
              )
              $
              (660,160
              )Net
                  loss attributable to common stockholders - Pro forma
              
              $
              (620,770
              )
              $
              (660,160
              )Loss
                  per share - as reported (basic and assuming dilution)
              
              $
              (0.03
              )
              $
              (0.03
              )Loss
                  per share - pro forma (basic and assuming dilution)
              
              $
              (0.03
              )
              $
              (0.03
              )
 
 
 F-12
  **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)**
 
 **Segment
        Information**
 
 The
        Company adopted Statement of Financial Accounting Standards No. 131, Disclosures
        about Segments of an Enterprise and Related Information ("SFAS 131") in the
        year
        ended December 31, 1999. SFAS establishes standards for reporting information
        regarding operating segments in annual financial statements and requires
        selected information for those segments to be presented in interim financial
        reports issued to stockholders. SFAS 131 also establishes standards for related
        disclosures about products and services and geographic areas. Operating segments
        are identified as components of an enterprise about which separate discrete
        financial information is available for evaluation by the chief operating
        decision maker, or decision-making group, in making decisions on how to allocate
        resources and assess performance. The information disclosed herein, materially
        represents all of the financial information related to the Company's principal
        operating segments.
 
 **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.
 
 **New
        Accounting Pronouncements**
 
 **SFAS
          123R** .
          On
          March 31, 2004 the Financial Accounting Standards Board (“FASB”) issued its
          exposure draft, “Share-Based Payments”, which is a proposed amendment to SFAS
          123. The exposure draft would require all share-based payments to employees,
          including grants of employee stock options and purchases under employee
          stock
          purchase plans, to be recognized in the statement of operations based on
          their
          fair value. The FASB issued the final standard in December 2004 that is
          effective for public companies for interim and annual periods beginning
          after
          June 15, 2005. The Company has not yet assessed the impact of adopting
          this new
          standard.
 
 **FAS
          129-1** .
          In
          April 2004, the FASB issued FASB Staff Position (FSP) 129-1, “Disclosure
          Requirements under SFAS 129, “ *Disclosure
          of Information about Capital Structure* ,”
          Relating to Contingently Convertible Securities.” The FSP interprets how the
          disclosure provisions of SFAS 129 apply to contingently convertible securities
          and their potentially dilutive effect on earnings per share. The Company
          is in a
          loss position for the three and nine months ended October 2, 2004, therefore,
          adoption of this FSP did
          not
          have a material effect on the Company’s financial position, results of
          operations, or cash flows.
 
 **EITF
          04-08** .
          In
          September 2004, the Emerging Issues Task Force issued EITF 04-08 "The Effect
          of
          Contingently Convertible Debt on Diluted Earnings Per Share." EITF 04-08
          requires companies to include in diluted earnings per share, on the if-converted
          method, any shares of our common stock into which debt of the Company may
          be
          converted, regardless of whether the conversion threshold has been met.
          The
          Company adopted this standard as of September 2004. The Company has reported
          per
          share losses for all periods contained in this report. Since inclusion
          of
          additional shares would be anti-dilutive, no change to the Company’s historical
          results is required, therefore, adoption of this EITF did not have a material
          effect on the Company’s financial position, results of operations, or cash
          flows.
  **SFAS
          151.** In
          November 2004, the Financial Accounting Standards Board (FASB) issued
          SFAS 151, Inventory Costs— an amendment of ARB No. 43, Chapter 4. This
          Statement amends the guidance in ARB No. 43, Chapter 4, “Inventory
          Pricing,” to clarify the accounting for abnormal amounts of idle facility
          expense, freight, handling costs, and wasted material (spoilage).
          Paragraph 5 of ARB 43, Chapter 4, previously stated that
“. . . under
          some circumstances, items such as idle facility expense, excessive spoilage,
          double freight, and rehandling costs may be so abnormal as to require treatment
          as current period charges. . . .” This Statement requires that those items be
          recognized as current-period charges regardless of whether they meet the
          criterion of “so abnormal.” In addition, this Statement requires that allocation
          of fixed production overheads to the costs of conversion be based on the
          normal
          capacity of the production facilities. This Statement is effective for
          inventory
          costs incurred during fiscal years beginning after June 15, 2005. The
          Company does not anticipate that the implementation of this standard will
          have a
          material impact on its financial position, results of operations or cash
          flows.
  **SFAS
          152.** In
          December 2004, the FASB issued SFAS No.152, “Accounting for Real Estate
          Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67” (“SFAS
          152) The amendments made by Statement 152 This Statement amends FASB Statement
          No. 66, Accounting for Sales of Real Estate, to reference the financial
          accounting and reporting guidance for real estate time-sharing transactions
          that
          is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
          Estate Time-Sharing Transactions. This Statement also amends FASB Statement
          No.
          67, Accounting for Costs and Initial Rental Operations of Real Estate Projects,
          to state that the guidance for (a) incidental operations and (b) costs
          incurred
          to sell real estate projects does not apply to real estate time-sharing
          transactions. The accounting for those operations and costs is subject
          to the
          guidance in SOP 04-2. This Statement is effective for financial statements
          for
          fiscal years beginning after June 15, 2005. with earlier application encouraged.
          The Company does not anticipate that the implementation of this standard
          will
          have a material impact on its financial position, results of operations
          or cash
          flows.
  **SFAS
          123R.** On
          December 16, 2004, the Financial Accounting Standards Board (“FASB”)
          published Statement of Financial Accounting Standards No. 123 (Revised
          2004), Share-Based Payment (“SFAS 123R”). SFAS 123R requires that compensation
          cost related to share-based payment transactions be recognized in the financial
          statements. Share-based payment transactions within the scope of SFAS 123R
          include stock options, restricted stock plans, performance-based awards,
          stock
          appreciation rights, and employee share purchase plans. The provisions
          of SFAS
          123R are effective as of the first interim period that begins after
          June 15, 2005. Accordingly, the Company will implement the revised
          standard
          in the third quarter of fiscal year 2005. Currently, the Company accounts
          for
          its share-based payment transactions under the provisions of APB 25, which
          does
          not necessarily require the recognition of compensation cost in the financial
          statements. The Company does not anticipate that the implementation of
          this
          standard will have a material impact on its financial position, results
          of
          operations or cash flows **.**
  **SFAS
          153.** On
          December 16, 2004, FASB issued Statement of Financial Accounting
          Standards
          No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion
          No. 29, Accounting for Nonmonetary Transactions (“ SFAS 153”). This
          statement amends APB Opinion 29 to eliminate the exception for nonmonetary
          exchanges of similar productive assets and replaces it with a general exception
          for exchanges of nonmonetary assets that do not have commercial substance.
          Under SFAS
          153,
          if a nonmonetary exchange of similar productive assets meets a
          commercial-substance criterion and fair value is determinable, the transaction
          must be accounted for at fair value resulting in recognition of any gain
          or
          loss. SFAS
          153
          is effective for nonmonetary transactions in fiscal periods that begin
          after
          June 15, 2005. The Company does not anticipate that the implementation
          of
          this standard will have a material impact on its financial position, results
          of
          operations or cash flows.
 F-13
  **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        A - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)**
 
 **Net
        Income (Loss) Per Share**
 
 The
        Company computes net income (loss) per share in accordance with Statement
        of
        Financial Accounting Standard ("SFAS") No. 128, "Earnings Per Share." Under
        the
        provisions of SFAS 128, basic net income (loss) per share is computed by
        dividing the net income (loss) for the period by the weighted average number
        of
        common shares outstanding during the period. Diluted net income (loss) per
        share
        is computed by dividing the net income (loss) for the period by the weighted
        average number of common and dilutive potential common shares outstanding
        during
        the period. As the Company had net losses during the periods presented, basic
        and diluted net income (loss) per share are the same.
 
 **NOTE
        B - INTANGIBLE ASSETS**
 
 The
        Company has adopted SFAS No. 142, Goodwill and Other Intangible Assets, whereby
        the Company periodically tests its intangible assets for impairment. On an
        annual basis, and when there is reason to suspect that their values have
        been
        diminished or impaired, these assets will be tested for impairment, and
        write-downs to be included in results from operations may be
        necessary.
 
 The
        costs
        and accumulated amortization of intangible assets at December 31, 2004 are
        summarized as follows:
 Patents
                  and related costs
              
              $
              517,199Less:
                  accumulated amortization
              
              
              517,199Intangible
                  assets, net
              
              $
              0
 
 Amortization
        expense included as a charge to income amounted to $30,210 and $103,400 in
        the
        years ended December31, 2004 and 2003, respectively.
 
 **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, 2004 the Company has issued
        and
        outstanding 27,556,810 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 are no preferred shares are outstanding at December 31, 2004.
 
 All
        valuations of common stock issued for services were based upon value of the
        services rendered, which did not differ materially from the fair value of
        the
        Company's common stock during the period the services were
        rendered.
  F-14
 
 **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        D- WARRANTS AND STOCK OPTIONS**
 
 **Employee
        Stock Options**
 
 The
        following table summarizes the changes in options outstanding and the related
        prices for the shares of the Company's common stock issued to employees of
        the
        Company under a non-qualified employee stock option plan.
 Options
                  Outstanding
              
              Options
                  ExercisableWeighted
                  Average
              
              Weighted
              
              
              
              WeightedNumber
              
              Remaining
                  Contractual
              
              Average
              
              Number
              
              AverageExercise
                  Prices
              
              Outstanding
              
              Life
                  (Years)
              
              Exercise
                  Price
              
              Exercisable
              
              Exercise
                  Price$1.18-
                  $9.50
              
              
              4,100,000
              
              
              2.25
              
              $
              1.33
              
              
              4,100,000
              
              $
              1.33
 
 Transactions
        involving stock options issued to employees are summarized as follows:
 
 Number
                  of
              
              Weighted
                  AverageShares
              
              Price
                  Per ShareOutstanding
                  at January 1, 2002
              
              
              –
              
              
              –Granted
              
              
              4,100,000
              
              
              1.33Exercised
              
              
              (–
              )
              
              –Canceled
                  or expired
              
              
              (–
              )
              
              –Outstanding
                  at December 31, 2002
              
              
              4,100,000
              
              $
              1.33Granted
              
              
              –
              
              
              –Exercised
              
              
              (–
              )
              
              –Canceled
                  or expired
              
              
              (–
              )
              
              –Outstanding
                  at December 31, 2003
              
              
              4,100,000
              
              $
              1.33Granted
              
              
              –
              
              
              –Exercised
              
              
              (–
              )
              
              –Canceled/
                  or expired
              
              
              (–
              )
              
              –Outstanding
                  at December 31, 2004
              
              
              4,100,000
              
              $
              1.33
 The
        weighted-average fair value of stock options granted to employees during
        the
        years ended December 31, 2004 and 2003 and the weighted-average significant
        assumptions used to determine those fair values, using a Black-Scholes option pricing
        model are as follows.
 2004
              
              2003Weighted
                  average grant date fair value per share:
              
              
              N/A
              
              
              N/ASignificant
                  assumptions (weighted-average):Risk-free
                  interest rate at grant date
              
              
              N/A
              
              
              N/AExpected
                  stock price volatility
              
              
              N/A
              
              
              N/AExpected
                  dividend payout
              
              
              N/A
              
              
              N/AExpected
                  option life-years (a)
              
              
              N/A
              
              
              N/A
 
 (a)
              The
                  expected option life is based on contractual expiration dates.
 
 
 F-15
 
 **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        D - WARRANTS AND STOCK OPTIONS (CONTINUED)**
 
 **Warrants**
 
 The
        following table summarizes the changes in warrants outstanding and the related
        prices for the shares of the Company's common stock issued to shareholders
        at
        December 31, 2004.
 Warrants
                  Outstanding
              
              Warrants
                  ExercisableWeighted
                  AverageNumber
              
              Contractual
                  Life
              
              Number
              
              Weighted
                  AverageExercise
                  prices:
              
              Outstanding
              
              (Years)
              
              Exercisable
              
              Exercise
                  Price$
              0.35
              
              
              6,500,120
              
              
              2.67
              
              
              6,500,120
              
              
              0.35$
              0.35
              
              
              6,500,120
              
              
              2.67
              
              
              6,500,120
              
              $
              0.35
 
 Transactions
        involving the Company's warrant issuance are summarized as follows:
 
 Number
                  of
              
              Weighted
                  AverageShares
              
              Exercise
                  PriceOutstanding
                  at January 1, 2003
              
              
              3,308,217
              
              $
              6.00Granted
              
              
              –
              
              
              –Exercised
              
              
              –
              
              
              –Cancelled
                  or expired
              
              
              –
              
              
              –Outstanding
                  at December 31, 2003
              
              
              3,308,217
              
              
              6.00Granted
              
              
              6,500,120
              
              
              0.35Exercised
              
              
              –
              
              
              –Cancelled
                  or expired
              
              
              (3,308,217
              )
              $
              6.00Outstanding
                  at December 31, 2004
              
              
              6,500,120
              
              $
              0.35
 
 **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 $38,000,000 which expire through 2024, subject to limitations
        of Section 382 of the Internal Revenue Code, as amended. The deferred tax
        asset
        related to the carryforward is approximately $13,300,000. 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.
  F-16
 
 **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        F - INCOME TAXES (CONTINUED)**
 
 Components
        of deferred tax assets as of December 31, 2004 are as follows:
 Non
                  Current:Net
                  operating loss carryforward
              
              $
              13,300,000Valuation
                  allowance
              
              
              (13,300,000
              )Net
                  deferred tax asset
              
              $
              –
 **NOTE
        G - LOSSES PER COMMON SHARE**
 
 The
        following table presents the computation of basic and diluted loss per
        share:
 2004
              
              2003Net
                  loss available for common shareholders
              
              $
              (620,770
              )
              $
              (660,160
              )Basic
                  loss per share
              
              $
              (0.03
              )
              $
              (0.03
              )Fully
                diluted loss per share
              
              $
              (0.02
              )
              $
              (0.03
              )Weighted
                  average common shares outstanding
              
              
              23,264,740
              
              
              21,056,690
 **NOTE
        H - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**
 
 Accounts
        payable and accrued liabilities at December 31, 2004 are as
        follows:
 2004
              
              2003Accounts
                  payable
              
              $
              223,913
              
              $
              407,574Accrued
                  expenses
              
              
              1,439,360
              
              
              1,377,578Total
              
              $
              1,663,273
              
              $
              1,785,152
 Included
        in accrued expenses are unpaid consulting fees of $712,000 and an unsecured
        loan
        in the principal amount of $200,000 due the President of the Company (see
        Note
        J).
 
  F-17
  
 **NEW
        GENERATION HOLDINGS, INC.**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004 AND 2003**
 
 **NOTE
        I - 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. The charge is reflected
        in
        selling, general and administrative expenses in the 2001 consolidated statement
        of losses. At December 31, 2003, the remaining liability for this obligation
        was
        $77,000 and was classified as an accrued expense in the consolidated balance
        sheet.
 
 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 is 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.
 
 **NOTE
        J - 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
        K - GOING CONCERN MATTERS**
 
 As
        reflected in the accompanying consolidated financial statements, the Company
        incurred net losses of $606,387 and $660,160 for the years ended December
        31,
        2004 and 2003, respectively, and has an accumulated deficit of $32,032,822
        as of
        December 31, 2004. The Company has discontinued substantially all operations
        and
        incurred negative cash flow from operating activities since inception. These
        factors among others may indicate that the Company will be unable to continue
        as
        a going concern for a reasonable period of time.
 
 The
        Company's existence dependent upon management's ability to develop profitable
        operations and resolve it's liquidity problems. While the Company is currently
        inactive with no significant operations, management is seeking to exploit
        its
        plastic polymer proprietary technology. Management anticipates the Company
        will
        improve its liquidity through the additional equity investment in the Company.
        The accompanying financial statements do not include any adjustments that
        might
        result should the Company be unable to continue as a going concern.
 
 In
        order
        to improve the Company's liquidity, the Company is actively pursing additional
        equity financing through discussions with investment bankers and private
        investors. There can be no assurance the Company will be successful in its
        effort to secure additional equity financing.
 
 If
        operations and cash flow improve through these efforts, management believes
        that
        the Company can continue to operate. However, no assurance can be given that
        management's actions will result in profitable operations or the resolution
        of
        its liquidity problems.
  F-18
  **NEW
          GENERATION HOLDINGS, INC.**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
          31, 2004 AND 2003**
 **NOTE
        L - SUBSEQUENT EVENTS**
 
 Subsequent
        to the date of the financial statements, the Company issued 18,560,150 shares
        of
        common stock and warrants to purchase an additional 15,435,150 shares
        of
        common stock in exchange for $1,856,015 in connection with a private placement
        of its restricted common stock and warrants under Regulation S.
 
 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.
  Subsequent
          to the date of the financial statements, the
          Company issued a warrant to purchase 200,000 shares of the Company's common
          stock in exchange for services. The warrant expires in March, 2008 and
          has an
          exercise price equal to $.25 per share.
 
  F-19