UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
DC 20549


FORM
10-Q





x Quarterly report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934




For the
quarterly period ended March 31, 2009




o Transition report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934




For the
transition period from ___________ to _____________




Commission
File No. 1-34022




NEW
GENERATION BIOFUELS HOLDINGS, INC.


(Exact
name of registrant as specified in its charter)





Florida
              26-0067474(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      No.)




1000
Primera Boulevard, Suite 3130


Lake
Mary, Florida  32746


(Address
of principal executive offices)




(321)
363-5100


(Registrant’s
telephone number, including area code)




Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports); and (2) has been subject to such filing
requirements for the past 90
days.     Yes  x    No   ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-K during the
preceeding 12 months (or for such shorter period that the registrant was
required to submit and post such files.) Yes £  No
£




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large
accelerated filer  ̈    Accelerated
filer  ̈    Non-accelerated
filer   ̈    Smaller
reporting company  x




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




At
April 30, 2009, the registrant had 25,575,226 shares of common stock,
$0.001 par value, issued and outstanding.








INDEX





PART
I.   FINANCIAL INFORMATION




Item
      1.
                Financial
      Statements
                PageConsolidated
      balance sheets as of March 31, 2009 (Unaudited) and December 31,
      2008
                3Consolidated
      statements of operations for the three months ended March 31, 2009
      (Unaudited), for the three months ended March 31, 2008 (Unaudited) and for
      the period from February 28, 2006 (Inception) through March 31, 2009
      (Unaudited)
                4Consolidated
      statement of stockholders’ equity for the three months ended March 31,
      2009 (Unaudited)
                5Consolidated
      statements of cash flows for the three months ended March 31, 2009
      (Unaudited), for the three months ended March 31, 2008 (Unaudited) and for
      the period from February 28, 2006 (Inception) through March 31, 2009
      (Unaudited)
                6Notes
      to consolidated financial statements
                7-16Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                17-21Item
      3.
                Qualitative
      and Quantitative Disclosures About Market Risk
                22Item
      4.
                Controls
      and Procedures
                22PART II.   OTHER
      INFORMATIONItem
      1A.
                Risk
      Factors
                23Item
      6.
                Exhibits
                24-26Signatures
                27


2


NEW
GENERATION BIOFUELS HOLDINGS, INC.


(A
Development Stage Enterprise)


Consolidated
Balance Sheets





March 31,
                                  
                                  
                                  December 31,2009
                                  
                                  
                                  2008ASSETSCurrent
      assets:Cash
                                  
                                  $
                                  2,600,388
                                  
                                  
                                  $
                                  1,476,246Accounts
      receivable
                                  
                                  
                                  -
                                  
                                  
                                  
                                  22,943Prepaid
      expenses
                                  
                                  
                                  703,970
                                  
                                  
                                  
                                  195,369Total
      current assets
                                  
                                  
                                  3,304,358
                                  
                                  
                                  
                                  1,694,558Property
      and Equipment - net
                                  
                                  
                                  809,263
                                  
                                  
                                  
                                  378,946Other
      assets
                                  
                                  
                                  424,361
                                  
                                  
                                  
                                  392,208License
      agreement
                                  
                                  
                                  6,112,068
                                  
                                  
                                  
                                  6,267,460TOTAL ASSETS
                                  
                                  $
                                  10,650,050
                                  
                                  
                                  $
                                  8,733,172LIABILITIES AND STOCKHOLDER'S
      EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                                  
                                  $
                                  1,436,494
                                  
                                  
                                  $
                                  1,385,311Loan
      payable-related party
                                  
                                  
                                  50,000
                                  
                                  
                                  
                                  50,000License
      agreement payable-current portion(net
      of unamortized discount of $426,208 and $71,270)
                                  
                                  
                                  573,792
                                  
                                  
                                  
                                  928,730Accrued
      dividend on preferred stock
                                  
                                  
                                  812,020
                                  
                                  
                                  
                                  765,369Total
      current liabilities
                                  
                                  
                                  2,872,306
                                  
                                  
                                  
                                  3,129,410License
      agreement payable(net
      of unamortized discount of $1,000,110 and $1,464,132)
                                  
                                  
                                  2,999,890
                                  
                                  
                                  
                                  3,535,868Common
      stock warrant liability
                                  
                                  
                                  1,545,912
                                  
                                  
                                  
                                  -Total
      Liabilities
                                  
                                  
                                  7,418,108
                                  
                                  
                                  
                                  6,665,278Stockholders'
      equity:Series
      A Cumulative Convertible Preferred Stock: $100 stated value, 300,000
      shares authorized, 18,400 and 26,400 shares issued and outstanding as of
      March 31, 2009 and December 31, 2008, respectively
                                  
                                  
                                  710,970
                                  
                                  
                                  
                                  1,020,087Series
      B Cumulative Convertible Preferred Stock: $100 stated value, 250,000
      shares authorized, 62,069 and 72,126 shares issued and outstanding as of
      March 31, 2009 and December 31, 2008, respectively
                                  
                                  
                                  4,287,105
                                  
                                  
                                  
                                  5,023,429Common
      stock, $0.001 par value, 100,000,000 shares authorized; 24,798,168 and
      19,299,168 shares issued and outstanding as of March 31, 2009 and December
      31, 2008, respectively
                                  
                                  
                                  24,798
                                  
                                  
                                  
                                  19,299Additional
      paid-in-capital
                                  
                                  
                                  36,537,783
                                  
                                  
                                  
                                  29,889,220Deficit
      accumulated during the development stage
                                  
                                  
                                  (38,328,714
                                  )
                                  
                                  
                                  (33,884,141
                                  )Total
      stockholders' equity
                                  
                                  
                                  3,231,942
                                  
                                  
                                  
                                  2,067,894TOTAL LIABILITIES AND STOCKHOLDERS'
      EQUITY
                                  
                                  $
                                  10,650,050
                                  
                                  
                                  $
                                  8,733,172





The
accompanying notes are an integral part of these consolidated financial
statements.


3


NEW
GENERATION BIOFUELS HOLDINGS, INC.


(A
Development Stage Enterprise)


Consolidated
Statements of Operations





For the Three
                        Months Ended
                        March 31, 2009
                      
                      
                      For the Three
                        Months Ended
                        March 31, 2008
                      
                      
                      For the Period from
                        February 28, 2006
                        (Inception) to
                        March31, 2009Net
      sales
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      22,943Cost
      of sales (including depreciation and  amortization of
      $160,853)
                      
                      
                      
                      208,655
                      
                      
                      
                      -
                      
                      
                      
                      516,196Gross
      loss
                      
                      
                      
                      (208,655
                      )
                      
                      
                      -
                      
                      
                      
                      (493,253
                      )Operating
      expenses:Research
      and development expenses
                      
                      
                      
                      194,266
                      
                      
                      
                      196,841
                      
                      
                      
                      2,144,439Merger
      expenses
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      340,000General
      and administrative expenses
                      
                      
                      
                      1,894,599
                      
                      
                      
                      1,899,427
                      
                      
                      
                      23,366,096Legal
      settlement
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      359,595License
      impairment
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,600,369Total
      operating expenses
                      
                      
                      
                      2,088,865
                      
                      
                      
                      2,096,268
                      
                      
                      
                      27,810,499Loss
      from operations
                      
                      
                      
                      (2,297,520
                      )
                      
                      
                      (2,096,268
                      )
                      
                      
                      (28,303,752
                      )Interest
      income
                      
                      
                      
                      719
                      
                      
                      
                      5,269
                      
                      
                      
                      79,671Interest
      expense
                      
                      
                      
                      (109,084
                      )
                      
                      
                      (154,442
                      )
                      
                      
                      (2,058,130
                      )Other
      income
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      7,208Other
      expense
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (250,000
                      )Gain  on
      debt extinguishment
                      
                      
                      
                      241,500
                      
                      
                      
                      -
                      
                      
                      
                      241,500(Loss)
      gain on fair value adjustment
                      
                      
                      
                      (103,200
                      )
                      
                      
                      (20,404
                      )
                      
                      
                      527,519Net
      loss
                      
                      
                      $
                      (2,267,585
                      )
                      
                      $
                      (2,265,845
                      )
                      
                      $
                      (29,755,984
                      )Preferred
      dividends
                      
                      
                      
                      (4,211,804
                      )
                      
                      
                      (1,477,750
                      )
                      
                      
                      (10,607,546
                      )Net
      loss available to common shareholders
                      
                      
                      $
                      (6,479,389
                      )
                      
                      $
                      (3,743,595
                      )
                      
                      $
                      (40,363,530
                      )Basic
      and diluted net loss per share
                      
                      
                      $
                      (0.31
                      )
                      
                      $
                      (0.21
                      )Weighted
      average number of shares outstanding
                      
                      
                      
                      20,900,675
                      
                      
                      
                      18,227,292





The
accompanying notes are an integral part of these consolidated financial
statements.


4


NEW
GENERATION BIOFUELS HOLDINGS, INC.


(A
Development Stage Enterprise)


Consolidated
Statement of Changes in Stockholders’ Equity


For
the Three Months ended March 31, 2009





Common Stock
                                
                                
                                Preferred-Stock Series A
                                
                                
                                Preferred Stock - Series
B
                                
                                
                                Additional
                                
                                
                                Deficit
                                  Accumulated
                                  During the
                                  DevelopmentShares
                                
                                
                                Amount
                                
                                
                                Shares
                                
                                
                                Amount
                                
                                
                                Shares
                                
                                
                                Amount
                                
                                
                                Capital
                                
                                
                                Stage
                                
                                
                                TotalBalance
      at December 31, 2008
                                
                                
                                19,299,168
                                
                                
                                $
                                19,299
                                
                                
                                
                                26,400
                                
                                
                                $
                                1,020,087
                                
                                
                                
                                72,126
                                
                                
                                $
                                5,023,429
                                
                                
                                $
                                29,889,220
                                
                                
                                $
                                (33,884,141
                                )
                                
                                $
                                2,067,894Cumulative
      effect of reclassification of warrants (EITF 07-05)
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (2,242,878
                                )
                                
                                
                                2,034,816
                                
                                
                                
                                (208,062
                                )Balance
      at January 1, 2009, as adjusted
                                
                                
                                19,299,168
                                
                                
                                $
                                19,299
                                
                                
                                
                                26,400
                                
                                
                                $
                                1,020,087
                                
                                
                                
                                72,126
                                
                                
                                $
                                5,023,429
                                
                                
                                $
                                27,646,342
                                
                                
                                $
                                (31,849,325
                                )
                                
                                $
                                1,859,832Compensation
      expense associated with options and restricted stock
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                432,682
                                
                                
                                
                                -
                                
                                
                                
                                432,682Issuance
      of options and warrants for services rendered
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                589,658
                                
                                
                                
                                -
                                
                                
                                
                                589,658Issuance
      of common stock for services rendered
                                
                                
                                56,989
                                
                                
                                
                                57
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                142,443
                                
                                
                                
                                -
                                
                                
                                
                                142,500Issuance
      of common stock for License Agreement payment
                                
                                
                                925,000
                                
                                
                                
                                925
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                757,575
                                
                                
                                
                                -
                                
                                
                                
                                758,500Issuance
      of common stock and warrants in private offering
                                
                                
                                3,957,500
                                
                                
                                
                                3,957
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                3,162,043
                                
                                
                                
                                -
                                
                                
                                
                                3,166,000Issuance
      of common stock – dividends on conversion of preferred
    stock
                                
                                
                                44,689
                                
                                
                                
                                45
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                159,948
                                
                                
                                
                                -
                                
                                
                                
                                159,993Record
      warrant liability associated with issuance of common stock
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (1,361,380
                                )
                                
                                
                                -
                                
                                
                                
                                (1,361,380
                                )Reclassification
      of warrant liability associated with antidilution triggering
      event
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                126,730
                                
                                
                                
                                -
                                
                                
                                
                                126,730Private
      placement costs
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (168,345
                                )
                                
                                
                                -
                                
                                
                                
                                (168,345
                                )Conversion
      of preferred stock into common stock
                                
                                
                                514,822
                                
                                
                                
                                515
                                
                                
                                
                                (8,000
                                )
                                
                                
                                (309,117
                                )
                                
                                
                                (10,057
                                )
                                
                                
                                (736,324
                                )
                                
                                
                                1,044,926
                                
                                
                                
                                -
                                
                                
                                
                                -Dividend
      associated with the beneficial conversion feature of the preferred
      stock
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                4,005,161
                                
                                
                                
                                (4,005,161
                                )
                                
                                
                                -Dividends
      accrued on preferred stock
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (206,643
                                )
                                
                                
                                (206,643
                                )Net
      loss
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (2,267,585
                                )
                                
                                
                                (2,267,585
                                )Balance
      at March 31, 2009
                                
                                
                                24,798,168
                                
                                
                                $
                                24,798
                                
                                
                                
                                18,400
                                
                                
                                $
                                710,970
                                
                                
                                
                                62,069
                                
                                
                                $
                                4,287,105
                                
                                
                                $
                                36,537,783
                                
                                
                                $
                                (38,328,714
                                )
                                
                                $
                                3,231,942





The
accompanying notes are an integral part of these consolidated financial
statements.


5


NEW
GENERATION BIOFUELS HOLDINGS, INC.


(A
Development Stage Enterprise)


Consolidated
Statement of Cash Flows





For the Three
                                              Months ended
                                              March 31, 2009
                                            
                                            
                                            For the Three
                                              Months ended
                                              March 31, 2008
                                            
                                            
                                            For the
                                              Period from
                                              February 28,2006
                                              (Inception) to
                                              March31, 2009(Unaudited)
                                            
                                            
                                            (Unaudited)
                                            
                                            
                                            (Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                            
                                            $
                                            (2,267,585
                                            )
                                            
                                            $
                                            (2,265,845
                                            )
                                            
                                            $
                                            (29,755,984
                                            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization expense
                                            
                                            
                                            11,859
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            19,242Amortization
      of license
                                            
                                            
                                            155,392
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            348,863Amortization
      of discount
                                            
                                            
                                            109,084
                                            
                                            
                                            
                                            154,442
                                            
                                            
                                            
                                            2,058,130Compensation
      expense associated with stock options, stock and restricted
      stock
                                            
                                            
                                            432,682
                                            
                                            
                                            
                                            791,969
                                            
                                            
                                            
                                            8,692,435Compensation
      expense associated with accrued stock and warrants
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            124,732Issuance
      of common stock, options and warrants for services
rendered
                                            
                                            
                                            100,154
                                            
                                            
                                            
                                            269,435
                                            
                                            
                                            
                                            3,022,642Penalty
      share expense
                                            
                                            
                                            -
                                            
                                            
                                            
                                            49,678
                                            
                                            
                                            
                                            230,277Warrant
      expense related to legal settlement
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            359,595Loss
      (gain) on fair value adjustment
                                            
                                            
                                            103,200
                                            
                                            
                                            
                                            20,404
                                            
                                            
                                            
                                            (527,519
                                            )Gain
      on debt extinguishment
                                            
                                            
                                            (241,500
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (241,500
                                            )License
      impairment
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            1,600,369Changes
      in operating assets and liabilities:Prepaid
      expenses
                                            
                                            
                                            (1,328
                                            )
                                            
                                            
                                            6,409
                                            
                                            
                                            
                                            (196,697
                                            )Accounts
      Receivables
                                            
                                            
                                            22,943
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Other
      assets
                                            
                                            
                                            34,089
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (230,047
                                            )Accounts
      payable and accrued expenses
                                            
                                            
                                            175,915
                                            
                                            
                                            
                                            (101,216
                                            )
                                            
                                            
                                            1,436,498Net
      cash used in operating activities
                                            
                                            
                                            (1,365,095
                                            )
                                            
                                            
                                            (1,074,724
                                            )
                                            
                                            
                                            (13,058,964
                                            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Payments
      for acquisition of property and equipment
                                            
                                            
                                            (440,549
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (826,878
                                            )Payment
      for plants
                                            
                                            
                                            (67,869
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (195,941
                                            )Acquisition
      of License Agreement
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (1,500,000
                                            )Cash
      used in investing activities
                                            
                                            
                                            (508,418
                                            )
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (2,522,819
                                            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Payments
      for license agreement payable
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (150,000
                                            )
                                            
                                            
                                            (3,500,000
                                            )Proceeds
      from issuance of founders' shares
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            554Proceeds
      from private offering issuances of common stock, net of
    costs
                                            
                                            
                                            2,997,655
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            9,403,138Proceeds
      from private offering issuance of preferred stock, net of
      costs
                                            
                                            
                                            -
                                            
                                            
                                            
                                            4,074,153
                                            
                                            
                                            
                                            11,006,299Proceeds
      from the exercise of warrants
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            457,180Proceeds
      from convertible note payable
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            765,000Proceeds
      from loan payable - related party
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            50,000Net
      cash provided by financing activities
                                            
                                            
                                            2,997,655
                                            
                                            
                                            
                                            3,924,153
                                            
                                            
                                            
                                            18,182171Net
      increase in cash and cash equivalents
                                            
                                            
                                            1,124,142
                                            
                                            
                                            
                                            2,849,429
                                            
                                            
                                            
                                            2,600,388Cash
      and cash equivalents - beginning of period
                                            
                                            
                                            1,476,246
                                            
                                            
                                            
                                            1,644,145
                                            
                                            
                                            
                                            -Cash
      and cash equivalents - end of period
                                            
                                            $
                                            2,600,388
                                            
                                            
                                            $
                                            4,493,574
                                            
                                            
                                            $
                                            2,600,388Supplemental
      Disclosure of Non-Cash Investing and Financing
      ActivitiesPayable
      for License Agreement (net of discount)
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            6,015,552License
      Agreement acquired in exchange for issuance of common
stock
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            545,747Preferred
      Stock Dividend
                                            
                                            $
                                            206,643
                                            
                                            
                                            $
                                            80,538
                                            
                                            
                                            $
                                            1,352,515Fair
      value of warrants issued in stock offering
                                            
                                            $
                                            1,361,380
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            1,361,380Issuance
      of Common stock as payment for License Agreement payable
                                            
                                            $
                                            1,000,000
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            1,000,000





The
accompanying notes are an integral part of these consolidated financial
statements.


6




NEW
GENERATION BIOFUELS HOLDINGS, INC.


(A
Development Stage Enterprise)


Notes
to Consolidated Financial Statements


NOTE1 –
ORGANIZATION
AND GOING CONCERN





New
Generation Biofuels Holdings, Inc. (the “Company”), formerly known as H2Diesel
Holdings, Inc., a Florida corporation, is a development stage company that
through its wholly owned subsidiary, New Generation Biofuels, Inc., formerly
known as H2Diesel Inc., a Delaware corporation, holds an exclusive license for
North America, Central America and the Caribbean to commercialize proprietary
technology (the “Technology”) to manufacture alternative biofuels from vegetable
oils and animal fats that the Company markets as a new class of renewable fuel
for power generation, commercial and industrial heating and marine
transportation.




The
Company is in the development stage and has generated minimal
revenues.  As a result, the Company has incurred a net loss of $29.8
million and negative cash flows from operating activities of $13.1 million since
Inception.  The Company is obligated to pay $5.0 million in additional
payments under the Master License, of which $1.0 million is due in installments
in February and March 2010. These matters raise substantial doubt about the
Company’s ability to continue as a going concern.  The Company’s
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.  Although the Company
completed a private placement of $3,166,000 in gross proceeds in March 2009, the
Company will need to reduce costs and raise additional financing to fund
operations and long term business objectives. The Company’s continued existence
is dependent upon several factors, including obtaining additional debt or equity
financing, producing biofuel, developing a market for its biofuel, and achieving
certain levels of sales volume and profitability from the sale of its biofuel
and sublicenses of its technology.  Management is investigating
various sources of debt or equity financing and is developing marketing and
production plans for its products.




NOTE 2–SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES




Basis of
presentation




The
accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with generally accepted accounting principles in the
United States and the rules and regulations of the Securities and Exchange
Commission (the “SEC”) for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements and should be read in
conjunction with the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008.  The interim financial statements are unaudited,
but in the opinion of management, all adjustments, consisting only of normal
recurring accruals, considered necessary for a fair statement of the results of
these interim periods have been included. The results of the Company’s
operations for any interim period are not necessarily indicative of the
operating results that may be expected for any other interim period or a full
fiscal year.




Property and
Equipment




Property
and equipment are stated at cost.  Depreciation has been calculated
over the estimated useful lives of the assets ranging from 5 to 15
years.  Depreciation expense for the three months ended March 31, 2009
and 2008 was $10,232 and $0, respectively.




Property
and equipment consists of the following at March 31, 2009 and December 31,
2008:


7


NEW
GENERATION BIOFUELS HOLDINGS, INC.
 (A
Development Stage Enterprise)
 Notes
to Consolidated Financial Statements


2009
                  
                  
                  2008Furniture
      and fixtures
                  
                  $
                  82,181
                  
                  
                  $
                  82,181Property
      and equipment
                  
                  
                  744,697
                  
                  
                  
                  54,439Construction
      in progress
                  
                  
                  -
                  
                  
                  
                  249,709826,878
                  
                  
                  
                  386,329Less
      accumulated depreciation
                  
                  
                  (17,615
                  )
                  
                  
                  (7,383
                  )Fixed
      assets, net
                  
                  $
                  809,263
                  
                  
                  $
                  378,946




Use of
Estimates




The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosure of contingent assets and
liabilities. The Company’s most significant estimate is the value of its
exclusive license. Other significant estimates include the valuation of shares,
warrants or options issued for services and the estimated useful life of the
exclusive license which will be used to calculate amortization. The Company
evaluates its estimates on an ongoing basis. Actual results could differ
significantly in the near term, especially as to the estimated value of its
exclusive license, from those estimates under different assumptions or
conditions.




Loss per Common
Share




Loss per
share (“EPS”) is computed based on the weighted average number of common shares
outstanding and excludes any potential dilution. Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock, which would then share in the earnings of the Company.
The shares issuable upon the exercise of stock options and warrants are excluded
from the calculation of net loss per share as their effect would be
antidilutive. As of March 31, 2009 and 2008, there were 16,045,176 and
11,036,028, respectively, shares of common stock equivalents including options
(5,966,289 shares of common stock as of March 31, 2009 and 6,005,000 shares of
common stock as of March 31, 2008), non employee options (1,641,000 shares of
common stock as of March 31, 2009 and 1,531,000 shares of common stock as of
March 31, 2008), warrants (8,405,898 shares of common stock as of March 31, 2009
and 3,500,028 shares of common stock as of March 31, 2008) and restricted stock
(31,989 shares of common stock as of March 31, 2009) that could potentially
dilute EPS in the future that were not included in the computation of EPS
because to do so would have been antidilutive.  As of March 31, 2009
and 2008 there were 18,400 and 39,550, respectively, shares of Series A
Convertible Preferred Stock which are convertible into 460,000 and 988,750,
respectively, shares of common stock that were not included in the computation
of EPS because to do so would have been antidilutive as well.  As of
March 31, 2009 and 2008 there were 62,069 and 43,986, respectively, shares of
Series B Convertible Preferred Stock which are convertible into 2,068,967 and
1,034,965, respectively, shares of common stock that were not included in the
computation of EPS because to do so would have been antidilutive as
well.


8


NEW
GENERATION BIOFUELS HOLDINGS, INC.
 (A
Development Stage Enterprise)
 Notes
to Consolidated Financial Statements


Recent Accounting
Pronouncements




Effective
January 1, 2009, the Company adopted the provisions of Emerging Issues Task
Force (EITF)EITF
07-05, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an
Entity’s Own Stock, (“EITF 07-05”).  EITF 07-05 applies to any
freestanding financial instruments or embedded features that have the
characteristics of a derivative, as defined by SFAS No. 133, “Accounting for
Derivative Instruments and Hedging Activities,” and to any freestanding
financial instruments that are potentially settled in an entity’s own common
stock.  As a result of adopting EITF 07-05, warrants to purchase
643,850 shares of our common stock previously treated as equity pursuant to the
derivative treatment exemption were no longer afforded equity
treatment.  The warrants had an exercise price of $6.25 and expire in
March and May 2013.  As such, effective January 1, 2009, the Company
reclassified the fair value of these warrants to purchase common stock, which
had exercise price reset features, from equity to liability status as if these
warrants were treated as a derivative liability since their date of issue in
March and May 2008.  On January 1, 2009, the Company reclassified from
additional paid-in capital, as a cumulative effect adjustment, $2,034,816 to
beginning deficit accumulated during the development stage and $208,062 to
common stock warrant liability to recognize the fair value of such warrants on
such date.




The
Company includes disclosures about fair value measurements pursuant to SFAS No.
157,Fair Value
Measurements (“SFAS 157”).  SFAS 157 defines fair value as the
price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants.  Such transactions
to sell an asset or transfer a liability are assumed to occur in the principal
or most advantageous market for the asset or liability.  Accordingly,
fair value as described by SFAS 157 is determined based on a hypothetical
transaction at the measurement date, considered from the perspective of a market
participant.




SFAS 157
establishes a three-tier fair value hierarchy, which prioritizes the inputs used
in measuring fair value.  These tiers include: Level 1, defined as
observable inputs such as quoted prices in active markets; Level 2, defined as
inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.  The following table presents information about our
assets and liabilities that are measured at fair value on a recurring basis as
of March 31, 2009:





SignificantQuoted Prices in
                                                
                                                
                                                Significant Other
                                                
                                                UnobservableMarch 31,
                                                
                                                
                                                Active Markets
                                                
                                                
                                                Observable inputs
                                                
                                                InputsDescription
                                                
                                                2009
                                                
                                                
                                                Level 1
                                                
                                                
                                                Level 2
                                                
                                                Level 3Assets:Cash
      and cash equivalents
                                                
                                                $
                                                2,600,388
                                                
                                                
                                                $
                                                2,600,388
                                                
                                                
                                                $
                                                —
                                                
                                                $
                                                —Total
      assets
                                                
                                                $
                                                2,600,388
                                                
                                                
                                                $
                                                2,600,388
                                                
                                                
                                                $
                                                
                                                
                                                $
                                                —Liabilities:Common
      stock warrant liability
                                                
                                                $
                                                1,545,912
                                                
                                                
                                                $
                                                —
                                                
                                                
                                                $
                                                —
                                                
                                                $
                                                1,545,912


9


NEW
GENERATION BIOFUELS HOLDINGS, INC.
 (A
Development Stage Enterprise)
 Notes
to Consolidated Financial Statements


The
following table presents information about our common stock warrant liability,
which was our only financial asset or liability measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) as defined in
SFAS 157 at March 31, 2009:





2009Balance
      at January 1,
                  
                  $
                  208,062Transfers
      to (from) Level 3
                  
                  
                  1,441,050Total
      gains/(losses) realized/ unrealized  included in
      earnings
                  
                  
                  (103,200
                  )Balance
      March 31,
                  
                  $
                  1,545,912





The
carrying value of the common stock warrant liability is calculated using the
Black-Scholes option pricing model, which requires the input of highly
subjective assumptions.  These assumptions include the risk-free rate
of interest, expected dividend yield, expected volatility, and the remaining
contractual term of the award.  The risk-free rate of interest is
based on the U.S. Treasury rates appropriate for the expected term of the
award.  Expected dividend yield is projected at 0%, as we have not
paid any dividends on our common stock since our inception and we do not
anticipate paying dividends on our common stock in the foreseeable
future.  Expected volatility is based on our historical volatility and
the historical volatilities of the common stock of comparable publicly traded
companies.





The
Company  also adopted SFAS No. 157 for non-financial assets and
liabilities in the first quarter of 2009. We had no required fair value
measurements for non-financial assets and liabilities in the first quarter of
2009 and no required additional disclosures upon adoption.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities — an amendment of FASB Statement No. 133
(SFAS No. 161). SFAS No. 161 requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures about
fair value amounts and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. SFAS No. 161 was effective for fiscal years beginning after
November 15, 2008. As of March 31, 2009, the Company
has derivatives of $1,545,912 related to the common stock warrant
liabilities.  The derivatives instruments were not entered into as
hedging activities, and the change in value of the liability is recorded as
(loss) gain on fair value adjustment.





In April
2009, the FASB issued Staff Position No. FAS 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1 and APB
28-1). FSP FAS 107-1 and APB 28-1 extends the disclosure requirements of SFAS
107 to interim period financial statements, in addition to the existing
requirements for annual periods and reiterates SFAS 107’s requirement to
disclose the methods and significant assumptions used to estimate fair value.
FSP FAS 107-1 and APB 28-1 is effective for the Company’s interim and
annual periods commencing with the June 30, 2009 consolidated financial
statements and will be applied on a prospective basis. The Company believes the
adoption of FSP FAS 107-1 and APB 28-1 will not have a material impact on
consolidated financial position, results of operations and cash
flows.





NOTE 3 –OPTIONS, WARRANTS AND
RESTRICTED STOCK





In
October 2007, the Company’s board of directors approved an Omnibus Incentive
Plan (the “Incentive Plan”) to attract, retain and motivate key employees, to
provide an incentive for them to achieve long-range performance goals and to
enable them to participate in the long-term growth of the
Company.  The Company’s shareholders approved the Incentive Plan at
their annual meeting in November 2007.  Options granted under the
Incentive Plan may include non-qualified stock options as well as incentive
stock option intended to qualify under Section 422A of the Internal Revenue
Code.  The aggregate number of shares of common stock that are
reserved for issuance under the Incentive Plan must not exceed 2.7 million
shares.  Each stock option agreement specifies when all or any
installment of the option becomes exercisable. Option awards are generally
granted with an exercise price equal to the market price of the Company’s common
stock on the grant date, generally vest from 0 to 3 years of continuous service
and have a 10 year contractual term.


10




NEW
GENERATION BIOFUELS HOLDINGS, INC.


(A
Development Stage Enterprise)


Notes
to Consolidated Financial Statements




The
Company utilizes the Black-Scholes option valuation model to estimate the fair
value of option and warrant grants on the date of grant.  The
following table summarizes information about the stock options outstanding at
March 31, 2009:




Weighted
      Average Exercise Price
                      
                      $
                      2.99Expected
      Life
                      
                      5
      yearsVolatility
                      
                      
                      100.0
                      %Dividend
      Yield
                      
                      
                      0
                      %Risk-free
      interest rate
                      
                      
                      1.88
                      %




Employee
Options




A summary
of the status of the Company’s options outstanding as of March 31, 2009 and the
changes during the period ending on that date is presented below:




Number of
                    Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    Price
                  
                  
                  Weighted
                    Average
                    Remaining
                    Contractual
                    Life
                    (Years)
                  
                  
                  Aggregate
                    Intrinsic
                    ValueOptions
      outstanding at  December 31, 2008
                  
                  
                  6,566,289
                  
                  
                  $
                  2.85
                  
                  
                  
                  8.10Forfeited
                  
                  
                  600,000
                  
                  
                  $
                  1.50
                  
                  
                  
                  7.54Options
      outstanding at March 31, 2009
                  
                  
                  5,966,289
                  
                  
                  $
                  2.99
                  
                  
                  
                  7.88Vested
      and expected to vest – March 31, 2009
                  
                  
                  5,326,289
                  
                  
                  $
                  2.84
                  
                  
                  
                  7.77
                  
                  
                  $
                  0Options
      exercisable at March 31, 2009
                  
                  
                  4,766,289
                  
                  
                  $
                  2.68
                  
                  
                  
                  7.41
                  
                  
                  $
                  0





Options
outstanding at March 31, 2009 have an exercise price of $1.50 to $10.50 per
share. Options exercisable at March 31, 2009 do not include 640,000 performance
based options. For the three months ended March 31, 2009 and 2008, the Company
recorded a non-cash compensation charge of $415,621 and $791,969
respectively.




The
aggregate intrinsic value in the table above represents the total intrinsic
value (the difference between the Company’s closing stock price on March 31,
2009 and the exercise price, multiplied by the number of in-the-money options)
that would have been received by the option holders had vested option holders
exercised their options on March 31, 2009. This amount changes based upon
changes in the fair market value of the Company’s common stock. As of March 31,
2009, $1,300,843 of the total unrecognized compensation costs related to stock
options is expected to be recognized over a period of approximately one year and
nine months.


11


NEW
GENERATION BIOFUELS HOLDINGS, INC.
 (A
Development Stage Enterprise)
 Notes
to Consolidated Financial Statements


Non-Employee
Options




The
Company has issued options in exchange for services rendered.  The
table below summarizes stock option information with respect to all non employee
stock options as of March 31, 2009:




Number of
                    Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    PriceOptions
      outstanding at December 31, 2008
                  
                  
                  1,591,000
                  
                  
                  $
                  6.02Granted
                  
                  
                  50,000
                  
                  
                  $
                  1.04Options
      outstanding at March 31, 2009
                  
                  
                  1,641,000
                  
                  
                  $
                  5.87Options
      exercisable at March 31, 2009
                  
                  
                  141,000
                  
                  
                  $
                  6.23





Non-employee
options outstanding at March 31, 2009 have an exercise price of $1.04 to $6.40
per share.  Options exercisable at March 31, 2009 do not include
1,550,000 performance based options. For the three months ended March 31, 2009
and 2008, the Company recorded a non-cash compensation charge of $6,488 and
$137,108 respectively.  As of March 31, 2009, $32,440 of the total
unrecognized compensation costs related to non-employee stock options is
expected to be recognized over a period of approximately nine
months.




Restricted Stock
Grants




In May
2008, the Compensation Committee of the Company’s board of directors approved a
Management Equity Compensation Plan (the “Equity Compensation Plan”) to ensure
that equity remains a significant component of management compensation, to align
employee and shareholder interests, by providing opportunities for employees to
own the Company’s common stock and to motivate and retain key employees with
multi-year equity incentives.  The Equity Compensation Plan generally
contemplates annual restricted stock grants based on achieving certain
performance targets and vesting annually over three years.  The amount
of each award is relative to an employee’s total compensation and based on the
individual’s ability to affect the Company’s results, with higher level
positions generally receiving grants equal to a greater percentage of their
compensation than lower level positions.




In May
2008, the Company issued under the Equity Compensation Plan 31,989 restricted
shares to certain employees based on achieving certain 2007 performance targets.
The number of shares was calculated based on the dollar value of the award
divided by the closing price of the Company’s common stock on the date the grant
was approved by the Compensation Committee.




For the
three months ended March 31, 2009, the Company recorded a non-cash compensation
expense of $17,061.  As of March 31, 2009, $145,017 of the total
unrecognized compensation costs related to restricted stock grants is expected
to be recognized over a period of approximately two years and three
months.




NOTE 4–COMMON
STOCK




In March
2009, the Company completed a private placement offering (the “Private
Placement”) of 3,957,500 shares of Common Stock, at a price of $.80 per share to
accredited investors. The gross proceeds from the Private Placement were
$3,166,000.  Each investor in the Private Placement also received a
warrant exercisable for a number of shares of Common Stock equal to the number
of shares of Common Stock purchased by each investor. The exercise price of the
warrants is $0.90 per share. The warrants are exercisable at any time after the
six month anniversary of the issue date but prior to the fifth anniversary of
the issue date.  The warrants have a fair value of $2,166,062 on the
date of issuance based on the Black-Scholes options pricing
method.


12




NEW
GENERATION BIOFUELS HOLDINGS, INC.


(A
Development Stage Enterprise)


Notes
to Consolidated Financial Statements




In
addition, the Company exchanged new warrants at an exercise price of $1.00 per
share with investors that participated in our 2008 private placement of Series B
Convertible Preferred Stock and warrants and invested a specified amount in this
offering. Under this exchange, the Company reissued warrants to purchase a total
of 97,792 shares.  The warrants are exercisable at any time after the
six month anniversary but prior to the fifth anniversary of the issue date,
either for cash or by means of a “cashless exercise.”  The reissued
warrants had a higher fair value by $13,615 based on the
Black-Scholes options pricing method and was recorded as a cost of the Private
Placement.





The
Private Placement also included certain antidilution provisions. If the Company
issues additional shares of common stock or convertible securities in a
financing transaction within the next fifteen (15) months with a purchase price
or conversion price less than $0.80 per share, the Company will issue additional
shares of its common stock to investors in the offering, up to a maximum cap of
82,322 additional shares.  This cap ensures that the number of shares
issued to all investors in the offering and pursuant to the antidilution
provisions in the aggregate will not exceed the maximum number of shares that we
can issue under Nasdaq rules without shareholder approval, which is slightly
less than 20% of our common stock outstanding prior to the offering. Similarly,
if the Company issues additional warrants in a financing transaction within the
next fifteen (15) months with an exercise price less than $0.90 per share, the
Company will reduce the exercise price of the warrants issued in the offering to
the price of the warrants in the subsequent financing transaction (but the
number of shares subject to the warrants will not change).  The
antidilution adjustments will not apply to certain excluded issuances of equity
securities or warrants, such as securities not issued in capital raising
transactions (for example, to customers, suppliers, joint venture partners or
our technology licensor) or in connection with equity awards that the Company
grants to employees, consultants and directors under employee benefit plans
approved by our board of directors.








The
Company agreed to take steps to allow investors to sell their shares under Rule
144 but did not enter into any registration rights agreements in connection with
the offering.





For
services rendered as finders in connection with the Private Placement, the
Company paid cash commissions of $122,080 and issued warrants to purchase
190,750 shares of Common Stock. The warrants had a fair value of $100,381 on the
date of issuance based on the Black-Scholes option pricing model.  The
warrants are considered a cost directly associated with the issuance of
stock.





NOTE 5 –
PREFERRED STOCK




Series A Preferred
Stock




On May 9,
2007, the Company completed the offering (the “Series A Private Placement”) of
27,950 shares of the Company’s newly issued Series A Cumulative Convertible
Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) at
price of $100.00 per share to “accredited investors” as defined under the
Securities Act of 1933, as amended (the “Securities Act”). The gross proceeds
were $2,795,000. Under the terms of the Series A Private Placement, each
investor had the option to purchase additional securities up to the amount
initially purchased on the same terms as those of the Series A Private Placement
(the “Subscriber Option”). On June 8, 2007, the Company sold an additional
14,600 shares of Series A Preferred Stock at price of $100.00 per share in
connection with exercises of the Subscriber Option. The gross proceeds were
$1,460,000.


13




NEW
GENERATION BIOFUELS HOLDINGS, INC.


(A
Development Stage Enterprise)


Notes
to Consolidated Financial Statements


At any
time prior to the third anniversary of the initial date of issuance, any holder
of  Series A Preferred Stock may convert all or a portion of their
shares into shares of the Company’s common stock calculated by multiplying the
number of shares to be converted by such shares’ “stated value” (i.e, $100 per share plus the
amount of all dividends accumulated thereon) and dividing the result by the
“conversion price” then in effect.  The initial conversion price of
each share of Series A Preferred Stock is $4.00, and each share of Series A
Preferred Stock is initially convertible into 25 shares of our common
stock.  Upon the third anniversary of the date of issuance, each share
of Series A Preferred Stock shall automatically, and without any action on the
part of the holder, convert into that number of shares of our common stock
computed by dividing such share’s “stated value” by the “conversion price” then
in effect.  The “conversion price” is subject to adjustment upon the
occurrence of certain events, including, among others, a stock split, reverse
stock split, stock dividend or combination of our common stock.  The
Series A Preferred Stock is not redeemable.




Each
share of Series A Preferred Stock will accrue cumulative dividends on a
quarterly basis at a rate of 8% per annum. All dividends will be paid in shares
of common stock having a fair market value at the time of issuance equal to the
amount of dividends to be paid, provided that to the extent the shares of common
stock to be issued are not then registered under the registration rights
agreements with the Series A Preferred Stock investors, dividends shall cumulate
but shall remain unpaid until such time as the shares are registered and
issued.  The Company may elect to pay any dividends in cash in lieu of
issuing shares of common stock.  The Series A Preferred Stock shall
also participate on an as-converted basis with all dividends paid on the shares
of common stock.  For the three months ended March 31, 2009 and 2008,
the Company accrued dividends for the Series A Preferred Stock of $52,226 and
$80,538, respectively.




Upon any
liquidation of the Company, the holders of the Series A Preferred Stock will be
entitled to be paid, prior to the common stock or any other securities that by
their terms are junior to the Series A Preferred Stock, the original issue price
of the Series A Preferred Stock plus all accrued and unpaid dividends. To the
extent the proceeds of liquidation are insufficient to pay such amounts in full,
the proceeds available will be allocated pro rata among the shares of Series A
Preferred Stock. As of the most recent balance sheet date, March 31, 2009, the
liquidation value of the Series A Preferred Stock was
$2,161,798.




Each
investor in the Series A Private Placement also received a warrant exercisable
for a number of shares of common stock equal to 50% of the number of shares of
common stock into which the Series A Preferred Stock purchased by such investor
is initially convertible. The initial exercise price of the warrants is $6.00
per share. At any time following the first anniversary of the Closing Date and
provided that the shares of Common Stock issuable upon exercise of the Warrants
are not then registered for resale pursuant to an effective registration
statement under the Securities Act, the Warrants may also be exercised by means
of a “cashless exercise.”  The warrants had a fair value of $2,610,882
on the date of issuance based on the Black-Scholes options pricing
method.




Series B Preferred
Stock




On March
31, 2008, the Company completed the offering (the “Series B Private Placement”)
of a total 43,986 shares of the Company’s newly issued Series B Convertible
Preferred Stock, par value $0.001 per share (“Series B Preferred Stock”) at a
price of $100.00 per share to “accredited investors” under the Securities Act..
The gross proceeds from the issuance of 40,768 shares of Series B Preferred
Stock was $4,076,800. In addition, the Company issued 3,218 shares of Series B
Preferred Stock as commission in connection with the Private
Placement.




On May
13, 2008, the Company completed a second closing of the Series B Private
Placement of a total 35,419 shares of the Company’s Series B Preferred
Stock.  The gross proceeds from the issuance of 35,123 shares of
Series B Preferred Stock was $3,512,300. In addition, the Company issued 296
shares of Series B Preferred Stock as commission in connection with the Private
Placement.  In summary, in the offering that was closed on March 31,
2008 and May 13, 2008, the Company sold a total of 75,891 shares of Series B
Preferred Stock and warrants to purchase 446,413 shares of its common stock for
total gross proceeds of $7,589,100.




The
Series B Preferred Stock ranks junior to the Series A Preferred Stock and senior
to the common stock with respect to the payment of dividends and amounts payable
upon liquidation, dissolution or winding up of the Company.  The
Series B Preferred Stock also is not redeemable.


14


NEW
GENERATION BIOFUELS HOLDINGS, INC.
 (A
Development Stage Enterprise)
 Notes
to Consolidated Financial Statements


At any
time prior to the third anniversary of the date of issuance, any holder of
Series B Preferred Stock may convert all or a portion of their shares into
shares of the Company’s common stock calculated by dividing the sum of the
Stated Value and all accrued dividends not previously paid or added to the
Stated Value to the date of such conversion by the Series B Conversion Price
then in effect. Upon the third anniversary of the initial issue date of the
Series B Preferred Stock, each share of Series B Preferred Stock will
automatically convert into the number of shares of common stock into which it is
then convertible. The initial conversion price is $4.25 per share, subject to
adjustment upon the occurrence of certain major corporate events such as
reorganizations and stock splits (the “Series B Conversion Price”).




Dividends
will be payable from the date of issuance at a rate of 8% per year when and as
declared by the board of directors. To the extent that dividends are not
declared, or cannot be paid, there will be an increase in the Stated Value of
the Series B Preferred Stock in the amount of 8% per year. In the event
dividends are declared by the Board and paid by the Company on the Common Stock,
holders of Series B Preferred Stock will either share ratably in such dividends
based on the number of shares of common stock into which the Series B Preferred
Stock may be converted or (to the extent that dividends are not declared or
cannot be paid), there will be a corresponding increase in the Stated Value.
Dividends will be paid semiannually, at the Company’s election, in cash, in
shares of Series B Preferred Stock (valued at Stated Value) or in common stock
valued at the market price, on September 30 and March 31 of each year beginning
on September 30, 2008 to holders of record on the 15th day of the preceding
month. If there is an increase in Stated Value because dividends were not or
could not be paid, that increase will occur semiannually on the dates that
dividends would have been paid. For the three months ended March 31, 2009, the
Company accrued dividends on the Series B Preferred Stock of
$154,417.




The
Series B Preferred Stock was convertible into 1,868,367 shares of common stock,
at the election of the holders, at an initial conversion price of $4.25 per
share. The fair market value of this beneficial conversion was calculated based
on the difference between the share price of the common stock, at the time of
issuance, and the initial conversion price. This resulted in a Series B
Preferred Stock dividend in the amount of $2,963,995 recorded during the year
ended December 31, 2008.




Upon any
Liquidation of the Company, after the Company has made the required
distributions to the holders of Series A Preferred Stock (and any other
preferred stock then outstanding, if any, ranking in liquidation senior to the
Series B Preferred Stock), and before any distribution is made to the holders of
Common Stock (and any other stock ranking in liquidation junior to the Series B
Preferred Stock), the holders of Series B Preferred Stock will be entitled to be
paid an amount in cash equal to the aggregate liquidation value of Series B
Preferred Stock, which equals the Stated Value plus all accrued dividends not
previously paid or added to Stated Value. As of the most recent balance sheet
date, March 31, 2009, the liquidation value of the Series B Preferred Stock was
$6,697,122.




Each
investor in the Series B Private Placement also received a warrant exercisable
for a number of shares of Common Stock equal to 25% of the number of shares of
Common Stock into which the Series B Preferred Stock purchased by such investor
is initially convertible. The initial exercise price of the warrants is $6.25
per share. Both the Series B Preferred Stock and the warrants include
antidilution provisions that, if triggered, could result in a reduction of the
conversion price of the Series B Preferred Stock or the exercise price of the
warrants, but not below $3.00 per share.  The warrants have a fair
value of $2,032,739 based on the Black-Scholes option pricing
method.




In
connection with the Series B Private Placement, the Company agreed to register
the resale of the shares of common stock issuable (i) upon conversion of the
Series B Preferred Stock, (ii) as dividends on the Series B Preferred Stock, and
(iii) upon exercise of warrants, all in accordance with registration rights
agreements among the Company and each of the investors. Under the registration
rights agreement, the Company is required to file a “resale” registration
statement with the SEC covering such shares on or before the 30th day following
the closing of the Series B Private Placement.  The Company filed the
registration statement on May 30, 2008, within the required time period. Since
the registration statement was not declared effective by the SEC within 180 days
of the initial required filing date, in 2008 the Company recorded an expense of
$43,986 for 1% of the shares issued in the March 31, 2008 Series B Private
Placement.  The registration statement was declared effective by the
SEC on November 24, 2008.


15


NEW
GENERATION BIOFUELS HOLDINGS, INC.
 (A
Development Stage Enterprise)
 Notes
to Consolidated Financial Statements


If at any
time prior to the first to occur of (i) the first anniversary of the
registration of the common stock underlying the Series B Preferred Stock or (ii)
18 months after the closing , the Company issues any additional shares of Common
Stock with a purchase price less than the Conversion Price of the Series B
Preferred Stock, or additional convertible securities with a conversion price
less than the Conversion Price of the Series B Preferred Stock, the Conversion
Price of the Series B Preferred Stock will be reduced to the purchase price at
which such Common Stock has been issued or the conversion price of such
additional convertible securities, but not below a Conversion Price of $3.00 per
share.  The antidilution adjustments in the Series B Preferred Stock
and warrants will not apply to certain issuances of equity securities or
warrants, including those not issued in capital-raising transactions (such as to
customers, suppliers, joint venture partners or in connection with acquisitions
of property) or in connection with equity award or options granted by the
Company to employees, consultants and directors under employee benefit plans
approved by the Board of Directors under which options generally are granted
with exercise prices at least equal to the Company’s stock price on the grant
dates.




In
conjunction with completing a Common Stock private placement offering on March
3, 2009, as noted in Note 4 above, antidilution provisions were
triggered.  The conversion price  of the Preferred Stock and
the exercise price of the Warrants were reset to $3.00 per share. Based on the
number of Preferred Stock outstanding on the trigger date, the Company
calculated the fair market value based on the incremental increase in
convertible shares based on the change in the conversion price before and
after  the price reset multiplied by the stock price on the initial
offering dates in March and May 2008. Based on this valuation, the Company
recorded a beneficial conversion dividend expense of $4,005,161 during the
period ended March 31, 2009.




In
connection with the Series B Private Placement, the Company paid a commission of
$249,288, issued 3,514 shares of Series B Preferred Stock and warrants
exercisable for 197,437 shares of Common Stock as consideration for investors
introduced to the company.  The warrants had a fair value of $770,858
on the date of issuance based on the Black-Scholes option pricing
model.  The warrants are considered a cost directly associated with
the issuance of stock.


16





ITEM
      2.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS




Overview




We are a
development stage renewable biofuels provider that is marketing a new class of
“second generation” biofuels for use in diesel fuel applications, including
power generation, commercial and industrial heating and marine
transportation.  We produce our biofuels using a proprietary blending
technology that we believe is simpler, cleaner, less expensive, and less energy
intensive than the complex chemical reaction process used to produce traditional
biodiesel.  We believe that this technology enables us to produce
biofuels that cost less to produce, use less energy and generate significantly
lower emissions than our competitors.  Our technology also gives us
the flexibility to produce our biofuel from multiple feedstocks, which allows us
to use non-edible raw materials in our production process, when
desirable.  We believe that these factors will enable us to customize
our product to specific customer requirements and react more quickly to trends
in the biofuels market.





Our business commenced in February
2006.  Our activities since inception have included acquiring our
exclusive license, conducting research and development to improve our product,
conducting test burns at power generation facilities, launching a pilot
production facility, entering into biofuel sales agreements in both the power
generation and commercial heating markets, entering into site lease and
terminaling services agreement and raising equity capital.  Our costs
have consisted mainly of research and development relating to our product and
general and administrative costs.  We have incurred annual operating
losses since inception and expect to incur substantial operating losses in the
future in connection with the development of our core products.  As of
March 31, 2009, we had an accumulated deficit of $38.3
million.





The
operation and development of our business will require substantial additional
capital to fund our operations, payments due under the exclusive license, the
acquisition or development of manufacturing plants, research and development,
and other initiatives, including potentially the financing of future
acquisitions.




Our
long-term business strategy consists of developing two revenue streams: (1)
direct sales from manufacturing plants that we may purchase, lease or build
(either directly or through joint ventures) in order to process, market and sell
our biofuel using our proprietary technology and (2) the collection of royalties
through sublicensing our proprietary technology. Our near-term business strategy
is focusing on direct sales of our biofuel produced at our manufacturing plant
as well as plants we may purchase or build, either directly or through joint
ventures. To execute this strategy, we are pursuing an active test burn program
with a number of energy producers to validate our biofuel. We may also sell our
biofuel to boiler operators under extended evaluation and test programs. In
addition, we have placed into service our first biofuel production plant, a 5
million gallon per year facility located in Baltimore, Maryland. We also have
commenced the process of procuring raw materials for production of our biofuel
but have not made any significant commitments or procurements at this point. As
a second potential revenue stream, our business plan contemplates collecting
royalties through sublicensing our proprietary technology where it is more
efficient for manufacturers to produce our biofuel at their own plants rather
than requiring production at our proposed facilities. We also are actively
pursuing our eligibility and qualification for tax credits and other government
incentives to strengthen the competitive position of our biofuel. To date, we
have recognized minimal revenue and costs of revenue. Our costs have consisted
mainly of research and development relating to our product and general and
administrative costs.





Financial
Operations Overview




Research
and Development Costs




We have
established a research and development group, headed by our Chief Technology
Officer, Andrea Festuccia, which is based in Rome, Italy and in Baltimore,
Maryland. We have conducted additional development of the product, as well as
testing in laboratory conditions of the performance of biofuel made with our
technology. From inception through March 31, 2009, we have incurred aggregate
research and development costs of approximately $2.1 million.


17




Our
research and development costs consist of expenses incurred in identifying,
developing and testing our product. These expenses consist primarily of salaries
and related expenses for personnel, fees paid to professional service providers,
costs of consultants and the costs of manufacturing batches of our biofuel for
use in conducting test burns.




General
and Administrative Expenses




General
and administrative expenses consist primarily of the costs associated with our
general management, including salaries, benefits and professional fees such as
legal and accounting expenses. Continued increases will also likely result from
the additional hiring of operational, financial, accounting, marketing and
information systems personnel.  We have ten employees, all of whom are
full time.




Interest
and Other Income (Expense), Net




Interest
income consists of interest earned on our cash and short-term
investments.  Interest expense consists of interest incurred related
to the license agreement payable.




Income
Taxes




We have
not recognized any deferred tax assets or liabilities in our financial
statements since we cannot assure their future realization. Because realization
of deferred tax assets is dependent upon future earnings, a full valuation
allowance has been recorded on the net deferred tax assets, which relate
primarily to net operating loss carry-forwards.




Results
of Operations


Comparison of the three
months ended March 31, 2009 and the three months ended March 31,
2008




Research
and Development Expenses




Research
and development expenses were approximately $194,000 for the three months ended
March 31, 2009 compared to approximately $197,000 for the three months ended
March 31, 2008. This resulted in no significant variance.





General
and Administrative Expenses


General
and administrative expenses were $1.9 million for the three months ended March
31, 2009 compared to $1.9 million for the three months ended March 31, 2008. The
increase is primarily due to salary and related
expenses offset by a decrease in expenses associated with stock
options and warrants over the prior period.





Interest Expense


Interest
expense was approximately $109,000 for the three months ended March 31, 2009
compared to approximately $154,000 for the three months ended March 31, 2008.
The decrease is due to a reduction in the License Agreement payable balance.
Interest expense consists of interest incurred related to the License Agreement
payable.




Liquidity
and Capital Resources




Liquidity




At March
31, 2009, we had $2.6 million in cash, compared to $1.5 million at December 31,
2008.





Although
we completed a private placement of $3,166,000 in gross proceeds in the first
quarter of 2009, we will need to reduce costs and raise additional financing to
continue our operations beyond the third quarter of 2009.  We expect
that our available cash and interest income will be sufficient to finance
currently planned activities through September2009.  We estimate
that we will require an additional $5 million to fund our
operations for the next twelve months. These estimates are based on certain
assumptions, which could be negatively impacted by the matters discussed under
the caption “Risk Factors” contained in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008.


18





Several
existing commitments that require significant expenditures will continue to
impact our liquidity and capital resources. We began incurring monthly lease and
other payment obligations in October 2008 under our new site lease and
terminaling service agreement and incurred upfront production costs associated
with manufacturing our biofuels under recent customer contracts. We also have
incurred costs associated with developing of our biofuel production facility in
Baltimore, Maryland. Under the license agreement with the inventor of our
proprietary technology, we are required to pay $1.0 million per year over the
next five years. We also will continue incurring costs to test our technology,
enhance research and development, pay our employees and sustain
operations.





We are
unlikely to be able to continue our operations unless we can obtain additional
financing. We would likely seek such funding through public or private
financings or some combination of them. Additional funding may not be available
to us on acceptable terms, or at all, especially considering the current
financial market conditions. Even after funding our short term needs, given our
ongoing need for capital, we may raise money on an opportunistic basis when the
market makes such funding available on acceptable terms.





We have
financed our operations to date primarily through the sale of our common and
preferred stock and warrants in privately negotiated transactions with
accredited investors. In March 2009, we raised approximately $3,166,000 in gross
proceeds from the sale of shares of common stock at a purchase price of $0.80
per share and warrants with an exercise price of $0.90 per share.




If we
raise capital through the sale of equity securities, or securities convertible
into equity, dilution to our then existing shareholders would result. If we
raise additional capital through the incurrence of debt, we would likely become
subject to covenants restricting our business activities, and holders of
debt instruments would have rights and privileges senior to those of our
equity investors. In addition, servicing the interest and repayment obligations
under these borrowings would divert funds that would otherwise be available to
support research and development or commercialization activities.




Cash
Flows




Net cash
used in operating activities was approximately $1.4 million for the three
months ended March 31, 2009 primarily reflecting our net loss of
$2.3 million, partially offset by $0.4 million in non-cash stock-based
compensation expense, approximately $0.1 million in non-cash for issuance
of stock, options and warrants for services rendered, $0.1 million in non-cash
amortization expense associated with our license agreement payable,
approximately $0.2 million in non-cash amortization of our license, $0.2 million
in non-cash gain on extinguishment of debt and $0.1 million non-cash loss on
fair market value adjustment of the common stock warrant liability.




Net cash
used in investing activities was approximately $0.5 for the three months ended
March 31, 2009 and consisted of payments for the acquisition of property
and equipment, and patents.




Net cash
provided by financing activities was $3.0 million for the three months ended
March 31, 2009, and consisted of net proceeds from the issuance of common
stock.





Capital
Requirements and Resources




Our
future capital requirements will depend on many factors, including:




·
              the level of cash flows from
      product sales;
 ·
              conducting additional testing
      with utilities, independent power producers or others, including product
      application testing, to gain market acceptance of our biofuel among
      customers and equipment
manufacturers;
 ·
              maintaining and improving our
      production facility in Baltimore, Maryland under our terminal lease
      agreement with Pennington Partners, LLC or with others to supply our
      products initially for testing and eventually for the broader biofuels
      market;
  19
 ·
              the scope and results of our
      research and development
efforts;
 ·
              developing and executing a sales
      marketing plan for the commercial and industrial heating fuel and marine
      market segments and a technology plan that complements the marketing
      plan;
 ·
              entering into feedstock supply
      and transportation logistics agreements to supply our production
      facilities;
 ·
              developing additional strategic
      relationships to attract potential customers and sublicensees and to
      obtain the capital commitments necessary to engineer, construct and
      operate biofuel plants in our exclusive
  territory;
 ·
              continuing to pursue favorable
      tax incentives for our biofuel, particularly efforts to include our
      biofuel in the $1 per gallon credit afforded biodiesel and to have the
      benefit of such a change extend beyond the current expiration date of
      December 31, 2009 and to pursue obtaining EPA
    approval;
 ·
              recruiting additional key
      employees to expand the capabilities of our existing management team;
      and
 ·
              the costs of maintaining,
      expanding and protecting our intellectual property portfolio, including
      litigation costs and
liabilities.




Critical
Accounting Policies




Our
consolidated financial statements and accompanying notes have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires we make estimates,
judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expense. Management evaluates the accounting policies
and estimates it uses to prepare the financial statements. We base our estimates
on assumptions believed to be reasonable under current facts and circumstances.
The Company’s most significant estimates are the value of its exclusive,
perpetual life, Master License Agreement and its useful life.




The
Company recorded its Master License Agreement at cost in accordance with SFAS
142 “Goodwill and Other Intangible Assets.” The value of the Master License
Agreement is tested for impairment in accordance with SFAS 144 “Accounting for
the Impairment or Disposal of Long-Lived Assets,” which requires a review of the
value of long-lived assets on a periodic basis for impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may not
be recoverable. Recoverability of assets held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted cash flows
expected to be generated by the asset. If such assets are considered impaired,
the impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds the fair value of the assets.





The
Company prepared a SFAS 144 analysis of the Master License Agreement at December
31, 2008 by utilizing the probability weighted sum of the undiscounted cash
flows method. The key variables used include various industry biodiesel
projections and management projections and applied weighted average
assumptions.




Based on
a review of the Company’s sublicensing agreement with Global Energy and other
third-party licensing agreements for various alternative fuel technologies, the
revenue base selected was projected gallons of biofuel production. Because of
the uncertainty associated with the Company’s future production, we considered
four scenarios for a sensitivity analysis. Scenarios 1 and 2 assume the
Company’s production will equal 0.5% and 1%, respectively, of total projected
U.S. biodiesel production in each of the projected periods. Scenario 3 is based
on the Company’s then current estimate of its anticipated production. Scenario 4
assumes a minimal amount of production is achieved due to capital constraints.
We applied probabilities of 32.67% to scenarios 1 through 3 and a probability of
2% to scenario 4.


In
determining a royalty rate for the Technology, we examined the royalty rates for
alternative energy related technologies, including biofuels, as well as the
Company’s sublicense with Global Energy. Based on this information, we applied a
$0.10 per gallon royalty. Taxes were estimated based upon a combined effective
total state and federal tax rate of 40%.


Based
upon our analysis the probability weighted sum of the undiscounted cash flows
attributable to the Master License Agreement was less  than its
carrying value. Therefore, for the year ended December 31, 2008, the Company
recorded a write down of the Master License Agreement in the amount of
$1,600,369.
  20




The
useful life of the Master License Agreement was assumed to be thirteen years
based on management’s assessment of the projected duration of economically
competitive new product life in the alternative-energy industry.




Other
significant estimates include the valuation of shares, stock options and
warrants issued. Actual amounts and results could differ from these estimates
made by management.





Off−Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangement or commitment that will have a current
effect on our financial condition, lead to changes in our financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to investors.


21


ITEM
3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET
RISK




Not
applicable to “smaller reporting companies” under Item 305(e) of Regulation
S-K.





ITEM
4.  CONTROLS AND PROCEDURES




(a)
Disclosure Controls and Procedures




Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our reports
filed under the Exchange Act, is accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required
disclosure.




As
required by Rule 13a-15 under the Exchange Act, we are required to evaluate the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report. This evaluation
was carried out under the supervision of our Chief Executive Officer and Chief
Financial Officer. Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
are effective at the reasonable assurance level such that the information
relating to us and our consolidated subsidiary required to be disclosed in our
Exchange Act reports (i) is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms, and (ii) is accumulated
and communicated to our management, including our principal executive officer
and principal financial officer, as appropriate to allow timely decisions
regarding required disclosure.




(b)
Changes in Internal Control over Financial Reporting





During
the quarter ended March 31, 2009, there were no significant changes in our
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.


22




PART
II.  OTHER INFORMATION




ITEM
1A.RISK FACTORS





An
investment in our common stock involves a high degree of risk. In addition
to the other information set forth in this report, you should carefully consider
the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2008, as filed with the SEC on
March 31, 2009. If any of these risks actually occur, our business, results of
operations and financial condition would likely suffer. In these
circumstances, the market price of our common stock could decline, and you may
lose all or part of your investment. We do not believe there have been any
material changes in our risk factors from those disclosed in our Form 10-K for
the fiscal year ended December 31, 2008.


23


ITEM
6.  EXHIBITS




The
following exhibits, which are furnished with this Quarterly Report or
incorporated herein by reference, are filed as part of this Quarterly
Report.




Exhibit No.
              
              Exhibit Description3.1
              
              Amended
      and Restated Articles of Incorporation (incorporated by reference to
      Exhibit 3.1 to the Current Report on Form 8-K filed March 31,
      2008).3.2
              
              Articles
      of Amendment to the Articles of Incorporation relating to our Series B
      Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to
      the Current Report on Form 8-K filed March 31, 2008).3.3
              
              Amended
      and Restated Bylaws, dated March 5, 2008 (incorporated by reference to
      Exhibit 3.3 to the Annual Report on Form 10-K filed March 31,
      2008).4.1
              
              Form
      of Warrant (incorporated by reference to Exhibit 4.1 to the Current Report
      on Form 8-K filed October 26, 2006).4.2
              
              Form
      of Warrant (incorporated by reference to Exhibit 4.2 to the Annual Report
      on Form 10-K filed March 31, 2008).4.3
              
              Form
      of Warrant(incorporated by reference to Exhibit 4.3 to the Annual Report
      on Form 10-K filed March 31, 2008).4.4
              
              Form
      of Warrant (incorporated by reference to Exhibit 4.1 to the Current Report
      on Form 8-K filed March 31, 2008).4.5
              
              Form
      of Warrant (incorporated by reference to Exhibit 4.1 to the Current Report
      on Form 8-K filed March 4, 2009).4.6
              
              Form
      of Warrant (incorporated by reference to Exhibit 4.2 to the Current Report
      on Form 8-K filed March 4, 2009).10.1
              
              Exclusive
      License Agreement dated as of March 20, 2006 between H2Diesel, Inc. and
      Ferdinando Petrucci (incorporated by reference to Exhibit 10.1 to the
      Current Report on Form 8-K filed October 26, 2006, portions of which
      have been omitted pursuant to a request for confidential
      treatment).10.2
              
              Amendment
      #1, dated September 11, 2006, to the Exclusive License Agreement between
      H2Diesel, Inc. and Ferdinando Petrucci (incorporated by reference to
      Exhibit 10.2 to the Current Report on Form 8-K filed October 26,
      2006).10.3
              
              Amendment
      #2, dated December 13, 2006, to the Exclusive License Agreement dated
      March 20, 2006, as amended, between H2Diesel, Inc. and Ferdinando Petrucci
      (incorporated by reference to Exhibit 10.1 to the Current Report on Form
      8-K filed December 15, 2006).10.4
              
              Amendment
      #3, dated November 3, 2007, to the Exclusive License Agreement dated March
      20, 2006, as amended, between H2Diesel, Inc. and Ferdinando Petrucci
      (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form
      10-QSB filed November 14, 2007).10.5
              
              Amendment
      #4, dated November 9, 2007, to the Exclusive License Agreement dated March
      20, 2006, as amended, between H2Diesel, Inc. and Ferdinando Petrucci
      (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form
      10-QSB filed November 14, 2007).10.6
              
              Amendment
      #5, dated February 20, 2008, to the Exclusive License Agreement
      dated  March 20, 2006, as amended, between H2Diesel, Inc. and
      Ferdinando Petrucci (incorporated by reference to Exhibit 10.1 to the
      Current Report on Form 8-K filed February 25,
  2008).10.7
              
              Amendment
      #6, dated March 25, 2008, to the Exclusive License Agreement dated March
      20, 2006, as amended, between H2Diesel, Inc. and Ferdinando Petrucci
      (incorporated by reference to Exhibit 10.7 to the Annual Report on Form
      10-K filed March 31,
2008).


24





10.8
              
              Amendment
      #7, dated January 8, 2009, to the Exclusive License Agreement, dated March
      20, 2006 and as amended, between New Generation Biofuels, Inc. (formerly
      H2Diesel, Inc.) and Ferdinando Petrucci (incorporated by reference to
      Exhibit 10.1 to the Current Report on Form 8-K filed January 12,
      2009).10.9
              
              Addendum
      to Exclusive License Agreement, dated April 3, 2009 (incorporated by
      reference to Exhibit 10.1 to the Current Report on Form 8-K filed April 7,
      2009).10.10*
              
              Omnibus
      Incentive Plan adopted November 14, 2007 (incorporated by reference to
      Exhibit 10.13 to the Annual Report on Form 10-K filed March 31,
      2008).10.11*
              
              Form
      of Director Non-Qualified Stock Option Agreement under Omnibus Incentive
      Plan (incorporated by reference to Exhibit 10.14 to the Annual Report on
      Form 10-K filed March 31, 2008).10.12
              
              Amended
      Form of Non-Qualified Stock Option Agreement under Omnibus Incentive Plan
      (incorporated by reference to Exhibit 10.11 to the Annual Report on Form
      10-K filed March 31, 2009).10.13
              
              Amended
      Form of Incentive Stock Option Agreement under Omnibus Incentive Plan
      (incorporated by reference to Exhibit 10.12 to the Annual Report on Form
      10-K filed March 31, 2009).10.14
              
              Amended
      Form of Restricted Stock Agreement under Omnibus Incentive Plan
      (incorporated by reference to Exhibit 10.13 to the Annual Report on Form
      10-K filed March 31, 2009).10.15
              
              Office
      Lease Agreement, dated as of March 12, 2008, by and between Central
      Florida Educators ’ Federal Credit Union and H2Diesel Holdings, Inc.
      (incorporated by reference to Exhibit 10.18 to the Annual Report on Form
      10-K filed March 31, 2008).10.16*
              
              Employment
      Agreement dated as of May 5, 2006 between Lee S. Rosen and H2Diesel, Inc.
      (incorporated by reference to Exhibit 10.6 to the Current Report on Form
      8-K filed October 26, 2006).10.17*
              
              Employment
      Agreement dated as of October 18, 2006 between David A. Gillespie
      and  H2Diesel, Inc. (incorporated by reference to Exhibit 10.5
      to the Current Report on Form 8-K filed October 26,
  2006).10.18*
              
              Separation
      Agreement, dated March 24, 2009, between the David A. Gillespie and New
      Generation Biofuels Holdings, Inc. (incorporated by reference to Exhibit
      10.17 to the Annual Report on Form 10-K filed March 31,
    2009).10.19*
              
              Amended
      and Restated Employment Agreement dated as of September 19, 2006, between
      Andrea Festuccia and H2Diesel, Inc. (incorporated by reference to Exhibit
      10.7 to the Current Report on Form 8-K filed October 26,
      2006).10.20*
              
              Amended
      and Restated Employment Agreement dated as of December 18, 2007 between
      Cary J. Claiborne and H2Diesel, Holdings, Inc. (incorporated by reference
      to Exhibit 10.1 to the Current Report on Form 8-K filed January 11,
      2008).10.21
              
              Form
      of Registration Rights Agreement (incorporated by reference to Exhibit
      10.8 to the Current Report on Form 8-K filed October 26,
      2006).10.22
              
              Form
      of Registration Rights Agreement in connection with the Private Placement
      of Series A Preferred Stock (incorporated by reference to Exhibit 10.3 to
      the Quarterly Report on Form 10-QSB filed May 15,
2007).10.23
              
              Form
      of Registration Rights Agreement in connection with the Private Placement
      of Common Stock in December 2007 (incorporated by reference to Exhibit
      10.25 to the Annual Report on Form 10-K filed March 31,
      2008).10.24
              
              Form
      of Registration Rights Agreement in connection with the Private Placement
      of Series B Preferred Stock (incorporated by reference to Exhibit 10.2 to
      the Current Report on  Form 8-K filed March 31,
  2008).10.25*
              
              Option
      Agreement dated September 15, 2006, between Lee S. Rosen and H2Diesel,
      Inc. (incorporated by reference to Exhibit 10.10 to the Current Report on
      Form 8-K filed October 26,
2006).


25





10.26*
              
              Option
      Agreement dated September 19, 2006, between Andrea Festuccia and H2Diesel,
      Inc. (incorporated by reference to Exhibit 10.11 to the Current Report on
      Form 8-K filed October 26, 2006).10.27*
              
              Option
      Agreement dated October 18, 2006, between David A. Gillespie and H2Diesel,
      Inc. (incorporated by reference to Exhibit 10.12 to the Current Report on
      Form 8-K filed October 26, 2006).10.28*
              
              Option
      Agreement dated December 19, 2008 between Cary J. Claiborne and H2Diesel
      Holdings, Inc. (incorporated by reference to Exhibit 10.30 to the amended
      Annual Report on Form 10-K/A filed July 25, 2008).10.29*
              
              Form
      of Independent Director Stock Option Agreement (incorporated by reference
      to Exhibit 10.1 to the Current Report on Form 8-K filed February 21,
      2007).10.30*
              
              Option
      Agreement dated April 24, 2007, between Kim Johnson and H2Diesel Holdings,
      Inc. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on
      Form 10-QSB filed May 15, 2007).10.31
              
              Site
      Lease Agreement, dated September 12, 2008, by and between Pennington
      Partners, LLC and New Generation Biofuels Holdings, Inc. (incorporated by
      reference to Exhibit 10.1 to the Current Report on Form 8-K filed
      September 18, 2008).10.32
              
              Terminaling
      Services Agreement, dated September 12, 2008, by and between Atlantic
      Terminalling, LLC and New Generation Biofuels Holdings, Inc. (incorporated
      by reference to Exhibit 10.2 to the Current Report on Form 8-K filed
      September 18, 2008, portions of which have been omitted pursuant to a
      request for confidential treatment).10.33
              
              Form
      of Subscription Agreement (incorporated by reference to Exhibit 10.1 to
      the Current Report on Form 8-K filed March 31, 2008).10.34
              
              Form
      of Subscription Agreement (incorporated by reference to Exhibit 10.1 to
      the Current Report on Form 8-K filed March 4, 2009).31.1†
              
              Certification
      pursuant to Section 302 of Sarbanes Oxley Act of 2002 (includes both
      Principal Executive Officer and Principal Financial
    Officer).32.1†
              
              Certification
      pursuant to Section 906 of Sarbanes Oxley Act of 2002 (includes both
      Principal Executive Officer and Principal Financial
    Officer).


________________


†           Filed
herewith.


*           Management
contract or compensatory plan or arrangement.


26




SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





Date:  May
      15, 2009
              By:
              /s/Cary J.
      ClaiborneCary
      J. ClaibornePresident,
      Chief Executive Officer & Chief Financial
                Officer
      (principal executive officer, principal financial
                and
      accounting officer)


27