		Page
PART I
Item 1.	Business	2
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	16
Item 4.	Submission of Matters to a Vote of Security Holders	16

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	18
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 8.	Financial Statements and Supplementary Data	22
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	47
Item 9A.	Controls and Procedures	47
Item 9B.	Other Information	48

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	49
Item 11.	Executive Compensation	54
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	58
Item 13.	Certain Relationships and Related Transactions, and Director Independence	61
Item 14.	Principal Accounting Fees and Services	61

PART IV
Item 15.	Exhibits and Financial Statement Schedules	62
	Signatures	63
	Index to Exhibits	64
	Certifications

Our near-term business strategy involves developing a revenue stream from direct sales of our biofuel produced at manufacturing plants that 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 have completed a number of test burns and are scheduled to conduct more in the near future. In addition, we have placed into service our first biofuel production plant, a 3 million gallon per year pilot facility jointly developed with Twin Rivers Technologies, and have entered into negotiations with Twin Rivers regarding the formation of a joint venture to construct a full scale plant. 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.

Xethanol Sublicense. We are still a party to a sublicense agreement with Xethanol, a renewable fuels company engaged in the production and sale of ethanol and its by-products, that we entered into in April 2006. Under this agreement, we granted Xethanol a ten-year exclusive right, subject to certain retained rights of use, to make and sell our biofuel and other products using our proprietary chemical additives. The license is exclusive within the eastern United States and includes a non-exclusive right to sell certain other products anywhere in North America, Central America and the Caribbean. We will be obligated to supply Xethanol with the proprietary additives for its production of products, including biofuel, at a purchase price equal to the lesser of our actual cost of the raw materials for the additives plus 10 percent or the lowest price charged to a third party that is not controlled by us. The sublicense agreement requires Xethanol to pay us a quarterly royalty per gallon of product sold directly or indirectly by or through Xethanol equal to the lesser of a fixed amount and the lowest royalty per gallon that we charge any other sublicensed third party not controlled by us. Xethanol is obligated to pay this royalty with respect to a minimum of 20 million gallons of fuel during the first 12 months following the date that we inform Xethanol that we are ready to accept orders for the additives and provide the necessary engineering specifications for a process plant to produce products, including biofuel, using the technology. Thereafter, the required minimum volume increases by 10 million gallons in each subsequent 12 month period during the term. If Xethanol fails to pay the minimum mandatory royalties during the first three years, we may terminate the sublicense or convert it to a non-exclusive basis. After the first three years, a failure to pay the minimum royalties results in the automatic conversion of the sublicense to a non-exclusive basis. The sublicense will automatically renew at the end of the initial 10 year term for successive one year terms, and the rate will adjust in accordance with the GNP Implicit Price Deflator, as defined in the agreement.

We will need additional financing for our business plan.

As of December 31, 2007, we have incurred a net loss of $14 million and negative cash flows from operating activities of $5.4 million since inception. As of December 31, 2007, we had approximately $1.6 million of available cash and approximately $635,000 of accounts payable and accrued expenses. In addition, under the license agreement with the inventor of our proprietary technology, we are required to pay $850,000 upon the completion of our next round of financing that exceeds $850,000 and an additional $1.0 million per year over the next six years. We have financed our operations to date primarily through the sale of our common stock, preferred stock and warrants in privately-negotiated transactions with accredited investors, including a recently-completed offering of Series B preferred stock and warrants. Although we believe have sufficient capital to fund our budget for the remainder of the year, we will need additional financing after that time to pursue our business plan, and we expect to seek additional capital to be able to increase our expenditures above our existing budget. Future capital requirements could vary significantly and will depend on certain factors, many of which are not within our control. These factors include the ongoing development and testing of our proprietary technology, the nature and timing of licensing and sublicensing activities, plant construction, commencement of sales, hiring qualified management and employees, responding to competitive pressures, regulatory requirements, and available financing. Because of our continuing need to raise additional capital, we are likely to seek additional financing on an opportunistic basis whenever we believe there is a suitable opportunity to do so. Any needed financing may not be available on acceptable terms. In addition, future equity financings, if any, could be dilutive to existing shareholders. If additional financing is not available when needed, you may lose your entire investment in our company.

Our ability to successfully test our technology, to develop and operate manufacturing plants and to identify and enter into commercial arrangements with customers or sublicensees will depend on developing and maintaining close working relationships with industry participants. These relationships will need to change and evolve over time, as we enter different phases of development. Our strategic relationships most often are not yet reflected in definitive agreements, or the agreements we have do not cover all aspects of the relationship. Our success in this area also will depend on our ability to select and evaluate new strategic relationships and to consummate transactions. Our inability to identify suitable companies or enter into and maintain strategic relationships may impair our ability to grow. The terms of relationships with strategic partners may require us to incur expenses or undertake activities we would not otherwise be inclined to incur or undertake in order to maintain these relationships. Moreover, reliance upon strategic partners to manufacture and sell biofuel subjects us to additional risks, including a limited ability to control the quality of such fuel and the failure of such partners to perform in accordance with the terms of agreements that they may enter into with us. Arrangements we enter into with such partners may compete with any biofuel that we may manufacture at our own plants and therefore may limit our organic growth.

Within the alternative fuels market, the manufacture, marketing and sale of biofuels (such as bio-diesel) and other alternative fuels is highly competitive. According to the National Bio-diesel Board (NBB), as of January 31, 2007, there were at least 105 companies that were engaged in developing, manufacturing and marketing bio-diesel fuel, with current production capacity estimated at 1.5 billion gallons per year. In addition, the NBB estimates that biodiesel demand in the United States was approximately 450 million gallons per year in 2007. The NBB further estimates that another 1.7 billion gallons of annual plant capacity are under development. Such competition could be intense and could drive up the costs of feedstock, plant construction, attracting and retaining qualified engineers, chemists and other key employees, as well as other operating expenses. Additionally, new companies are constantly entering the market. This growth and fragmentation could negatively impact us or our sublicensees’ ability to obtain additional capital from investors. Larger companies which have been engaged in this business for substantially longer periods of time may have access to greater financial and other resources. These companies may have greater success in recruiting and retaining qualified employees and in fuel manufacturing and marketing, which may give them a competitive advantage.

Our success will depend, in large part, on our technology’s commercial viability and on the strength of our intellectual property rights. Much of the technology presently consists only of trade secret rights, which are difficult to protect. If others gain access to the trade secrets relating to our technology, including through analysis or “reverse engineering” of the additives or biofuel made with the technology, they may able to develop substantially equivalent technology. Although we filed patent applications on behalf of the inventor to protect our technology, there can be no assurance that we ultimately will receive patent protection or that any protection that is obtained will be broad enough to be effective in protecting our technology against claims or actions by competitors. Further, any patents that are obtained may not withstand challenges as to validity and enforceability. Third parties may assert that the technology, or the products we or our sub-licensees commercialize using the technology, infringes upon their proprietary rights. We have yet to complete an infringement analysis and, even if such an analysis were available at the current time, we could not be certain that no infringement exists, particularly as our products have not yet been fully developed. We may need to acquire additional licenses from third parties in order to avoid infringement claims, and any required licenses may not be available to us on acceptable terms, or at all. To the extent infringement claims are made, we could incur substantial costs in the resulting litigation, and the existence of this type of litigation could impede the development of our business.

Under the terms of our private placements, we entered into Registration Rights Agreements dated October 20, 2006, May 9, 2007, December 14, 2007, December 21, 2007 and March 31, 2008 with the purchasers of our preferred and common stock. Under the Registration Rights Agreements, we are required to file “resale” registration statements with the SEC covering the shares of our common stock issued directly, upon conversion of the preferred stock issued or upon exercise of the warrants issued in the private placements. In October 2007, we registered 11,173,050 shares of our common stock for resale by the selling stockholders on two registration statements on Form SB-2 (Registration No. 333-144386 and No. 333-144389). We are obligated to maintain the effectiveness of these “resale” registration statements from the effective date until all securities registered under the registration statements have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without regard to volume limitations, provided we comply with our reporting obligations. We may also include on future registration statements additional shares issuable upon exercise of our outstanding warrants and options. We agreed to use our best efforts to have the “resale” registration statement declared effective by the SEC as soon as possible after the initial filing, but by no later than 180 days after the closing of the private placements. Because we did not file the registration statement when required after our October 2006 private placement, we issued additional shares of our common stock to the purchasers in the October 2006 private placement, in an amount equal to 174,900 shares (or 6%) of the shares sold. On December 21, 2007, the Company determined that they would not be able to file a “resale” registration statement for the December 2007 private placements within 30 days. The Company anticipates that they will file by April 30, 2008 and have recorded a liability for 2% of the shares issued in the December 2007 private placements. The Company recorded an $80,752 contingent liability based on the Company’s stock price at dates of the closings. For the year ended December 31, 2007 the Company recorded a gain on fair value adjustment of $1,796 related to this liability as the Company’s stock price declined during this period.

Note 1 - ORGANIZATION AND PLAN OF OPERATION

New Generation Biofuels Holdings, Inc. (formerly known as H2Diesel Holdings, Inc. and Wireless Holdings, Inc.) (the “Company) was incorporated June 4, 2003 under the laws of the State of Florida. We are a development stage company that, through our wholly owned subsidiary, H2Diesel, Inc. soon to be renamed New Generation Biofuels, Inc., a Delaware corporation (“H2Diesel”), holds an exclusive license for North America, Central America and the Caribbean to exploit proprietary technology (the “Technology”) to manufacture biofuel that is intended to be marketed as a new class of biofuel for power generation, heavy equipment, marine use and as heating fuel (the “H2Diesel Biofuel”). We acquired H2Diesel on October 20, 2006 in a so-called “reverse merger” transaction (such merger, the “Merger”). As a result of the Merger, a change of control occurred as former H2Diesel stockholders acquired 93.6% of the outstanding shares of our common stock, par value $.001 per share (“Common Stock”) and we ceased being a “shell company” as such term is defined in Rule 12b-2 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Following the Merger we changed the name of our company to “H2Diesel Holdings, Inc.”

The Merger was consummated under Delaware law and pursuant to an Agreement of Merger and Plan of Reorganization, dated October 17, 2006 (the “Merger Agreement”). Shortly before the closing of the Merger, H2Diesel completed a private offering (the “Private Placement”) to accredited investors of 2,915,000 shares of its common stock, par value $.0001 per share (“H2 Common Stock”), and received gross proceeds of $2,915,000 at the closing of the Private Placement, which includes the conversion of a demand note in the principal amount of $765,000 into 765,000 shares of H2 Common Stock (the “Demand Note”) at price of $1.00 per share.

In connection with the Merger, the Company assumed all of H2Diesel’s obligations under its outstanding stock options and warrants. At the time of the Merger, H2Diesel had outstanding stock options and warrants to purchase 5,571,500 shares of H2 Common Stock, which outstanding stock options and warrants are now options and warrants to purchase an equal number of shares of the Common Stock of the Company as a result of the Merger. The Company did not have any warrants or options to purchase shares of Common Stock outstanding immediately prior to the closing of the Merger.

Pursuant to a Purchase and Repayment Agreement, dated October 20, 2006 between the Company and Joseph Hess, the former President and Chief Executive Officer of the Company, which was entered into in connection with the Merger, the Company paid an aggregate of $300,000 to Mr. Hess in consideration of the payment in full of all indebtedness owed by the Company to Mr. Hess in the amount of $215,945 and the sale to the Company of 29,075,000 shares of Common Stock, which shares were then cancelled at the closing of the Merger. Immediately following the closing of the Merger and pursuant to an Acquisition Agreement dated October 20, 2006, and as part of the consideration for the repurchase of Mr. Hess’ shares, the Company sold to Mr. Hess all of the capital stock of our subsidiary, Action Wireless, Inc., a Florida corporation, through which the Company conducted its historical wireless products reseller business, and Mr. Hess assumed and agreed to indemnify and hold the Company harmless from the historical and future liabilities of those operations. Giving effect to the cancellation of Mr. Hess’ shares, there were 1,101,250 shares of Common Stock outstanding before giving effect to the stock issuances in the Merger.

The Merger is being accounted for as a “reverse merger” (i.e., a recapitalization of H2Diesel), because the stockholders of H2Diesel now own a majority of the outstanding shares of Common Stock immediately following the Merger. H2Diesel is deemed to be the acquiror in the reverse merger and, consequently, the assets and liabilities and the historical operations that are reflected in the financial statements are those of H2Diesel and are recorded at the historical cost basis of H2Diesel.

H2Diesel is an alternative fuel company. H2Diesel plans to produce, sell or sublicense to third parties for its manufacture and use, the Company’s proprietary H2Diesel Biofuel pursuant to an exclusive license agreement entered into by the Company on March 20, 2006 (the “Master License”).

The Company is in the development stage and has not generated any revenues. As a result, the Company has incurred a net loss of $14 million and negative cash flows from operating activities of $5.4 million since Inception. The Company is obligated to pay $6.85 million in additional payments under the Master License. The Company’s continued existence beyond 2008 is dependent upon several factors, including obtaining additional debt or equity financing, production of its products, developing a market for its products, and achieving certain levels of sales volume and profitability from the sale of its products 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 consolidated financial statements include the Company and its wholly owned subsidiary, H2Diesel, Inc. soon to be renamed New Generation Biofuels, Inc., a company organized on February 28, 2006 (“Inception”). All intercompany accounts and transaction have been eliminated.

The Company has devoted most of its activities to establishing its business, including raising capital and, accordingly, the Company presents its consolidated financial statements as a development stage enterprise as defined in Statement of Financial Accounting Standards (“SFAS”) No.7, “Accounting and Reporting by Development Stage Enterprises.”

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, 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 December 31, 2007 and 2006, there were 10,332,565 and 5,671,500, respectively, shares of common stock equivalents including options (5,605,000 shares of common stock as of December 31, 2007 and 4,100,000 shares of common stock as of December 31, 2006), non employee options (1,531,000 shares of common stock as of December 31, 2007) and warrants (3,196,565 shares of common stock as of December 31, 2007 and 1,571,500 shares of common stock as of December 31, 2006 ) 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 December 31, 2007 there were 42,050 shares of convertible preferred stock, which are convertible into 1,051,250 shares of common stock that were not included in the computation of EPS because to do so would have been antidilutive as well.

Concentration of Credit Risk

The Company maintains cash balances at financial institutions insured up to $100,000 by the Federal Deposit Insurance Corporation. Balances exceed these insured amounts during the year.

Costs Associated with Issuance of Stock

Costs directly associated with the sale of stock are charged to stockholders’ equity.

Share-Based Compensation

In accordance with SFAS 123R “Share-Based Payment”, the Company records compensation expense for all share-based payment awards made to employees based on estimated fair value.

Stock Issued for Non-Cash Consideration

Stock issued for services has been valued based on the estimated fair value of the shares at the time they were issued.

Accounting for Long-Lived Assets

The Company’s long-lived assets include the Master License. In accordance with SFAS 144, long-lived assets other than goodwill are reviewed 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 to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be 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.

Master License

In accordance with SFAS 142 “Goodwill and Other Intangible Assets”, the Company has capitalized its Master License and has estimated its useful life to be 13 years. The Company has not amortized any of the cost of its Master License as the Company has not produced any product. The value of the Master License was tested for impairment at December 31, 2007 and 2006 in accordance with SFAS 144. As discussed in Note 1, if the Company is unable to meet its financial obligations, the Company will not be able to recover its investment in the Master License.

Revenue Recognition

The Company follows a policy of recognizing sales revenue at the time that the fuel produced is shipped to its customers. Royalty revenues are recognized based upon the terms of the underlying agreement, when the amounts are measurable and collectability is reasonably assured.

Research and Development

Research and development costs consist of ongoing testing of the technology and are expensed as incurred.

Income Taxes

Deferred tax assets and liabilities are computed based on the difference between the book and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expenses or credits are based on changes in the assets and liabilities from period to period. These differences arise primarily from the Company’s net operating loss. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. No deferred taxes were recorded due to the uncertainty of future income.

Fair Value of Financial Instruments

The carrying amount of cash, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. License agreement payable approximates fair value of amounts due under the Master License as it has been recorded in accordance with Accounting Principles Board Opinion No. 21.

Recently Issued Accounting Standards

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“SFAS 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments. SFAS 157 is effective for financial assets and liabilities on January 1, 2008. The FASB has deferred the implementation of the provisions of SFAS 157 relating to certain nonfinancial assets and liabilities until January 1, 2009. The adoption of SFAS 157 on January 1, 2008 for financial assets and liabilities will not have a material effect on the Company’s consolidated financial statements. The Company has not determined whether the adoption of SFAS 157 will have a material impact on its consolidated financial position and results of operations on January 1, 2009 for non financial assets and liabilities.

In December 2006, the FASB issued FASB Staff Positions (FSP) EITF 00-19-2 “Accounting for Registration Payment Arrangements”. Under this pronouncement, contingently payable registration payment arrangements are accounted for separately from and do not affect the classification of the underlying shares, warrants or other financial instruments subject to the registration payment provisions. This was accomplished by amending SFAS No. 133 and No. 150 to include scope exceptions for registration payment arrangements. A liability for a registration payment arrangement should be recognized when payment is probable and the amount is reasonably estimable (whether at inception or during the life of the arrangement) in accordance with SFAS No. 5, “Accounting for Contingencies.” The FSP is effective for registration payment arrangements and the financial instruments subject to such arrangements that are entered into or modified after December 21, 2006. For registration payment arrangements and financial instruments subject to those arrangements that were entered into before December 22, 2006, companies are required to account for transitioning to the FSP through a cumulative-effect adjustment to the opening balance of accumulated deficit or retained earnings in fiscal years beginning after December 15, 2006. The Company implemented this FSP effective January 1, 2007 and recorded a $1,574,100 contingent liability.

Reclassification

For the period from Inception to December 31, 2006, payments in the amount of $400,000 have been reclassified from investing activities to financing activities on the consolidated statement of cash flows.

Note 3 - MASTER LICENSE AGREEMENT AND NOTE PAYABLE

On March 20, 2006 (the “Effective Date”), the Company entered into a Master License with Ferdinando Petrucci, the inventor of the H2Diesel Biofuel (“Licensor”), to obtain an exclusive license to make, use and sell the Product in the territory comprising North America, Central America and Caribbean as well as other regions that may be added by mutual agreement of the parties. The Company agreed to pay $11.0 million to the Licensor which was to be payable as follows: $1.5 million paid upon the Effective Date, $1.0 million within 180 days after the Effective Date, $1.5 million within one year after the Effective Date and $1.0 million on each subsequent anniversary of the Effective Date for the seven years thereafter. The Company also issued 893,750 shares of Common Stock to the Licensor as additional compensation for the Master License. The Company recorded an intangible asset of $8,061,300 for the Master License. The Company recorded a payable for the $9.5 million of remaining payments under the Master License with a discount based on an imputed interest rate of 14%. The Company has recorded interest expense of $773,832 and $638,633 representing amortization of the discount for the year ended December 31, 2007 and for the period from Inception through December 31, 2006, respectively.

On September 11, 2006, the Master License Agreement was amended to extend to December 31, 2006 each of the following: (i) the due date of the $1.0 million payment that was due on September 20, 2006, (ii) the expiration of the option to add South America, excluding Paraguay, to the covered territory, and (iii) the deadline to file a registration statement with the SEC with respect to the Company’s securities, to December 31, 2006.

On December 13, 2006, the Master License Agreement, as amended, was further amended: (i) to require the Company to make a $400,000 payment by December 15, 2006; (ii) to reduce to $600,000 the $1.0 million payment due December 31, 2006 and to extend the due date for such payment to July 31, 2007. In addition, the due date for the $1.5 million payment which was March 20, 2007 was extended to October 31, 2007. The Company made the required $400,000 payment on December 15, 2006.

On November 3, 2007, the Master License Agreement, as amended, was further amended: (i) to extend the October 31, 2007 payment of $1,500,000 until November 15, 2007 and (ii) the Company agreed to prepay $500,000 of the $1,000,000 that was due on March 20, 2008.

On November 9, 2007, the Master License Agreement was further amended to extend the $2,000,000 due on November 15, 2007 to November 29, 2007. Additionally, the remaining payment of $500,000 that was due on March 20, 2008 is now due February 20, 2008. The $1,000,000 payment due on March 20, 2009 is now due on February 20, 2009. Of the $1,000,000 payment due on March 20, 2010, $500,000 will be prepaid on February 20, 2010. During December 2007, the Company paid $1,500,000 of the $2,000,000 due on November 29, 2007.

On February 20, 2008, the Master License Agreement, as amended, was further amended, to extend the remaining $500,000 that was due on November 29, 2007 to March 20, 2008. Additionally, the due date for the $500,000 payment due February 20, 2008 was also extended to March 20, 2008.

The following is a schedule of future payment requirements of the Master License Agreement:

Years Ended December 31,	Amount Due

2008	$	1,000,000
2009		1,000,000
2010		1,000,000
2011		1,000,000
2012		1,000,000
Thereafter		2,000,000
		7,000,000
Unamortized Discount		(2,071,983	)
	$	4,928,017

Note 4 - INVESTMENT AGREEMENT, MANAGEMENT AGREEMENT AND

SUBLICENSE AGREEMENT

Effective April 14, 2006, the Company entered into an Investment Agreement (the “Agreement”) with two institutional investors (the “Investors”) and Xethanol Corporation (“Xethanol”). The Agreement was amended on May 17, 2006, effective as of April 14, 2006 (the “Amended Agreement”).

On March 20, 2006, in exchange for gross proceeds of Two Million Dollars ($2,000,000) from the Investors, the Company issued to the Investors 3,250,000 shares of Common Stock and stock options to purchase 2,000,000 shares of Common Stock for $2.50 per share (the “Investor Option”). The Investor Option was exercisable up to 60 days after the Company provided notice of certain test results (the “Test Notice”) with respect to its technology (the “Exercise Period”). The Investor Option has a fair value of $15,463 based on the Black-Scholes option-pricing model.

Costs associated with the investment amounted to $254,789 resulting in net proceeds to the Company of $1,745,211. The Company issued 80,000 warrants to purchase shares of Common Stock at an exercise price of $2.50 per share as compensation for investment banking services associated with raising the equity. The warrants have a fair value of $17,420 based on the Black-Scholes option pricing model. The warrants are considered a cost of raising the capital.

The Company issued to Xethanol a total of 2,600,000 shares of the Common Stock, granted Xethanol the right to purchase up to an additional 2,000,000 shares of Common Stock at $1.80 per share (the “Xethanol Option”), and Xethanol granted the Investors the right to require Xethanol to purchase the shares of the Common Stock owned by the Investors in exchange for 500,000 shares of Xethanol common stock (the “Put Right”). The Xethanol Option was exercisable during the Exercise Period. The Xethanol Option has a fair value of $41,410 based on the Black-Scholes option pricing model. Of the 2,600,000 shares issued to Xethanol, 1,300,000 shares were issued to Xethanol as an inducement to enter into the Put Right.

The fair value of these shares was $793,815, based on a share price of approximately $0.61. On April 14, 2006, the Investors exercised their respective Put Rights, and Xethanol purchased the Investors’ 3,250,000 shares of Common Stock in exchange for 500,000 shares of Xethanol common stock. As of December 31, 2007, Xethanol owned 5,850,000 shares of Common Stock which represented as of such date a 32% ownership interest in the Company.

On June 15, 2006 the Company sent the Test Notice and on August 15, 2006, the Company agreed to extend the Exercise Period to August 21, 2006. As of August 21, 2006, the Investor Option and the Xethanol Option expired.

In connection with the Agreement, Xethanol and the Company entered into a Management Agreement and Sublicense Agreement, each of which is dated April 14, 2006. The Sublicense Agreement was amended and restated on June 15, 2006, effective April 14, 2006, in an Amended and Restated Sublicense Agreement (the “Amended Sublicense Agreement’).

Under the Management Agreement, Xethanol agreed to manage the business of the Company. The Company issued 1,300,000 shares of Common Stock to Xethanol pursuant to the Amended Agreement as a non-refundable fee for its services under the Management Agreement. The shares have a fair value of $793,815, based on the Company’s estimate of the fair value of the services to be performed and were recorded as a deferred expense. On August 25, 2006, the Company notified Xethanol of the Company’s election to terminate the Management Agreement. As a result the Management Agreement terminated on September 25, 2006. Accordingly, the Company recorded the entire management fee expense of $793,815 as a charge to operations during 2006.

Under the Amended Sublicense Agreement, Xethanol was granted a ten year sublicense to produce and sell bio-fuel and other products (“Products”) incorporating the Company’s proprietary additive (the “Additive”) and know how exclusively in Maine, Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, Delaware, New Jersey, Virginia, West Virginia, North Carolina, South Carolina, Georgia and Florida and a non-exclusive license to sell those Products anywhere within North America, Central America and the Caribbean. Additional territories may be added by written agreement of the parties.

Under the Amended Sublicense Agreement, the Company must sell Xethanol sufficient Additive to meet its requirements for the production of Product at the lower of its actual cost plus 10% or the price at which the Company sells Additive to unrelated third parties or at such other price as Xethanol and the Company may agree. Xethanol is obligated to pay certain royalties to the Company based on sales of Products by them or their sublicensees. Xethanol is obligated to pay to the Company a royalty (the “Royalty”) per gallon of Product that it or its distributors sell equal to the lesser of $.10 per gallon or the lowest per gallon royalty that the Company charges to unrelated entities. During the first royalty period, which begins on the date the Company first notifies Xethanol that the Company can produce and deliver Additive in sufficient quantities to meet Xethanol’s requirements, is able to do so and provides them with the technical and engineering specifications necessary for a plant to produce the Products (the “Trigger Date”) and ends 12 months later, Xethanol must pay a minimum Royalty amount that would be payable based upon sales of 20,000,000 gallons of Product (the “Minimum Sales Amount”), regardless of whether such sales actually occur. The Minimum Sales Amount increases by 10,000,000 gallons for each succeeding 12-month period during the initial term of the Amended Sublicense Agreement, which ends 10 years from the Trigger Date. If Xethanol does not meet the Minimum Sales Amount, or fails to pay the Royalty that would have been payable had they met the Minimum Sales Amount, in any 12-month period, its rights may become non-exclusive or the agreement may be subject to termination. The Amended Sublicense Agreement automatically renews for successive one-year periods provided there are no existing defaults at the time of renewal. As of March 25, 2008, the Trigger Date had not yet occurred.

Also on June 15, 2006, Xethanol entered into a Technology Access Agreement with the Company, pursuant to which the Company will deliver to Xethanol the Additive formula and all know-how in the Company’s possession, under the Company’s control or available from the inventor of the Technology that relates to the manufacture of the Additive. The Company is required to continue to provide Xethanol with information regarding modifications to that formula or know-how. Xethanol has no right to use the formula or the know-how except as set forth in the Amended Sublicense Agreement so long as the Company is not in default of its obligations under the Amended Sublicense Agreement. After an event of default by the Company, Xethanol has the right to use the formula and know-how to produce Additive to meet its needs to sell Product under the Amended Sublicense Agreement. Xethanol must pay the Company the royalties that it would otherwise have paid in connection with sales of Product, but may offset the amount by which the cost it incurs in manufacturing the Product itself exceeds the price that it would otherwise have paid to the Company. Xethanol has retained the right to seek damages from the Company for any excess cost of the Additive.

On October 5, 2007, the Company entered into a Stock Purchase and Termination Agreement with Xethanol in which, subject to raising the requisite financing, the Company agreed to purchase 5,460,000 shares of its Common Stock from Xethanol for an aggregate purchase price of $7,000,000. The shares subject to the agreement represent approximately 30% of the outstanding shares of the Company. Upon the repurchase of the shares, all of the existing agreements with Xethanol were to be cancelled, and there was to be no further commercial relationship between the parties. The existing agreements include the sublicense agreement and the technology access agreement. A letter agreement regarding registration rights would also be terminated and a $50,000 loan from Xethanol will also be deemed to be satisfied and cancelled. A mutual release by the parties of all claims also would be effective at closing. The closing of this agreement was contingent upon the Company raising a minimum of $10,000,000 of new financing. Subject to the satisfaction of the financing condition, the closing was to occur on or before November 9, 2007 or a later date as agreed to by the parties. On November 13, 2007, the agreement was amended to change the closing date to November 29, 2007. The Company paid Xethanol a non-refundable deposit of $250,000, which was to be deducted from the purchase price payable at closing.

On January 7, 2008, the Company received written notice from Xethanol that it was terminating the Stock Purchase and Termination Agreement, effective January 17, 2008. The Company recorded the forfeited deposit of $250,000 as a charge to other expense for the year ended December 31, 2007.

Note 5 - CONVERTIBLE PROMISSORY NOTE

On September 11, 2006, the Company issued a $765,000 Convertible Promissory Note (the “Note”), in a Private Placement, payable on demand and bearing interest at 8% per annum. The Note was converted at the Company’s option into shares of Common Stock upon the consummation of the Private Placement.

Note 6 PREFERRED AND COMMON STOCK

Preferred Stock

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

The Preferred Stock is convertible at the election of the holders into shares of Common Stock, at an initial conversion price of $4.00 per share. Each share of 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 agreement described below, 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. For the period ended December 31, 2007 the Company accrued dividends of $210,275.

The Preferred Stock shall also participate on an as-converted basis with all dividends paid on the shares of Common Stock. Upon any liquidation of the Company, the holders of the 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 Preferred Stock (collectively with the common stock, “Junior Securities”), the original issue price of the Preferred Stock plus all accrued and unpaid dividends (collectively, the “Liquidation Preference”). 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 Preferred Stock. Any shares of Preferred Stock outstanding on the third anniversary of the Offering shall automatically convert into a number of shares of Common Stock determined by dividing the Liquidation Preference by the Conversion Price of the Preferred Stock then in effect.

Each investor in the Preferred Offering 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 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 have a fair value of $2,610,882 based on the Black-Scholes option pricing model.

In connection with the Preferred Offering, the Company agreed to register the resale of the shares of Common Stock issuable (i) upon conversion of the Preferred Stock, (ii) as dividends on the Preferred Stock, and (iii) upon exercise of the Warrants (collectively, the “Preferred Offering Registrable Shares”), all in accordance with a Registration Rights Agreement dated May 9, 2007 among the Company and each of the investors in the Offering (the “Preferred Offering Registration Rights Agreement”). Under the Preferred Offering Registration Rights Agreement, the Company was required to file the “resale” registration statement with the SEC covering such shares on or before the 60th day following the closing of the Preferred Offering. On July 6, 2007, the Company complied with this deadline by filing a registration statement with the SEC covering such shares and on October 16, 2007 the registration statement was declared effective. The Company is obligated to maintain the effectiveness of the registration statement from the effective date through and until 13 months after the date of closing of the Preferred Offering, unless all securities registered under the registration statement have been sold or are otherwise able to be sold pursuant to Rule 144 under the Securities Act, without regard to volume limitations, provided the Company complies with its reporting obligations.

The Preferred Stock is convertible into 1,063,750 shares of Common Stock, at the election of the holders, at an initial conversion price of $4.00 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 Preferred Stock dividend in the amount of $2,496,150 recorded during the year ended December 31, 2007.

In connection with the Preferred Offering, Empire Financial Group or affiliated persons received a cash commission of $345,500 which represents 10% of the consideration paid by investors introduced by it in connection with the Preferred Offering, and warrants exercisable for 58,000 shares of Common Stock. The warrants have a fair market value of $288,420 based on the Black-Scholes option pricing model. The warrants are considered a cost directly associated with the issuance of stock.

In December 2007, pursuant to the terms of the Preferred Offering dated May 9, 2007, one of the investors elected to convert the Preferred Stock into shares of Common Stock. Accordingly the investor converted 500 shares of Preferred Stock into 12,500 shares of Common Stock.

Common Stock

On December 14, 2007, the Company completed a private placement offering (the “Common Offering”) of 815,000 shares of Common Stock, at a price of $3.50 per share to accredited investors. The gross proceeds from the Common Offering were $2,852,500. On December 21, 2007, the Company completed a second closing of 72,143 shares of Common Stock. The gross proceeds were $252,501.

Each investor in the Common Offering 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 initial exercise price of the warrants is $5.25 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. Warrantholders may exercise their warrants by means of a “cashless exercise” at any time following the first anniversary of the issue 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 have a fair value of $2,993,230 based on the Black-Scholes option pricing model.

In connection with the Common Offering, the Company agreed to register the resale of the shares of Common Stock issued or issuable to investors (i) upon the exercise of any warrants and (ii)as may be issued or distributed in respect thereof by way of stock dividend or stock split or other distribution, recapitalization or reclassification (collectively, the “Common Offering Registrable Shares”), all in accordance with a Registration Rights Agreement among the Company and each of the investors in the Common Offering (the “Common Offering Registration Rights Agreement”). Under the Common Offering Registration Rights Agreement, the Company is required to file the “resale” registration statement with the SEC covering such shares on or before the 30th day following the closing date. We are obligated to maintain the effectiveness of the “resale” registration statement from the effective date of the registration statement through and until (i) the Common Offering Registrable Shares have been disposed of in accordance with such registration statement, (ii) such shares have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act, (iii) all of the Common Offering Registrable Shares then owned by such investor could be sold pursuant to Rule 144(k), or (iv) such shares have ceased to be outstanding. We agreed to use our best efforts to have the “resale” registration statement declared effective by the SEC as promptly as practicable after the initial filing, but by no later than 180 days after the closing of the Common Offering. The Company may be required to issue additional shares of Common Stock to investors in the Common Offering, in an amount not to exceed 6.0% of the shares of Common Stock issued to investors if we fail to meet certain registration rights obligations (See Note 7).

In connection with the Common Offering, the Company paid a cash commission of $154,875 and issued warrants exercisable for 63,214 shares of Common Stock as consideration for investors introduced to the Company. The warrants have a fair value of $215,665 based on the Black-Scholes option pricing model. The warrants are considered a cost directly associated with the issuance of stock.

On October 17, 2006, the Company completed the closing of a Private Placement of a total of 2,915,000 shares of Common Stock, inclusive of the shares issued upon conversion of the Note, at a purchase price of $1.00 per share (See Note 5). Gross proceeds were $2,915,000.

In connection with the Private Placement, the Company paid a cash commission of $222,475 and issued warrants exercisable for 251,500 shares of Common Stock as consideration for investors introduced to the Company. The warrants have a fair value of $141,243 based on the Black-Scholes option pricing model. The warrants are considered a cost directly associated with the issuance of stock.

In connection with the Private Placement, the Company agreed to register the resale of the shares of Common Stock issued (the “Registrable Shares”), in accordance with a Registration Rights Agreement among the Company and each of the investors in the Private Placement (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Company was required to file the “resale” registration statement with the SEC covering such shares on or before the 30^th day following the closing of the Private Placement. Because the Company did not file the registration statement prior to November 20, 2006, (the “Filing Deadline”), the Company was required to issue additional shares of Common Stock to the investors in the Private Placement, in an amount equal to 1% of the shares sold in the Private Placement for each 30 day period following the Filing Deadline, up to a maximum of 6%. In July 2007, the Company issued 174,900 shares of Common Stock to investors in the Private Placement (See Note 7). On July 6, 2007, the Company filed a registration statement with the SEC covering such shares and on October 16, 2007, the registration statement was declared effective.

On September 20, 2006, in consideration of strategic advisory services to be provided by an independent contractor to the Company, the Company issued 75,000 shares of Common Stock. The fair market value of the Common Stock issued amounted to $45,750 based on a share price of approximately $0.61, and was recorded as consulting expense during the period from Inception through December 31, 2006.

On April 14, 2006, the Company issued 1,300,000 shares of Common Stock to Xethanol as a non-refundable fee for its services under the Management Agreement, issued an additional 1,300,000 shares of Common Stock to Xethanol to induce it to grant the Put Right, granted Xethanol the Xethanol Option and entered into the Amended Sublicense Agreement with Xethanol.

On March 20, 2006, the Company completed the closing of a private placement of a total of 3,250,000 shares of Common Stock at a purchase price of approximately $0.61 per share (See Note 4).

On March 20, 2006, upon the Effective Date of the Master License, the Company issued an aggregate of 715,000 shares of Common Stock to two consultants (one of whom is now the Company’s Chief Technology Officer) as compensation for their services rendered in introducing the inventor to the Company and their assistance in negotiating the terms of the Master License. The fair market value of the Common Stock issued to the consultants amounted to $436,598, based on a share price of approximately $0.61, and was recorded as consulting expense during the period from Inception through December 31, 2006.

Note 7 - GAIN ON FAIR VALUE ADJUSTMENT

On January 1, 2007, the Company implemented EITF 00-19-2, which requires a company to recognize a liability for registration rights payments when they are probable and the amount is reasonable estimable. As of December 31, 2006, the Company had not filed a “resale” registration statement for the Private Placement. On January 1, 2007, the Company recorded a liability for 6% of the shares issued in the Private Placement. The Company recorded a $1,574,100 contingent liability based on the Company’s stock price at that date. For the year ended December 31, 2007, the Company recorded a gain on fair value adjustment of $629,640 related to this liability as the Company’s stock price declined during this period. Upon issuance of the shares the contingent liability was eliminated.

On December 14, 2007, the Company determined that they would not be able to file a “resale” registration statement for the Common Offering within 30 days. The Company anticipates that they will file by April 30, 2008 and have recorded a liability for 2% of the shares issued in the Common Offering. The Company recorded an $80,752 contingent liability based on the Company’s stock price at dates of the closings. For the year ended December 31, 2007 the Company recorded a gain on fair value adjustment of $1,796 related to this liability as the Company’s stock price declined during this period.

Note 8 - OPTIONS, WARRANTS AND NON EMPLOYEE OPTIONS

The Company utilizes the Black-Scholes option valuation model to estimate the fair value of option and warrant grants on the date of grant using the following weighted-average assumptions:

	2007		2006

Expected life (in years)	5		3-5
Risk-free interest rate		2.93% - 4.72%		4.60% - 4.91%
Volatility		100%		100%
Dividend yield		0%		0%

Utilizing these assumptions, the weighted average fair value of options granted with an exercise price equal to their fair market value at the date of the grant is $2.63 and $1.65 for the year ended December 31, 2007 and for the period from Inception to December 31, 2006, respectively.

Employee Options

The following table summarizes stock option information with respect to all employee and director stock options for the year ended December 31, 2007 and for the period from Inception to December 31, 2006:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value

Options outstanding at February 28, 2006		-
Granted		4,100,000	$	1.65		9.70
Options outstanding at December 31, 2006		4,100,000	$	1.65		9.70
Granted		1,505,000	$	5.30		9.04
Options outstanding at December 31, 2007		5,605,000	$	2.63		8.79
Vested and expected to vest - end of year		4,260,000	$	2.58		8.74	$	9,608,750

Options exercisable at December 31, 2007		3,180,000	$	2.33		8.76	$	7,751,000

Options outstanding at December 31, 2007 have an exercise price of $1.50 to $10.50 per share. Options exercisable at December 31, 2007 does not include 1,380,000 performance based options.

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company’s closing stock price on December 31, 2007 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 December 31, 2007. This amount changes based upon changes in the fair market value of the Company’s stock. As of December 31, 2007 $1,718,069 of the total unrecognized compensation costs related to stock options is expected to be recognized over a period of approximately three years.

Warrants

The Company has issued warrants in conjunction with various private placements of its stock and in exchange for services. All warrants are currently exercisable.

The following table summarizes warrant information for the year ended December 31, 2007 and for the period from Inception to December 31, 2006:

	Shares			Weighted Average Exercise Price

Warrants outstanding at February 28, 2006		-		$	-
Issued for services rendered		1,571,500		$	2.11
Issued to investors		2,000,000		$	2.50
Issued for Put Right Agreement		2,000,000		$	1.80
Expired		(4,000,000	)	$	2.15
Warrants outstanding at December 31, 2006		1,571,500		$	2.11
Issued to investors - Preferred offering		531,875		$	6.00
Issued to investors - Common offering		887,143		$	5.25
Issued for services rendered		206,047		$	5.50
Warrants outstanding at December 31, 2007		3,196,565		$	3.85

The following table summarizes warrants information as of December 31, 2007:

Number of Warrants	Exercise Prices	Expiration Dates

340,000	$1.50	2009
251,500	$1.50	2011
400,000	$2.00	2009
100,000	$2.25	2011
80,000	$2.50	2011
400,000	$3.00	2009
62,083	$4.00	2012
950,357	$5.25	2012
589,875	$6.00	2012
22,750	$9.00	2010
3,196,565

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 for the year ended December 31, 2007 and for the period from Inception to December 31, 2006:

	Number of Shares		Weighted Average Exercise Price

Options outstanding at December 31, 2006		-	$	-
Granted		1,531,000	$	6.01
Options outstanding at December 31, 2007		1,531,000	$	6.01
Options exercisable at December 31, 2007		40,500	$	6.10

Non Employee options outstanding at December 31, 2007 have an exercise price of $6.00 to $6.25 per share. Options exercisable at December 31, 2007 do not include 1,490,500 performance based options.

Note 9 - INCOME TAXES

As of December 31, 2007 and 2006, the Company had an unused net operating loss carryforward approximating $6,811,000 and $2,460,000, respectively, which may be applied against future taxable income. The net operating loss carryforward expires in the years 2026 and 2027. At December 31, 2007 and 2006, the deferred tax assets (representing the potential future tax savings) related to the carryforwards were as follows:

	2007		2006

Deferred tax asset	$	2,724,400	$	984,000
Less: Valuation allowance		2,724,400		984,000
Net deferred tax asset	$	-	$	-

As a result of the uncertainty that the net operating loss carryforward will be utilized in the foreseeable future, a 100% valuation allowance has been provided.

Note 10 - OTHER AGREEMENTS

On March 27, 2007, the Company entered into a Letter of Intent with Twin Rivers Technologies, LP with respect to the potential development of the Company’s first production plant at Twin Rivers’ facility located in Quincy, Massachusetts. The Letter of Intent contemplated an exclusive period, as extended, through December 31, 2007 during which Twin Rivers will negotiate with the Company regarding definitive agreements covering the siting, construction, operation and management of the Company’s proposed initial 25 million gallon per year production facility, the supply of vegetable oils and other commodity feedstocks and the off take of finished bio-fuel by Twin Rivers from the facility. A definitive agreement had not been entered into as of March 20, 2008.

On May 1, 2007, the Company entered into a Test Burn Agreement with Dynegy Oakland, LLC, a Delaware limited liability company and an affiliate of Dynegy Inc. (“Dynegy”) to evaluate the Company’s proprietary biofuel technology in power generation applications. The Agreement required the Company to supply biofuel for a test program that was performed at Dynegy’s Oakland Power Plant combustion turbine facility in the fourth quarter 2007. The test program included the evaluation of both technical and environmental performance characteristics of our biofuel. The agreement also required the Company to pay 50% of all costs of environmental emissions testing conducted in connection with the test program, provided that the aggregate obligation with respect to such expenses will not exceed $150,000. Dynegy is entitled to all revenue arising from sales of electricity generated during the testing.

On December 17, 2007, the Company entered into a Test Burn Agreement with Mirant Energy Trading, L.L.C., as agent for Mirant Mid-Atlantic, LLC, Mirant Pitney Point, LLC and LLC Mirant Kendall, LLC, a limited liability company to evaluate the Company’s proprietary biofuel technology in power generation applications. The Agreement requires the Company to supply its biofuel for a test program that will be performed by Mirant. The test program will include the evaluation of both technical and environmental performance characteristics of the Company’s biofuel. The Agreement also requires the Company to pay 50% of all costs of environmental emissions testing conducted in connection with the test program, up to a maximum of $150,000. Mirant is entitled to all revenue arising from sales of electricity generated during the testing.

Note 11 - RELATED PARTY TRANSACTIONS

For the period from Inception through December 31, 2006, Lee Rosen, a significant shareholder and Chairman of the Company, received $105,000 for management services.

On September 15, 2006, the Company granted to Lee Rosen an option to purchase 1,500,000 shares of the Company’s common stock at an exercise price of $1.50 per share and vested immediately. The fair value of the option based on the Black-Scholes option pricing model is $785,863.

On June 30, 2006 the Company received a $50,000 loan from Xethanol, which bears interest at the prime rate.

On April 14, 2006, the Company issued a total of 2,600,000 shares of the Company’s common stock to Xethanol (See Note 4).

Note 12 - SUBSEQUENT EVENTS

On March 14, 2008, the Company entered into a lease agreement for office space in Lake Mary, Florida in connection with the relocation of its corporate headquarters to Florida. The lease commitment is for approximately 6,000 square feet of office space commencing in July 2008 for a period of sixty six months. The total rental commitment, for the entire rental period, is approximately $952,000.

On March 20, 2008, the Company paid $150,000 of the $1,000,000 payment due on March 20, 2008 under the Exclusive License Agreement.

On March 23, 2008 the Exclusive License Agreement, as amended, was further amended to extend the due date of the remaining $850,000 that was due on March 20, 2008 to the closing of the Company’s next financing, that provides net proceeds exceeding $850,000.

On March 28, 2008 we changed our corporate name to “New Generation Biofuels Holdings, Inc.”.

On March 31, 2008, we completed a private placement of 40,770 shares of our 8% Series B Non-Redeemable Convertible Preferred Stock at a price of $100.00 per share and a conversion price of $4.25 per share and five-year warrants to purchase 239,823 shares of our common stock at an exercise price of $6.25 per share. The gross proceeds from the offering were $4,077,000.

Effective December 1, 2007, we entered into an employment agreement with Cary J. Claiborne to serve as our Chief Financial Officer, similar to the employment agreements with our other senior executive officers. Under the employment agreement, our Board granted Mr. Claiborne options to purchase 750,000 shares of our common stock at an exercise price of $4.00 per share, the fair market value of the our common stock on the grant date of December 1, 2007 and restricted stock in the amount of $75,000. The stock options consists of 300,000 time based options and 450,000 performance based options. The stock options and the restricted stock will vest incrementally through 2010. The options expire on December 1, 2017, unless sooner exercised. The employment agreement provides for a relocation expense reimbursement of up to $50,000 and provides for participation in our executive bonus plan, with a maximum eligible bonus of 50% of base salary, subject to achieving certain performance targets. The agreement includes other customary terms, including participation in any incentive and benefit plans made available to executive officers. The employment agreement will automatically renew for successive one year periods unless we elect to terminate the agreement upon not less than 270 days notice prior to the expiration of the then current term.

On October 18, 2006, we entered into a three-year employment agreement with David A. Gillespie to serve as our President and Chief Executive Officer. Under the terms of the employment agreement, Mr. Gillespie replaced Lee S. Rosen as our President and Chief Executive Officer and receives an initial salary of $20,000 per month and received a grant of 800,000 stock options at an exercise price of $1.50 per share, of which 200,000 vested immediately and the balance vest in three annual installments. Mr. Gillespie is entitled to an additional 1,200,000 “performance vesting” options at an exercise price of $1.50 per share, which vest in three equal annual installments beginning on December 31, 2007, subject to certain performance targets being achieved during the preceding annual period. The employment agreement provides for a relocation expense reimbursement of up to $50,000 and provides for participation in our executive bonus plan, with a maximum eligible bonus during 2007 targeted at 50% of Mr. Gillespie’s annual salary. The agreement includes other customary terms, including participation in any incentive and benefit plans made available to executive officers. The employment agreement will automatically renew for successive one year periods unless we elect to terminate the agreement upon not less than 270 days notice prior to the expiration of the then current term.

The employment agreements for Mr. Gillespie and Mr. Claiborne provide that such executive’s employment may be terminated by the Company upon death, disability, for “cause,” and “without cause” and that such executive can resign from the Company with or without good reason or retire. Upon the death of such executive, such executive’s employment will automatically terminate and (i) any vested options may be exercised on or before the expiration date of such options (payments made under this subsection (i) are referred to as “Equity Compensation”); and (ii) the executive’s legal representatives shall receive (A) such executive’s compensation that is earned but unpaid and (B) any other amounts or benefits owing to such executive under an employee benefit plan, long term incentive plan or equity plan (payments made under this subsection (ii) are collectively referred to as, the “Accrued Amounts”). If Mr. Gillespie’s or Mr. Claiborne’s employment is terminated without cause or by Mr. Gillespie or Mr. Claiborne for good reason, then he shall receive (i) his base salary and bonus, if any (with the achievement of bonus targets presumed), for the time period that is remaining under his employment agreement or 12 months, whichever amount is less; (ii) such executive’s Equity Compensation, including all unvested time vesting options and the next unvested tranche of performance vesting options; and (iii) such executive’s Accrued Amounts. If Mr. Gillespie’s or Mr. Claiborne’s employment is terminated because he is disabled, then he shall receive (i) his base salary, for the time period that is remaining under his employment agreement or six months, whichever amount is less; (ii) such executive’s Equity Compensation, including the next unvested tranche of performance vesting options; and (iii) such executive’s Accrued Amounts. If Mr. Gillespie or Mr. Claiborne is terminated by the Company for “cause,” then he shall receive the Accrued Amounts and may exercise his vested options for a period of thirty days. If Mr. Gillespie or Mr. Claiborne resigns without good reason or retires then he shall receive the Accrued Amounts.

The employment agreements for Messrs. Rosen and Festuccia provide that such executive’s employment may be terminated by the Company upon death, disability, for “cause,” and “without cause” and that such executive can resign from the Company with or without good reason or retire. Upon the death of such executive, such executive’s employment will automatically terminate and (i) any unvested equity compensation granted to such executive shall immediately vest and any vested options may be exercised on or before the earlier of (A) the expiration date of such options and (B) twelve months after such executive’s death (payments made under this subsection (i) are referred to as “Equity Compensation”); and (ii) the executive’s legal representatives shall receive (A) such executive’s compensation that is earned but unpaid and (B) any other amounts or benefits owing to such executive under an employee benefit plan, long term incentive plan or equity plan (payments made under this subsection (ii) are collectively referred to as, the “Accrued Amounts”). If Mr. Rosen or Mr. Festuccia’s employment is terminated without cause, because such executive is disabled or if such executive resigns for good reason, then such executive shall receive (i) such executive’s base salary for the time period that is remaining under such executive’s employment agreement or six months, whichever amount is less; (ii) such executive’s Equity Compensation; and (iii) such executive’s Accrued Amounts. If either Mr. Rosen or Mr. Festuccia is terminated by the Company for “cause,” resigns without good reason or retires, then such executive shall receive the Accrued Amounts.

EXHIBIT INDEX

Exhibit No.	Exhibit Description
3.1	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.
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 $6.00 Warrant.
4.3†	Form of $5.25 Warrant.
4.4†	Form of $6.25 Warrant (incorporated by reference to Exhibit 4.1 to the Current Report on 8-K filed March 31, 2008).
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).
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.
10.8	Sublicense Agreement dated as of April 14, 2006 (as amended and restated on June 15, 2006) between H2Diesel, Inc. and Xethanol Corporation (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed October 26, 2006).
10.9	Technology Access Agreement dated as of June 15, 2006 between H2Diesel, Inc. and Xethanol Corporation (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed October 26, 2006).
10.10	Registration Rights Agreement dated October 16, 2006 between H2Diesel, Inc. and Xethanol Corporation (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K filed October 26, 2006).
10.11	Stock Purchase and Termination Agreement, dated as of October 5, 2007, by and among H2Diesel Holdings, Inc., H2Diesel, Inc. and Xethanol Corporation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed October 10, 2007).
10.12	Amendment No. 1 dated November 13, 2007, to the Stock Purchase and Termination Agreement, dated October 5, 2007 between Xethanol Corporation and the Company (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-QSB filed November 14, 2007).
10.13†*	Omnibus Incentive Plan adopted November 14, 2007.
10.14†	Form of Director Non-Qualified Stock Option Agreement under Omnibus Incentive Plan.

10.15†	Form of Non-Qualified Stock Option Agreement under Omnibus Incentive Plan.
10.16†	Form of Incentive Stock Option Agreement under Omnibus Incentive Plan.
10.17†	Form of Restricted Stock Agreement under Omnibus Incentive Plan.
10.18†	Office Lease Agreement, dated as of March 12, 2008, by and between Central Florida Educators’ Federal Credit Union and H2Diesel Holdings, Inc.
10.19	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).
10.20*	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).
10.21*	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).
10.22*	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).
10.23	Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed October 26, 2006).
10.24	Form of Registration Rights Agreement for May/June (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-QSB filed May 15, 2007).
10.25†	Form of Registration Rights Agreement for the December 2007 Private Placement.
10.26†	Form of Registration Rights Agreement for the March 2008 Private Placement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed March 31, 2008).
10.27	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).
10.28	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).
10.29	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).
10.30†	Option Agreement dated December [__], 2008 between Cary J. Claiborne and H2Diesel Holdings, Inc.
10.31	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).
10.32	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).
14.1†	Code of Business Conduct and Ethics adopted November 13, 2007.
21.1†	Subsidiaries of New Generation Biofuels Holdings, Inc.
24.1†	Power of Attorney (incorporated by reference to the signature page of this annual report on Form 10-K).
31.1†	Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002.
31.2†	Certification pursuant to Section 302 of Sarbanes Oxley Act of 2002.
32.1†	Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002.
32.2†	Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002.

† Filed herewith.

* Management contract or compensatory plan or arrangement.

Florida	26-0067474
(State of Incorporation)	(I.R.S. Employer Identification No.)

	·	delays in demonstrating the technological advantages or commercial viability of our proposed products,
	·	adverse changes in our strategic relationships such as that with Twin Rivers,
	·	problems with the pilot or subsequent production plants, including technical, staffing, permitting or other operational issues,
	·	inability to interest early adopter customers in our products, and

	·	our announcement of developments, whether positive or negative, with respect to our business, including the viability of our biofuel, new or changes in strategic relationships, and our ability or failure to meet business milestones;
	·	developments concerning intellectual property rights and regulatory approvals;
	·	the announcement of new products or product enhancements by our competitors;
	·	changes in the market for alternative fuels and in commodities used to produce them;
	·	fluctuations in the availability of capital to companies in the early stages;
	·	changes in the social, political and economic climate in the regions in which we operate; and
	·	the impact of sales and trading activity with respect to our common stock in the market.


Nominee	In Favor		Withheld

Lee S. Rosen		10,019,773		5,550
David A. Gillespie		10,024,273		1,050
Phillip E. Pearce		10,024,273		1,050
John E. Mack		10,024,273		1,050
James R. Sheppard, Jr.		10,024,073		1,050
Steven F. Gilliland		10,024,073		1,050

In Favor		Against		Abstained

	10,024,273		1,050		0

(Title of Each Class)	(Name of Exchange on Which Registered)
Common Stock, par value $.001 per share

	High		Low

2006
First Quarter	$	0.00	$	0.00
Second Quarter		0.00		0.00
Third Quarter		0.00		0.00
Fourth Quarter		10.00		8.50

2007
First Quarter	$	12.00	$	4.10
Second Quarter		8.00		5.25
Third Quarter		7.00		4.27
Fourth Quarter	$	7.75	$	3.25

2008
First Quarter (through March 21, 2008)	$	6.00	$	3.00

	Page
Report of Independent Registered Public Accounting Firm	24

Balance Sheets	25

Statement of Operations	26

Statements of Stockholders’ Equity	27

Statements of Cash Flows	28

Notes to Financial Statements	29-42

	December 31,			December 31,
	2007			2006

ASSETS

Current assets:
Cash	$	1,644,145		$	1,031,923
Prepaid expenses		84,968			70,275
Total current assets		1,729,113			1,102,198

License agreement		8,061,300			8,061,300
TOTAL ASSETS	$	9,790,413		$	9,163,498

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:

Accounts payable and accrued expenses	$	634,587		$	190,504
Loan payable-related party		50,000			50,000
License agreement payable-current portion
(net of unamortized discount of $78,153 and $650,698)		921,847			1,449,302
Accrued dividend on preferred stock		210,275			-
Liability under registration rights agreement		78,956			-
Total current liabilities		1,895,665			1,689,806

License agreement payable
(net of unamortized discount of $1,993,830 and $2,195,117)		4,006,170			4,804,883
Total Liabilities		5,901,835			6,494,689

Stockholders' equity:
Series A Cumulative Convertible Preferred Stock: $100 stated
value, 300,000 shares authorized, 42,050 shares issued and
outstanding as of December 31, 2007		1,624,798			-
Common stock, $0.001 par value, 100,000,000 shares
authorized; 18,165,793 and 17,091,250 shares issued and
outstanding as of December 31, 2007 and 2006, respectively		18,166			17,091
Additional paid-in-capital		18,955,101			8,043,792
Deficit accumulated during the development stage		(16,709,487	)		(5,392,074	)
Total stockholders' equity		3,888,578			2,668,809
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,790,413		$	9,163,498

	For the Year Ended December 31, 2007			For the Period from February 28, 2006 (Inception) to December 31, 2006			For the Period from February 28, 2006 (Inception) to December 31, 2007

Operating expenses:
Research and development expenses		779,341			84,109			863,450
Merger expenses		-			340,000			340,000
General and administrative expenses		7,488,785			4,329,332			11,818,117
Total operating expenses		8,268,126			4,753,441			13,021,567

Net loss from operations		(8,268,126	)		(4,753,441	)		(13,021,567	)

Interest income		49,534			-			49,534

Interest expense		(773,832	)		(638,633	)		(1,412,465	)

Other expense		(250,000	)		-			(250,000	)

Gain on fair value adjustment		631,436			-			631,436

Net loss	$	(8,610,988	)	$	(5,392,074	)	$	(14,003,062	)

Preferred dividends		(2,706,425	)		-			(2,706,425	)

Net loss available to common shareholders	$	(11,317,413	)	$	(5,392,074	)	$	(16,709,487	)

Basic and diluted net loss per share	$	(0.66	)	$	(0.42	)

Weighted average number of
shares outstanding		17,207,157			12,990,813

														Deficit
														Accumulated
											Additional			During the
	Common Stock				Preferred Stock						Paid-in-			Development
	Shares		Amount		Shares			Amount			Capital			Stage			Total

Balance at February 28, 2006		-	$	-		-		$	-		$	-		$	-		$	-
Issuance of founders' shares ($0.001 per share)		5,541,250		5,541		-			-			(4,987	)		-			554
Issuance of shares to shareholders of company
acquired in recapitalization transaction		1,101,250		1,101		-			-			(1,101	)		-			-
Issuance of common stock in private offerings,
net of costs		6,165,000		6,165		-			-			4,290,328			-			4,296,493
Issuance of common stock for services rendered		2,090,000		2,090		-			-			1,274,073			-			1,276,163
Issuance of common stock for Put Right		1,300,000		1,300		-			-			(1,300	)		-			-
Issuance of common stock for Master License		893,750		894		-			-			544,853			-			545,747
Issuance of warrants for services rendered		-		-		-			-			512,583			-			512,583
Compensation expense associated with options		-		-		-			-			1,429,343			-			1,429,343
Net loss		-		-		-			-			-			(5,392,074	)		(5,392,074	)
Balance at December 31, 2006		17,091,250		17,091		-			-			8,043,792			(5,392,074	)		2,668,809

Cumulative effect of change in accounting principle		-		-		-			-			(1,574,100	)		-			(1,574,100	)
Compensation expense associated with options		-		-		-			-			3,562,047			-			3,562,047
Issuance of options and warrants for services rendered		-		-		-			-			496,738			-			496,738
Issuance of common stock - registration rights agreement		174,900		175		-			-			944,285			-			944,460
Issuance of preferred stock and warrants in private offering		-		-		42,550			1,644,118			2,610,882			-			4,255,000
Dividend associated with the beneficial conversion
feature of the preferred stock		-		-		-			-			2,496,150			(2,496,150	)		-
Issuance of common stock and warrants in private offering		887,143		887		-			-			3,104,114			-			3,105,001
Liability under registration rights agreement in common
stock private offering		-		-		-			-			(80,752	)		-			(80,752	)
Private placement costs		-		-		-			-			(667,362	)		-			(667,362	)
Conversion of preferred stock into common stock		12,500		13		(500	)		(19,320	)		19,307			-			-
Dividends accrued on preferred stock		-		-		-			-			-			(210,275	)		(210,275	)
Net loss		-		-		-			-			-			(8,610,988	)		(8,610,988	)
Balance at December 31, 2007		18,165,793	$	18,166		42,050		$	1,624,798		$	18,955,101		$	(16,709,487	)	$	3,888,578

NEW GENERATION BIOFUELS HOLDINGS, INC.
(A Development Stage Enterprise)
Consolidated Statement of Cash Flows

	For the Year ended December 31, 2007			For the Period from February 28, 2006(Inception) to December 31, 2006			For the Period from February 28, 2006(Inception) to December 31, 2007
				(restated)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(8,610,988	)	$	(5,392,074	)	$	(14,003,062	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount		773,832			638,633			1,412,465
Compensation expense associated with stock options		3,562,047			1,429,343			4,991,390
Issuance of common stock, options and warrants for
services rendered		496,738			1,788,745			2,285,483
Gain on fair value adjustment		(631,436	)		-			(631,436	)

Changes in operating assets and liabilities:
Prepaid expenses		(14,693	)		(70,275	)		(84,968	)
Accounts payable and accrued expenses		444,083			190,504			634,587
Net cash used in operating activities		(3,980,417	)		(1,415,124	)		(5,395,541	)

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of License Agreement		-			(1,500,000	)		(1,500,000	)
Cash used in investing activities		-			(1,500,000	)		(1,500,000	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments for license agreement payable		(2,100,000	)		(400,000	)		(2,500,000	)
Proceeds from issuance of founders' shares		-			554			554
Proceeds from private offering issuances of common stock, net of costs		2,873,990			3,531,493			6,405,483
Proceeds from private offering issuance of preferred stock, net of costs		3,818,649			-			3,818,649
Proceeds from convertible note payable		-			765,000			765,000
Proceeds from loan payable - related party		-			50,000			50,000
Net cash provided by financing activities		4,592,639			3,947,047			8,539,686

Net increase in cash and cash equivalents		612,222			1,031,923			1,644,145
Cash and cash equivalents - beginning of period		1,031,923			-			-
Cash and cash equivalents - end of period	$	1,644,145		$	1,031,923		$	1,644,145

Supplemental Disclosure of Non-Cash Investing and Financing Activities

Payable for License Agreement (net of discount)	$	-		$	6,015,552		$	6,015,552
License Agreement acquired in exchange for issuance of common stock	$	-		$	545,747		$	545,747

Name	Age	Position

Lee S. Rosen	54	Chairman of the Board

David A. Gillespie	47	President, Chief Executive Officer and Director

Cary J. Claiborne	47	Chief Financial Officer

Andrea Festuccia	36	Chief Technology Officer

Phillip J. Wallis	44	Chief Marketing Officer

Connie Lausten, P.E.	40	Vice President of Regulatory and Legislative Affairs

David H. Goebel	48	Vice President of Global Sourcing and Supply Chain

Steven F. Gilliland	56	Director

John E. Mack	60	Director

Phillip E. Pearce	78	Director

James R. Sheppard, Jr.	60	Director


	•	compliance with laws, including insider trading;

	•	preservation of confidential information relating to our business and that of our clients;

	•	conflicts of interest;

	•	reporting of illegal or unethical behavior or concerns regarding accounting or auditing practices;

	•	corporate payments;


	•	corporate opportunities; and

	•	the protection and proper use of our assets.


	•	resolve any disagreements between management and the outside independent registered public accounting firm regarding financial reporting; and

	•	serve as an independent and objective body to monitor and assess our compliance with legal and regulatory requirements, our financial reporting processes and related internal control systems and the performance, generally, of our internal audit function;

	•	oversee the audit and other services of our outside independent registered public accounting firm and be directly responsible for the appointment, independence, qualifications, compensation and oversight of the outside independent registered public accounting firm, who reports directly to the Audit Committee;

	•	provide an open avenue of communication among the outside independent registered public accounting firm, accountants, financial and senior management, the internal auditing department, and our Board;

	•	consider and approve transactions between the Company and our directors, executive officers, nominees for directors or 5% or greater beneficial owners, any of their immediate family members or certain entities affiliated with them.

	•	identify individuals qualified to become Board members and recommend to our Board candidates for election or re-election to the Board;

	•	consider and make recommendations to our Board concerning the size and composition of our Board, committee structure and makeup, retirement policies and procedures affecting Board members; and

	•	take a leadership role with respect to the development, implementation and review of our principles of corporate governance and practices.

Name and Principal Position (1)	Year	Salary ($)	Option Awards ($)(2)	All Other Compensation ($)(3)	Total ($)

David A. Gillespie, President & Chief Executive Officer	2007	240,000	428,032	120,000	788,032
David A. Gillespie, President & Chief Executive Officer	2006	51,077	172,395	0	223,472

Lee S. Rosen, Chairman of the Board	2007	180,000	0	120,000	300,000
Lee S. Rosen, Chairman of the Board	2006	30,000	785,863	105,000(4)	920,863

Andrea Festuccia, Chief Technology Officer	2007	150,000	78,296	15,000	243,296
Andrea Festuccia, Chief Technology Officer	2006	112,500	97,871(5)	0	210,371

Name and Principal Position	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price ($)	Option Expiration Date
David A. Gillespie, President & Chief Executive Officer(1)	800,000	1,200,000	$1.50	October 18, 2016

Lee S. Rosen, Chairman of the Board	1,500,000	0	$1.50	September 15, 2016

Andrea Festuccia, Chief Technology Officer(2)	300,000	200,000	$1.50	September 19, 2016

Name and Principal Position	Fees Earned or Paid in Cash ($)	Option Awards ($) (1)	Total ($)
Phillip E. Pearce	14,000	290,278(2)	304,278

John Mack	10,500	787,607(3)	798,107

James Sheppard, Jr.	5,000	305,553(4)	310,553

Steven Gilliland	4,000	305,675(5)	309,675

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)

Equity compensation plans approved by security holders	0	0	2,700,000

Equity compensation plans not approved by security holders	10,332,565(1)	$3.51	N/A

Total	10,332,565 (1)	$3.51	N/A

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership (1)	Percentage of Class (2)

Common Stock	Lee Rosen 2006 Irrevocable Trust I 17698 Foxborough Lane Boca Raton, Florida 33496	2,090,000(3)	11.4%

Common Stock	Xethanol Corporation 1185 Avenue of the Americas, 20^th Floor New York, New York 10036	5,670,000	31.0%

Common Stock	The River Trust 1877 S. Federal Highway, Suite 101 Boca Raton, Florida 33432	990,000	5.4%

Common Stock	The Aspen Trust 2000 So. Ocean Blvd. Palm Beach, Florida 33480	1,000,000	5.5%

Common Stock	Ferdinando Petrucci Via Stazione, 133A, Arce Frosimone, Italy	893,750	**

Common Stock	David A. Gillespie* 664 West Forest Drive Houston, Texas 77079	809,375 (4)	**

Common Stock	Lee. S. Rosen* 17698 Foxborough Lane Boca Raton, Florida 33496	3,608,750(5)	18.2%

Common Stock	Andrea Festuccia* Circonvallazione Gianicolense, 295 00152 Rome, Italy	657,500(6)	**

Common Stock	Phil E. Pearce* 6624 Glenleaf Court Charlotte, North Carolina 28270	100,000(7)	**

Common Stock	John Mack* P.O. Box 1575 Breckenridge, Colorado 80424	109,375(8)	**

Common Stock	James R. Sheppard, Jr.	50,000(9)	**

Common Stock	Steven F. Gilliland	50,000(10)	**

	2007		2006

Audit Fees	$	145,000	$	136,620

Audit Related Fees		6,101		22,241

Tax Fees		23,513		---

All Other Fees				---

Total	$	174,614	$	158,861

	New Generation Biofuels Holdings, Inc

	By: /s/ David A. Gillespie
	David A. Gillespie President and Chief Executive Officer

	Date: March 31, 2008

SIGNATURE	TITLE	DATE

/s/ David A. Gillespie	President, Chief Executive Officer and Director	March 31, 2008
David A. Gillespie	(Principal Executive Officer)


/s/ Cary J. Claiborne	Chief Executive Financial Officer	March 31, 2008
Cary J. Claiborne	(Principal Financial Officer)


/s/ Lee S. Rosen	Chairman of the Board	March 31, 2008
Lee S. Rosen


/s/ Phillip E. Pearce	Director	March 31, 2008
Phillip E. Pearce


/s/ John E. Mack	Director	March 31, 2008
John E. Mack


/s/ James R. Sheppard, Jr.	Director	March 31, 2008
James R. Sheppard, Jr.


/s/ Steven F. Gilliland	Director	March 31, 2008
Steven F. Gilliland