New Generation Biofuels Reports First Quarter 2010 Financial Results

COLUMBIA, Md., May 17 /PRNewswire-FirstCall/ -- Renewable fuels provider New Generation Biofuels Holdings, Inc. (Nasdaq: NGBF) ("NGBF" or the "Company") today announced its financial results for the quarter ended March 31, 2010.

New Generation Biofuels reported a net loss of $2.9 million for the quarter ending March, 31, 2010 on revenues of $6,477 versus a net loss of $2.4 million with no revenues for the comparable quarter in 2009.  The net loss for both periods reflect operating costs, as well as significant non-cash charges relating to stock based compensation, stock options and warrants issued for services and amortization charges relating to our technology license.  

Net cash used in operating activities was $1.3 million for the three months ended March 31, 2010, down $0.1 million from $1.4 million used in last year's comparable period.  As of March 31, 2010 the Company had cash on hand of approximately $0.24 million, and will need to complete another financing during the second quarter.

First Quarter Highlights and Accomplishments

• In March 2010, we received the permit to construct approval from the State of Maryland to expand our Baltimore facility to 25 million gallons. Our current plans are to invest in capacity expansion based on resources and market demands.
• On March 12, 2010, we executed a non-binding Memorandum of Understanding, or MOU, with Regent Trend Investment Ltd (soon to be re-named Milestone Biofuels Limited, or Milestone), a potential strategic partner from China, under which Milestone would invest $20 million in our equity securities and we would collaborate with Milestone to form a joint venture to develop and operate biofuel production plants in the continental United States with a total aggregate plant capacity of 250 million gallons per year. Milestone would fund all of the capital requirements for the joint venture, and we would provide the technology and operate the plants.  We would earn a minimum royalty on all sales from the joint venture and would share in a percentage of profits above the minimum royalty. The MOU remains subject to a due diligence period of up to 75 days and negotiation, execution and delivery of definitive agreements acceptable to both parties and approved by their respective boards of directors. The investment also may be subject to shareholder approval under the NASDAQ listing rules. There is no assurance that definitive agreements will be signed or that the transaction will close.
• In February 2010, we entered into an agreement with Ferdinando Petrucci, the inventor of our proprietary technology, to issue 1,100,000 shares of common stock and $120,000 in cash in lieu of the $1 million license payment payable in two equal installments in February and March 2010 to help conserve cash and strengthen our liquidity.
• In February 2010, we closed a private placement of 1,890,858 shares of common stock and warrants to purchase 1,890,858 shares of common stock for total gross proceeds of approximately $1.3 million.
• In January 2010, Baltimore City Schools named us in their annual heating fuel request for proposal. This request for proposal by the Baltimore City Schools is in conjunction with a proposed 1 year contract with the City of Baltimore. We previously completed a successful test program with the City of Baltimore and reached an agreement to proceed with a longer contract to include the Baltimore City Schools.

Recent Developments

• On May 12, 2010, we issued a termination notice to Fenix Energy to terminate our biofuel contract with them as a result of Fenix's failure to post the mandatory letter of credit equal to one month's projected sales that we requested in March 2010. The termination is effective July 11, 2010, although Fenix has a 30 day cure period.  At this point, we have no reason to believe that Fenix will meet the requirement for the letter of credit or purchase any of our biofuel and have removed the contract from our production plans. We are continuing to work to advance several potential customers in our pipeline from negotiation to executed contracts.  We believe that we will be able to offset the volume lost from the Fenix termination with some delay relative to when product might have been shipped under the Fenix contract, although there can be no assurance that we will be able to do so.
• On May 7, 2010, the Company's board of directors appointed John E. Mack, our current audit committee chairman, as non-executive Chairman of the Board, appointed David H. Goebel, Jr., our Chief Operating Officer, as a director, accepted the resignation of Lee S. Rosen as Chairman and as director and approved and executed a separation agreement with Mr. Rosen.
• On April 30, 2010, the Company completed a private placement of 90-day secured convertible notes and warrants, raising $700,000 in gross proceeds and $630,000 in net proceeds, after deducting finders' fees.  This additional cash infusion will cover our second quarter expenses, but before the end of the second quarter we will be looking for additional capital.

CEO Comments

"To date, 2010 has been a period of transition for New Generation.  With changes in the composition of our board and management team we are continuing our evolution as a technology based, commercially focused company.  We are excited about the opportunities presented by the prospective strategic partner from China.  Beyond the equity infusion, the collaborative aspects of the memorandum of understanding reached with Milestone Biofuels Limited, via the contemplated joint venture, would significantly increase our production capacity and market presence.  While we remain in the diligence period, and thus far are pleased with how it is going, we are continuing our efforts in expanding our distribution base.  We also are working to finalize several new sales contracts in the near future and to make additional progress within the utility industry," said Cary J. Claiborne, President and Chief Executive Officer of New Generation Biofuels Holdings, Inc. "On the technical side we are also continuing to work on optimizing our production process and expand the number of feedstocks that can be used to produce our fuels. I am also pleased that we managed to lower our year over year cash burn in the first quarter despite carrying the full quarters cost of our plant and increases in legal expenses resulting from a number of business activities."

About New Generation Biofuels, Holdings, Inc.

New Generation Biofuels is a renewable fuels provider. New Generation Biofuels holds an exclusive license for North America, Central America and the Caribbean to commercialize proprietary technology to manufacture alternative biofuels from plant oils and animal fats that it markets as a new class of biofuel for power generation, commercial and industrial heating and marine use. The Company believes that its proprietary biofuel can provide a lower cost, renewable alternative energy source with significantly lower emissions than traditional fuels. New Generation Biofuels' business model calls for establishing direct sales from manufacturing plants that it may purchase or build and sublicensing its technology to qualified licensees.

Forward Looking Statements

This news release contains forward-looking statements. These forward-looking statements concern our operations, prospects, plans, economic performance and financial condition and are based largely on our current beliefs and expectations. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results expressed or implied by such forward-looking statements The risks and uncertainties related to our business include all the risks attendant a development stage business in the volatile energy industry, including, without limitation, the risks set forth under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and in subsequent filings with the Securities and Exchange Commission.

SOURCE New Generation Biofuels Holdings, Inc.