NewGen (NWGN) 10QSB 2007 Q1 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

x Quarterly report filed under Section 13 or 15 (d) of the Securities

Exchange Act of 1934 For the Quarterly Period Ended March 31, 2007

or

o Transitional report filed under Section 13 or 15 (d) of the

Exchange Act.

Commission File No. 0-23365

NEWGEN TECHNOLOGIES, INC.

(A development stage company)

(Name of Small Business Issuer in its Charter)

Nevada	33-0840184
State or other jurisdiction of	I.R.S. Employer Identification Number
incorporation or organization

6000 Fairview Road 12^th Floor, Charlotte, North Carolina 28210

(Address of principal executive office)

Issuer's telephone number: (704) 552-3590

Check whether the issuer: (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) been subject to such filing requirements for the past ninety (90) days.

Yes x       No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: As of

May 11, 2007, there were 66,983,213 shares of Common Stock, par value $0.001 per share, outstanding.

Transitional Small Business Disclosure Format (check one):

Yes o      No x

TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
		Page
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
a.	Condensed Consolidated Balance Sheet as of March 31, 2007 and 2006 (Unaudited)	1
b.	Condensed Consolidated Statements of Operations and Comprehensive (Loss) for the three months and period ended March 31, 2007 and 2006 and for the period from June 1, 2005 (Inception) to March 31, 2007 (Unaudited)	2
c.	Condensed Consolidated Statement of Changes in Stockholders’ Deficiency for the period from June 1, 2005 (Inception) to March 31, 2007 (Unaudited)	3
d.	Condensed Consolidated Statements of Cash Flows for the three months and period ended March 31, 2007 and 2006 and for the period from June 1, 2005 (Inception) to March 31, 2007 (Unaudited)	6
e.	Notes to Condensed Consolidated Financial Statements as of March 31, 2007 (Unaudited)	7
Item 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS		30
Item 3.  CONTROLS AND PROCEDURES		47
PART II  OTHER INFORMATION		48
Item 1.  LEGAL PROCEEDINGS		48
Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		48
Item 3.  DEFAULTS ON SENIOR SECURITIES		48
Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		48
Item 5.  OTHER INFORMATION		48
Item 6.  EXHIBITS AND REPORTS ON 8-K		49
SIGNATURES PAGE		51
CERTIFICATIONS		52

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this Plan of Operation of this Quarterly Report on Form 10-QSB include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the actual results of the Company (sometimes referred to as "we", "us" or the "Company"), performance (financial or operating) or achievements expressed or implied by such forward-looking statements not to occur or be realized. Such forward-looking statements generally are based upon the Company's best estimates of future results, general merger and acquisition activity in the marketplace, performance or achievement, based upon current conditions and the most recent results of operations. Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "project," "expect," "believe," "estimate," "anticipate," "intends," "continue", "potential," "opportunity" or similar terms, variations of those terms or the negative of those terms or other variations of those terms or comparable words or expressions. (See the Company's Form 10-KSB for a description of certain of the known risks and uncertainties of the Company.)

NEWGEN TECHNOLOGIES, INC.

(A development stage company)

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

ASSETS	March 31,			March 31,
	2007			2006
CURRENT ASSETS
Cash	$	81,773		$	612,241
Accounts receivable, net of allowance of $390,821		816,643			-
Unbilled revenue		33,153			-
Deposits		22,914			-
Prepaid assets		395,009			104,827
Pending acquisition costs		1,329,431			-
Deferred debt issuance costs		369,129			295,619
Total Current Assets		3,048,052			1,012,687
Long term deferred debt issuance costs		268,319			541,968
Property, plant and equipment, net of accumulated depreciation of $58,205 in 2007 and $2,025 in 2006		6,949,507			2,042,641
Investment in IPF America		46,823			-
Total Other Assets		7,264,649			2,584,609
TOTAL ASSETS	$	10,312,701		$	3,597,296
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Notes payable and convertible debentures - related parties net of unamortized discount of $399,865 for 2007 and $-0- for 2006	$	3,161,977		$	281,500
Notes payable and convertible debentures -non-related net of unamortized discount of $3,722,462 for 2007 and $-0- for 2006		2,341,814			-
Accounts payable and accrued expenses - related parties		1,036,043			701,324
Accounts payable and accrued expenses - non-related		3,520,716			670,738
Total Current Liabilities		10,060,550			1,653,562
LONG TERM LIABILITIES
Convertible debentures - non-related net of unamortized discount of $-0- for 2007 and $2,849,527 for 2006		-			473
Derivative financial instrument liability		7,329,300			4,942,149
Total Long Term Liabilities		7,329,300			4,942,622
TOTAL LIABILITIES		17,389,850			6,596,184
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding		-			-
Common stock, $0.001 par value, 100,000,000 shares authorized, 66,983,213 shares issued and outstanding 2007 and 38,611,224 in 2006		66,983			38,611
Additional paid-in capital		14,139,230			6,491,026
Common stock subscriptions receivable		-			(2,581	)
Deferred equity-based expenses		(161,327	)		(1,183,125	)
Accumulated other comprehensive income		(9,792	)		-
Deficit accumulated during development stage		(21,112,243	)		(8,342,819	)
TOTAL STOCKHOLDERS' DEFICIENCY		(7,077,149	)		(2,998,888	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	$	10,312,701		$	3,597,296

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

-1-

NEWGEN TECHNOLOGIES, INC.

(A development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)

	For the Three Months Ended March 31, 2007			For the Three Months Ended March 31, 2006			For the Period From June 1, 2005 (Inception) to March 31, 2007			For the Period From June 1, 2005 (Inception) to March 31, 2006
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues	$	981,548		$	-		$	1,897,818		$	-
Consulting cost of goods and services		333,617			-			572,512			-
Compensation		1,483,405			704,215			7,328,788			2,357,575
Professional services		990,448			605,391			6,268,413			1,972,496
Travel		270,188			221,837			1,467,484			675,545
Marketing		-			105			243,375			241,447
Royalty		62,500			62,500			437,500			187,500
Investor relations		103,431			88,160			615,955			206,864
Write offs and provisions for losses		-			127,383			337,805			235,940
General and administrative expenses		371,681			121,618			1,363,005			284,727
Loss from operations		(2,633,722	)		(1,931,209	)		(16,737,019	)		(6,162,094	)
Other income (expenses)
Derivative instrument income (expense)		1,045,508			(2,092,434	)		(2,376,842	)		(2,092,434	)
Other		28,446			-			30,456			-
Interest		(398,934	)		(7,130	)		(742,095	)		(34,362	)
Settlements and penalties		(2,083	)		-			(544,527	)		-
Amortization of deferred debt issuance costs		(321,852	)		(47,413	)		(727,551	)		(47,413	)
Bank fees and escrow fees		(6,007	)		(553	)		(14,665	)		(6,516	)
Total other income (expenses)		345,078			(2,147,530	)		(4,375,224	)		(2,180,725	)
Loss before provision for income taxes		(2,288,644	)		(4,078,739	)		(21,112,243	)		(8,342,819	)
Provision for income taxes		-			-			-			-
Net loss		(2,288,644	)		(4,078,739	)		(21,112,243	)		(8,342,819	)
Other comprehensive (loss)
Foreign currency translation adjustments		(1,197	)		-			(9,792	)
Comprehensive (loss)	$	(2,289,841	)	$	(4,078,739	)	$	(21,122,035	)	$	(8,342,819	)
Loss per share - basic and diluted	$	(0.04	)	$	(0.11	)	$	(0.51	)	$	(0.24	)
Weighted average number of common shares outstanding - basic and diluted		64,654,404			37,615,615			41,550,078			35,350,929

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

-2-

NEWGEN TECHNOLOGIES, INC.

(A development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY

FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO MARCH 31, 2007

(UNAUDITED)

	Common Stock
	Shares		Amount		Additional Paid-In Capital			Common Stock to be issued			Common Stock Subscriptons Receivable			Deferred Equity Based Expenses			Accumulated Other Comprehensive Income (Loss)		Deficit Accumulated During Development Stage			Total
Balance at June 1, 2005		-	$	-	$	-		$	-		$	-		$	-		$	-	$	-		$	-
Issuance of shares of common stock to founders in exchange for subscriptions receivable		27,711,000		27,711		(24,940	)		-			(2,581	)		-			-		-			190
Issuance of shares of common stock in exchange for services and expense reimbursement		424,033		424		211,596			-			-			-			-		-			212,020
Transfer of shares of common stock in a share exchange agreement		3,333,491		3,333		(3,333	)		-			-			-			-		-			-
Common stock to be issued for cash (4,225,500 shares)		-		-		-			2,112,750			(25,000	)		-			-		-			2,087,750
Common stock to be issued for services and expense reimbursement (1,094,000 shares)		-		-		-			547,000			-			(122,641	)		-		-			424,359
Non-cash compensation expense for intrinsic value of options granted in September		-		-		885,000			-			-			(737,500	)		-		-			147,500
Issuance of shares of common stock		4,225,500		4,226		2,108,524			(2,112,750	)		25,000			-			-		-			25,000
Non-cash compensation expense for intrinsic value of options granted in October		-		-		600,000			-			-			(562,500	)		-		-			37,500
Issuance of shares of common stock		1,094,000		1,094		545,906			(547,000	)		-			70,727			-		-			70,727
Common stock to be issued for services and expense reimbursement (13,000 shares)		-		-		-			13,000			-			(4,000	)		-		-			9,000
Common stock to be issued for cash (265,200 shares)		-		-		-			265,200			-			-			-		-			265,200
Common stock and warrant to be issued in exchange for subscriptions receivable (805,000 shares)		-		-		-			805,000			(805,000	)		-			-		-			-
Net loss																				(4,264,080	)		(4,264,080	)
Balance at December 31, 2005		36,788,024		36,788		4,322,753			1,083,200			(807,581	)		(1,355,914	)		-		(4,264,080	)		(984,834	)

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

Continued

-3-

NEWGEN TECHNOLOGIES, INC.

(A development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY

FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO MARCH 31, 2007

(UNAUDITED)

	Common Stock
	Shares		Amount		Additional Paid-In Capital			Common Stock to be issued			Common Stock Subscriptons Receivable			Deferred Equity Based Expenses			Accumulated Other Comprehensive Income (Loss)			Deficit Accumulated During Development Stage			Total
Balance at January 1, 2006		36,788,024		36,788		4,322,753			1,083,200			(807,581	)		(1,355,914	)		-			(4,264,080	)		(984,834	)
Issuance of shares of common stock		1,523,200		1,523		1,521,679			(1,083,200	)		805,000			-			-			-			1,245,002
Amortization of compensation expense and services for the three months ended March 31, 2006		-		-		46,894			-			-			172,790			-			-			219,684
Issuance of shares of common stock in exchange for subscriptions in conjunction with issuance of receivable (805,000 shares) convertible debentures		300,000		300		599,700			-			-			-			-			-			600,000
Payment for Shares of common stock previously issued		-		-		-			-			2,581			-			-			-			2,581
Amortization of compensation expense and services for the three months ended June 30, 2006		-		-		42,591			-			-			112,585			-			-			155,176
Cancellation of options granted in 2005		-		-		(160,305	)		-			-			160,305			-			-			-
Conversion of Cornell Debenture on August 22, 2006		390,625		391		99,610			-			-			-			-			-			100,001
Amortization of compensation expense and services for the three months ended Sept. 30, 2006		-		-		42,591			-			-			132,970			-			-			175,561
Equity based settlement		562,500		563		224,437			-			-			-			-			-			225,000
Cancellation of options granted in 2005		-		-		(437,500	)		-			-			437,500			-			-			-
Non-cash compensation expense for intrinsic value of options on October 6, 2006						672,984																		672,984
Conversion of Convertible Debenture on October 11, 2006		416,667		417		49,583			-			-			-			-			-			50,000
Conversion of Convertible Debenture on November 13, 2006		189,394		189		24,811			-			-			-			-			-			25,000
Conversion of Convertible Debenture on November 21, 2006		806,452		806		99,194			-			-			-			-			-			100,000
Conversion of Convertible Debenture on November 24, 2006		806,452		806		99,194			-			-			-			-			-			100,000
Conversion of Convertible Debenture on November 24, 2006		104,667		105		14,895			-			-			-			-			-			15,000
Conversion of Convertible Debenture on December 27, 2006		247,844		248		88,976			-			-			-			-			-			89,224
Conversion of Convertible Debenture on December 12, 2006		13,558,058		13,558		3,104,795			-			-			-			-			-			3,118,353
Conversion of Convertible Debenture on December 12, 2006		4,646,257		4,646		1,063,993			-			-			-			-			-			1,068,639
Amortization of compensation expense and services for the three months ended December 31, 2006		-		-		12,907			-			-			95,469			-			-			108,376
Common stock issued for services on December 21, 2006		1,350,000		1,350		808,650			-			-			-			-			-			810,000
Common stock issued for services on December 21, 2006		500,000		500		299,500			-			-			-			-			-			300,000
FAS 123R valuation adjustment		-		-		(320,382	)		-			-			-			-			-			(320,382	)
Foreign currency translation gain		-		-		-			-			-			-			(8,595	)		-			(8,595	)
Net loss		-		-		-			-			-			-			-			(14,559,519	)		(14,559,519	)
Balance at December 31, 2006		62,190,140		62,190		12,321,550			-			-			(244,295	)		(8,595	)		(18,823,599	)		(6,692,749	)

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

Continued

-4-

NEWGEN TECHNOLOGIES, INC.

(A development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY

FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO MARCH 31, 2007

(UNAUDITED)

	Common Stock				Additional		Common		Common Stock		Deferred Equity			Accumulated Other			Deficit Accumulated During
	Shares		Amount		Paid-In Capital		Stock to be issued		Subscriptons Receivable		Based Expenses			Comprehensive Income (Loss)			Development Stage			Total
Balance at January 1, 2007		62,190,140		62,190		12,321,550		-		-		(244,295	)		(8,595	)		(18,823,599	)		(6,692,749	)
Conversion of Convertible Debenture on January 17, 2007		763,359		763		399,237		-		-		-			-			-			400,000
Conversion of Convertible Debenture on January 17, 2007		763,359		763		399,237		-		-		-			-			-			400,000
Conversion of Convertible Debenture on February 20, 2007		367,188		367		234,633		-		-		-			-			-			235,000
Conversion of Warrants on March 1, 2007		2,155,000		2,155		-		-		-		-			-			-			2,155
Conversion of Convertible Debenture on March 5, 2007		56,667		57		33,943															34,000
Conversion of Convertible Debenture on March 5, 2007		666,667		667		399,333															400,000
Conversion of Convertible Debenture on March 9, 2007		20,833		21		12,479															12,500
Non-cash compensation expense for intrinsic value of options on March 26, 2007		-		-		325,911															325,911
Amortization of compensation expense and services for the three months ended March 31, 2007		-		-		12,907		-		-		82,968						-			95,875
Foreign currency translation gain		-		-		-		-		-		-			(1,197	)		-			(1,197	)
Net loss		-		-		-		-		-		-			-			(2,288,644	)		(2,288,644	)
Balance at March 31, 2007		66,983,213	$	66,983	$	14,139,230	$	-	$	-	$	(161,327	)	$	(9,792	)	$	(21,112,243	)	$	(7,077,149	)

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

-5-

NEWGEN TECHNOLOGIES, INC.

(A development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

							For the Period
	For the Three			For the Three			From June 1, 2005
	Months Ended			Months Ended			(Inception) to
	March 31, 2007			March 31, 2006			March 31, 2007
Cash flows from operating activities:
Net loss	$	(2,288,644	)	$	(4,078,739	)	$	(21,112,243	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		40,612			405			58,205
Recognition of deferred equity based expense		95,879			24,662			1,470,784
Non-cash compensation expense		325,908			195,021			1,973,508
Accretion of debt discount on convertible debentures		576,698			188			830,101
Amortization of deferred debt issuance costs		321,852			47,413			727,552
(Gain) loss on derivative instruments		(1,045,478	)		2,092,434			2,376,872
Amortization of royalty agreement		62,500			-			437,500
Capitalized Interest		(235,123	)		-			(413,588	)
Non-cash expenses settled in equity		-			-			163,262
Equity based settlement stock issued		-			-			277,714
Allowance for doubtful accounts		4,165			-			4,165
Gain on equity earnings on IPF America		(499	)		-			(30,177	)
Changes in operating assets and liabilities:
(Increase) in accounts receivable		(408,487	)		-			(810,156	)
(Increase) in prepaid royalty		-			62,500			(250,000	)
(Increase) in prepaid assets and deposits		12,520			(35,959	)		234,576
(Increase) in other current assets		69,789			-			(43,805	)
Increase in accounts payable
and accrued expenses - related parties		395,297			(266,443	)		1,868,775
Increase in accounts payable and accrued expenses - non-related		851,232			305,885			2,292,103
Note payable issued for expenses paid on behalf of the Company
and accrued interest, net of repayments		-			-			281,500
Net cash used in operating activities		(1,221,779	)		(1,652,633	)		(9,663,352	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(68,008	)		(1,696,558	)		(5,864,494	)
Deposit on land and improvements		(250,000	)		-			(590,000	)
Cash paid for acquisitions		(327,500	)		-			(678,567	)
Pending acquisition costs		(456,463	)		-			(834,973	)
Joint venture dissolution		-						(110,000	)
Net cash used in investing activities		(1,101,971	)		(1,696,558	)		(8,078,034	)
Cash flows from financing activities:
Proceeds from convertible debentures		2,100,000			2,850,000			10,844,368
Proceeds from notes payable		-			-			4,443,731
Payment of debt issuance costs		(140,000	)		(285,000	)		(765,000	)
Proceeds received for common stock issued to founders		-			-			190
Proceeds received from common stock to be issued		-			1,245,002			2,377,950
Proceeds received for common stock issued		2,156			-			1,249,737
Repayment of notes payable to related parties		-			-			(318,026	)
Net cash provided by financing activities		1,962,156			3,810,002			17,832,950
Effect of foreign currency translation on cash		(1,196	)		-			(9,791	)
Net increase in cash		(362,790	)		460,811			81,773
Cash, beginning of period		444,563			151,430			-
Cash, end of period	$	81,773		$	612,241		$	81,773
Non cash investing and financing activities:
Common stock issued for deferred equity based expenses	$	-		$	-		$	910,234
Conversion of debenture into stock	$	1,481,500		$	-		$	479,224
Deposit on land improvements utilized to acquire terminals	$	-		$	340,000		$	340,000
Conversion of note payable and interest into common stock	$	-		$	-		$	4,186,992
Common stock issued with the convertible debentures
and included in deferred debt costs	$	-		$	-		$	600,000
Settlement of debt with issuance of common stock	$	-		$	-		$	225,000
Increase in derivative financial instrument liability with
corresponding increase in discount on convertible debentures	$	1,293,300		$	-		$	6,765,060
Interest paid	$	20,916		$	-		$	27,000

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

-6-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

(1)ORGANIZATION

Refuel (a development stage company), was incorporated on June 1, 2005 under the laws of the state of Delaware.  Refuel was formed for the purpose of developing and distributing innovative alternative fuels including biodiesel.  Refuel’s offices are located in Charlotte, North Carolina. The Company’s fiscal year end is December 31. 

On July 29, 2005, Bongiovi Entertainment, Inc. (“Bongiovi"), a totally inactive reporting public shell corporation, consummated a Share Exchange Agreement (the "Agreement") with Refuel whereby all of the shareholders in Refuel had their shares converted into 28,135,033 shares of Bongiovi, or approximately 89% of the common stock of Bongiovi. Under generally accepted accounting principles, a company whose stockholders receive over fifty percent of the stock of the surviving entity in a business combination is considered the acquirer for accounting purposes.  Accordingly, the transaction was accounted for as an acquisition of Bongiovi, the legal acquirer, and a recapitalization of Refuel, the accounting acquirer.

On August 10, 2005, to effect a name change, Bongiovi executed a merger and reorganization agreement with the sole shareholder of NewGen Technologies, Inc, a newly formed Nevada corporation. This transaction effectively changed the registrant’s name from Bongiovi Entertainment, Inc. to NewGen Technologies, Inc.

The Company has not generated any significant revenues since inception and the Company is in the process of raising additional capital and financing for future operations (see Note 13).

(2)BASIS OF PRESENTATION ANDSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Restatement

On August 29, 2006, the Company restated its financial statements as of and for the three months ended March 31, 2006 and for the period from June 1, 2005 (Inception) to March 31, 2006 to reflect changes in the valuation of our embedded derivative financial instrument liability due to the use of a more comprehensive modeling tool for valuing such complex derivative financial instruments and the identification of other embedded derivative financial instruments. The amounts reported in the accompanying condensed consolidated financial statements for the period from June 1, 2005 (Inception) to March 31, 2007 reflect these restated amounts.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. They do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information refer to the December 31, 2006 consolidated financial statements of NewGen Technologies, Inc., included in the Company’s filing on Form 10-KSB /Amendment No.1 on April 3, 2007.

Revenue Recognition and Valuation of Unbilled Revenues

Revenue is recognized only when all of the following are present: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, our fee to the client is fixed or determinable, and collectability is reasonably assured. These criteria are in accordance with GAAP and SEC Staff Accounting Bulletin No. 104 (SAB 104). The Company currently offers engineering services, project management and logistical support to its clients. Revenues are recorded in the period in which services are provided and meet revenue recognition criteria in accordance with SAB 104. The Company bills clients based upon a predetermined agreed upon fixed fee or based on actual hours incurred on client projects at expected net realizable rates per hour, plus agreed upon out-of-pocket expenses. The cumulative impact on any subsequent revision in the estimated realizable value of unbilled fees for a particular client project is reflected in the period in which the change becomes known.

-7-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of NewGen Technologies, Inc., its wholly owned subsidiaries majority owned (greater than 50% owned) subsidiaries and all variable interest entities (VIE’s) (collectively, the “Company”) for which the Company is the primary beneficiary. All material inter-company accounts and transactions have been eliminated in consolidation.

Variable Interest Entities

In general, a VIE is a corporation, partnership, limited-liability corporation, trust or any other legal structure used to conduct activities or hold assets that either 1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support; 2) has a group of equity owners that are unable to make significant decisions about its accountabilities; or 3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. FIN 46 (R) requires a VIE to be consolidated if a party with an ownership, contractual or other financial interest in the VIE (a variable interest holder) is obligated to absorb a majority of the risk of loss from the VIE’s activities, is entitled to receive a majority of the VIE’s residual returns, or both. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary must record all of the VIE’s assets, liabilities and non-controlling interests at fair value and account for the VIE as if it were consolidated based on majority voting interest.

Joint Ventures

The Company intends to operate certain of its manufacturing and distribution business through various joint ventures. Upon the adoption of FIN 46 (R), the Company has consolidated all joint ventures that were determined to be VIE’s and where the Company is the primary beneficiary.

On September 2, 2005, the Company formed a joint venture, named Advanced Biotechnologies, LLC, with Advanced Biotechnologies, Inc. for the purpose of blending, processing, storing, distributing and selling biodiesel, biodiesel mixtures and biodiesel byproducts. The Company has a 50% voting interest and a 50% allocation share of Advanced Biotechnologies, LLC’s profits and losses. The Company has contributed capital of $664,571 for initial start up costs to Advanced Biotechnologies, LLC as of March 31, 2007. The Company has concluded that this joint venture is a VIE and accordingly has included this entity in its condensed consolidated statements as of March 31, 2007 and for the period from June 1, 2005 (inception) to March 31, 2007.

On November 8, 2005, the Company formed a joint venture, named PowerSHIFT Biofuels of Iowa, LLC, with PowerSHIFT Energy Company, Inc., for the purpose of conducting the business of manufacturing, processing, storing, marketing, distributing, and selling biodiesel, biodiesel mixtures, and biodiesel byproducts. The Company has a 50% voting interest and a 50% allocation share of PowerSHIFT Biofuels of Iowa, LLC’s profits and losses. The Company has contributed capital of $210,090 for initial start up costs to PowerSHIFT Biofuels of Iowa, LLC as of March 31, 2007. The Company has concluded that this joint venture is a VIE and accordingly has included this entity in its condensed consolidated financial statements as of March 31, 2007 and for the period from June 1, 2005 (inception) to March 31, 2007. The Company currently is in the process of dissolving this joint venture.

On November 8, 2005, the Company formed a joint venture, named PowerSHIFT Biofuels of Hawaii, LLC, with PowerSHIFT Energy Company Inc., for the purpose of conducting the business of manufacturing, processing, storing, marketing, distributing, and selling biodiesel, biodiesel mixtures, and biodiesel byproducts. The Company has a 50% voting interest and a 50% allocation share of PowerSHIFT Biofuels LLC’s profits and losses. As of March 31, 2007, there has been no activity in the joint venture. Therefore, the Company has not advanced any capital for initial start up costs to PowerSHIFT Biofuels of Hawaii, LLC. The Company has concluded that this joint venture is a VIE and accordingly has included this entity in its condensed consolidated financial statements as of March 31, 2007, and for the period from June 1, 2005 (inception) to March 31, 2007. The Company currently is in the process of dissolving this joint venture.

On November 29, 2005, the Company signed an agreement with AG Global Partners, Ltd., that included several provisions that if agreed, would then lead to the formation of a joint venture named NewGen Fuel Technologies, Ltd., a company registered in the United Kingdom. The purpose of the joint venture was to be involved in all steps of the manufacture of biofuels through the supply and distribution of fuels to wholesale and retail networks in Europe, the Middle East, Southeastern Asia and Australia. The Company has a 50% voting interest and a 50% allocation share of NewGen Fuel Technologies, Ltd’s profits and losses.

-8-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

As of December 31, 2006, the Company has funded the start up costs in the amount of $191,507; however, the amount has been fully reserved since the joint venture has not been consummated. On September 5, 2006, the Company terminated its interest in consummating this joint venture and has paid AG Global Partners Ltd. a cash payment of $110,000 and 562,500 shares of the Company’s Common Shares and 562,500 shares was paid by a former executive director.

On November 30, 2005, the Company formed a joint venture named Actanol BioEngineering, LLC, with Actanol Service, Ltd., a provider of alternative energy and biofuel plant solutions, to conduct the business of design, engineering, contracting, building, staffing and managing the feasibility and operational processes of various types of biofuel plants and agro-refineries. On August 15, 2006, the Company increased its ownership interest from 50% voting interest to 60% and from 50% to 60% allocation share of Actanol BioEngineering, LLC’s profits and losses. Additionally, Actanol BioEngineering LLC changed its capital structure from a limited liability company to a corporation. The Company has advanced $1,700,899 for initial start up costs to Actanol BioEngineering, LLC as of March 31, 2007. No additional contributions for working capital were made subsequent to March 31, 2007. The Company has included this entity in its condensed consolidated financial statements as of March 31, 2007, and for the period from June 1, 2005 (inception) to March 31, 2007.

On September 26, 2006 the Company formed a joint venture named NewGen Biofuels Asia Pte Ltd (“NBA”) a company registered in Singapore, with Palmbio Venture Pte Lte, a company registered in Singapore, for the purpose of conducting the business of manufacturing, processing, storing, marketing, distributing, and selling biodiesel, biodiesel mixtures, and biodiesel byproducts. The Company has a 68% voting interest. The Company has no commitments to fund initial start up costs and working capital, however, as of September 30, 2006, the Company has advanced $190,000 in costs prior to creation of NBA. Additional working capital requirements will be treated as shareholder loans. As of March 31, 2007 the total amount recorded as loans to NBA is $309,000. No additional working capital has been loaned to NBA subsequent to March 31, 2007.

Investment in Unconsolidated Entity

The Company accounts for its thirty percent investment in an unconsolidated entity under the equity method of accounting, as the Company does not have any management control over this entity. This investment was recorded initially at cost and subsequently adjusted for equity in net earnings and cash distributions. On August 31, 2006, in conjunction with the acquisition described below, the Company purchased a minority interest in IPF America, Inc., a privately owned engineering consulting firm, for a purchase price of $16,645. Legal and professional fees associated with the purchase of the partnership interest, were expensed.

Acquisitions

On August 18, 2006 the Company’s majority owned subsidiary Actanol, Inc. acquired all of the issued and outstanding capital stock of a privately held company, Blitz 06-149 GmbH., a German shelf company with no assets or liabilities set up for the purpose of accelerating the legal process of setting up a German corporation for approximately $34,000. Blitz 06-149 subsequently changed its name to Actanol GmbH and on September 1, 2006 acquired 98.8% of IPF Germany GmbH for approximately $8,800 from Industrie Planung Fischer AG, an entity in German insolvency proceedings. As required by the insolvency administrator, an interest bearing two-month working capital loan of $317,125, held in escrow under the control of the insolvency administrator was set up and used during the months of September and October 2006. This loan has a term of one year and an interest rate of 10%. Accordingly, it is eliminated in consolidation. Additionally, on September 1, 2006 IPF Germany GmbH acquired for approximately $308,000 all the assets of Industrie Planung Fischer AG, including 99% of the outstanding stock of IPF Polska and 30% of the outstanding stock of IPF America, Inc. The aggregate acquisition price for all transactions described above was approximately $351,000, which was paid entirely in cash. Management estimated the net fair value of the assets and stock purchased to be approximately $351,000, as shown below.

The acquisition of the IPF entities including the assets of Industrie Planung Fischer AG, a provider of project engineering, project management and engineering consulting services, compliment and optimize Actanol, Inc.’s ability to provide full service biofuel plant design, building, staffing and management solutions.

-9-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

Under the purchase method of accounting, the purchase price for the 2006 Acquisitions was allocated to the acquired companies’ net tangible and intangible assets based on their estimated fair values as of the date of the completion of the respective acquisition. The allocation of the total purchase price is summarized below:

	Purchase Price Allocation			Asset Life In Years
Working capital		(67,707.00	)		-
Fixed assets		32,009.00			-
Investment in IPF America		16,645.00			-
Customer relationships		31,623.00			10
Trademarks		42,870.00			20
Goodwil		295,627.00			Indefinite
Net Assets Acquired		351,067.00

Purchase Accounting For Acquisitions

The results of operations of the 2006 Acquisitions are included in the Company’s results of operations beginning after their respective acquisition dates. The following unaudited pro forma information combines the consolidated results of operations of the Company and the companies that it acquired as if the acquisitions had occurred at the beginning of fiscal year 2005:

	Three Months Ended March, 31,						For The Period From June 1, 2005 (Inception) to March 31,
	2007			2006			2007			2006
Revenues	$	982,000		$	211,000		$	3,782,000		$	1,252,000
(Loss) from Operations		(2,634,000	)		(1,951,000	)		(16,832,000	)		(6,197,000	)
Net (Loss)		(2,289,000	)		(4,104,000	)		(21,221,000	)		(8,375,000	)
Per Share - basic and fully diluted		(0.04	)		(0.11	)		(0.51	)		(0.20	)

The unaudited pro forma information does not purport to be indicative of the results that would actually have been achieved had the acquisitions occurred as of the date of the periods indicated.

Cash

The Company maintains its cash balances in financial institutions. Balances in the institutions may at times exceed the Federal Deposit Insurance Corporation limits.

Pre-Acquisition Costs

The Company accounts for costs incurred prior to the date of acquisition of a parcel of real property as pre-acquisition costs. Pre-acquisition cots are capitalized if the property was acquired or the acquisition of the property is probable. Capitalized pre-acquisition costs in excess of recoverable amounts are charged to expense.

Accounts Receivable and Allowance For Doubtful Accounts

The Company carries accounts receivable at their face amount less allowances for doubtful accounts, and carries unbilled revenues at estimated net realizable value. Assessing the collectability of receivables (billed and unbilled) requires management judgment. When evaluating the adequacy of the allowance for doubtful accounts and the overall collectability of receivables, the Company analyzes historical bad debts, client creditworthiness, the age of accounts receivable and current economic trends and conditions.

-10-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated over the estimated useful lives of the related assets. Office equipment is being depreciated using the straight line method with a useful life of five years. The terminals and terminal improvements will be placed in service after they have been refurbished. Once refurbished and operating, they will be depreciated using the straight line method with an expected useful life of twenty five years.

Capitalized Interest Costs

The Company capitalizes interest cost in accordance with Statement of Financial Accounting Standard No. 34 “Capitalization Interest” during the period commencing with the first expenditure for a qualifying asset and ending when the asset is substantially complete and ready for its intended use. Capitalization of interest is based on the principle that a better measure of acquisition cost is achieved when certain interest costs that are directly related to borrowings that are made to acquire the qualifying asset are capitalized.

Long Lived Assets

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such review indicates that the asset is impaired when the carrying amount of an asset exceeds the sum of its expected future cash flows on an undiscounted basis, the asset’s carrying amount is written down to fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Excess of Cost Over Net Assets Acquired

In accordance with Statement of Financial Accounting Standard No. 141, “Business Combinations” (SFAS 141) the Company allocates the purchase price of its acquisitions to the tangible assets, liabilities and intangible assets acquired based on their estimated fair values. The excess purchase price over those fair values is recorded as “Excess of Cost Over Net Assets Acquired”. The fair values assigned to intangible assets acquired is based on valuations prepared by independent third-party appraisal firms using estimates and assumptions provided by management or negotiated at arms-length between the Company and the seller of the acquired assets. In accordance with SFAS 141, goodwill and purchased intangibles with indefinite lives acquired after June 30, 2001 are not amortized, but will be reviewed periodically for impairment. Purchased intangibles with finite lives will be amortized on a straight-line basis over their respective useful lives.

Loss Per Share

Basic net income (loss) per common share is computed based on the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed based on the weighted average number of common shares and common stock equivalents outstanding during the period. The exercise of options to purchase 4,740,000 shares and warrants to purchase 6,446,521 common shares; and debt (principal and interest) convertible into an indeterminable number of common shares as of March 31, 2007, (the conversion feature is limitless as the price per share declines, (see Note 12) were not included in the computation of diluted loss per share since the assumed conversion and exercise would be anti-dilutive for all periods presented.

Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

-11-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

Fair Value Of Financial Instruments

At March 31, 2007, the carrying value of the Company’s financial instruments, which include cash, accounts receivable, prepaid assets, accounts payable and accrued expenses for related and non-related parties, and notes payable, approximates their fair value due to the short-term maturity of those instruments. The Company has estimated the fair value of its convertible debentures, excluding the value of any conversion, call or put rights, using a discounted future cash flow analysis. The Company utilized a discount rate commensurate with other entities with similar credit and business risks, in this analysis. The carrying amount and estimated fair value is as follows:

	March 31, 2007
	Carrying Amount		Estimated Fair Value using Discounted Cash Flow Analysis
Convertible Debentures	$	5,435,949	$	6,291,800

Use of Estimates

In preparing our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts in the financial statements and the accompanying notes. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions we are required to make.

Estimates that are critical to the accompanying condensed consolidated financial statements include the identification and valuation of derivative instruments, the amortization periods for debt issuance costs and the amortization of discounts on convertible securities arising from warrants, options and bifurcated derivative instruments, estimates that arise from the provisions for loss on advances to joint ventures, the valuation of deferred income tax assets and estimated depreciation for tangible assets. Management bases its estimates and judgements on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.

Derivative Financial Instruments

We review the terms of convertible debt instruments we issue to determine whether there are embedded derivative instruments including, but not limited to, the conversion option, our ability to pre-pay the debt (call option), and the investor’s ability to demand early repayment (put option) in a default situation, that may be required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible debt instrument contains more than one embedded derivative instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Also, in connection with the sale of convertible debt and equity instruments, we may issue freestanding options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.

When the risks and rewards of any embedded derivative instrument are not "clearly and closely" related to the risks and rewards of the host instrument, the embedded derivative instrument is generally required to be bifurcated and accounted for separately. If the convertible instrument is debt, or has debt-like characteristics, the risks and rewards associated with the embedded conversion option are not "clearly and closely" related to that debt host instrument. The conversion option has the risks and rewards associated with an equity instrument, not a debt instrument, because its value is related to the value of our common stock. Nonetheless, if the host instrument is considered to be "conventional convertible debt" (or "conventional convertible preferred stock"), bifurcation of the embedded conversion option is generally not required. However, if the instrument is not considered to be conventional convertible debt (or conventional convertible preferred stock), bifurcation of the embedded conversion option may be required in certain circumstances Generally, the ability of the Company to prepay the debt (call option), is clearly and closely related to the host instrument since the host and the derivative instrument have risks and rewards of a debt instrument, and therefore, bifurcation would not be required.

-12-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

However, there may be certain circumstances when the option to prepay would not be considered clearly and closely related, in which bifurcation would be required. Similarly, the holder of the debt has the ability to require the Company to repay the debt before the due date (put option) in a default situation, since the host and the derivative instrument have risks and rewards of a debt instrument, bifurcation generally would not be required. However, there may be certain circumstances when the put option would not be considered clearly and closely related, in which bifurcation would be required.

Certain instruments, including convertible debt and the freestanding options and warrants issued in connection with those convertible instruments are subject to registration rights agreements, which impose penalties for failure to register the underlying common stock by a defined date or failure to maintain an effective registration statement over the term of the debt instruments. If the convertible debt instruments are not considered to be "conventional", then the existence of the potential cash penalties under the related registration rights agreement requires that the embedded conversion option be accounted for as a derivative instrument liability. Similarly, the potential cash penalties under the related registration rights agreement may require us to account for the freestanding options and warrants as derivative financial instrument liabilities, rather than as equity. In addition, when the ability to physically or net-share settle the conversion option or the exercise of the freestanding options or warrants is deemed to be not within the control of the Company, the embedded conversion option or freestanding options or warrants may be required to be accounted for as a derivative financial instrument liability.

Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative financial instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based derivative financial instruments and free standing options or warrants, we use the Black-Scholes option pricing model to value the derivative financial instruments. The binomial method is used to value all embedded derivative financial instruments.

If freestanding options or warrants were issued in connection with the issuance of convertible debt instruments and will be accounted for as derivative instrument liabilities (rather than as equity), the total proceeds received are first allocated to the fair value of those freestanding instruments. If the freestanding options or warrants are to be accounted for as equity instruments, the proceeds are allocated between the convertible debt instrument and those derivative equity instruments, based on their relative fair values. When the convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. To the extent that the fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair value.

The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income, using the effective interest method. Under the effective interest method, interest expense in the earlier periods of the term of the debenture is significantly lower than in the latter periods of the term of the debenture.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed periodically, including at the end of each reporting period. If re-classification is required, the fair value of the derivative instrument, as of the determination date, is re-classified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Stock-Based Compensation

Statement of Financial Accounting Standard No. 123, “Accounting for Stock−Based Compensation” (SFAS 123) previously provided companies with a choice to follow the provisions of SFAS 123 in determination of stock−based compensation expenses or to continue with the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). Under APB 25, if the exercise price of the stock options granted to employees equals or exceeds the market price of the underlying common stock on the date of grant, no compensation expense is recognized.

-13-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share−Based Payment” (SFAS No. 123(R)), which replaces SFAS No. 123 and superseded APB Opinion No. 25. SFAS No. 123(R) requires all share−based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values beginning with the first annual reporting period that begins after December 15, 2005, with early adoption encouraged. The pro forma disclosures previously permitted under SFAS No. 123 will no longer be an alternative to financial statement recognition.

Prior to January 1, 2006, we accounted for our stock-based compensation under the recognition and measurement provisions of APB No. 25, and related Interpretations, as permitted by SFAS 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure”. Stock-based compensation cost representing a prorata portion of the “in the money” intrinsic value was recognized in the Consolidated Statements of Operations during 2005 included in the period from June 1, 2005 (inception) to December 31, 2006 as all options granted under our option plans had an exercise price less than the fair market value of the underlying common stock on the date of grant.

Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R) using the modified prospective transition method. As a result, the Company’s net loss before taxes for the three months ended March 31, 2007, is $12,908 higher than if it had continued to account for share based compensation under Accounting Principles Board (“APB”) opinion No. 25. As of March 31, 2007, the Company has $21,513 of unrecognized stock-based compensation cost related to non-vested stock-based compensation that is expected to be recognized over the next twelve months.

The provisions of SFAS 123R require that we make an estimate of our forfeiture rate and adjust the expense that we recognize to reflect the estimated number of options that will go unexercised. Due to our early stage of development as a newly focused company and our limited workforce of 52 employees as of March 31, 2007, including executive officers, we are challenged to develop an appropriate estimate of forfeitures. Based on these circumstances we have opted for a conservative position in that we are estimating forfeitures to be 0% at this time. We will continue to assess this position as our company develops and our workforce expands. When we feel that we have sufficient data on which to base an assumption we will adjust the expense recognized, if necessary.

On September 7, 2005, the Company adopted an incentive based Non-Qualified Stock Option Plan (“NQSO Plan”) with a vesting period of four (4) years from the grant date with an expiration period of ten (10) years after the last vesting date. Up to eight million shares or 15% of the float of Common stock will be provided for the NQSO Plan. The incentive awards will be based on performance, up to maximum levels, tiered as follows: Chairman/CEO 100%, next level 50% to 75%, and the next level 25% of their cash compensation.

In addition, a special one-time award was granted to certain individuals for their efforts contributed to the Company up to the date of the award. The amount of shares allocated for this award is 300,000. The options were granted as of September 9, 2005, and participants will be fully vested over a two-year timeframe with an expiration period of ten (10) years after the last vesting date. The option exercise price is $0.50 per share. The shares are to be equally split between certain officers. In January 2006 one of the grantees resigned and forfeited his award, which amounted to 75,000 shares.

Another award was granted to the chief financial officer on October 10, 2005, the date of employment, for the option to purchase 500,000 shares at $1.00 per share and vesting in accordance with the NQSO Plan. On August 1, 2006, an award for 75,000 shares was granted to a former executive officer as part of a settlement plan (see Note 12, Contingencies) and on September 29, 2006 one of the grantees forfeited his award of 500,000 shares. The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	2005
Risk free interest rate	3.94%
Volatility factor	185.50%
Term in years	5.00
Expected dividend yield	-

-14-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

On October 6, 2006, 3,040,000 options, not part of the Company’s NQSO plan, were granted to five directors and one officer. These options vest immediately and are exercisable at $1.00 per shares exercisable over a period of ten years. The fair value of these options was estimated at the date of grant to be $638,280 using the Black-Scholes option pricing model with the following assumptions:

	2006
Risk free interest rate	4.64%
Volatility factor	128.00%
Term in years	10
Expected dividend yield	-

We may also issue options or warrants to non-employees in connection with consulting or other services they provide.

On December 7, 2006 the Company issued 500,000 warrants to a consultant for services received. The exercise price of the warrants is $.25 with an expiration date of December 7, 2009.

On December 21, 2006 the Company issued 500,000 and 1,350,000 of common stock to two individuals in exchange for consulting services received.

On February 28, 2007, the warrant dated August 1, 2005, for 2,155,000 shares of stock was exercised. The warrants exercised had a par value per share of $.001.

On March 27, 2007, 500,000 options, not part of the Company’s NQSO plan, were granted to a director. These options vest immediately and are exercisable at $1.00 per shares exercisable over a period of ten years. The fair value of these options was estimated at the date of grant to be $325,911 using the Black-Scholes option pricing model with the following assumptions:

	2007
Risk free interest rate	4.64%
Volatility factor	128.00%
Term in years	10
Expected dividend yield	-

The weighted average fair value of options and warrants granted during 2005 is estimated to be $2.62 and $0.60, respectively, and the weighted average fair value of options and warrants granted during 2006 is estimated to be $0.33 and $0.52.

-15-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

The Company has reserved shares of its authorized but un-issued common stock for the following: 

	Stock Options Weighted Average Exercise Price						Warrants Weighted Average Exercise Price
	Shares			Per Share			Shares			Per Share		Total			Exercisable
Balance at 06/01/2005 (Inception):		-			-			-			-		-			-
Granted		800,000		$	0.81			2,395,000		$	0.30		3,195,000			2,395,000
Excercised		-						-					-
Expired		-						-					-
Forfeited		-						-					-
Balance at 12/31/2005:		800,000		$	0.81			2,395,000		$	0.30		3,195,000			2,395,000
Granted		-						4,891,304		$	0.23		4,891,304			4,891,304
Excercised		-						-					-
Expired		-						-					-
Forfeited		(75,000	)		(0.50	)		-					(75,000	)
Balance at 06/30/2006:		725,000		$	0.84			7,286,304		$	0.25		8,011,304			7,286,304
Granted		75,000		$	0.50			-					75,000			75,000
Excercised		-						-					-
Expired		-						-					-
Forfeited		(500,000	)	$	1.00			-					(500,000	)
Balance at 09/30/2006		300,000		$	0.50			7,286,304		$	0.25		7,586,304			7,361,304
Granted		3,940,000		$	0.25			1,315,217		$	0.23		5,255,217			5,255,217
Excercised
Expired
Forfeited
Balance at 12/31/2006		4,240,000		$	0.96			8,601,521		$	0.25		12,841,521			12,616,521
Granted		500,000		$	1.00								500,000			500,000
Excercised								(2,155,000	)	$	0.001		(2,155,000	)		(2,155,000	)
Expired
Forfeited
Balance at 03/31/2007		4,740,000		$	0.97			6,446,521		$	0.33		11,186,521			10,961,521

The following table summarizes information concerning options and warrants outstanding and excercisable at March 31, 2007:

			Options Outstanding				Options Exercisable
	Weighted		Number		Weighted		Number		Weighted
	Average		of		Average Exercise		of		Average Exercise
Range of Exercise Prices	Remaining Life		Options		Price Per Share		Options		Price Per Share
$         0.50		10.50		225,000	$	0.50
$         0.50		1.83		75,000	$	0.50		75,000	$	0.50
$         1.00		9.50		3,940,000	$	1.00		3,940,000	$	1.00
$         1.00		10.00		500,000	$	1.00		500,000	$	1.00
$.50 - 1.00		9.48		4,740,000	$	0.96		4,515,000	$	0.99

			Warrants Outstanding				Warrants Exercisable
	Weighted		Number		Weighted		Number		Weighted
	Average		of		Average Exercise		of		Average Exercise
Range of Exercise Prices	Remaining Life		Warrants		Price Per Share		Warrants		Price Per Share
$            0.50		1.83		4,891,304	$	0.23		4,891,304	$	0.23
$            0.23		2.67		815,217	$	0.23		815,217	$	0.23
$            0.25		2.67		500,000	$	0.25		500,000	$	0.25
$            1.50		4.25		140,000	$	1.50		140,000	$	1.50
$            5.00		3.83		100,000	$	5.00		100,000	$	5.00
$0.001 - 5.00		2.07		6,446,521	$	0.33		6,446,521	$	0.54

-16-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

Reclassifications

Certain amounts in the 2006 condensed consolidated financial statements have been reclassified to conform to the current year presentation. Reclassifications include: “general and administrative expenses” which is now reported in the separate line items of compensation, professional services, travel, marketing, royalty, investor relations, and provision for loss on advances to joint ventures. These reclassifications did not impact the Company’s reported loss from operations.

Foreign Currency Translation

Monetary transactions in foreign currencies are translated into U. S. dollars, the functional currency, at the rate of exchange at the date of transaction. Transaction gains and losses are recognized in operating expenses within the statement of operations at the average exchange rate during the period.

Monetary assets and liabilities denominated in foreign currencies are translated into U. S. dollars, the functional currency, at the rate of exchange at the balance sheet date.

These financial statements are presented in U.S. dollars. Translation of balance sheet data from Euros’ to U.S. dollars is made at the exchange rate on the balance sheet date (1 Euro equals U.S. dollar $0.75). Translation of operating statement and cash flow amounts is made at the average exchange rate for the period (1 Euro equals U.S. dollar $.76341) Translation gains and losses are recognized within “other comprehensive loss” on the balance sheet.

Comprehensive Income (Loss)

In accordance with FASB Statement No. 130, “Reporting Comprehensive Income,” all components of comprehensive income (loss), including net income (loss) are reported in the financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), consisting solely of foreign currency translation adjustments, are reported, net of any related tax effect to arrive at comprehensive income (loss).

Recent Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments— an amendment of FASB Statements No. 133 and 140” This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This Statement permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for fiscal years beginning after September 15, 2006. Management does not believe the adoption of SFAS 155 will have a material impact on the Company’s financial condition or results of operations.

FASB Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (SFAS 157), issued in September 2006, establishes a formal framework for measuring fair value under GAAP. It defines and codifies the many definitions of fair value included among various other authoritative literature, clarifies and, in some instances, expands on the guidance for implementing fair value measurements, and increases the level of disclosure required for fair value measurements. Although SFAS 157 applies to and amends the provisions of existing FASB and AICPA pronouncements, it does not, of itself, require any new fair value measurements, nor does it establish valuation standards. SFAS 157 applies to all other accounting pronouncements requiring or permitting fair value measurements, except for; SFAS No. 123 (R), share-based payment and related pronouncements, the practicability exceptions to fair value determinations allowed by various other authoritative pronouncements, and AICPA Statements of Position 97-2 and 98-9 that deal with software revenue recognition. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Management does not believe the adoption of SFAS 157 will have a material impact on the Company’s financial condition or results of operations.

-17-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

In June 2006, FASB issued FIN 48 - Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB 109 Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings.  The Company does not expect this pronouncement to have a material effect on the financial position or results of operations of the Company.

InFebruary 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159), which permits an entity to measure certain financial assets and financial liabilities at fair value. Pursuant to SFAS No. 159, entities that elect the fair value alternative will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value alternative may be elected on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value alternative election is irrevocable, unless a new election date occurs. Assets and liabilities that are measured at fair value must be displayed on the face of the balance sheet. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity (1) makes that choice in the first 120 days of that fiscal year, (2) has not yet issued financial statements, and (3) elects to apply the provisions of SFAS No. 157, Fair Value Measurements. We are evaluating the provisions of SFAS No. 159 to determine the potential impact, if any, the adoption will have on our consolidated financial statements.

(3) PREPAID ASSETS

The following table represents the prepaid asset balance as of March 31, 2007.

Description	Amount
APPCO Deposit	$	250,000
Deferred Royalty		62,499
Prepaid Insurance		53,441
Prepaid Directors Fees		21,000
Other		8,069
	$	395,009

On January 16, 2007 the Company entered into a stock purchase agreement with APPCO and the stock holders of APPCO, (the “sellers”). On March 13, 2007 the Company paid to the “sellers” a $250,000 non-refundable good faith deposit. The good faith deposit will be applied to the at the closing as a prepaid credit toward the Company’s obligation to pay the purchase price.

(4) DEFERRED DEBT ISSUANCE COSTS

On January, 24, 2006, March 14, 2006, September 15, 2006, December 11, 2006, and March 13, 2007 in conjunction with the issuance of 10% convertible debentures (See Note 12), the Company paid debt issuance costs in the amount of $220,000, $65,000, $215,000, $125,000 and $140,000 respectively, to the lender. In addition, the Company issued 300,000 shares of its common stock to the lender as part of the January 24, 2006 convertible debentures. These shares had a fair value of approximately $600,000 at the date of grant. These debt issuance costs have been deferred and are being amortized using the straight-line method over the term of the convertible debenture. The convertible debentures have a three-year term, except for the December 11, 2006 debenture, which has a two-month term and the March 13, 2007 debenture, which has a 24 month term. As of March 31, 2007, $637,448 remains deferred with a current portion of $369,129.

(5) PROPERTY, PLANT AND EQUIPMENT

On January 24, 2006, the Company closed on a contract of sale, as amended, pursuant to which the Company purchased three parcels of land along with fuel terminals located on such properties for a purchase price of $1,700,000 for all three parcels. The terminals, with a total storage capacity of over 10 million gallons, and an annual throughput capacity of more than 500 million gallons, will be used for the distribution and storage of alternative fuels, including biodiesel and ethanol blends, as well as traditional hydrocarbons. In February 2006, the Company began the process of assessing the refurbishment of these fuel terminals (See Note 12 regarding refurbishment commitments and agreements).

-18-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

On February 20, 2007 the Company completed the purchase of the Ashland Inc. property located at 75 Pineridge Drive, located in the city of Spartanburg, of Spartanburg County, South Carolina. Total consideration provided was $327,500.

In addition, the Company purchased property, plant and equipment consisted of the following as of March 31, 2007:

	Total
Terminal improvements	$	4,411,128
Terminals		1,700,000
Joint venture bio-diesel plant		373,055
Goodwill and intangibles		383,892
Equipment		139,637
		7,007,712
Less accumulated depreciation		(58,205	)
	$	6,949,507

Depreciation expense on office equipment for the period from inception to the period ended March 31, 2007 and 2006 was $46,113 and $-0-, respectively. During the three months ended March 31, 2007 and 2006, we capitalized approximately $235,123 and $-0-, respectively, of interest related to terminal refurbishment.

(6) ACCOUNTS PAYABLE AND ACCRUED EXPENSES

For the period from June 1, 2005 (inception) to March 31, 2007, various officers and directors of the Company agreed to defer a portion of their salaries payable until such time as adequate funds have been received by the Company. The amount deferred as of March 31, 2007 was $339,020, which is included in accounts payable and accrued expenses - related parties (See Note 12). Accounts payable and accrued expenses consisted of the following as of March 31, 2007:

	Related		Non-related
Accounts payable	$	431,041	$	2,420,391
Accrued expenses		605,002		1,100,325
Total	$	1,036,043	$	3,520,716

(7) NOTES PAYABLE

The Company’s wholly-owned subsidiary, Refuel, executed a promissory note on June 30, 2005 with John King, former Executive Director, in the amount of $316,500 (See Note 12). As of June 30, 2006, the unsecured note had a remaining principal balance of $281,500 and accrued interest of $13,959, which is included in accounts payable and accrued expenses-related parties. The unsecured note bears interest at 10% per annum with an original due date of December 1, 2005, that was extended to January 15, 2006. As of June 30, 2006 the note had not been paid off and was in default. On May 24, 2006, the Company was served with a complaint filed against the Company; however there are no adverse covenants relating to this note payable. On August 1, 2006 the Company reached a settlement in the action entitled John King v. NewGen Technologies, Inc. and Refuel America, Inc. The action was filed in the US District Court for the Western District of North Carolina. The settlement agreement included an option grant of 75,000 shares exercisable at $0.50 per share for a period of 30 months and two 12% convertible unsecured promissory notes (“Settlement Convertible Debentures”) effective August 1, 2006 in the amounts of $317,794 and $357,206 (See Note 12). As a result of the settlement, accrued expenses-related parties and notes payable were reduced by a total of $638,636. In addition, settlement expense increased by $36,364.

On April 26, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $420,000 at an interest rate of 10% for working capital purposes. Principal and interest were originally due October 26, 2006 and have been extended for another six months to April 25, 2007. As of March 31, 2007 this note had a principal balance and accrued interest of $67,474 and $23,167 respectively.

-19-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

On May 17, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $752,500 at an interest rate of 10% for working capital purposes. Principal and interest were originally due November 17, 2006 and have been extended for another six months to May 16, 2007. On December 12, 2006 the principal balance of $752,500 and interest of $43,088 was converted into company shares (See Note 11).

On June 12, 2006, the Company received an unsecured loan in the amount of $1,000,000 from Indexia Holdings Limited (“Indexia”). There is no written agreement between the parties and a note has not been executed, however the Company and Indexia orally agreed that the principal of the loan will be due and payable on December 12, 2006, along with interest of 10% per annum. On December 12, 2006 the principal balance of $1,000,000 and interest of $50,137 was converted into company shares (See Note 13).

On August 8, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $500,000 at an interest rate of 10% for working capital purposes. Principal and interest are due February 8, 2007. On December 12, 2006 the principal balance of $500,000 and interest of $17,808 was converted into company shares (See Note 13).

On August 24, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $500,000 at an interest rate of 10% for working capital purposes. Principal and interest are due February 24, 2007. On December 12, 2006 the principal and interest of $15,068 was converted into company shares (See Note 13).

On August 31, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $600,000 at an interest rate of 10% for working capital purposes. Principal and interest are due March 3, 2007. On December 12, 2006 the principal balance of $600,000 and interest of $16,932 was converted into company shares (See Note 13)..

On August 31, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $671,230 at an interest rate of 10% for working capital purposes. Principal and interest are due March 3, 2007. On December 12, 2006 the principal balance of $671,230 and interest of $20,229 was converted into company shares (See Note 13).

On December 12, $4,023,730 of the short term promissory note’s were repaid with shares of common stock of the Company. The following table summarizes the dates funds were received, the interest accrued and the total number of shares issued to satisfy the outstanding principal and accrued interest balance.

Date	Amount		Interest		Shares
05/17/06	$	752,500	$	43,088		3,459,080
06/12/06		1,017,500		50,137		4,641,900
08/08/06		500,000		17,808		2,251,340
08/24/06		500,000		15,068		2,239,428
08/31/06		600,000		16,932		2,682,311
08/31/06		653,730		20,229		2,930,256
	$	4,023,730	$	163,262		18,204,315

-20-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

(8) COMMITMENTS AND CONTINGENCIES

Operating Leases

The company leases office facilities, data processing, and other equipment under a combination of non-cancelable and cancelable operating lease which expire at various dates through 2011. Rent expense totaled $78,044 and $23,323 for the three months ended March 31, 2007 and 2006 respectively.

Future minimum rental payments for operating leases with initial or remaining terms in excess of one year are as follows:

Year Ending December 31:
2008		326,132
2009		158,334
2010		158,334
2011		2,802
2012		-
	$	645,602

Commitments

The Company has entered into three separate five-year management services contracts (commencing on October 1, 2005, November 1, 2005 and April 1, 2006) for management of three fuel terminals (storage tanks, piping and racks for dispensing) for $8,333 per month each. From June 1, 2005 (Inception) to March 31, 2007, the Company has incurred $394,167 in terminal management services.

In the first quarter 2006, the Company entered into various agreements with an engineering consultant and contractors for approximately $3,650,000 for refurbishment of its newly purchased fuel terminals located in Charlotte, NC, Spartanburg SC and Columbus GA, of which the Company has paid approximately, $3,157,000, as of March 31, 2007. The Company expects to enter into additional agreements with the engineering consultant and contractors to bring the terminals into proper working order. The Company anticipates an additional $1,684,000 will be required to complete the refurbishment of the Charlotte terminal and an additional $9,500,000, to $10,500,000 to complete the remaining terminals. The Company anticipates the Charlotte terminal will begin operations within the third quarter of 2007 with Spartanburg and Columbus to follow at the end of the second half of 2007 and first half of 2008, respectively. The fourth terminal in Spartanburg is estimated to become operational in the second half of 2008.

Contingencies

On August 25, 2006 Refuel America, Inc., the Company’s wholly-owned subsidiary, S. Bruce Wunner, the Company’s Vice-Chairman and Chief Executive Officer, and Ian Williamson, the Company’s President and Director, were served with a complaint in an action entitled Douglas Brown, Sr. v. Refuel America, Inc., Ian Williamson and S. Bruce Wunner. The action was filed in the Superior Court of the State of North Carolina, Cleveland County. Mr. Brown alleges that in return for advancing a loan of $1,000,000 to a potential acquisition candidate of Refuel, he received 3,740,424 fully paid and non-assessable shares of Refuel common stock. Mr. Brown is seeking a declaration acknowledging his ownership of the Refuel common stock and such other monetary damages as determined at trial. The Company denies all allegations and believes it has sufficient defenses on all matters. In addition, the Company intends to vigorously defend the action brought by Mr. Brown.

On October 20, 2006 Scott Deininger, a former employee, has sued NewGen for breach of contract after his employment was terminated. He currently serves as a member of the Board. The Company is seeking to settle the claim. The Company does not believe that the ultimate outcome of this matter will have a material adverse effect on the Company.

-21-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

(9) INCOME TAXES

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at March 31, 2007 are presented below:

	March 31, 2007
Deferred income tax assets:
Net operating loss carry forwards	$	5,330,326
Deferred income tax liabilities:		-
		5,330,326
Valuation allowance		(5,330,326	)
Net deferred tax assets	$	-

As of March 31, 2007, the Company has a net operating loss carry forward for Federal income tax purposes in the amount of $5,330,326, which expires in 2025. The Company has recorded a valuation allowance of $5,330,326 as of March 31, 2007. The valuation allowance was recorded due to the doubt surrounding the Company’s ability to utilize the deferred tax asset.

	March 31, 2007
Tax (benefit) at U.S. federal statutory rate of 34%	$	(5,330,326	)
Valuation allowance		5,330,326
Tax expense (benefit)	$	-

(10) CONVERTIBLE DEBENTURES

On January 24, 2006, the Company consummated a securities purchase agreement (the “Purchase Agreement”) providing for the sale of its Convertible Debentures in the aggregate principal amount of $5,000,000, of which $2,200,000 was advanced immediately, $650,000 was advanced on March 14, 2006, and the remaining $2,150,000 was advanced on September 19, 2006 two days before the Company’s Registration Statement on Form SB-2 was declared effective by the Securities & Exchange Commission on September 21, 2006. As agreed to in the Purchase Agreement, the Registration Statement was to be declared effective by May 11, 2006 and was extended to June 19, 2006. However, the Company was contractually obligated to pay liquidated damages from this date to the effective deadline date September 15, 2006. As such, $171,000 was reduced from the loan proceeds received. The above debentures are currently in default due to non-payment of another debenture not paid on its maturity date. The Convertible Debentures holders may convert, at any time, the principal amount outstanding into shares of Common Stock, at a conversion price per share equal to the lesser of (i) $1.00, or (ii) eighty percent (80%) of the lowest closing bid price for the Company’s Common Stock during the five trading days immediately preceding the conversion date, subject to adjustment. The non-payment of principal and interest at the maturity date of the other convertible debentures noted below has caused these debentures to be in default.

On January 24, 2006, in connection with the sale of $2,200,000 of 10% Secured Convertible Debentures, the Company issued 300,000 shares of the Company’s Common Stock. Also, as part of the same transaction, the Company also issued a warrant for the purchase of 1,125,000 shares of the Company’s Common Stock at an exercise price of $1.00 per share. The agreement allows for the increase in shares to match $1,125,000 if the Company sells shares at a price below $1.00 per share. The warrant expires in three years. Due to a settlement agreement dated August 1, 2006, with a former executive director and payment of notes in shares to a director on December 12, 2006 at $.23 per share (Note 12), whereby shares were issued at $0.50 and $0.23 respectively, triggering the ratchet provision of the warrant noted below. The warrant has now been increased to 4,891,304 and the exercise price decreased to $0.23 per share. The expiration date remains three years.

Upon three business days advance written notice, the Company may redeem the Convertible Debentures, in whole or part, if the closing bid price of the Company’s Common Stock at the time of such written notice is less than $1.00. In the event the Company exercises its right of redemption within 90 days of the date of issuance of the Convertible Debentures, the redemption will be calculated at 107% and thereafter the redemption will be calculated at 110% of the Convertible Debentures face value.

The Company’s obligations under the Purchase Agreement are secured by substantially all of the Company’s assets. In addition, certain executive officers and directors of the Company have granted the holders a security interest in a portion of shares of the Company’s common stock held by such officers and directors.

-22-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

The conversion price of the Convertible Debentures may also be adjusted in certain circumstances, such as if the Company pays a stock dividend, subdivides or combines outstanding shares of common stock into a greater or lesser number of shares, or take such other actions as would otherwise result in dilution. Also, if we issue shares of common stock at a price below $0.23 per share, the fixed conversion price of the warrants will be reduced accordingly (the ratchet provision). As a result, the secured Convertible Debentures are not considered to be "conventional convertible debt, convertible into a fixed number of shares" as that term is used in EITF Issue 00-19 "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled In, a Company's Own Stock."

The warrant for the purchase of 4,891,304 shares of common stock was valued using the Black-Scholes option pricing model. Because of the potential penalties we may have to pay under the Registration Rights Agreement, this warrant has been recorded as a derivative instrument liability rather than as equity. This derivative instrument liability was initially recorded at its fair value and it is adjusted to fair value (using the Black-Scholes option pricing model) at the end of each reporting period with any changes in the fair value charged or credited to income in the period of change.

On August 1, 2006 the Company reached a settlement with a former executive director. The settlement agreement included options for 75,000 shares exercisable over the next 30 months and two 12% convertible unsecured promissory notes effective August 1, 2006 in the amounts of $317,794 and $357,206 (See Notes 7and 10). These settlement debentures are convertible at a fixed price of $0.50 per share. Due to the non-payment of principal and interest at the maturity date of the December 7, 2006 convertible debentures and the lack of payment of interest subsequent to March 31, 2007 on this convertible settlement debenture, this note is in default.

On December 7, 2006, the Company entered into a $1,100,000 secured convertible debenture agreement with interest to accrue on the outstanding principal balance at an annual rate equal to ten percent (10%) with a third party lender and a warrant to purchase 815,217 shares of the Company’s stock. The Company’s obligations under the December 7, 2006 Purchase Agreement are secured by substantially all of the Company’s assets. In addition, certain executive officers and directors of the Company have granted the holders a security interest in a portion of shares of the Company’s common stock held by such officers and directors. The December 7, 2007 debenture is due January 6, 2007. On January 11, 2007 the due date of the December 7, 2006 debenture was extended to February 6, 2007. This note is in default. The Company is currently in the process of extending this note.

A portion or all the amounts of principle and interest due and outstanding on the December 7, 2006 debenture is convertible into shares of common stock at any time at a price equal to $.25. In addition, the December 7, 2006 debenture includes a provision for the conversion price, upon the occurrence of an event of default, to be calculated at eighty percent (80%) of the lowest closing bid price of the common stock during the five (5) trading days immediately preceding the conversion date.

On December 20, 2006, the Company entered into an unsecured convertible debenture with a director in the amount of $2,644,400 at an interest rate of 10% for working capital purposes. Principal and interest are due June 20, 2007. The Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the December 20, debenture. A portion or all the amounts of principle and interest due and outstanding on the December 20, 2006 debenture is convertible into shares of the Company’s common stock at any time at a price the lesser of (i) 80% of the average three (3) day trading price of the Common Stock during the three trading days immediately prior to the date of such election or (ii) $0.25 per share. Provided written notice, the Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the December 20, 2006 debenture. Following the date of the notice of prepayment, the Holder shall have a period of fifteen (15) calendar days to exercise the conversion rights provided.

On February 15, 2007, the Company entered into an unsecured convertible debenture with a director in the amount of $850,000 at an interest rate of 10% for working capital purposes. Principal and interest are due May 15, 2007. The Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the February 15, 2007 debenture. A portion or all the amounts of principle and interest due and outstanding on the February 15, 2006 debenture is convertible into shares of the Company’s common stock at any time at a price the lesser of (i) 80% of the average three (3) day trading price of the Common Stock during the three trading days immediately prior to the date of such election or (ii) $0.25 per share. Provided written notice, the Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the December 20^th debenture. Following the date of the notice of prepayment, the Holder shall have a period of fifteen (15) calendar days to exercise the conversion rights provided.

-23-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

On March 14, 2007, the Company entered into a $1,250,000 secured convertible debenture agreement with interest to accrue on the outstanding principal balance at an annual rate equal to ten percent (10%) with a third party lender. The Company’s obligations under the March 14, 2007 Purchase Agreement are secured by substantially all of the Company’s assets. In addition, certain executive officers and directors of the Company have granted the holders a security interest in a portion of shares of the Company’s common stock held by such officers and directors. The March 14, 2007, debenture is due March 14, 2009, and currently is in default due to the non-payment of the principal and interest at the date of maturity of the December 7, 2006 debenture.

The Convertible Debentures are not considered to be conventional convertible debt; therefore, the embedded conversion option of the Convertible Debentures is subject to the requirements of EITF Issue 00-19. Because of the potential penalties we may have to pay under the Registration Rights Agreement, together with the fact that the conversion price of the debt can be adjusted, we are required by EITF Issue 00-19 to bifurcate the embedded conversion option and account for it as a derivative instrument liability. This derivative instrument liability was initially recorded at its fair value and is be adjusted to fair value at the end of each reporting period with any changes in the fair value charged or credited to income in the period of change.

The Convertible Debentures permit the Company, at its discretion, to prepay the debt (“Call Option”), plus accrued interest and applicable penalty. According to the applicable accounting guidance, including FASB Statement 133 “Accounting for Derivative Instruments and Hedging Activities” (“FASB 133”), as amended and Derivative Implementation Group - Statement 133 Implementation Issue No. B39 “Embedded Derivatives: Application of Paragraph 13(b) to Call Options That Are Exercisable Only by the Debtor”, the risks and rewards of the call option are considered to be clearly and closely related to that of the host instrument. Therefore, we have not bifurcated the embedded Call Option from the host instrument and have not accounted for the Call Option separately.

In addition, the Convertible Debentures permit the holder of the debt to require the Company to repay the debt before the due date in a default situation, either in cash or through the aforementioned conversion option (“Put Option”). Since the ability of the holder to exercise this option is contingent upon a default, according to the applicable accounting guidance, including FASB 133 and Derivative Implementation Group - Statement 133 Implementation Issue No. B16 “Embedded Derivatives: Calls and Puts in Debt Instruments,” the put option is not considered to be clearly and closely related to that of the host instrument and must be bifurcated from the host instrument. Since the Put Option must be bifurcated, it is subject the requirements of EITF Issue 00-19, and will be accounted for as a derivative instrument liability. This derivative instrument liability was initially recorded at its fair value and it is adjusted to fair value at the end of each reporting period with any changes in the fair value charged or credited to income in the period of change.

The proceeds received from the Convertible Debentures during the first quarter of 2006 were first allocated to the fair value of the freestanding warrant and then to the fair value of the bifurcated embedded derivative instruments included in the Convertible Debentures. Because the fair value of the warrants of $894,800 and the fair value of the bifurcated derivative instruments of $4,647,900 exceeded the proceeds received, the loan was initially recorded at $285 (a nominal value) and a charge to income of $2,692,985 was recognized to record the warrant and the bifurcated derivative instruments at their fair values. The proceeds received from the Convertible Debentures during the third quarter of 2006 were first allocated to the fair value of the bifurcated embedded derivative instrument included in the Convertible Debenture. The fair value of the bifurcated embedded derivative of $1,565,200 was less than the proceeds received and the loan was recorded at $1,565,200. There were no proceeds received from the Settlement Convertible Debentures, however, as a result of the settlement, accrued expenses-related parties and accounts payable were reduced by a total of $638,636 and settlement expense increased by $36,364. The fair value of the 75,000 options was $21,200 and the bifurcated embedded derivative of $211,200 were less than the proceeds received and the loan was recorded at $442,600. This discount, together with the stated interest on the Convertible Debentures, is being amortized using the effective interest method over the term of the Convertible Debentures. Under the effective interest method, interest expense in the earlier periods of the term of the debenture is significantly lower than in the latter periods of the term of the debenture. The weighted average effective interest rate is 53.45%.

The proceeds received from the December 7, 2006 Convertible Debentures were first allocated to the fair value of the freestanding warrant and then to the fair value of the bifurcated embedded derivative instruments included in the Convertible Debentures. The fair value of the warrants of $51,700 and the fair value of the bifurcated derivative instruments of $68,900 was less than the proceeds received and the loan was recorded at $68,900.

There were no warrants issued in conjunction with the December 20, 2006 debenture. The loan was recorded at the fair value of $704,600.

-24-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

At March 31, 2007, the following amounts were outstanding under the Convertible Debentures. See Note 12 for information on the derivative instrument liabilities related to the warrant issued and the bifurcated embedded derivative instruments related to the accompanying Convertible Debentures.

Original face value	$11,519,000
Less: Conversions		(1,960,724	)
Face value, net of conversion at March 31, 2007		9,558,276
Less: unamortized debt discount		(4,122,327	)
Balance at March 31, 2007	$	5,435,949

Principal payments are as follows, for the fiscal years ending December 31:

2007	$	9,558,276
2008		-
2009		-
2010		-
2011		-
Total	$	9,558,276

(11) DERIVATIVE FINANCIAL INSTRUMENT LIABILITIES

We use the Black-Scholes option pricing model to value warrants, and the binomial method to value embedded conversion option components of any bifurcated embedded derivative instruments that are recorded as derivative liabilities. See Note 12 related to embedded derivative instruments that have been bifurcated from our Convertible Debentures.

In valuing the warrants and the bifurcated derivative liability instruments, at the time they were issued and at March 31, 2007, we used the market price of our common stock on the date of valuation, an expected dividend yield of 0% and the remaining period to the expiration date of the warrants or repayment date of the convertible debt instrument. The warrant and conversion option can be exercised by the holder at any time.

The volatility factor used was approximately 100% and the risk-free rate of return used was 4.66%, based on constant maturity rates, applicable to the remaining life of the warrants and debentures. In addition a discount was used to account for the lack of marketability of the Company’s stock due to the current thinly trading share volume.

-25-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

At March 31, 2007, the following derivative liabilities related to common stock warrant and embedded derivative instruments were outstanding (See Note 12):

			Exercise
			Price Per		Fair Market
	Expiration		Share as of		Value at
Issue Date	Date	Instrument	03/31/07		03/31/07
01/24/06	01/23/09	4,891,304 Warrants	$	0.23	$	657,500
12/07/06	12/07/09	815,217 Warrants	$	0.23	$	343,400
Fair market value of freestanding derivative instrument liabilities for warrants					$	1,000,900

				Exercise	Face
			Price Per		Value at			Fair Market
	Expiration		Share as of		Issuance,			Value at
Issue Date	Date	Instrument	03/31/07		Net Conversions		03/31/07
01/24/06	01/23/09	Convertible Debenture Tranch 1	$	0.54	$	2,100,000	$	1,686,200
03/14/06	03/13/09	Convertible Debenture Tranch 2	$	0.54	$	203,500		169,700
09/15/06	09/15/09	Convertible Debenture Tranch 3	$	0.54	$	735,776		675,200
12/07/06	12/07/09	Convertible Debenture Tranch 4	$	0.25	$	1,100,000		1,539,400
03/14/07	03/14/09	Convertible Debenture Tranch 5	$	0.54	$	1,250,000		1,072,200
08/01/06	01/31/08	Settlement Convertible Debenture	$	0.50	$	675,000		363,000
12/20/06	06/20/07	Convertible Debenture Director	$	0.71	$	2,644,400		582,800
02/15/07	05/15/07	Convertible Debenture Director	$	0.71	$	850,000		203,300
Fair market value of bifurcated embedded derivative instrument liabilities, as noted above								6,291,800
Total derivative financial instruments							$	7,292,700

Our obligation to issue shares upon conversion of our convertible debenture is essentially limitless since conversion is at the lower of $1.00 or 80% of the lowest closing bid price for the common stock for the 5 trading days before but not including the conversion date. Accordingly, the number of shares of common stock issuable upon conversion of our secured convertible notes will increase if the market price of our stock declines, which will cause dilution to our existing stockholders. The following is an example of the amount of shares of our common stock that were issuable as of March 31, 2007, upon conversion of the secured convertible notes (excluding accrued interest), based on market prices 25%, 50% and 75% below the market price of $0.72.

Effect on shares issuable from convertible debentures as a result from declining market prices
% Below Market	Price Per Share		Number of Shares Issuable		% of Outstanding Stock
25%		0.54		23,957,741		35.77%
50%		0.36		28,947,811		43.22%
75%		0.18		49,353,756		73.68%

-26-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

(12)STOCKHOLDERS’ DEFICIENCY

The total number of shares of all classes of stock which the Company is authorized to issue is 100,000,000 shares of common stock, par value $0.001 (“Common Stock”) and 10,000,000 shares of preferred stock, par value $0.001 (“Preferred Stock”). The Common Stock is identical and shall entitle each of the holders thereof to the same rights and privileges. When dividends (if any) are declared upon the Common Stock, whether payable in cash, in property or in shares of stock of the Company, the holders of Common Stock is entitled to share equally, share for share, in such dividends. Each holder of Common Stock is entitled to one vote per share.

In June 2005, the Company issued 27,711,000 shares of Common Stock to founders at $0.0001 per share for total cash proceeds of $2,771 of which the remaining $2,581 was received in June 2006.

In June 2005, the Company issued a total of 424,033 shares of Common Stock to various individuals in exchange for services rendered and expense reimbursement, at $0.50 per share for a total of $212,020.

On July 29, 2005, Bongiovi Entertainment, Inc. (“Bongiovi"), a totally inactive reporting public shell corporation, consummated a Share Exchange Agreement (the "Agreement") with Refuel whereby all of the shareholders in Refuel had their shares converted into 28,135,033 shares of Bongiovi, or approximately 89% of the common stock of Bongiovi. As part of the reverse merger between Bongiovi and Refuel, warrants were issued to two shareholders to purchase 2,255,000 common shares. One warrant for 2,155,000 common shares has no expiration date and has an exercise price of $0.001 per share. The other warrant for 100,000 common shares is exercisable for a term of five years and has an exercise price of $5.00 per share.

During August and September, 2005 the Company sold 4,225,500 shares of Common Stock to various individuals at $0.50 per share for cash proceeds of $2,087,750 and a subscription receivable of $25,000 which was received in December 2005.

On September 9, 2005, the Company issued to four employees options to purchase 300,000 shares at $0.50 per share, having an intrinsic value of $885,000. In 2006, one employee forfeited his options with an intrinsic value of $133,672. There are now 225,000 shares that vest over a two year period, having an intrinsic value of $299,609 of which $161,327 remains deferred as of March 31, 2007. The excess of the fair market value over the intrinsic value of $137,683 had been amortized on a pro forma basis per SFAS No. 148 “Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123”. However, with the adoption of SFAS 123 (R) “Share Based Payment” this amount is now being expensed. The additional amount expensed in 2007 was $12,908 and $21,513 remains unamortized as of March 31, 2007.

On October 10, 2005, the Company issued to one employee options to purchase 500,000 shares at $1.00 per share with vesting over a four year period, having an intrinsic value of $600,000, of which $437,500 was written off to additional paid in capital due to these shares being forfeited in conjunction with the forfeiture of these options as of September 30, 2006. The excess of the fair market value over the intrinsic value of $474,937 had been amortized on a pro forma basis per SFAS No. 148 “Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123”.

During November and December 2005, the Company issued a total of 1,094,000 shares of Common Stock to various individuals who exchanged services, future services and expense reimbursements at $0.50 per share totaling $547,000. As of September 30, 2006 the full amount has been amortized.

In December 2005, the Company agreed to issue a total of 13,000 shares of Common Stock to various individuals in exchange for services rendered and future services at $1.00 per share totaling $13,000. The subscription was received and these shares were issued during the quarter ended March 31, 2006.

In December 2005, the Company sold 1,070,200 shares of Common Stock to various individuals at $1.00 per share for cash proceeds of $265,200 and a subscription receivable of $805,000. At December 31, 2005 these shares were reflected as common stock to be issued and were subsequently issued during the quarter ended March 31, 2006. In conjunction with the sale of shares of Common Stock in December 2005, the Company agreed to issue a warrant having a fair value of $217,852 to purchase 140,000 shares of the Company’s Common Stock at an exercise of $1.50 per share. The warrant was issued on January 16, 2006 and expires in 5 years.

-27-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

During the nine months ended 2006, the Company sold and issued 440,000 shares of Common Stock to various individuals and a mutual fund at $1.00 per share for cash proceeds of $440,000 and received $807,583 from subscriptions receivable on common stock sold in 2005.

On January 24, 2006, the Company issued 300,000 common shares having a fair market value of $600,000 in conjunction with sale of its Convertible Debentures (See Note 12).

On August 1, 2006, as part of a settlement agreement with a former executive director, the Company issued 75,000 fully vested options at an exercise price of $0.50 per share having an expiration date of January 15, 2009.

On August 22, 2006, $100,000 of the Company’s Convertible Debentures (See Note 12) were converted into 390,625 shares at a per share price of $0.256, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.32.

On September 5, 2006, the Company has terminated its interest in consummating the AG Global Partners, Ltd. joint venture and has paid them a cash payment of $110,000 and 562,500 shares of the Company’s Common Shares, having a fair market value of $225,000 and 562,500 shares was paid by a former executive director. This potential joint venture has been terminated.

On October 6, 2006, 3,040,000 options, not part of the Company’s NQSO plan, were granted to five directors and one officer. These options vest immediately and are exercisable at $1.00 per shares exercisable over a period of ten years. The fair value of these options was estimated at the date of grant to be $672,984 using the Black-Scholes option pricing model with the following assumptions and expensed:

	2006
Risk free interest rate	4.64%
Volatility factor	128%
Term in years	10.00
Expected dividend yield	-

On October 11, 2006, $50,000 of the Company’s Convertible Debentures (See Note 12) were converted into 416,667 shares at a per share price of $0.12, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.15.

On November 13, 2006, $25,000 of the Company’s Convertible Debentures (See Note 12) were converted into 189,394 shares at a per share price of $0.132, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.165.

On November 21, 2006, $100,000 of the Company’s Convertible Debentures (See Note 12) were converted into 806,452 shares at a per share price of $0.124, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.155.

On November 22, 2006, $100,000 of the Company’s Convertible Debentures (See Note 12) were converted into 806,452 shares at a per share price of $0.124, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.155.

On November 29, 2006, $15,000 of the Company’s Convertible Debentures (See Note 12) were converted into 104,667 shares at a per share price of $0.144, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.18.

On December 12, 2006 $3,006,230 of the Company’s notes Payable and $112,123 (See Note 12) of accrued interest was repaid with 13,558,058 shares at a per share price of $.23 which is calculated at a rate equal to the lesser of (i) 80% of the average three (3) day trading price of the Common Stock (on the OTC-BB or other exchange on which the Common Stock is then trading) during the three trading days immediately prior to the date of such election or (ii) $0.25 per share.

On December 12, 2006 $1,017,500 of the Company’s notes payable and $51,139 (See Note 12) of accrued interest was repaid with 4,646,257 shares at a per share price of $.23 which is calculated at a rate equal to the lesser of (i) 80% of the average three (3) day trading price of the Common Stock (on the OTC-BB or other exchange on which the Common Stock is then trading) during the three trading days immediately prior to the date of such election or (ii) $0.25 per share.

On December 21, 2006, the Company issued 500,000 and 1,350,000 of common stock to two individuals in exchange for consulting services received.

-28-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

On December 27, 2006, $89,224 of the Company’s Convertible Debentures (See Note 12) were converted into 247,844 shares at a per share price of $.36, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.45.

On January 17, 2007 $800,000 of the Company’s Convertible Debentures (See Note 12) were converted into 1,526,718 shares at a per share price of $0.524, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.655.

On February 20, 2007, $235,000 of the Company’s Convertible Debentures (See Note 12) were converted into 367,188 shares at a per share price of $0.64, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.80.

On March 5, 2007, $434,000 of the Company’s Convertible Debentures (See Note 12) were converted into 723,334 shares at a per share price of $0.60, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.75.

On March 9, 2007, $12,500 of the Company’s Convertible Debentures (See Note 12) were converted into 20,833 shares at a per share price of $0.60, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.75.

On February 28, 2007, the warrant dated August 1, 2005, for 2,155,000 shares of stock was exercised. The warrants exercised had a par value per share of $.001.

On March 27, 2006, the Company issued options to purchase 500,000 shares at $1.00 per share with immediate vesting, to a director. These options expire in ten years. The fair value of these options was estimated at the date of grant to be $325,910 using the Black-Scholes option pricing model. The Company used the same assumptions as noted for the October 6, 2006 options grant date. In addition the Company has authorized various options and warrants to be issued upon the completion of the APPCO acquisition to various directors, employees and other third parties involved with the transaction.

(13) RELATED PARTY TRANSACTIONS

Various officers and directors of the Company agreed to defer a portion of their salaries, payable, until such time as adequate funds have been received by the Company. The amount deferred as of March 31, 2007 was $347,895, which is included in accounts payable and accrued expenses - related parties (See Note 12).

On July 1, 2005, the Company entered into an assignment and royalty agreement with two directors and shareholders of the Company, whereby various Great Britain patent applications were assigned to the Company. According to the terms of the agreement, the Company was required to pay $250,000 at the inception of the agreement (paid July 1, 2005) and a continuing royalty fee of the greater of $250,000 or 0.1% of the aggregate products sold per year utilizing the assigned patents during the term of the royalty agreement (indefinite until cancelled by either the directors or the Company). As of December 31, 2006 the agreement was renewed and $125,000 of agreement has been expensed. The balance of $250,000 has been accrued and is included in related party payables (See Note #5).

On September 14, 2005, the Company entered into a two-month management services agreement with Treasure Coast Capital Partners (“TCCP”), a company owned by a shareholder and officer of the Company. The agreement provided for the Company to pay $43,250 in fees, of which $30,000 has been paid. This agreement has not been renewed.

On November 1, 2005, the Company acquired all of the issued and outstanding equity of Advanced Fuel Chemistry, Inc., a company jointly owned by a member of the Company’s board of directors and president, for a purchase price of $1. At the date of acquisition, Advanced Fuel Chemistry, Inc. was an inactive company having no assets or liabilities.

The Company’s obligations in connection with the Convertible Debentures (See Notes 9 & 10) are secured by substantially all of the Company’s assets. In addition, the vice-chairman has granted a security interest in 214,916 shares of the Company’s common stock that he owns, the president has granted a security interest in 5,000,000 shares of the Company’s common stock that he owns, the chief financial officer has granted a security interest in 115,000 shares of the Company’s common stock that he owns and a director has granted a security interest in 5,000,000 shares of the Company’s common stock that he owns.

On April 26, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $420,000 at an interest rate of 10% for working capital purposes. Principal and interest were originally due October 26, 2006 and have been extended for another six months to April 25, 2007. As of March 31, 2007 this note had a principal balance and accrued interest of $67,474 and $23,167 respectively.

-29-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

On May 17, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $752,500 at an interest rate of 10% for working capital purposes. Principal and interest were originally due November 17, 2006 and have been extended for another six months to May 16, 2007. On December 12, 2006 the principal balance of $752,500 and interest of $43,088 was converted into company shares, see Note 12.

On June 12, 2006, the Company received an unsecured loan in the amount of $1,000,000 from Indexia Holdings Limited (“Indexia”). There is no written agreement between the parties and a note has not been executed, however the Company and Indexia have orally agreed that the principal of the loan will be due and payable on December 12, 2006, along with interest of 10% per annum. On December 12, 2006 the principal balance of $1,000,000 and interest of $50,137 was converted into company shares, see Note 12.

On August 8, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $500,000 at an interest rate of 10% for working capital purposes. Principal and interest are due February 8, 2007. On December 12, 2006 the principal balance of $500,000 and interest of $17,808 was converted into company shares, see Note 12.

On August 24, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $500,000 at an interest rate of 10% for working capital purposes. Principal and interest are due February 24, 2007. On December 12, 2006 the principal and interest of $15,068 was converted into company shares, see Note 12.

On August 31, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $600,000 at an interest rate of 10% for working capital purposes. Principal and interest are due March 3, 2007. On December 12, 2006 the principal balance of $600,000 and interest of $16,932 was converted into company shares, see Note 12.

On August 31, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $671,230 at an interest rate of 10% for working capital purposes. Principal and interest are due March 3, 2007. On December 12, 2006 the principal balance of $671,230 and interest of $20,229 was converted into company shares, see Note 12.

On December 12, $4,023,730 of the short term promissory note’s were repaid with shares of common stock of the Company. The following table summarizes the dates funds were received, the interest accrued and the total number of shares issued to satisfy the outstanding principal and accrued interest balance.

On December 20, 2006, the Company entered into an unsecured convertible debenture with a director in the amount of $2,644,400 at an interest rate of 10% for working capital purposes. Principal and interest are due June 20, 2007. The Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the December 20, 2006 debenture (See Note 12).

On February 15, 2007, the Company entered into an unsecured convertible debenture with a director in the amount of $850,000 at an interest rate of 10% for working capital purposes. Principal and interest are due May 15, 2007. The Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the February 15, 2007 debenture.

(14)GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has a working capital deficiency of $7,012,498 and a stockholders’ deficiency of $7,077,149 as of March 31, 2007 and a net loss of $21,112,243 and a cash flow deficiency from operations of $9,484,887 for the period from June 1, 2005 (inception) to March 31, 2007. These matters raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company’s existence is dependent on management’s ability to develop profitable operations and resolve the Company’s liquidity problems. In order to improve the Company’s liquidity, management is actively pursuing additional equity and debt financing through discussions with investment bankers and private investors. There can be no assurance the Company will be successful in its efforts to raise additional financing.

-30-

NEWGEN TECHNOLOGIES, INC AND SUBSIDIARES

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007

(UNAUDITED)

(15) SUBSEQUENT EVENTS

On April 3, 2007, the Company entered into a $325,000 convertible debenture with a third party lender. The note bears interest at 10% and is due on April 3, 2009. The Company’s obligations under the April 3, 2007 Purchase Agreement are secured by substantially all of the Company’s assets. In addition, certain executive officers and directors of the Company have granted the holders a security interest in a portion of shares of the Company’s common stock held by such officers and directors

On April 4, 2007, the Company entered into an addendum to the stock purchase agreement originally dated January 16, 2007 and amended and extended on February 28, 2007, March 7, 2007, March 12, 2007 to effectively provide that neither party can unilaterally terminate that certain Stock Purchase Agreement, , prior to the end of business on April 30, 2007 due to the failure to close the Appco acquisition provided, that, NewGen pays to the Sellers another $250,000 as a non-refundable good faith deposit prior to the end of business on April 5, 2007. This non-refundable second good faith deposit will be applied at the Closing as a pre-paid credit toward NewGen’s obligation to pay the purchase price. On April 5, 2007, NewGen paid Appco the $250,000 non-refundable good faith deposit. In the event the closing does not occur on or prior to the end of business on April 30, 2007 APPCO has granted an additional extension to May 29, 2007, provided the Company pay another $250,000 non-refundable deposit, which will be applied to the purchase price at the closing.

On April 24, 2007, Noel M. Corcoran resigned from his position as director of the Company. Notification of such resignation was provided to the Company on April 24, 2007 via a letter sent by Mr. Corcoran to the Company’s Board of Directors.

On May 5, 2007, the Company forgave $1,109,824 in debt to IPF GmbH.

On May 16, 2007, the Company defaulted on a convertible debenture, from a former director, with a 10% interest rate entered into on February 15, 2007 with a maturity date for payment of principal in the amount of $850,000 and interest in the amount of $21,014 as of May 15, 2007.

On May 16, 2007, the Company and Appalachian Oil Company, Inc. (“Appco”) and the stockholders of Appco (the “Sellers”) entered into a verbal addendum, effectively providing that neither party can unilaterally terminate that certain Stock Purchase Agreement, dated as of January 16, 2007, as amended, prior to the close of business on June 7, 2007 due to the failure to close the Appco acquisition prior to such time.

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Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

CORPORATE HISTORY

Refuel (a development stage company), was incorporated on June 1, 2005 under the laws of the state of Delaware.  Refuel was formed for the purpose of developing and distributing innovative alternative fuels including biodiesel.  Refuel’s offices are located in Charlotte, North Carolina. The Company’s fiscal year end is December 31. 

On July 29, 2005, Bongiovi Entertainment, Inc. (“Bongiovi"), a totally inactive reporting public shell corporation, consummated a Share Exchange Agreement (the "Agreement") with Refuel whereby all of the shareholders in Refuel had their shares converted into 28,135,033 shares of Bongiovi, or approximately 89% of the common stock of Bongiovi. Under generally accepted accounting principles, a company whose stockholders receive over fifty percent of the stock of the surviving entity in a business combination is considered the acquirer for accounting purposes.  Accordingly, the transaction was accounted for as an acquisition of Bongiovi, the legal acquirer, and a recapitalization of Refuel, the accounting acquirer.

On August 10, 2005, to effect a name change, Bongiovi executed a merger and reorganization agreement with the sole shareholder of NewGen Technologies, Inc, a newly formed Nevada corporation. This transaction effectively changed the registrant’s name from Bongiovi Entertainment, Inc. to NewGen Technologies, Inc.

The Company has not generated any significant revenues since inception and the Company is in the process of raising additional capital and financing for future operations.

OVERVIEW

Newgen and its wholly-owned subsidiary, Refuel is a fuel production and distribution company engaged in the development of fuel technology, including bio fuels and blends, which can increase an automobile’s miles per gallon while providing cleaner fuel emissions by changing the property of fuel to allow more complete combustion and decrease the dependency on foreign fuels. 

Bongiovi was an entertainment content provider and independent record label, whose market is the global entertainment/music consumer and was engaged in the acquisition of music industry assets and in operational activities. Since June 14, 2004, Bongiovi had no operating business and did not intend to develop its own operating business but instead was seeking to effect a merger with a corporation and undertake a merger for its own corporate purposes. This merger occurred on August 2, 2005, whereby Bongiovi became the legal acquirer and Refuel became the accounting acquirer. As such, the inception date of NewGen is June 1, 2005 which is the inception date of Refuel. Accordingly, the accompanying financial statements include only activity from June 1, 2005 (inception) to June 30, 2006.

Restatement

On August 29, 2006, the Company restated its financial statements as of and for the three months ended March 31, 2006 and for the period from June 1, 2005 (Inception) to March 31, 2006 to reflect changes in the valuation of our embedded derivative financial instrument liability due to the use of a more comprehensive modeling tool for valuing such complex derivative financial instruments and the identification of other embedded derivative financial instruments. The amounts reported in the accompanying condensed consolidated financial statements for the period from June 1, 2005 (Inception) to March 31, 2007 reflect these restated amounts.

PLAN OF OPERATIONS

To date we have not derived any significant revenues and we have not derived a profit from our operations. There can be no assurance that we will be able close on the transactions noted below or conduct operations profitably in the future, if at all, or that we will be able to generate revenues from operations in the future. We currently do not have sufficient cash reserves to meet all of our anticipated obligations for the next twelve months. As a result, we are in the process of soliciting additional equity and debt funding in the near future.

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While we have not yet begun distribution, we intend to utilize our patent pending technology to produce fuel products, which we plan to distribute to both the wholesale and retail segments of the fuel marketplace. We intend to continue development of our technology to diversify our product offerings. We utilize technology that is multi-functional and multi-purpose, allowing it to be used in a wide range of fuels including gasoline, diesel, Biodiesel and Ethanol.  Our products include proprietary formulae, designed to positively alter the combustion characteristics of the fuel. Because of the unique character of the proprietary formulae, our formulations are designed to create a mono-layer on the fuel delivery system, increasing lubricity (reducing engine wear and tear) while the detergent character of the formulae is designed to prevent deposit formation on fuel injectors. The technology is also designed to result in greater atomization and efficiency of combustion, to provide increases in fuel economy and reductions in emissions.

Currently, we are in the process of working with a joint venture partner through our ReFuel subsidiary to build and operate biodiesel plants in the Southeast. A facility that is planned to produce 60 million gallons annually will be based in Sandersville, Georgia. This joint venture serves as the initial step in our plans to manufacture, process, and distribute biofuels in the U.S. with the aim of substantially increasing a vehicle's operating efficiency while reducing the amount of carbon monoxide, particulates, and nitrous oxides produced. Current cash requirements are projected to be approximately $2,000,000 in general and administrative costs and approximately $60,000,000 in capital expenditures over the next twelve to fourteen months. Operations are planned to commence in the third quarter 2008.

In addition, the company closed on the purchase of three fuel terminals in 2006 and one fuel terminal in 2007, in the Southeast United States which are assets acquired from Crown Central LLC. The terminals, with a total storage capacity of over 15 million gallons, and an annual throughput capacity of more than 700 million gallons, will be refurbished to further enhance the storage, blending, and distribution of a full slate of transportation fuels, including biodiesel and ethanol blends, as well as traditional hydrocarbon fuels. The four terminals are strategically located near existing major petroleum product pipelines with railcar and truck transport access. The purchase of these terminals gives NewGen the opportunity to process, blend, and store its proprietary biodiesel and ethanol blends as well as hydrocarbon fuels. This is a crucial next step in the company’s growth strategy - allowing the company to blend biodiesel and ethanol with conventional hydrocarbon fuels for distribution domestically and internationally. NewGen intends to offer proprietary products to meet increasing demand for biofuel products, driven by the need for greater fuel efficiency, reduced exhaust emissions, and for the desire for greater energy independence. Barring unforeseen delays, two of these terminals, located in Charlotte, North Carolina and Spartanburg, South Carolina, are expected to be operational in the third and fourth quarter, respectively, of 2007, with the Columbus, Georgia operational line in the first half of 2008 and the second Spartanburg, South Carolina location operational in the second half 2008.

On November 30, 2005, NWGT International, Inc., our wholly-owned subsidiary and Actanol Service, Ltd., entered into a Limited Liability Company Agreement for the formation of Actanol BioEngineering, LLC. This joint venture entity was equally owned by us and Actanol Service, Ltd. and was created to oversee the design, engineering, construction, operations and technology support for biodiesel and other biofuel plants worldwide. On August 15, 2006 we increased our equity interest from 50% to 60% and changed the capital structure from a limited liability company to a Delaware corporation.

On August 18, 2006 our majority owned subsidiary Actanol, Inc. acquired all of the issued and outstanding capital stock of a privately held company, Blitz 06-149 GmbH., a German shelf company with no assets or liabilities set up for the purpose of accelerating the legal process of setting up a German corporation for approximately $34,000, Blitz 06-149 subsequently changed its name to Actanol GmbH and on September 1, 2006 acquired 98.8% of IPF Germany GmbH for approximately $8,800 from Industrie Planung Fischer AG, an entity in German insolvency proceedings. As required by the insolvency administrator, an interest bearing two month working capital loan of $317,125, held in escrow under the control of the insolvency administrator was set up and used during the month of September and October 2006. Additionally, on September 1, 2006 IPF GmbH acquired for approximately $308,000 all the assets of Industrie Planung Fischer AG, including the stock of IPF Polska, representing 99% of the outstanding stock and the stock of IPF America, Inc representing 30% of the outstanding stock. The aggregate acquisition price was approximately $351,000, which was paid entirely in cash. The acquisition of the IPF entities including the assets of Industrie Planung Fischer AG, a provider of project engineering, project management and engineering consulting services compliment and optimize Actanol, Inc.’s ability to provide full service biofuel plant design, building, staffing and management solutions. In addition, the IPF entities are emerging from insolvency and are soliciting business from other non-NewGen sources.

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On September 26, 2006 the Company formed a joint venture named NewGen Biofuels Asia Pte Ltd (“NBA”) a company registered in Singapore, with Palmbio Venture Pte Lte, a company registered in Singapore, for the purpose of conducting the business of manufacturing, processing, storing, marketing, distributing, and selling biodiesel, biodiesel mixtures, and biodiesel byproducts. The Company has a 68% voting interest. The Company has no commitments to fund initial start up costs and working capital, however, as of September 30, 2006, the Company has advanced $190,000 in costs prior to creation of NBA. Additional working capital requirements will be treated as shareholder loans. As of March 31, 2007 the total amount recorded as loans to NBA is $309,000. No additional working capital has been loaned to NBA subsequent to March 31, 2007.

As of March 31, 2007, we did not have cash available to fund current operations. In 2007, we received cash proceeds of $850,000 and $1,250,000 from the issuance of 10% convertible debentures to a director and third party lender respectively. However, we will need funding for current operations and additional capital expenditures as noted above.

In connection with our currently planned capital projects, we will require approximately $1,000 million in additional financing for the construction of biodiesel production plants and power generation facilities and additional financing of approximately $8 million to $10.5 million to complete the upgrade and refurbishment of our fuel distribution terminals. Further, the Company is identifying and evaluating acquisitions of entities conducting fuel distribution, for which more financing would be required. We are currently reviewing various proposals for traditional debt project financing in order to fund a majority of the costs of these projects. In addition, we may decide to seek additional private debt or equity financing in order to provide for any additional financing needs we may have.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Flows from Operations

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has a working capital deficiency of $7,012,498 and a stockholders’ deficiency of $7,077,149 as of March 31, 2007 and a net loss of $21,112,243 and a cash flow deficiency from operations of $9,484,887 for the period from June 1, 2005 (inception) to March 31, 2007. These matters raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company’s existence is dependent on management’s ability to develop profitable operations and resolve the Company’s liquidity problems. In order to improve the Company’s liquidity, management is actively pursuing additional equity and debt financing through discussions with investment bankers and private investors. There can be no assurance the Company will be successful in its efforts to raise additional financing.

We do not have sufficient funds on hand to fund our current operations. We intend to complete additional rounds of our private placement and debt financing to fund our current and future operations. If successful in completing this financing, we may not be able to do so on terms that are not excessively dilutive to our existing stockholders or less costly than existing sources of financing. Failure to secure additional financing in a timely manner and on favorable terms if and when needed in the future will have a material adverse effect on our financial performance, balance sheet and stock price and require us to implement cost reduction initiatives and curtail operations.

Financing Through Equity

During August and September, 2005 the Company issued 3,333,491 shares to acquire Bongiovi, and sold 4,225,500 shares of common stock to various individuals at a value of $0.50 per share for cash proceeds of $2,112,750. In December 2005, another 1,070,200 shares were subscribed for by various individuals for cash proceeds of $265,200, and a subscription receivable of $805,000. The Company has subsequently collected all amounts due. The proceeds from these offerings were used for the repayment of a portion of an outstanding debt obligation, professional expenses, working capital and general corporate expenses. In addition, we issued to employees, 800,000 shares, of which 575,000 shares have been forfeited, which have an initial intrinsic value of $1,485,000, of which $339,765, have been deferred as of September 30, 2006.

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We have also issued 300,000 shares in January 2006, discussed below in “Cornell Financing” and issued an additional 440,000 shares to various individuals at $1.00 per share for cash proceeds of $440,000 also in January, 2006. In August, 2006 we issued 75,000 of options to a former executive director as part of a settlement agreement discussed below and converted $100,000 worth of Convertible Debentures into 390,625 shares of stock as required by the our Convertible Debenture. In September, 2006, we terminated our interest in consummating a joint venture and paid AG Global Partners Ltd. a cash payment of $110,000 and issued 562,500 shares of company stock. In addition, 562,500 shares of company stock were issued to a former executive director.

On October 11, 2006, $50,000 of the Company’s Convertible Debentures were converted into 416,667 shares at a per share price of $0.12, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.15.

On November 13, 2006, $25,000 of the Company’s Convertible Debentures were converted into 189,394 shares at a per share price of $0.132, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.165.

On November 21, 2006, $100,000 of the Company’s Convertible Debentures were converted into 806,452 shares at a per share price of $0.124, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.155.

On November 22, 2006, $100,000 of the Company’s Convertible Debentures were converted into 806,452 shares at a per share price of $0.124, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.155.

On November 29, 2006, $15,000 of the Company’s Convertible Debentures were converted into 104,667 shares at a per share price of $0.144, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.18.

On December 12, 2006 $3,006,230 of the Company’s notes Payable and $112,123 (See Note 12) of accrued interest was repaid with 13,558,058 shares at a per share price of $.23 which is calculated at a rate equal to the lesser of (i) 80% of the average three (3) day trading price of the Common Stock (on the OTC-BB or other exchange on which the Common Stock is then trading) during the three trading days immediately prior to the date of such election or (ii) $0.25 per share.

On December 12, 2006 $1,017,500 of the Company’s notes payable and $51,139 (See Note 12) of accrued interest was repaid with 4,646,257 shares at a per share price of $.23 which is calculated at a rate equal to the lesser of (i) 80% of the average three (3) day trading price of the Common Stock (on the OTC-BB or other exchange on which the Common Stock is then trading) during the three trading days immediately prior to the date of such election or (ii) $0.25 per share.

The following table summarizes the dates funds were received, the interest accrued and the total number of shares issued to satisfy the outstanding principal and accrued interest balance.

Date	Amount		Interest		Shares
05/17/06	$	752,500	$	43,088		3,459,080
06/12/06		1,017,500		50,137		4,641,900
08/08/06		500,000		17,808		2,251,340
08/24/06		500,000		15,068		2,239,428
08/31/06		600,000		16,932		2,682,311
08/31/06		653,730	$	20,229		2,930,256
		4,023,730	$	163,262		18,204,315

On December 21, 2006, the Company issued 500,000 and 1,350,000 of common stock to two individuals in exchange for consulting services received.

On December 27, 2006, $89,224 of the Company’s Convertible Debentures (See Note 12) were converted into 247,844 shares at a per share price of $.36, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.45.

On January 17, 2007 $800,000 of the Company’s Convertible Debentures (See Note 12) were converted into 1,526,718 shares at a per share price of $0.524, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.655.

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On February 15, 2007, the Company entered into an unsecured convertible debenture with a director in the amount of $850,000 at an interest rate of 10% for working capital purposes. Principal and interest are due May 15, 2007. The Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the February 15, 2007 debenture.

On February 20, 2007, $235,000 of the Company’s Convertible Debentures (See Note 12) were converted into 367,188 shares at a per share price of $0.64, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.80.

On February 28, 2007, the warrant dated August 1, 2005, for 2,155,000 shares of stock was exercised. The warrants exercised had a par value per share of $.001.

On March 5, 2007, $434,000 of the Company’s Convertible Debentures (See Note 12) were converted into 723,334 shares at a per share price of $0.60, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.75.

On March 9, 2007, $12,500 of the Company’s Convertible Debentures (See Note 12) were converted into 20,833 shares at a per share price of $0.60, which is calculated at the lower of $1.00 or 80% of the previous five day bid price of $0.75.

Financing through Debt

Convertible Debentures

On January 24, 2006, the Company consummated a securities purchase agreement (the “Purchase Agreement”) providing for the sale of its Convertible Debentures in the aggregate principal amount of $5,000,000, of which $2,200,000 was advanced immediately, $650,000 was advanced on March 14, 2006, and the remaining $2,150,000 was advanced on September 19, 2006 two days before the Company’s Registration Statement on Form SB-2 was declared effective by the Securities & Exchange Commission on September 21, 2006. As agreed to in the Purchase Agreement, the Registration Statement was to be declared effective by May 11, 2006 and was extended to June 19, 2006. However, the Company was contractually obligated to pay liquidated damages from this date to the effective deadline date September 15, 2006. As such, $171,000 was reduced from the loan proceeds received. The above debentures are currently in default due to non-payment of another debenture not paid on its maturity date. The Convertible Debentures holders may convert, at any time, the principal amount outstanding into shares of Common Stock, at a conversion price per share equal to the lesser of (i) $1.00, or (ii) eighty percent (80%) of the lowest closing bid price for the Company’s Common Stock during the five trading days immediately preceding the conversion date, subject to adjustment. The non-payment of principal and interest at the maturity date of the other convertible debentures noted below has caused these debentures to be in default.

On January 24, 2006, in connection with the sale of $2,200,000 of 10% Secured Convertible Debentures, the Company issued 300,000 shares of the Company’s Common Stock. Also, as part of the same transaction, the Company also issued a warrant for the purchase of 1,125,000 shares of the Company’s Common Stock at an exercise price of $1.00 per share. The agreement allows for the increase in shares to match $1,125,000 if the Company sells shares at a price below $1.00 per share. The warrant expires in three years. Due to a settlement agreement dated August 1, 2006, with a former executive director and payment of notes in shares to a director on December 12, 2006 at $.23 per share (Note 12), whereby shares were issued at $0.50 and $0.23 respectively, triggering the ratchet provision of the warrant noted below. The warrant has now been increased to 4,891,304 and the exercise price decreased to $0.23 per share. The expiration date remains three years.

Upon three business days advance written notice, the Company may redeem the Convertible Debentures, in whole or part, if the closing bid price of the Company’s Common Stock at the time of such written notice is less than $1.00. In the event the Company exercises its right of redemption within 90 days of the date of issuance of the Convertible Debentures, the redemption will be calculated at 107% and thereafter the redemption will be calculated at 110% of the Convertible Debentures face value.

The Company’s obligations under the Purchase Agreement are secured by substantially all of the Company’s assets. In addition, certain executive officers and directors of the Company have granted the holders a security interest in a portion of shares of the Company’s common stock held by such officers and directors.

The conversion price of the Convertible Debentures may also be adjusted in certain circumstances, such as if the Company pays a stock dividend, subdivides or combines outstanding shares of common stock into a greater or lesser number of shares, or take such other actions as would otherwise result in dilution. Also, if we issue shares of common stock at a price below $0.23 per share, the fixed conversion price of the warrants will be reduced accordingly (the ratchet provision). As a result, the secured Convertible Debentures are not considered to be "conventional convertible debt, convertible into a fixed number of shares" as that term is used in EITF Issue 00-19 "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled In, a Company's Own Stock."

The warrant for the purchase of 4,891,304 shares of common stock was valued using the Black-Scholes option pricing model. Because of the potential penalties we may have to pay under the Registration Rights Agreement, this warrant has been recorded as a derivative instrument liability rather than as equity. This derivative instrument liability was initially recorded at its fair value and it is adjusted to fair value (using the Black-Scholes option pricing model) at the end of each reporting period with any changes in the fair value charged or credited to income in the period of change.

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On August 1, 2006 the Company reached a settlement with a former executive director. The settlement agreement included options for 75,000 shares exercisable over the next 30 months and two 12% convertible unsecured promissory notes effective August 1, 2006 in the amounts of $317,794 and $357,206 (See Notes 7and 10). These settlement debentures are convertible at a fixed price of $0.50 per share. Due to the non-payment of principal and interest at the maturity date of the December 7, 2006 convertible debentures and the lack of payment of interest subsequent to March 31, 2007 on this convertible settlement debenture, this note is in default.

On December 7, 2006, the Company entered into a $1,100,000 secured convertible debenture agreement with interest to accrue on the outstanding principal balance at an annual rate equal to ten percent (10%) with a third party lender and a warrant to purchase 815,217 shares of the Company’s stock. The Company’s obligations under the December 7, 2006 Purchase Agreement are secured by substantially all of the Company’s assets. In addition, certain executive officers and directors of the Company have granted the holders a security interest in a portion of shares of the Company’s common stock held by such officers and directors. The December 7, 2007 debenture is due January 6, 2007. On January 11, 2007 the due date of the December 7, 2006 debenture was extended to February 6, 2007. This note is in default. The Company is currently in the process of extending this note.

A portion or all the amounts of principle and interest due and outstanding on the December 7, 2006 debenture is convertible into shares of common stock at any time at a price equal to $.25. In addition, the December 7, 2006 debenture includes a provision for the conversion price, upon the occurrence of an event of default, to be calculated at eighty percent (80%) of the lowest closing bid price of the common stock during the five (5) trading days immediately preceding the conversion date.

On December 20, 2006, the Company entered into an unsecured convertible debenture with a director in the amount of $2,644,400 at an interest rate of 10% for working capital purposes. Principal and interest are due June 20, 2007. The Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the December 20, debenture. A portion or all the amounts of principle and interest due and outstanding on the December 20, 2006 debenture is convertible into shares of the Company’s common stock at any time at a price the lesser of (i) 80% of the average three (3) day trading price of the Common Stock during the three trading days immediately prior to the date of such election or (ii) $0.25 per share. Provided written notice, the Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the December 20, 2006 debenture. Following the date of the notice of prepayment, the Holder shall have a period of fifteen (15) calendar days to exercise the conversion rights provided.

On February 15, 2007, the Company entered into an unsecured convertible debenture with a director in the amount of $850,000 at an interest rate of 10% for working capital purposes. Principal and interest are due May 15, 2007. The Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the February 15, 2007 debenture. A portion or all the amounts of principle and interest due and outstanding on the February 15, 2006 debenture is convertible into shares of the Company’s common stock at any time at a price the lesser of (i) 80% of the average three (3) day trading price of the Common Stock during the three trading days immediately prior to the date of such election or (ii) $0.25 per share. Provided written notice, the Company may, without premium or other prepayment penalty, prepay all or a portion of the outstanding principal of the December 20^th debenture. Following the date of the notice of prepayment, the Holder shall have a period of fifteen (15) calendar days to exercise the conversion rights provided.

On March 14, 2007, the Company entered into a $1,250,000 secured convertible debenture agreement with interest to accrue on the outstanding principal balance at an annual rate equal to ten percent (10%) with a third party lender. The Company’s obligations under the March 14, 2007 Purchase Agreement are secured by substantially all of the Company’s assets. In addition, certain executive officers and directors of the Company have granted the holders a security interest in a portion of shares of the Company’s common stock held by such officers and directors. The March 14, 2007, debenture is due March 14, 2009, and currently is in default due to the non-payment of the principal and interest at the date of maturity of the December 7, 2006 debenture.

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The Convertible Debentures are not considered to be conventional convertible debt; therefore, the embedded conversion option of the Convertible Debentures is subject to the requirements of EITF Issue 00-19. Because of the potential penalties we may have to pay under the Registration Rights Agreement, together with the fact that the conversion price of the debt can be adjusted, we are required by EITF Issue 00-19 to bifurcate the embedded conversion option and account for it as a derivative instrument liability. This derivative instrument liability was initially recorded at its fair value and is be adjusted to fair value at the end of each reporting period with any changes in the fair value charged or credited to income in the period of change.

The Convertible Debentures permit the Company, at its discretion, to prepay the debt (“Call Option”), plus accrued interest and applicable penalty. According to the applicable accounting guidance, including FASB Statement 133 “Accounting for Derivative Instruments and Hedging Activities” (“FASB 133”), as amended and Derivative Implementation Group - Statement 133 Implementation Issue No. B39 “Embedded Derivatives: Application of Paragraph 13(b) to Call Options That Are Exercisable Only by the Debtor”, the risks and rewards of the call option are considered to be clearly and closely related to that of the host instrument. Therefore, we have not bifurcated the embedded Call Option from the host instrument and have not accounted for the Call Option separately.

In addition, the Convertible Debentures permit the holder of the debt to require the Company to repay the debt before the due date in a default situation, either in cash or through the aforementioned conversion option (“Put Option”). Since the ability of the holder to exercise this option is contingent upon a default, according to the applicable accounting guidance, including FASB 133 and Derivative Implementation Group - Statement 133 Implementation Issue No. B16 “Embedded Derivatives: Calls and Puts in Debt Instruments,” the put option is not considered to be clearly and closely related to that of the host instrument and must be bifurcated from the host instrument. Since the Put Option must be bifurcated, it is subject the requirements of EITF Issue 00-19, and will be accounted for as a derivative instrument liability. This derivative instrument liability was initially recorded at its fair value and it is adjusted to fair value at the end of each reporting period with any changes in the fair value charged or credited to income in the period of change.

The proceeds received from the Convertible Debentures during the first quarter of 2006 were first allocated to the fair value of the freestanding warrant and then to the fair value of the bifurcated embedded derivative instruments included in the Convertible Debentures. Because the fair value of the warrants of $894,800 and the fair value of the bifurcated derivative instruments of $4,647,900 exceeded the proceeds received, the loan was initially recorded at $285 (a nominal value) and a charge to income of $2,692,985 was recognized to record the warrant and the bifurcated derivative instruments at their fair values. The proceeds received from the Convertible Debentures during the third quarter of 2006 were first allocated to the fair value of the bifurcated embedded derivative instrument included in the Convertible Debenture. The fair value of the bifurcated embedded derivative of $1,565,200 was less than the proceeds received and the loan was recorded at $1,565,200. There were no proceeds received from the Settlement Convertible Debentures, however, as a result of the settlement, accrued expenses-related parties and accounts payable were reduced by a total of $638,636 and settlement expense increased by $36,364. The fair value of the 75,000 options was $21,200 and the bifurcated embedded derivative of $211,200 was less than the proceeds received and the loan was recorded at $442,600. This discount, together with the stated interest on the Convertible Debentures, is being amortized using the effective interest method over the term of the Convertible Debentures. Under the effective interest method, interest expense in the earlier periods of the term of the debenture is significantly lower than in the latter periods of the term of the debenture. The weighted average effective interest rate is 53.45%.

The proceeds received from the December 7, 2006 Convertible Debentures were first allocated to the fair value of the freestanding warrant and then to the fair value of the bifurcated embedded derivative instruments included in the Convertible Debentures. The fair value of the warrants of $51,700 and the fair value of the bifurcated derivative instruments of $68,900 was less than the proceeds received and the loan was recorded at $68,900.

There were no warrants issued in conjunction with the December 20, 2006 debenture. The loan was recorded at the fair value of $704,600.

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At March 31, 2007, the following amounts were outstanding under the Convertible Debentures. See Note 12 for information on the derivative instrument liabilities related to the warrant issued and the bifurcated embedded derivative instruments related to the accompanying Convertible Debentures.

Original face value	$	11,519,000
Less: Conversions		(1,960,724	)
Face value, net of conversion at March 31, 2007		9,558,276
Less: unamortized debt discount		(4,122,327	)
Balance at March 31, 2007	$	5,435,949
Principal payments are as follows, for the fiscal years ending December 31:

2007	$	9,558,276
2008		-
2009		-
2010		-
2011		-
Total	$	9,558,276

Derivative Financial Instruments

We use the Black-Scholes option pricing model to value warrants, and the binomial method to value embedded conversion option components of any bifurcated embedded derivative instruments that are recorded as derivative liabilities.

In valuing the warrants and the bifurcated derivative liability instruments, at the time they were issued and at March 31, 2007, we used the market price of our common stock on the date of valuation, an expected dividend yield of 0% and the remaining period to the expiration date of the warrants or repayment date of the convertible debt instrument. The warrant and conversion option can be exercised by the holder at any time.

The volatility factor used was approximately 100% and the risk-free rate of return used was 4.66%, based on constant maturity rates, applicable to the remaining life of the warrants and debentures. In addition a discount was used to account for the lack of marketability of the Company’s stock due to the current thinly trading share volume.

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At March 31, 2007, the following derivative liabilities related to common stock warrant and embedded derivative instruments were outstanding:

			Exercise
			Price Per		Fair Market
	Expiration		Share as of		Value at
Issue Date	Date	Instrument	03/31/07		03/31/07
01/24/06	01/23/09	4,891,304 Warrants	$	0.23	$	657,500
12/07/06	12/07/09	815,217 Warrants	$	0.23	$	343,400
Fair market value of freestanding derivative instrumment liabilities for warrants					$	1,000,900

				Exercise	Face
			Price Per		Value at			Fair Market
	Expiration		Share as of		Issuance,			Value at
Issue Date	Date	Instrument	03/31/07		Net Conversions		03/31/07
01/24/06	01/23/09	Convertible Debenture Tranch 1	$	0.54	$	2,100,000	$	1,686,200
03/14/06	03/13/09	Convertible Debenture Tranch 2	$	0.54	$	203,500		169,700
09/15/06	09/15/09	Convertible Debenture Tranch 3	$	0.54	$	735,776		675,200
12/07/06	12/07/09	Convertible Debenture Tranch 4	$	0.25	$	1,100,000		1,539,400
03/14/07	03/14/09	Convertible Debenture Tranch 5	$	0.54	$	1,250,000		1,072,200
08/01/06	01/31/08	Settlement Convertible Debenture	$	0.50	$	675,000		363,000
12/20/06	06/20/07	Convertible Debenture Director	$	0.71	$	2,644,400		582,800
02/15/07	05/15/07	Convertible Debenture Director	$	0.71	$	850,000		203,300
Fair market value of bifurcated embedded derivative instrument liabilities, as noted above								6,291,800
Total derivative financial instruments							$	7,292,700

On April 3, 2007, the Company entered into a $325,000 convertible debenture with a third party lender. The note bears interest at 10% and is due on April 3, 2009. The Company’s obligations under the April 3, 2007 Purchase Agreement are secured by substantially all of the Company’s assets. In addition, certain executive officers and directors of the Company have granted the holders a security interest in a portion of shares of the Company’s common stock held by such officers and directors

Our obligation to issue shares upon conversion of our convertible debenture is essentially limitless since conversion is at the lower of $1.00 or 80% of the lowest closing bid price for the common stock for the 5 trading days before but not including the conversion date. Accordingly, the number of shares of common stock issuable upon conversion of our secured convertible notes will increase if the market price of our stock declines, which will cause dilution to our existing stockholders. The following is an example of the amount of shares of our common stock that were issuable as of March 31, 2007, upon conversion of the secured convertible notes (excluding accrued interest), based on market prices 25%, 50% and 75% below the market price of $0.72.

Effect on shares issuable from convertible debentures as a result from declining market prices
% Below Market	Price Per Share		Number of Shares Issuable		% of Outstanding Stock
25%		0.54		23,957,741		35.77%
50%		0.36		28,947,811		43.22%
75%		0.18		49,353,756		73.68%

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Financing through Debt

The Company’s wholly-owned subsidiary, ReFuel, executed a promissory note on June 30, 2005 with a former executive director in the amount of $316,500 with a remaining principal balance of $281,500 and accrued interest of approximately $18,700. On August 1, 2006 we reached a settlement with the executive director and issued two convertible debentures in the amount of $675,000. As a result of this settlement, accrued expenses-related parties and notes payable were reduced by $638,636 and we recognized $36, 364 in settlement expense.

The Company received $420,000 of additional financing from a director of the Company. On April 26, 2006, the Company entered into an unsecured short-term promissory note with a director in the amount of $420,000 at an interest rate of 10% for working capital purposes. Principal and interest were originally due October 26, 2006 and have been extended for another six months to April 25, 2007. As of March 31, 2007 principal and interest totaled $67,474 and $23,167 respectively.

During 2006, the Company received $3,006,230 of conventional debt financing from a director of the Company. In addition, the Company received $1,017,500 of the conventional debt financing from a third party. The total received from the director and third party total $4,023,730.

On December 12, 2006 $3,006,230 of the Company’s Notes Payable and $112,123 of accrued interest was repaid with 13,558,058 shares at a per share price of $.23 which is calculated at a rate equal to the lesser of (i) 80% of the average three (3) day trading price of the Common Stock (on the OTC-BB or other exchange on which the Common Stock is then trading) during the three trading days immediately prior to the date of such election or (ii) $0.25 per share.

On December 12, 2006 $1,017,500 of the Company’s Notes Payable and $51,139 of accrued interest was repaid with 4,646,257 shares at a per share price of $.23 which is calculated at a rate equal to the lesser of (i) 80% of the average three (3) day trading price of the Common Stock (on the OTC-BB or other exchange on which the Common Stock is then trading) during the three trading days immediately prior to the date of such election or (ii) $0.25 per share.

The following table summarizes the dates funds were received, the interest accrued and the total number of shares issued to satisfy the outstanding principal and accrued interest balance.

Date	Amount		Interest		Shares
05/17/06	$	752,500	$	43,088		3,459,080
06/12/06		1,017,500		50,137		4,641,900
08/08/06		500,000		17,808		2,251,340
08/24/06		500,000		15,068		2,239,428
08/31/06		600,000		16,932		2,682,311
08/31/06		653,730		20,229		2,930,256
	$	4,023,730	$	163,262		18,204,315

Investing

In conjunction with the convertible debentures noted above, also on January 24, 2006, the Company, closed on a contract of sale, as amended, pursuant to which the Company purchased three parcels of land, along with fuel terminals located on such properties for a purchase price of $1,700,000 for all three parcels. Currently, the Company has engaged an experienced liquid bulk terminal storage engineering consulting and contracting firm to inspect, assess, clean the terminals, and manage the refurbishment and upgrading of various operating equipment and tanks to bring the terminals into proper operating condition. Assessments of the total costs needed to complete the terminal project costs range from as low as $8,500,000 and as high as $10,000,000.

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On February 20, 2007 the Company completed the purchase of the Ashland Inc. property located at 75 Pineridge Drive, located in the city of Spartanburg, of Spartanburg County, South Carolina. Total consideration provided was $327,500. This site is estimated to by operational in the first quarter 2008 at a refurbishment cost range between $3,500,000 and $4,500,000. Additionally, if the total refurbishment and upgrade costs are in excess of the amount already borrowed, we will need to secure additional funding in a timely manner. Failure to do so could have a material adverse effect on our financial performance, balance sheet and stock price and require us to implement cost reduction initiatives and curtail operations. We are not aware of any material trend, event or capital commitment that which would potentially adversely affect liquidity.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2006, the FASB issued SFAS No. 155 “Accounting for Certain Hybrid Financial Instruments— an amendment of FASB Statements No. 133 and 140” This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This Statement permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instruments. This statement is effective for fiscal years beginning after September 15, 2006. Management does not believe the adoption of SFAS 155 will have a material impact on the Company’s financial condition or results of operations.

In June 2006, FASB issued FIN 48 - Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB 109 Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings.  The Company does not expect this pronouncement to have a material effect on the financial position or results of operations of the Company.

In September 2006 the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, establishing a formal framework for measuring fair value under GAAP. It defines and codifies the many definitions of fair value included among various other authoritative literature, clarifies and, in some instances, expands on the guidance for implementing fair value measurements, and increases the level of disclosure required for fair value measurements. Although SFAS No. 157 applies to and amends the provisions of existing FASB and AICPA pronouncements, it does not, of itself, require any new fair value measurements, nor does it establish valuation standards. SFAS No. 157 applies to all other accounting pronouncements requiring or permitting fair value measurements, except for; SFAS No. 123 (R), share-based payment and related pronouncements, the practicability exceptions to fair value determinations allowed by various other authoritative pronouncements, and AICPA Statements of Position 97-2 and 98-9 that deal with software revenue recognition. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Management does not believe the adoption of SFAS 157 will have a material impact on the Company’s financial condition or results of operations.

InFebruary 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS No. 159), which permits an entity to measure certain financial assets and financial liabilities at fair value. Pursuant to SFAS No. 159, entities that elect the fair value alternative will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value alternative may be elected on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value alternative election is irrevocable, unless a new election date occurs. Assets and liabilities that are measured at fair value must be displayed on the face of the balance sheet. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity (1) makes that choice in the first 120 days of that fiscal year, (2) has not yet issued financial statements, and (3) elects to apply the provisions of SFAS No. 157, Fair Value Measurements. We are evaluating the provisions of SFAS No. 159 to determine the potential impact, if any, the adoption will have on our consolidated financial statements.

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RESULTS OF OPERATIONS

For the Three Months Ended March 31, 2007

Income

Income of $982,000 primarily consisted of engineering consulting services.

Operating Expenses

Operating expenses primarily consisted of the following:

· Compensation expense of $1,483,000, of which $422,000 related to stock option grants

· Professional fees of $990,000, which consisted of the following:

o Legal and accounting fees of $340,000

o Fuel terminal management/consulting fees of $75,000

o Other professional and consulting fees of $575,000

· Travel expenses were $270,000

· Investor relations were $103,000

· Other general and administrative expenses of $372,000

Derivative Instrument Income / Expense

Derivative instrument income of $1,046,000 represents the net unrealized (non-cash) change in the fair value of our derivative instrument liabilities related to certain warrants and embedded derivatives in our convertible debt instruments that have been bifurcated and accounted for separately.

Interest Expense

We incurred interest expense of $399,000 on our note payable of $67,000, and our Convertible Debentures of $9,559,000.

Amortization of Debt Issuance Costs

Debt issuance costs of approximately $954,000 incurred in connection with the sale of our Convertible debentures are being amortized over the life of the debentures, which is three years, on the straight-line basis. Amortization expense amounted to $322,000.

Bank Fees and Escrow Fees

We incurred approximately $6,000 of bank and escrow fees during the period.

Settlement and Penalties

Settlements and penalties amounted to $2,000.

For the Three Months Ended March 31, 2006

Income

There were no revenues generated during the three months ended March 31, 2006.

Operating Expenses

Operating expenses primarily consisted of the following:

· Compensation expense of approximately $704,000, of which approximately $210,000 related to stock option grants

· Professional fees of approximately $605,000, which consisted of the following:

o Legal and accounting fees of approximately $292,000

o Fuel terminal management fees of approximately $50,000

o Other professional and consulting fees of approximately $263,000

· Travel expenses were approximately $222,000

· Royalty expense of $63,000 relating to the assignment to the Company of the Great Britain patent applications from related parties

· Investor relations were approximately $88,000

· Write offs and provision for loss on advances to joint ventures, approximated $127,000

· Other general and administrative expenses of approximately $122,000

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Derivative Instrument Income / Expense

Derivative instrument expense of $2,092,000 represents the net unrealized (non-cash) change in the fair value of our derivative instrument liabilities related to certain warrants and embedded derivatives in our convertible debt instruments that have been bifurcated and accounted for separately.

Interest Expense

We incurred interest expense of $7,130 on our note payable of $281,500 and our Convertible Debentures of $2,850,000.

Amortization of Debt Issuance Costs

Debt issuance costs of approximately $885,000 incurred in connection with the sale of our Convertible debentures are being amortized over the life of the debentures, which is three years, on the straight-line basis. Amortization expense amounted to $47,413.

Bank Fees and Escrow Fees

We incurred approximately $7,000 of bank and escrow fees during the period.

Settlement and Penalties

There were no settlements and penalties incurred for the three months ended March 31, 2006

For the Period From June 1, 2005 (inception) to March 31, 2007

Income

Income of $1,898,000 primarily consisted of engineering consulting services.

Operating Expenses

Operating expenses primarily consisted of the following:

· Compensation expense of approximately $7,329,000, of which approximately $2,238,000 related to stock option grants

· Professional fees of approximately $6,268,000, which consisted of the following:

o Consulting fees prior to inception of approximately $520,000, including $200,000 for a Bongiovi consultant

o Legal and accounting fees of approximately $2,144,000

o Recruiting fees of $154,000

o Fuel terminal management fees of approximately $394,000

o Other professional and consulting fees of approximately $3,056,000

· Travel expenses were approximately $1,467,000

· Marketing studies of approximately $245,000

· Royalty expense of $438,000 relating to the assignment to the Company of the Great Britain patent applications from related parties

· Investor relations were approximately $616,000

· Write offs and provision for loss on advances to joint ventures, approximated $338,000

· Other general and administrative expenses of approximately $1,363,000

Derivative Instrument Income / Expense

Derivative instrument expense of $2,377,000 represents the net unrealized (non-cash) change in the fair value of our derivative instrument liabilities related to certain warrants and embedded derivatives in our convertible debt instruments that have been bifurcated and accounted for separately.

Interest Expense

We incurred interest expense of $742,000 on our note payable of $67,000 and our Convertible Debentures of $9,559,000.

Amortization of Debt Issuance Costs

Debt issuance costs of approximately $1,365,000 incurred in connection with the sale of our Convertible debentures are being amortized over the life of the debentures, which is three years, on the straight-line basis. Amortization expense was approximately $728,000.

Bank Fees and Escrow Fees

We incurred approximately $14,000 of bank and escrow fees during the period.

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Settlement and Penalties

Settlements and penalties amounted to $545,000. Included in this total is $335,000, $171,000, and $36,000 resulting from the Greystoke settlement, short term financing, and John King settlement respectively.

Prior to June 1, 2005, the Company had no operating business.

For the Period From June 1, 2005 (inception) to March 31, 2006

Operating Expenses

Operating expenses primarily consisted of the following:

· Compensation expense of approximately $2,358,000, of which approximately $1,066,000 related to stock option grants

· Professional fees of approximately $1,972,000, which consisted of the following:

o Consulting fees prior to inception of approximately $520,000, including $200,000 for a Bongiovi consultant

o Legal and accounting fees of approximately $762,000

o Recruiting fees of $154,000

o Fuel terminal management fees of approximately $92,000

o Other professional and consulting fees of approximately $244,000

· Travel expenses were approximately $676,000

· Marketing studies of approximately $241,000

· Royalty expense of $188,000 relating to the assignment to the Company of the Great Britain patent applications from related parties

· Investor relations were approximately $207,000

· Write offs and provision for loss on advances to joint ventures, approximated $236,000

· Other general and administrative expenses of approximately $285,000

Derivative Instrument income

Derivative instrument expense of $2,092,000 represents the net unrealized (non-cash) change in the fair value of our derivative instrument liabilities related to certain warrants and embedded derivatives in our convertible debt instruments that have been bifurcated and accounted for separately.

Interest Expense

We incurred interest expense of $34,000 on our note payable of $281,500 and our Convertible Debentures of $2,850,000.

Amortization of Debt Issuance Costs

Debt issuance costs of approximately $885,000 incurred in connection with the sale of our Convertible debentures are being amortized over the life of the debentures, which is three years, on the straight-line basis. Amortization expense was approximately $47,000.

Bank Fees and Escrow Fees

We incurred approximately $7,000 of bank and escrow fees during the period.

Settlement and Penalties

Settlements and penalties amounted were $0.

Prior to June 1, 2005, the Company had no operating business.

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GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has a working capital deficiency of $7,012,498 and a stockholders’ deficiency of $7,077,149 as of March 31, 2007 and a net loss of $21,112,243 and a cash flow deficiency from operations of $9,663,352 for the period from June 1, 2005 (inception) to March 31, 2007. These matters raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company’s existence is dependent on management’s ability to develop profitable operations and resolve the Company’s liquidity problems. We do not have sufficient funds on hand to fund our current operations. In order to improve the Company’s liquidity, management is actively pursuing additional equity and debt financing through discussions with investment bankers and private investors. There can be no assurance the Company will be successful in its efforts to raise additional financing.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported. Please see the discussion of critical accounting policies and estimates in the Company’s Annual Report on Form 10-KSB for the period June 1, 2005 (inception) to March 31, 2007.

Accounting policies, methods and estimates are an integral part of our consolidated financial statements and are based upon management’s current judgments. Certain accounting policies, methods and estimates are particularly important because of their significance to the consolidated financial statements. Note 2 of the Notes to the Consolidated Financial Statements included in Part II Item 7 of this report, includes a summary of the significant accounting policies, estimates and methods we use. The following is a discussion of what we believe to be the most critical of these policies and methods.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of NewGen Technologies, Inc., its wholly-owned subsidiaries and all variable interest entities (VIE’s) (collectively, “the Company”) for which the Company is the primary beneficiary. All material intercompany accounts and transactions have been eliminated in consolidation.

Variable Interest Entities

The Financial Accounting Standards Board (FASB) issued FASB Interpretation 46, (R) Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46 (R) provides a new framework for identifying VIE’s and determining when a company should include the assets, liabilities, non-controlling interests and results of activities of a VIE in its consolidated financial statements.

In general, a VIE is a corporation, partnership, limited-liability corporation, trust or any other legal structure used to conduct activities or hold assets that either 1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support 2) has a group of equity owners that are unable to make significant decisions about its accountabilities or 3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations. FIN 46 (R) requires a VIE to be consolidated if a party with an ownership, contractual or other financial interest in the VIE (a variable interest holder) is obligated to absorb a majority of the risk of loss from the VIE’s activities, is entitled to receive a majority of the VIE’s residual returns, or both. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary must record all of the VIE’s assets, liabilities and non-controlling interests at fair value and account for the VIE as if it were consolidated based on majority voting interest.

Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

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Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose the nature of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Derivative Instruments

In connection with the sale of debt instruments, we may issue options or warrants to purchase our common stock. In certain circumstances, these options or warrants may be classified as derivative liabilities, rather than as equity. Additionally, the debt instruments may contain embedded derivative instruments, such as conversion options, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative instrument liability.

The identification of, and accounting for, derivative instruments is complex. Our derivative instrument liabilities are re-valued at the end of each reporting period, with changes in the fair value of the derivative liability recorded as charges or credits to income, in the period in which the changes occur. For options, warrants and bifurcated conversion options that are accounted for as derivative instrument liabilities, we determine the fair value of these instruments using the Black-Scholes option pricing model. That model requires assumptions related to the remaining term of the instruments and risk-free rates of return, our current common stock price and expected dividend yield, and the expected volatility of our common stock price over the life of the option. The identification of, and accounting for, derivative instruments and the assumptions used to value them can significantly affect our financial statements.

Item 3. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. 

NewGen Technologies, Inc.’s Chief Executive Officer and Chief Financial Officer have designed disclosure controls and procedures over financial reporting and evaluated the effectiveness of NewGen Technologies, Inc.’s disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act) over financial reporting as of the end of the period covered by this report (the “Evaluation Date”). Based on the evaluation, our chief executive officer and chief financial officer concluded that as of the valuation date, NewGen Technologies Inc.’s disclosure controls and procedures over financial reporting are effective.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING.

There were no changes in internal controls over financial reporting identified in connection with the evaluation of our internal controls that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting. During the three months ended September 30, 2006, it was determined that an officer, director and principal stockholder (“the Officer”) of NewGen sold 1,638,841 restricted shares of NewGen common stock to 37 purchasers for an aggregate of $640,365. The Officer loaned $420,000 of the proceeds of such sales to NewGen. The sale of such shares may have been made in violation of the Securities Act of 1933 as it was not registered thereunder. The Officer has indicated that he intends to offer rescission to the purchasers of the securities which he sold. The transfer of the Officer’s securities was completed based upon correspondence between the Officer’s representative and NewGen’s transfer agent, without the participation of NewGen. In order to ensure that such transactions cannot occur in the future, NewGen has now instituted a procedure where any officer or director of NewGen intending to sell or otherwise transfer stock of NewGen shall first contact NewGen’s Chief Financial Officer with the details of any proposed transaction. If required, the Chief Financial Officer shall then contact legal counsel to determine if such transaction can be consummated as proposed. The transfer agent will be directed not to make any transfers of unregistered shares of NewGen stock without an opinion of counsel.

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PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

On May 24, 2006, the Company and its wholly-owned subsidiary, Refuel, were served with a complaint in an action entitled John King v. NewGen Technologies, Inc. and Refuel America, Inc. The action was filed in the US District Court for the Western District of North Carolina. Mr. King served as Chief Executive Officer of the Company from June 9, 2005 through September 9, 2005. Mr. King then served as Chief Executive Officer of the Company’s International Operations until January 15, 2006. Mr. King also served as a member of the Company’s Board of Directors from June 9, 2005 through January 16, 2006 when he was removed by a vote of the holders of a majority of the Company’s common stock. On August 1, 2006, the Company and Mr. King reached a settlement agreement which granted options for 75,000 shares exercisable over the next 30 months and the Company issued two 12% Settlement Convertible Debentures effective August 1, 2006 in the amounts of $317,794 and $357,206. The debentures are convertible at a fixed price of $0.50 per share. Accrued expenses-related and notes payable were reduced by a total of $638,636. In addition, settlement expense increased by $36,364.

On August 25, 2006 Refuel America, Inc., the Company’s wholly-owned subsidiary, S. Bruce Wunner, the Company’s Vice-Chairman and Chief Executive Officer, and Ian Williamson, the Company’s President and Director, were served with a complaint in an action entitled Douglas Brown, Sr. v. Refuel America, Inc., Ian Williamson and S. Bruce Wunner. The action was filed in the Superior Court of the State of North Carolina, Cleveland County. Mr. Brown alleges that in return for advancing a loan of $1,000,000 to a potential acquisition candidate of Refuel, he received 3,740,424 fully paid and non-assessable shares of Refuel common stock. Mr. Brown is seeking a declaration acknowledging his ownership of the Refuel common stock and such other monetary damages as determined at trial. The Company denies all allegations and believes it has sufficient defenses on all matters. In addition, the Company intends to vigorously defend the action against Mr. Brown.

On October 20, 2006 Scott Deininger, a former employee, has sued NewGen for breach of contract after his employment was terminated. He currently serves as a member of the Board.  The Company is seeking to settle the claim.  The Company does not believe that the ultimate outcome of this matter will have a material adverse effect on the Company.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

NONE.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

On January 24, 2006, the Company consummated a securities purchase agreement (the “Purchase Agreement”) providing for the sale of its Convertible Debentures in the aggregate principal amount of $5,000,000, of which $2,200,000 was advanced immediately, $650,000 was advanced on March 14, 2006, and the remaining $2,150,000 was advanced on September 19, 2006 two days before the Company’s Registration Statement on Form SB-2 was declared effective by the Securities & Exchange Commission on September 21, 2006. As agreed to in the Purchase Agreement, the Registration Statement was to be declared effective by May 11, 2006 and was extended to June 19, 2006. However, the Company was contractually obligated to pay liquidated damages from this date to the effective deadline date September 15, 2006. As such, $171,000 was reduced from the loan proceeds received. The above debentures are currently in default due to non-payment of another debenture not paid on its maturity date.

The Company is currently in default for the non-payment of the December 6, 2006, debenture. The principal amount of $1,100,000 was due on February 6, 2007, subsequent to a 30 day extension.

In addition, the company is in default for the non-payment of interest on the $675,000 convertible debenture issued to a former director. The December 6, 2006 non-payment and lack of interest payment default have resulted in all the convertible debentures to be in a default status.

The Company defaulted on a convertible debenture, from a former director, with a 10% interest rate entered into on February 15, 2007 with a maturity date for payment of principal in the amount of $850,000 and interest in the amount of $21,014 as of May 15, 2007.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE

ITEM 5 - OTHER INFORMATION

NONE

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ITEM 6 - EXHIBITS

Exhibit Number	Description of Exhibit
3.1	Registrant’s Articles of Incorporation (incorporated by reference to the exhibits to Registrants Form 8-K filed on November 14, 2005).
3.2	Certificate of Amendment to Registrant’s Articles of Incorporation
3.4	Articles of Merger changing the Registrant’s name to NewGen Technologies, Inc. (incorporated by reference to the exhibits to Registrants Form 8-K filed on August 12, 2005).
3.5	Registrant’s By-Laws.
10.1	Share Exchange Agreement by and among Bongiovi Entertainment, Inc., Refuel America, Inc. and the shareholders of Refuel America, Inc. (incorporated by reference to a Form 8-K filed by the Registrant on August 4, 2005)
10.2	Management Services Agreement by and between Bongiovi Entertainment, Inc. and Sarmatan Developments Ltd. (incorporated by reference to a Form 8-K filed by the Registrant on August 4, 2005)
10.3	Warrant issued to Frank Crivello SEP IRA dated August 2, 2005 (incorporated by reference to a Form 8-K filed by the Registrant on August 4, 2005)
10.4	Form of Registration Rights Agreement (incorporated by reference to the exhibit to Registrants Form 8-K filed on August 25, 2005)
10.5	Limited Liability Company Agreement of Advanced Biotechnology, LLC (incorporated by reference to a Form 8-K filed by the Registrant on September 22, 2005)
10.6	Contract of Sale, dated September 28, 2005, by and among Crown Central LLC and Refuel America, Inc. (incorporated by reference to a Form 8-K filed by the Registrant on October 3, 2005)
10.7	Amendment to Contract of Sale, dated December 9, 2005, by and among Crown Central LLC and Refuel America, Inc. (incorporated by reference to the exhibit to Registrants Form 8-K filed on December 16, 2005)
10.8	Limited Liability Company Agreement of PowerSHIFT Biofuels of Hawaii, LLC, dated November 15, 2005, by and among PowerSHIFT Biofuels of Hawaii, LLC, PowerSHIFT Energy Company, Inc. and Refuel America, Inc. (incorporated by reference to a Form 8-K filed by the Registrant on November 16, 2005)
10.9	Limited Liability Company Agreement of PowerSHIFT Biofuels of Iowa, LLC, dated November 15, 2005, by and among PowerSHIFT Biofuels of Hawaii, LLC, PowerSHIFT Energy Company, Inc. and Refuel America, Inc. (incorporated by reference to a Form 8-K filed by the Registrant on November 16, 2005)
10.10	Joint Venture Agreement, dated November 29, 2005, by and among NewGen Technologies, Inc., AG Global Partners Limited and NewGen Fuel Technologies Limited (incorporated by reference to a Form 8-K filed by the Registrant on December 6, 2005)
10.11	Technology License & Development Agreement, dated November 29, 2005, by and between NewGen Technologies, Inc. and NewGen Fuel Technologies Limited (incorporated by reference to a Form 8-K filed by the Registrant on December 6, 2005)
10.12	Limited Liability Company Agreement of Actanol Bioengineering, LLC, dated November 28, 2005, by and among Actanol Bioengineering, LLC, Actanol Service Ltd. and Newgen Technologies, Inc. (incorporated by reference to a Form 8-K filed by the Registrant on December 6, 2005)
10.13	$2,200,000 principal amount Secured Convertible Debenture, dated January 24, 2006, issued by NewGen Technologies, Inc. to Cornell Capital Partners LP (incorporated by reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.14	Warrant to purchase 1,125,000 shares of Common Stock of NewGen Technologies, Inc., issued January 24, 2006 (incorporated by reference to a Form 8-K filed by the Registrant on January 30, 2006)

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Exhibit Number	Description of Exhibit
10.15	Securities Purchase Agreement, dated January 24, 2006, by and between NewGen Technologies, Inc. and Cornell Capital Partners LP (incorporated by reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.16	Investor Registration Rights Agreement, dated January 24, 2006, by and between NewGen Technologies, Inc. and Cornell Capital Partners LP (incorporated by reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.17	Security Agreement, dated January 24, 2006, by and between NewGen Technologies, Inc. and Cornell Capital Partners LP (incorporated by reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.18	Subsidiary Security Agreement, dated January 24, 2006, by and between Refuel Terminal Operations, Inc. and Cornell Capital Partners LP (incorporated by reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.19	Subsidiary Security Agreement, dated January 24, 2006, by and between Refuel America, Inc. and Cornell Capital Partners LP (incorporated by reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.20	Subsidiary Security Agreement, dated January 24, 2006, by and between NewGen International, Inc. and Cornell Capital Partners LP (incorporated by reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.21	Amendment to Registration Rights Agreement dated June 5, 2006
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)

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SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	NEWGEN TECHNOLOGIES, INC.
Date: May 17, 2007	By:	/s/ S. Bruce Wunner
		Bruce Wunner Chief Executive Officer

By:	/s/ Michael W. Woods
	Michael W. Woods Chief Financial Officer

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