NewGen allegedly defaults on $3.49 million of convertible notes

By Laura Lutz

Des Moines, July 17 - NewGen Technologies, Inc. said in an 8-K filing with the Securities and Exchange Commission that it has allegedly defaulted on $3,494,400 of convertible promissory notes held by Noel M. Corcoran, the company's former chairman.

On July 11, the company also filed suit against Corcoran and Thomas C. Plummer, a former NewGen consultant and an authorized agent of Corcoran, according to the 8-K.

Among other allegations, NewGen says that Corcoran used his position as chairman to obtain favorable conversion rates on loans he made to the company, including the convertible notes on which the default was alleged, and engaged in self-dealing in relation to the notes.

As a result of those claims, NewGen said in the 8-K that it does not intend to pay the amounts owed under the alleged default.

"To the extent Mr. Corcoran sues to collect amounts owed under the convertible promissory notes, NewGen expects to assert any counterclaims available to it, including the circumstances surrounding the negotiation of the convertible promissory notes, and will assert any applicable defenses available to it with respect to any such repayment obligations," the company said in the 8-K.

Corcoran bought a $2,644,400 note in a private placement that settled on Dec. 20, 2006 and a $850,000 note in a private placement that settled on Feb. 15.

The December note was due June 20, and the February note was due on May 14.

The company allegedly failed to make required redemption payments for both notes.

The payment for the December note was due on July 10, and the payment for the February note was due on May 31.

NewGen said it received notices of default for both notes July 10.

According to the notices, the company owes $2,792,558.85, payable immediately, on the December note and $886,864.38 on the February note.

Each note bore interest at 10% per year.

Under the terms of the notes, the interest rate on each note increased to 13% per year on the default dates.

The increased interest rate for each note will be applicable until NewGen pays all amounts due under that note, the 8-K filing said.

NewGen, based in Charlotte, N.C., develops biofuel and hydrocarbon blends.

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