0001493152-17-013573.txt : 20171120 0001493152-17-013573.hdr.sgml : 20171120 20171120140954 ACCESSION NUMBER: 0001493152-17-013573 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 42 CONFORMED PERIOD OF REPORT: 20170930 FILED AS OF DATE: 20171120 DATE AS OF CHANGE: 20171120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Bluefire Renewables, Inc. CENTRAL INDEX KEY: 0001370489 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 204590982 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-52361 FILM NUMBER: 171213463 BUSINESS ADDRESS: STREET 1: 31 MUSICK CITY: IRVINE STATE: CA ZIP: 92618 BUSINESS PHONE: 949-588-3767 MAIL ADDRESS: STREET 1: 31 MUSICK CITY: IRVINE STATE: CA ZIP: 92618 FORMER COMPANY: FORMER CONFORMED NAME: BLUEFIRE ETHANOL FUELS INC DATE OF NAME CHANGE: 20060726 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended:
September 30, 2017

 

OR

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File No. 000-52361

 

 

BLUEFIRE RENEWABLES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   20-4590982

(State or other jurisdiction

of incorporation)

 

(IRS Employer

Identification No.)

 

25108 Marguerite Parkway Suite A-321

Mission Viejo, CA 92692

(Address of principal executive offices)

 

(949) 588-3767

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes [X] No [  ]

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]
    Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

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

 

As of November 20, 2017, there were 499,680,109 shares outstanding of the registrant’s common stock.

 

 

 

   

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION
     
Item 1. Financial Statements. 3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 15
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 20
     
Item 4. Controls and Procedures. 20
     
PART II – OTHER INFORMATION
     
Item 1. Legal Proceedings. 20
     
Item 1A. Risk Factors. 21
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 21
     
Item 3. Defaults Upon Senior Securities. 21
     
Item 4. Mine Safety Disclosures. 21
     
Item 5. Other Information. 21
     
Item 6. Exhibits. 22
     
Signatures 23

 

 2  

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

BLUEFIRE RENEWABLES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   September 30, 2017   December 31, 2016 
ASSETS        
         
Current assets:          
Cash and cash equivalents  $426   $161,991 
Prepaid expenses   12,644    977 
Total current assets   13,070    162,968 
           
Total assets  $13,070   $162,968 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current liabilities:          
Accounts payable  $1,226,810   $1,162,788 
Accrued liabilities   1,940,471    1,549,200 
Notes payable   420,000    420,000 
Line of credit, related party   253,074    240,924 
Note payable to a related party   200,000    200,000 
Convertible notes payable, net of discount of $0 and $3,889, respectively   -    21,111 
Derivative liability   -    27,104 
Total current liabilities   4,040,355    3,621,127 
           
Total liabilities   4,040,355    3,621,127 
           
Commitments and contingencies (Note 4)          
           
Redeemable noncontrolling interest   859,377    860,980 
           
Stockholders’ deficit:          
Preferred stock, no par value, 1,000,000 shares authorized; 51 and 51 shares issued outstanding, as of September 30, 2017 and December 31, 2016, respectively   -    - 
Common stock, $0.001 par value; 500,000,000 shares authorized; 462,680,109 and 408,235,664 shares issued; and 462,647,938 and 408,203,492 outstanding, as of September 30, 2017 and December 31, 2016, respectively   462,681    408,236 
Additional paid-in capital   17,072,974    17,068,865 
Treasury stock at cost, 32,172 shares at September 30, 2017 and December 31, 2016   (101,581)   (101,581)
Accumulated deficit   (22,320,736)   (21,694,659)
Total stockholders’ deficit   (4,886,662)   (4,319,139)
           
Total liabilities and stockholders’ deficit  $13,070   $162,968 

 

See accompanying notes to consolidated financial statements

 

 3  

 

 

BLUEFIRE RENEWABLES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   For the Three
Months ended
September 30, 2017
   For the Three
Months ended
September 30, 2016
   For the Nine
Months ended
September 30, 2017
   For the Nine
Months ended
September 30, 2016
 
                 
Revenues:                
Department of Energy grant revenue  -   -   -   - 
Total revenues  -   -   -   - 
                 
Cost of revenue                
Consulting revenue  -   -   -   - 
Gross margin   -    -    -    - 
                     
Operating expenses:                    
Project development   14,668    67,622    87,449    238,049 
General and administrative   158,784    206,627    483,756    715,253 
Total operating expenses   173,452    274,249    571,205    953,302 
                     
Operating loss   (173,452)   (274,249)   (571,205)   (953,302)
                     
Other income and (expense):                
Amortization of debt discount   -    (4,167)   (3,889)   (37,033)
Interest expense   (5,053)   (11,574)   (27,209)   (52,314)
Related party interest expense   (7,651)   (5,334)   (22,127)   (10,117)
Gain on settlement of accounts payable and accrued liabilities   -    6,450    -    16,785 
Change in fair value of warrant liability   -    -    -    199 
Settlement expense        (25,000)        (25,000)
Loss on excess of derivative over face value   -    (36,317)   -    (36,317)
Change in fair value of derivative liability   2,133    (77,642)   (3,250)   73,933 
Total other income and (expense)   (10,571)   (153,584)   (56,475)   (69,864)
                     
Loss before income taxes   (184,023)   (427,833)   (627,680)   (1,023,166)
Provision for income taxes   -    -    -    153 
Net loss   (184,023)   (427,833)   (627,680)   (1,023,319)
                     
Loss attributable to non-controlling interest  (147) 

(1,044) 

(1,603) 

(3,591)
Net loss attributable to controlling interest  $(183,876)  $(426,789)  $(626,077)  $(1,019,728)
Basic and diluted loss per common share  $(0.00)  $(0.00)  $(0.00)  $(0.00)
Weighted average common shares outstanding, basic and diluted   

443,194,227

    408,139,405    

421,921,630

    391,390,961 

 

See accompanying notes to consolidated financial statements

 

 4  

 

 

BLUEFIRE RENEWABLES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   For the Nine
Months Ended
   For the Nine
Months Ended
 
   September 30, 2017   September 30, 2016 
           
Cash flows from operating activities:          
Net loss  $(627,680)  $(1,023,319)
Adjustments to reconcile net loss to net cash used in operating activities:          
Change in the fair value of warrant liability   -    (199)
Change in fair value of derivative liability   3,250    (73,933)
Loss on excess fair value of derivative liability   -    36,317 
Gain on settlement of accounts payable and accrued liabilities   -    (16,785)
Share-based compensation   3,200    144 
Amortization   3,889    37,033 
Depreciation   -    276 
Excess fair value of common stock issued for accrued interest   -    7,200 
Changes in operating assets and liabilities:          
Prepaid expenses and other current assets   (11 ,667)    8,314 
Accounts payable   64,022    156,783 
Accrued liabilities   391,271    674,029 
Net cash used in operating activities   (173,715)   (194,140)
           
Cash flows from financing activities:          
Proceeds from related party line of credit/notes payable   12,150    168,556 
Net cash provided by financing activities   12,150    168,556 
           
Net decrease in cash and cash equivalents   (161,565)   (25,584)
           
Cash and cash equivalents beginning of period   161,991    26,922 
           
Cash and cash equivalents end of period  $426   $1,338 
           
Supplemental disclosures of cash flow information          
Cash paid during the period for:          
Interest  $-   $- 
Income taxes  $-   $- 
           
Supplemental schedule of non-cash investing and financing activities:          
Conversion of convertible notes payable into common stock  $25,000   $52,950 
Interest converted to common stock  $-   $12,547 
Derivative liability reclassed to additional paid-in capital  $30,354   $139,303 
Gain on settlement of shares  $-   $10,335 

 

See accompanying notes to consolidated financial statements

 

 5  

 

 

BLUEFIRE RENEWABLES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – ORGANIZATION AND BUSINESS

 

BlueFire Ethanol, Inc. (“BlueFire” or the “Company”) was incorporated in the state of Nevada on March 28, 2006. BlueFire was established to deploy the commercially ready and patented process for the conversion of cellulosic waste materials to ethanol (“Arkenol Technology”) under a technology license agreement with Arkenol, Inc. (“Arkenol”). BlueFire’s use of the Arkenol Technology positions it as a cellulose-to-ethanol company with demonstrated production of ethanol from urban trash (post-sorted “MSW”), rice and wheat straws, wood waste and other agricultural residues. The Company’s goal is to develop and operate high-value carbohydrate-based transportation fuel production facilities in North America, and to provide professional services to such facilities worldwide. These “biorefineries” will convert widely available, inexpensive, organic materials such as agricultural residues, high-content biomass crops, wood residues, and cellulose from MSW into ethanol.

 

On September 30, 2015, the Company filed an amendment to the Company’s articles of incorporation with the Secretary of State of the State of Nevada, which, among other things, established the designation, powers, rights, privileges, preferences and restrictions of the Series A Preferred Stock, no par value per share (the “Series A Preferred Stock”). Among other things, each one (1) share of the Series A Preferred Stock shall have voting rights equal to(x) 0.019607 multiplied by the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. For purposes of illustration only, if the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote is 5,000,000, the voting rights of one share of the Series A Preferred Stock shall be equal to 102,036 (0.019607 x 5,000,000) / 0.49) – (0.019607 x 5,000,000) = 102,036).

 

The Series A Preferred Stock has no dividend rights, no liquidation rights and no redemption rights, and was created primarily to be able to obtain a quorum and conduct business at shareholder meetings. All shares of the Series A Preferred Stock shall rank (i) senior to the Company’s common stock and any other class or series of capital stock of the Company hereafter created, (ii) pari passu with any class or series of capital stock of the Company hereafter created and specifically ranking, by its terms, on par with the Series A Preferred Stock and (iii) junior to any class or series of capital stock of the Company hereafter created specifically ranking, by its terms, senior to the Series A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.

 

Due to the Company’s struggles in securing sufficient financing necessary to enact its business plan, the Board is currently evaluating strategic alternatives which include, among other things, merging or selling the Company, in order to obtain additional capital sufficient to continue operating and meet both our operating and financial obligations. This evaluation is still under way and there can be no assurance that we will be successful in any of these efforts or that we will have sufficient funds to cover our operational and financial obligations over the next twelve months.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Going Concern

 

The Company has incurred losses since Inception. Management has funded operations primarily through proceeds received in connection with the reverse merger, loans from its Chief Executive Officer, the private placement of the Company’s common stock in December 2007 for net proceeds of approximately $14,500,000, the issuance of convertible notes with warrants in July and in August 2007, various convertible notes, and Department of Energy reimbursements from 2009 to 2015. The Company may encounter further difficulties in establishing operations due to the time frame of developing, constructing and ultimately operating the planned bio-refinery projects.

 

 6  

 

 

As of September 30, 2017, the Company has negative working capital of approximately $4,027,285. Management has estimated that operating expenses for the next 12 months will be approximately $625,000 excluding engineering costs related to the development of bio-refinery projects. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company intends to fund its operations with any additional funding that can be secured in the form of equity or debt. As of November 20, 2017, the Company expects the current resources available to them will only be sufficient for a period of approximately one month unless significant additional financing is received. Management has determined that the general expenditures must be reduced and additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short term capital we may consume all of our cash reserved for operations. There are no assurances that management will be able to raise capital on terms acceptable to the Company or at all. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. The financial statements do not include any adjustments that might result from these uncertainties.

 

As of December 31, 2010, the Company completed the detailed engineering on our proposed Fulton Project, procured all necessary permits for construction of the plant, and began site clearing and preparation work, signaling the beginning of construction. All site preparation activities have been completed, including clearing and grating of the site, building access roads, completing railroad tie-ins to connect the site to the rail system, and finalizing the layout plan to prepare for the site foundation. In addition, the County of Itawamba sent notice that it would terminate the lease for the Fulton Project on May 10, 2017 if full payment was not made. The Company was unable to make payment but received a letter stating that access to the site would be on a first-come, first-served basis. See Note 4.

 

We estimate the total construction cost of the bio-refinery to be in the range of approximately $300 million for the Fulton Project. These cost approximations do not reflect any increase/decrease in raw materials or any fluctuation in construction cost, since originally bid, that would be realized by the dynamic world metals markets or inflation of general costs of construction. The Company is looking for potential sources of financing for this facility but no definitive agreements are in place. The Company cannot continue significant development or furtherance of the Fulton project or any other opportunity until financing for the Company and the construction of the Fulton project is obtained.

 

Risks and Uncertainties

 

The Company has a limited operating history and has not generated revenues from our planned principal operations.

 

The Company’s business and operations are very sensitive to general business and economic conditions in the U.S. and worldwide. Specifically, these conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general price of crude oil and gasoline.

 

The risks related to the Company’s plans to sell engineering services are that the Company currently has no sales and limited marketing capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our services. Developing a marketing and sales force is also time consuming and could delay launch of our future bio-ethanol plants. In addition, the Company will compete with other engineering companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote to sales and marketing.

 

The Company’s business and industry is also subject to new innovations in technology. Significant technical changes can have an adverse effect on product lives. Design and development of new products and services are important elements to achieve profitability in the Company’s industry segment. As a result, the Company’s products may quickly become obsolete and unmarketable. The Company’s future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and services and enhance our current products on a timely and cost-effective basis.

 

The Company’s products must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company’s new products may not be favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.

 

 7  

 

 

Due to the continuing capital constraints at the Company, John Cuzens, our Chief Technology Officer and Senior VP, has begun employment as an engineer in an industry that we feel does not compete with the Company. His technical and engineering expertise, including his familiarity with the Arkenol Technology, is important to BlueFire and our failure to retain Mr. Cuzens on a full-time basis, or to attract and retain additional qualified personnel, could adversely affect our planned operations. We do not currently carry key-man life insurance on any of our officers.

 

The long time horizon of project development and financing for the Company’s intended biorefinery projects may make it difficult to keep key project contracts active and in force with the Company’s limited resources. There is no guarantee the Company can keep them active or find suitable replacements if they do expire or are canceled.

 

Due to the continuing capital constraints of the Company, as of September 30, 2017 the Company has only Arnold Klann, our chief executive officer and director, as a full time employee. We presently are entirely dependent upon his experience, abilities and continued servicesThe loss of his services would be detrimental to the business and could have a material adverse effect on our business, financial condition or force us to no longer operate.

 

Lastly, the Company may be subject to federal, state and local environmental laws and regulations. The Company does not anticipate material expenditures to comply with such laws and does not believe that regulations will have a material impact on the Company’s financial position, results of operations, or liquidity. The Company believes that its operations comply, in all material respects, with applicable federal, state, and local environmental laws and regulations.

 

Basis of Presentation

 

The accompanying unaudited consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities Exchange Commission. Certain information and disclosures normally included in the annual financial statements prepared in accordance with the accounting principles generally accepted in the Unites States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the full year.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of BlueFire Renewables, Inc., and its wholly-owned subsidiary, BlueFire Ethanol, Inc. BlueFire Ethanol Lancaster, LLC, BlueFire Fulton Renewable Energy LLC (excluding 1% interest sold) and SucreSource LLC are wholly-owned subsidiaries of BlueFire Ethanol, Inc. All intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of 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 disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could materially differ from those estimates.

 

Project Development

 

Project development costs are either expensed or capitalized. The costs of materials and equipment that will be acquired or constructed for project development activities, and that have alternative future uses, both in project development, marketing or sales, will be classified as property and equipment and depreciated over their estimated useful lives. To date, project development costs include the research and development expenses related to the Company’s future cellulose-to-ethanol production facilities with almost 100% of the allocation being employee salaries. During the three and nine months ended September 30, 2017 and 2016, development costs included in Project Development were approximately $14,668, $67,622, $87,449 and $238,049, respectively.

 

 8  

 

 

Fair Value of Financial Instruments

 

The Company follows the guidance of ASC 820 – “Fair Value Measurement and Disclosure”. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

 

Level 1. Observable inputs such as quoted prices in active markets;

 

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The Company did not have any Level 1 financial instruments at September 30, 2017 or December 31, 2016.

 

As of September 30, 2017 and December 31, 2016, the Company’s derivative liabilities are considered a Level 2 item (see Note 3).

 

As of September 30, 2017 and December 31, 2016 the Company’s redeemable non-controlling interest is considered a Level 3 item and changed during the nine months ended September 30, 2017 as follows.

 

Balance at December 31, 2016  $860,980 
Net loss attributable to non-controlling interest   (1,603)
Balance at September 30, 2017  $859,377 

 

See Note 6 for details of valuation and changes during the years 2017 and 2016.

 

The carrying amounts reported in the accompanying consolidated financial statements for current assets and current liabilities approximate the fair value because of the immediate or short term maturities of the financial instruments.

 

Concentrations of Credit Risk

 

As of September 30, 2017 and December 31, 2016, four vendors made up approximately 87% and 82% of accounts payable, respectively. Except for the Company’s legal counsel, the loss of the other vendors would not have a significant impact on the Company’s operations.

 

Loss per Common Share

 

The Company presents basic income (loss) per share (“EPS”) and diluted EPS on the face of the consolidated statement of operations. Basic income (loss) per share is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. The Company has had convertible notes outstanding that are dilutive and convertible into the Company’s common stock. However, due to the net loss in each respective period, these were excluded from diluted EPS as their effects would be anti-dilutive.

 

 9  

 

 

New Accounting Pronouncements

 

The Financial Accounting Standards Board (“FASB”) issues Accounting Standard Updates (“ASU”) to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 840), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for a public entity. Early adoption of the amendments in this standard is permitted for all entities and the Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently in the process of evaluating the effect this guidance will have on its financial statements and related disclosures.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

 

NOTE 3 – NOTES PAYABLE

 

From time-to-time, the Company enters into convertible notes with third parties as indicated below.

 

For the below convertible notes, the Company determined that since the conversion prices are variable and do not contain a floor, the conversion feature represents a derivative liability upon the ability to convert the loan after the six month period. Since the conversion feature is only convertible after six months, there is no derivative liability upon issuance. However, the Company will account for the derivative liability upon the passage of time and the note becoming convertible if not extinguished.

 

JMJ Convertible Note

 

On April 2, 2015, the Company issued a convertible note in favor of JMJ Financial in the principal amount of $100,000 out of a total of a possible $250,000, with a maturity date of April 1, 2017 (the “JMJ Note”). The JMJ Note was issued with a 10% original issue discount, and was convertible at any time. The $10,000 on-issuance discount will be amortized over the life of the note. The Company was to repay any principal balance due under the note including a one-time charge of 12% interest on the principal balance outstanding if not repaid within 90 days. The Company had the option to prepay the JMJ Note prior to maturity. The JMJ Note was convertible into shares of the Company’s common stock as calculated by multiplying 60% of the lowest trade price in the 25 trading days prior to the conversion date.

 

Due to the variable conversion feature of the note, derivative accounting is required. The Company valued the derivative upon issuance and at each conversion, and reporting date. The initial value of the derivative liability was $412,212, resulting in a day one loss $312,212. The discount on the convertible note is being amortized over the life of the note. During the nine months ended September 30, 2016, amortization of the discount was $32,866 with $0 remaining.

 

   Final Conversion
April 5, 2016
(Excluding Inception)
   April 2, 2015 
Annual dividend yield   -    - 
Expected life (years)   0.99    2.00 
Risk-free interest rate   0.56%   0.55%
Expected volatility   188%   301.07%

 

During the nine months ended September 30, 2016, the Company issued 105,741,400 shares of common stock for the conversion of approximately $65,500, including approximately $52,950 of principal and $12,550 of accrued interest. As of April 5, 2016, the JMJ Note was fully converted into shares of Company stock and as such repaid in full.

 

 10  

 

 

AKR Promissory Note

 

On April 8, 2014, the Company issued a promissory note in favor of AKR Inc, (“AKR”) in the principal aggregate amount of $350,000 (the “AKR Note”). The AKR Note was due on April 8, 2015; however, the Company has received multiple extensions to the due date moving it to December 31, 2017. The AKR Note requires the Company to (i) incur interest at five percent (5%) per annum; (ii) issue on April 8, 2014 to AKR warrants allowing them to buy 7,350,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant A”); (iii) issue on August 8, 2014 to AKR warrants allowing them to buy 7,350,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant B”); and (iv) issue on November 8, 2014 to AKR warrants allowing them to buy 8,400,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant C”, together with AKR Warrant A and AKR Warrant B the “AKR Warrants”). All AKR Warrants were expired as of April 8, 2016. The Company had the ability to prepay the debt, prior to maturity, as extended, with no prepayment penalty.

 

The Company valued the AKR Warrants as of the date of the note and recorded a discount of $42,323 based on the relative fair value of the AKR Warrants compared to the debt. The discount was fully amortized as of the original maturity date of April 8, 2015. The Company assessed the fair value of the AKR Warrants based on the Black-Scholes pricing model. See below for variables used in assessing the fair value.

 

   April 8, 2014 
Annual dividend yield   - 
Expected life (years)   1.41 - 2.00 
Risk-free interest rate   0.40%
Expected volatility   183% - 206%

 

On April 24, 2014, the Company issued an additional promissory note in favor of AKR in the principal aggregate amount of $30,000 (“2nd AKR Note”). The 2nd AKR Note was due on July 24, 2014; however, the Company has received multiple extensions to the due date moving it to December 31, 2017. Pursuant to the terms of the 2ndAKR Note, the Company is to repay any principal balance and interest, at 5% per annum at maturity. The Company may prepay the debt prior to maturity with no prepayment penalty.

 

Tarpon Bay Convertible Note

 

Pursuant to a contemplated 3(a)10 transaction, which would be used to reduce aged liabilities of the Company, with Tarpon Bay Partners LLC (“Tarpon”), on August 31, 2016, the Company issued to Tarpon a convertible promissory note in the principal amount of $25,000 (the “Tarpon Initial Note”). Under the terms of the Tarpon Initial Note, the Company shall pay Tarpon $25,000 on the date of maturity which was February 28, 2017. This note was convertible by Tarpon into the Company’s common shares at a 50% discount to the lowest closing bid price for the common stock for the twenty (20) trading days ending on the trading day immediately before the conversion date.

 

The above note was issued without funds being received. Accordingly, the note was issued with a full on-issuance discount that was amortized over the term of the note. During the nine months ended September 30, 2017, amortization of $3,889, was recognized related to the discount on the note. As of September 30, 2017, a discount of $0 remained and was fully converted.

 

Because the conversion price was variable and did not contain a floor, the conversion feature represented a derivative liability upon issuance. Accordingly, the Company calculated the derivative liability using the Black-Sholes pricing model for the notes upon inception, resulting in a day one loss of approximately $36,000. The derivative liability was marked to market each quarter and as of the date of last conversion, August 21, 2017, which resulted in a loss of approximately $2,133. The Company used the following assumptions for the three months ended September 30, 2017:

 

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   September 30, 2017 
Annual dividend yield   - 
Expected life (years)   0.001 
Risk-free interest rate   0.95% - 1.00%
Expected volatility   143% - 149%

 

During the nine months ended September 30, 2017, the Company issued 54,444,445 shares of common stock to pay down $25,000 of principal and $3,200 in fees of the Tarpon Bay Convertible Note. The note is fully converted as of September 30, 2017.

 

On September 27, 2017, BlueFire Renewables, Inc., a Nevada Corporation (the “Company”) entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Tarpon Bay Partners, LLC, a Florida limited liability company (“TBP”), pursuant to which the Company agreed to issue common stock to TBP in exchange for the settlement of $999,630.45 (the “Settlement Amount”) of past-due obligations and accounts payable of the Company. TBP purchased the obligations and accounts payable from certain employees, former employees, consultants and vendors of the Company as described below in Note 8.

 

The Company is moving forward with Tarpon Bay and with the proposed 3(a)10 transaction. (See Note 8)

 

Kodiak Promissory Note

 

On December 17, 2014, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Kodiak Capital Group, LLC (“Kodiak”). Pursuant to the terms of the Purchase Agreement, for a period of twenty-four (24) months commencing on the date of effectiveness of the registration statement, Kodiak shall commit to purchase up to $1,500,000 of Put Shares, pursuant to Puts (as defined in the Purchase Agreement), covering the Registered Securities (as defined in the Purchase Agreement, and below).

 

As further consideration for Kodiak entering into and structuring the Purchase Agreement, the Company issued Kodiak a promissory note in the principal aggregate amount of $60,000 (the “Kodiak Note”) that bears no interest and had a maturity date of July 17, 2015. No funds were received for this note. The Company is currently in default of the Kodiak Note.

 

As of September 30, 2017, the balance outstanding on the Kodiak Note was $40,000.

 

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

Fulton Project Lease

 

On July 20, 2010, the Company entered into a thirty year lease agreement with Itawamba County, Mississippi for the purpose of the development, construction, and operation of the Fulton Project. At the end of the primary 30 year lease term, the Company shall have the right for two additional thirty year terms. The current lease rate is computed based on a per acre rate per month that is approximately $10,300 per month. The lease stipulates the lease rate is to be reduced at the time of the construction start by a Property Cost Reduction Formula which can substantially reduce the monthly lease costs. The lease rate shall be adjusted every five years to the Consumer Price Index.

 

The Company is currently in default of the lease due to non payment. On May 1, 2017, the Company received a letter from the County of Itawamba stating that the lease for the Fulton Project would be cancelled unless the current balance outstanding plus default interest were paid in full by May 10, 2017. The Company appealed for an extension or forgiveness of the past due liability but was denied and told “The County is actively marketing the real property through its economic developer. The real property is available on a first-come, first-served basis.” Due to the uncertainty of access to the site, the Company stopped the accrual of lease payments on May 10, 2017 and considers the lease cancelled. The Company will work to reinstate when financing is obtained.

 

Rent expense under non-cancellable leases was approximately $0, $30,900, $44,600 and $92,600 during the three and nine months ended September 30, 2017 and 2016, respectively.

 

As of September 30, 2017 and December 31, 2016, $ 343,010 and $298,468, respectively, of the monthly lease payments were included in accounts payable on the accompanying consolidated balance sheets, respectively.

 

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The Company considers the lease cancelled as of May 10, 2017. As of September 30, 2017, the Company has accrued $46,131 of default interest due to the nonpayment of the lease.

 

SEC Notice and Settlement

 

On May 2, 2016, the Company received a written notice from the Securities and Exchange Commission (SEC), as further described elsewhere in this quarterly report. In connection with such notice, on August 1, 2016, the Company entered into a settlement with the SEC. Pursuant to the settlement, the Company agreed to pay a civil penalty of $25,000 to the SEC. On July 29, 2016, the Company made an initial payment of $5,000 to the SEC. The remaining $20,000 balance was to be paid to the SEC over a nine-month period ending on or about June 30, 2017. The Company has accrued the balance on the accompanying consolidated financial statements for such settlement. The Company has yet to make an additional payment due to capital constraints and as of November 17, 2017 the Company has received no further communication from the SEC in regards to the settlement or further payment.

 

Legal Proceedings

 

We are currently not involved in litigation that we believe will have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision is expected to have a material adverse effect.

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

Loan Agreement

 

On December 15, 2010, the Company entered into a loan agreement (the “Loan Agreement”) by and between Arnold Klann, the Chief Executive Officer, Chairman of the board of directors and majority shareholder of the Company, as lender (the “Lender”), and the Company, as borrower. Pursuant to the Loan Agreement, the Lender agreed to advance to the Company a principal amount of Two Hundred Thousand United States Dollars ($200,000) (the “Loan”). The Loan Agreement requires the Company to (i) pay to the Lender a one-time amount equal to fifteen percent (15%) of the Loan (the “Fee Amount”) in cash or shares of the Company’s common stock at a value of $0.50 per share, at the Lender’s option; and (ii) issue the Lender warrants allowing the Lender to buy 500,000 common shares of the Company at an exercise price of $0.50 per common share. The Company has promised to pay in full the outstanding principal balance of any and all amounts due under the Loan Agreement within thirty (30) days of the Company’s receipt of investment financing or a commitment from a third party to provide One Million United States Dollars ($1,000,000) to the Company or one of its subsidiaries (the “Due Date”), to be paid in cash. These warrants expired on December 15, 2013.

 

Related Party Lines of Credit

 

On November 10, 2011, the Company obtained a line of credit in the amount of $40,000 from its Chairman/Chief Executive Officer and, at the time, the majority shareholder to provide additional liquidity to the Company as needed, at his sole discretion. Under the terms of the note, the Company is to repay any principal balance and interest, at 12% per annum, within 30 days of receiving qualified investment financing of $100,000 or more. On April 10, 2014, the line of credit was increased to $55,000. On March 13, 2016, the line of credit was increased to $125,000, and then incrementally increased to $275,000 on August 17, 2017. As of September 30, 2017, the outstanding balance on the line of credit was approximately $253,074 with $21,926 remaining under the line. Although the Company has received over $100,000 in financing since this agreement was put into place, Mr. Klann does not hold the Company in default.

 

As of September 30, 2017 and December 31, 2016, $61,144 and $31,709 in accrued interest is owed under this line of credit and included with accrued liabilities, respectively.

 

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Accrued Salaries

 

As of September 30, 2017 and December 31, 2016, accrued salary due to the Chief Executive Officer included within accrued liabilities was $508,500 and $339,000, respectively.

 

Total accrued and unpaid salary of all employees is $1,672,984 and $1,330,777 as of September 30, 2017, and December 31, 2016, respectively, representing 28 months of accrual at September 30, 2017. Of the total accrued salaries, $867,000 is included in the 3a10 transaction with Tarpon Bay Partners.

 

NOTE 6 – REDEEMABLE NON-CONTROLLING INTEREST

 

On December 23, 2010, the Company sold a one percent (1%) membership interest in its operating subsidiary, BlueFire Fulton Renewable Energy, LLC (“BlueFire Fulton” or the “Fulton Project”), to an accredited investor for a purchase price of $750,000 (“Purchase Price”). The Company maintains a 99% ownership interest in the Fulton Project. In addition, the investor received a right to require the Company to redeem the 1% interest for $862,500, or any pro-rata amount thereon. The redemption is based upon future contingent events based upon obtaining financing for the construction of the Fulton Project. The third party equity interests in the consolidated joint ventures are reflected as redeemable noncontrolling interests in the Company’s consolidated financial statements outside of equity. The Company accreted the redeemable noncontrolling interest for the total redemption price of $862,500 through the estimated forecasted financial close, originally estimated to be the end of the third quarter of 2011.

 

Net loss attributable to the redeemable non-controlling interest during for the three and nine months ended September 30, 2017 and 2016 was $(142), $(1,598), $(1,044) and $(3,591), respectively, which netted against the value of the redeemable non-controlling interest in temporary equity. The allocation of loss was presented on the statement of operations.

 

NOTE 7 – STOCKHOLDERS’ DEFICIT

 

Please see Note 3 for information on current conversion of notes payable to the Company’s common stock.

 

NOTE 8 – SUBSEQUENT EVENTS

 

On September 27, 2017, BlueFire Renewables, Inc., a Nevada Corporation (the “Company”) entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Tarpon Bay Partners, LLC, a Florida limited liability company (“TBP”), pursuant to which the Company agreed to issue common stock to TBP in exchange for the settlement of $999,630.45 (the “Settlement Amount”) of past-due obligations and accounts payable of the Company. TBP purchased the obligations and accounts payable from certain employees, former employees, consultants, and vendors of the Company as described below. On October 11, 2017, the Circuit Court of Leon County, Florida (the “Court”), entered an order (the “TBP Order”) approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in accordance with a stipulation of settlement, pursuant to the Settlement Agreement between the Company and TBP, in the matter entitled Tarpon Bay Partners, LLC v. BlueFire Renewables, Inc. (the “TBP Action”). TBP commenced the TBP Action against the Company to recover an aggregate of $999,630.45 of past-due obligations and accounts payable of the Company (the “TBP Claim”), which TBP had purchased from certain vendors of the Company pursuant to the terms of separate receivable purchase agreements between TBP and each of such vendors (the “TBP Assigned Accounts”). The TBP Assigned Accounts relate to certain contractual obligations and legal services provided to the Company. The TBP Order provides for the full and final settlement of the TBP Claim and the TBP Action. The Settlement Agreement became effective and binding upon the Company and TBP upon execution of the TBP Order by the Court on October 11, 2017. The parties reasonably estimate that the fair market value of the TBP Settlement Shares to be received by TBP is equal to approximately $1,666,000. In connection with the Settlement Agreement, on October 16, 2017, the Company issued 37,000,000 shares of the Company’s common stock to TBP. Additional tranche requests shall be made as requested by TBP until the TBP Settlement Amount is paid in full. The Company is currently determining the impact of this transaction on its financial statements.

 

On October 26, 2017, the Company filed a Preliminary 14C with the US Securities and Exchange Commission to increase in the number of authorized shares of Common Stock from five hundred million (500,000,000) shares of Common Stock to five billion (5,000,000,000) shares of Common Stock (the “Share Increase”). On September 28, 2017, the Company received a unanimous written consent in lieu of a meeting of the holders of all 51 shares of Series A Preferred, as permitted by the Company’s Certificate of Incorporation, as may be amended (“Amended Certificate”) authorizing the Share Increase, Each share of Series A Preferred has voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. As there are currently 499,680,109 shares of Common Stock issued and 499,647,938 outstanding, the 51 shares of Series A Preferred Stock have the voting equivalent of 520,019,358 shares of Common Stock.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This quarterly report on Form 10-Q and other reports filed by BlueFire Renewables, Inc. (the “Company”) from time to time with the SEC (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

 

PLAN OF OPERATION

 

Our primary business encompasses development activities culminating in the design, construction, ownership and long-term operation of cellulosic ethanol production bio-refineries utilizing the licensed Arkenol Technology in North America. Our secondary business is providing support and operational services to Arkenol Technology based bio-refineries worldwide. As such, we are currently in the development-stage of finding suitable locations and deploying project opportunities for converting cellulose fractions of municipal solid waste and other opportunistic feedstock into ethanol fuels.

 

Our initial planned bio-refinery in North America is projected as follows:

 

  A bio-refinery proposed for development and construction previously in conjunction with the DOE, located in Fulton, Mississippi, which will process approximately 700 metric dry tons of woody biomass, mill residue, and other cellulosic waste to produce approximately 19 million gallons of ethanol annually. We estimate the total construction cost of the Fulton Project to be in the range of approximately $300 million. In 2007, we received an Award from the DOE of up to $40 million for the Fulton Project. On December 4, 2009, the DOE announced that the total award for this project has been increased to a maximum of $88 million ARRA and the Energy Policy Act of 2005. As of September 12, 2012, Award 1 was officially closed. On December 23, 2013, the Company received notice from the DOE indicating that the DOE would no longer provide funding under the DOE Grant for the development of the Fulton Project due to the Company’s inability to comply with certain deadlines related to providing certain information to the DOE with respect to the Company’s future financing arrangements for the Fulton Project. On March 17, 2015, the Company received a letter from the DOE stating that because of the upcoming September 2015 expiration date for expending ARRA funding, it cannot reconsider its decision and the Company considers such decision to be final. In 2010, BlueFire signed definitive agreements for the following three crucial contracts related to the Fulton Project: (a) feedstock supply with Cooper Marine, (b) off-take for the ethanol of the facility with Tenaska, and (c) the construction of the facility with MasTec. Also in 2010, BlueFire continued to develop the engineering package for the Fulton Project, and completed both the FEL-2 and FEL-3 stages of engineering readying the facility for construction. As of November 2010, the Fulton Project had all necessary permits for construction, and in that same month we began site clearing and preparation work, signaling the beginning of construction.

 

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In 2014, BlueFire signed an Engineering Procurement and Construction (EPC) contract with China Three Gorges Corporation and its subsidiary China International Water & Electric, a large Chinese Engineering Procurement and Construction company. In tandem with the new EPC contractor, the company is engaging Chinese banks to provide the debt financing for the Fulton Project. BlueFire has received a letter of intent from the Export Import Bank of China to provide up to $270 million in debt financing for the Fulton project. The letter of intent and EPC agreement have since expired and BlueFire is actively seeking the remaining equity in order to reestablish the letter of intent or to find other banking entities capable of financing the Fulton Project and to issue the notice to proceed to reestablish the EPC Contract. A commitment for the equity portion of the financing has been the major delay in the financing and the Company is focusing most of its efforts on finding suitable partners. No definitive agreements have been executed in regards to the Letter of Intent for financing.

 

The Company has received notice from Tenaska Commodities, LLC, the off-take agreement provider for the Fulton Project, that due to the Company’s inability to construct the facility and provide first delivery of ethanol before December 31, 2016 that Tenaska Commodities, LLC terminated the market price contract on December 31, 2016. The Company has identified and received interest from other potential ethanol marketers and off-take companies and is actively seeking a replacement for this contract, but no definitive agreements have been made.

 

The Company is currently in default of its obligations under the site lease agreement with the County of Itawamba. On May 1, 2017, the Company received a letter from the County of Itawamba stating that the lease for the Fulton Project would be cancelled unless the current balance outstanding plus default interest were paid in full by May 10, 2017. The Company appealed for an extension or forgiveness of the past due liability but was denied and told “The County is actively marketing the real property through its economic developer. The real property is available on a first-come, first-served basis.” Due to the uncertainty of access to the site, the Company stopped the accrual of lease payments on May 10, 2017 and considers the lease cancelled. The Company will continue to speak with the County of Itawamba to try and keep the site location active as long as possible and work to reinstate the lease if or when financing is obtained.

 

The Company is still actively pursuing the Fulton Project and working to reinstate all Project agreements and raise the capital needed to construct the facility but can make no assurances that it will be successful. The engineering package and other pertinent process documents generated can be used at another suitable location if efforts to continue with the Fulton Project are unsuccessful.

 

Other opportunities are being evaluated by us in North America, although no definitive agreements have been reached.

 

  In February of 2012, SucreSource announced its first client GS Caltex, a South Korean petroleum company. In the same month, it received the first payment under the Professional Services Agreement (PSA) for work on a facility in South Korea. As of March 31, 2015, SucreSource has completed and fulfilled all initial work and obligations under the fixed portion of the agreement. Any future work product and additional services will be billed on an hourly basis when services are performed as GS Caltex continues to develop facilities in South Korea.

 

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BlueFire’s capital requirement strategies for its planned bio-refineries and general company operations are as follows:

 

  Obtain additional operating capital from joint venture partnerships, Federal or State grants or loan guarantees, debt financing or equity financing to fund our ongoing operations and the development of initial bio-refineries in North America. Although the Company is in discussions with potential financial and strategic sources of financing for their planned bio-refineries, no definitive agreements are in place and no assurances can be made that the Company will be able to procure financing on terms acceptable to the Company or at all.
     
  The 2014 Farm Bill made amendments to Title IX of the Food, Conservation, and Energy Act of 2008 (“2014 Farm Bill”) including changes to Section 9003 Biorefinery Assistance Program of Title IX (“9003 Biorefinery Assistance Program” or the “Program”) to expand the Program to enable loan guarantees for renewable chemical and biobased product manufacturing facilities. The 2014 Farm Bill provides mandatory budget authority of $100 million for the fiscal year ending September 2014 and $50 million for each of fiscal years 2015 and 2016. Carryover funding from the 2008 Farm Bill may still be made available. While BlueFire will continue to explore potential opportunities under the 2014 Farm Bill, initial attempts under the 9003 Program have been unsuccessful and unless a qualified lender is identified to participate, an application filing by BlueFire is not imminent.
     
  Sale of Company engineering services and design packages to technology licensees.
     
  Apply for public funding to leverage private capital raised by us, as applicable.
     
  Sale of consulting services to project developers and technology companies.
     
  The issuance of debt and/or equity to fund operations.
     
  Leverage existing relationships with Chinese or South Korean strategic partners for investment.
     
  The sale of Company assets or entertaining suitors for acquisition of part or all of Company and the Company’s ongoing projects.

 

Due to the Company’s struggles in securing sufficient financing necessary to enact its business plan, the Board is currently evaluating strategic alternatives which include, among other things, merging or selling the Company, in order to obtain additional capital sufficient to continue operating and meet both our operating and financial obligations. This evaluation is still under way, there is no formal plan is in place, and there can be no assurance that we will be successful in any of these efforts or that we will have sufficient funds to cover our operational and financial obligations over the next twelve months.

 

DEVELOPMENTS IN BLUEFIRE’S BIO-REFINERY ENGINEERING AND DEVELOPMENT

 

In 2010, BlueFire continued to develop the engineering package for the Fulton Project, and completed the Front-End Loading (FEL) stages 2 and FEL-3 of engineering for the Fulton Project readying the facility for construction. FEL is the process for conceptual development of processing industry projects. This process is used in the petrochemical, refining, and pharmaceutical industries. Front-End Loading is also referred to as Front-End Engineering Design (FEED).

 

FEL-1   FEL-2   FEL-3
* Material Balance   * Preliminary Equipment Design   * Purchase Ready Major Equipment Specifications
* Energy Balance   * Preliminary Layout   * Definitive Estimate
* Project Charter   * Preliminary Schedule   * Project Execution Plan
    * Preliminary Estimate   * Preliminary 3D Model
        * Electrical Equipment List
        * Line List
        * Instrument Index

 

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As of November 2010, the Fulton Project had all necessary permits for construction, and in that same month we began site clearing and preparation work, signaling the beginning of construction. In June 2011, BlueFire completed initial site preparation and the site is now ready for facility construction. In February 2010, we announced that we submitted an application for a $250 million dollar loan guarantee for the Fulton Project, under the DOE LGPO, mentioned above. In August 2010, BlueFire submitted an application for a $250 million loan guarantee with the U.S. Department of Agriculture (“USDA”) under Section 9003 of the 2008 Farm Bill, as defined below (“USDA LG”). Ultimately the USDA rejected the Company’s lender, BNP Paribas, for not meeting certain capital ratios. The Company has since abandoned pursuit of both loan guarantee opportunities but may reapply at a later date as funding opportunities arise.

 

The Company is currently in default of its obligations under the site lease agreement with the County of Itawamba. On May 1, 2017, the Company received a letter from the County of Itawamba stating that the lease for the Fulton Project would be cancelled unless the current balance outstanding plus default interest were paid in full by May 10, 2017. The Company appealed for an extension or forgiveness of the past due liability but was denied and told “The County is actively marketing the real property through its economic developer. The real property is available on a first-come, first-served basis.” Due to the uncertainty of access to the site, the Company stopped the accrual of lease payments on May 10, 2017 and considers the lease cancelled. The Company will continue to speak with the County of Itawamba to keep the site location active as long as possible and work to reinstate the lease when financing is obtained.

 

The Company has received notice from Tenaska Commodities, LLC, the off-take agreement provider for the Fulton Project, that due to the Company’s inability to construct the facility and provide first delivery of ethanol before December 31, 2016 that Tenaska Commodities, LLC terminated the market price contract on December 31, 2016. The Company has identified and received interest from other potential ethanol marketers and off-take companies and is actively seeking a replacement for this contract, but no definitive agreements have been made.

 

RESULTS OF OPERATIONS

 

For the Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016

 

Project Development

 

For the three months ended September 30, 2017, our project development costs were approximately $14,668, compared to project development costs of $67,622 for the same period during 2016. The decrease in project development costs was primarily due to the reduction in the number of employees, the land lease termination by the County of Itawamba, and reduced activities on the Fulton project.

 

General and Administrative Expenses

 

General and administrative expenses were approximately $158,784 for the three months ended September 30, 2017, compared to $206,627 for the same period in 2016. The decrease in general and administrative costs is mainly due to the reduction in number of employees and associated overhead costs caused by the Company’s capital constraints.

 

Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016

 

Project Development

 

For the nine months ended September 30, 2017, our project development costs were approximately $87,449 compared to project development costs of $238,049 for the same period during 2016. The decrease in project development costs was primarily due to the reduction in the number of employees, the land lease termination by the County of Itawamba, and reduced activities on the Fulton project.

 

General and Administrative Expenses

 

General and administrative expenses were approximately $483,756 for the nine months ended September 30, 2017, compared to $ 715,253 for the same period in 2016. The decrease in general and administrative costs is mainly due to the reduction in number of employees and associated overhead costs caused by the Company’s capital constraints.

 

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LIQUIDITY AND CAPITAL RESOURCES

 

Historically, we have funded our operations through financing activities consisting primarily of private placements of debt and equity securities with existing shareholders and outside investors. In addition, in the past we have received funds under the grant received from the DOE. Our principal use of funds has been for the further development of our bio-refinery projects, for capital expenditures and general corporate expenses. As our projects are developed to the point of construction, we anticipate significant purchases of long lead time item equipment for construction if the requisite capital can be obtained. As of November 20, 2017, we had cash and cash equivalents of $100.

 

Management has estimated that operating expenses for the next twelve months will be approximately $625,000, excluding engineering costs related to the development of bio-refinery projects. These matters raise substantial doubt about the Company’s ability to continue as a going concern. For 2017, the Company intends to fund its operations from the potential sale of Fulton Project equity ownership, potential consulting opportunities, from the sale of debt or equity instruments, and from a potential merger or sale of the Company. As of November 20, 2017, the Company expects the current resources, as well as the resources available in the short term under various financing mechanisms, will only be sufficient for a period of approximately one month, depending upon certain funding conditions contained herein, unless significant additional financing is received. Management has determined that general expenditures have been reduced as much as is possible without affecting operations and that additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short term capital we will be forced to continue to further accrue liabilities due to our limited cash reserves. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results.

 

Changes in Cash Flows

 

During the nine months ended September 30, 2017 and 2016, we used cash of approximately $174,000 and $194,000 in operating activities. During the 2017 period, we had a net loss of approximately $627,680, which included add back non-cash charges of approximately $10,339 and net cash usage stemming from operating assets and liabilities of approximately $443,626. During the 2016 period, we had a net loss of approximately $1,023,000, which included add back non-cash charges of approximately $(9,947) and net cash usage stemming from operating assets and liabilities of approximately $839,000. The decrease in cash used was due to the Company cutting additional costs, reduced development of the Fulton Project, and a reduction in the amount of capital raised for operations.

 

During the nine months ended September 30, 2017, we had positive cash flow from financing activities of approximately $12,150 compared to approximately $169,000 for the same period in 2016. During the nine months ended September 30, 2017, the Company issued 54,444,445 shares of common stock in the conversion of convertible notes compared to 105,741,400 shares of common stock issued during the nine months ended September 30, 2016.

 

CRITICAL ACCOUNTING POLICIES

 

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements require the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions.

 

 19  

 

 

The methods, estimates, and judgment we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. The SEC has defined “critical accounting policies” as those accounting policies that are most important to the portrayal of our financial condition and results, and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based upon this definition, our most critical estimates relate to the fair value of warrant liabilities. We also have other key accounting estimates and policies, but we believe that these other policies either do not generally require us to make estimates and judgments that are as difficult or as subjective, or it is less likely that they would have a material impact on our reported results of operations for a given period. For additional information see Note 2, “Summary of Significant Accounting Policies” in the notes to our reviewed financial statements appearing elsewhere in this quarterly report and our annual audited financial statements appearing on Form 10-K. Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available, and actual results may differ significantly from these estimates.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We do not hold any derivative instruments and do not engage in any hedging activities.

 

Item 4. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures.

 

In connection with the preparation of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, our Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our PEO and PFO concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our Chief Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

(b) Changes in Internal Control over Financial Reporting.

 

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

On May 6, 2016, the Company reached a settlement with James G. Speirs and James N. Speirs in regard to the lawsuit filed in Orange County Superior Court and subsequently appealed by the Company. Under the settlement agreement, James G. Speirs and James N. Speirs have returned 5,740,741 shares to the Company and they have been subsequently retired to treasury. The case was dismissed with prejudice on May 12, 2016 and the matter closed.

 

On May 2, 2016, the Company received a written “Wells Notice” from the staff of the SEC indicating that the staff made a preliminary determination to recommend that the SEC bring an administrative proceeding against the Company.

 

On August 1, 2016, in connection with the Wells Notice, the Company entered into an offer of settlement (the “Wells Settlement”) with the SEC. Pursuant to the Wells Settlement, the Company agreed to pay a twenty-five thousand dollar ($25,000) civil penalty to the SEC.

 

On October 11, 2016, pursuant to the terms and conditions of the Wells Settlement, the Company made an initial payment of five thousand dollars ($5,000) to the SEC. The remaining balance of the penalty will be paid to the SEC over a nine-month period ending on or about September 30, 2017. The Company has yet to make an additional payment and as of November 20, 2017 the Company has received no further communication from the SEC in regards to the Settlement or further payment.

 

 20  

 

 

On September 27, 2017, BlueFire Renewables, Inc., a Nevada Corporation (the “Company”) entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Tarpon Bay Partners, LLC, a Florida limited liability company (“TBP”), pursuant to which the Company agreed to issue common stock to TBP in exchange for the settlement of $999,630.45 (the “Settlement Amount”) of past-due obligations and accounts payable of the Company. TBP purchased the obligations and accounts payable from certain employees, former employees, consultants, and vendors of the Company as described below. On October 11, 2017, the Circuit Court of Leon County, Florida (the “Court”), entered an order (the “TBP Order”) approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in accordance with a stipulation of settlement, pursuant to the Settlement Agreement between the Company and TBP, in the matter entitled Tarpon Bay Partners, LLC v. BlueFire Renewables, Inc. (the “TBP Action”). TBP commenced the TBP Action against the Company to recover an aggregate of $999,630.45 of past-due obligations and accounts payable of the Company (the “TBP Claim”), which TBP had purchased from certain vendors of the Company pursuant to the terms of separate receivable purchase agreements between TBP and each of such vendors (the “TBP Assigned Accounts”). The TBP Assigned Accounts relate to certain contractual obligations and legal services provided to the Company. The TBP Order provides for the full and final settlement of the TBP Claim and the TBP Action. The Settlement Agreement became effective and binding upon the Company and TBP upon execution of the TBP Order by the Court on October 11, 2017. The parties reasonably estimate that the fair market value of the TBP Settlement Shares to be received by TBP is equal to approximately $1,666,000. Tranche requests shall be made as requested by TBP until the TBP Settlement Amount is paid in full. The Company is currently determining the impact of this transaction on its financial statements.

 

Other than as disclosed above, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors.

 

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our annual report on Form 10-K for the year ended December 31, 2016, filed with the SEC on April 5, 2017.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

See Note 3 for information related to Convertible Notes Payable. Other than the information stated above, there were no unregistered sales of the Company’s equity securities during the quarter ended September 30, 2017 that were not previously reported in a Current Report on Form 8-K.

 

Item 3. Defaults Upon Senior Securities.

 

Other than disclosed herein, there has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

Except as detailed below, there is no other information required to be disclosed under this item which was not previously disclosed.

 

 21  

 

 

Item 6. Exhibits.

 

Exhibit No.   Description
     
31.1   Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
     
31.2   Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
     
32.1   Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
     
32.2   Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
     
101.INS   XBRL Instance Document *
     
101.SCH   XBRL Taxonomy Extension Schema *
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase *
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase *
     
101.LAB   XBRL Taxonomy Extension Label Linkbase *
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase *

 

* Filed herewith

 

 22  

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BLUEFIRE RENEWABLES, INC.
     
Date: November 20, 2017 By: /s/ Arnold Klann
  Name: Arnold Klann
  Title: Chief Executive Officer
    (Principal Executive Officer)
    (Principal Financial Officer)
    (Principal Accounting Officer)

 

 23  

 

 

EX-31.1 2 ex31-1.htm

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Arnold Klann, certify that:

 

1. I have reviewed this Form 10-Q of BlueFire Renewables, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
     
  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
     
  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 20, 2017 By: /s/ Arnold Klann
    Arnold Klann
   

Principal Executive Officer

BlueFire Renewables, Inc.

 

 
 

 

EX-31.2 3 ex31-2.htm

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Arnold Klann, certify that:

 

1. I have reviewed this Form 10-Q of BlueFire Renewables, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
     
  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
     
  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 20, 2017 By: /s/ Arnold Klann
    Arnold Klann
   

Principal Financial Officer

BlueFire Renewables, Inc.

 

 
 

 

EX-32.1 4 ex32-1.htm

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report of BlueFire Renewables, Inc. (the “Company”), on Form 10-Q for the period ended September 30, 2017, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Arnold Klann, Principal Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) Such Quarterly Report on Form 10-Q for the period ended September 30, 2017, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  (2) The information contained in such Quarterly Report on Form 10-Q for the period ended September 30, 2017, fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 20, 2017 By: /s/ Arnold Klann
    Arnold Klann
   

Principal Executive Officer

BlueFire Renewables, Inc.

 

 
 

 

EX-32.2 5 ex32-2.htm

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report of BlueFire Renewables, Inc. (the “Company”), on Form 10-Q for the period ended September 30, 2017, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Arnold Klann, Principal Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) Such Quarterly Report on Form 10-Q for the period ended September 30, 2017, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  (2) The information contained in such Quarterly Report on Form 10-Q for the period ended September 30, 2017, fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 20, 2017 By: /s/ Arnold Klann
    Arnold Klann
   

Principal Financial Officer

BlueFire Renewables, Inc.

 

 
 

 

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Nov. 20, 2017
Document And Entity Information    
Entity Registrant Name Bluefire Renewables, Inc.  
Entity Central Index Key 0001370489  
Document Type 10-Q  
Document Period End Date Sep. 30, 2017  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   499,680,109
Trading Symbol BFRE  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2017  
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Consolidated Balance Sheets (Unaudited) - USD ($)
Sep. 30, 2017
Dec. 31, 2016
Current assets:    
Cash and cash equivalents $ 426 $ 161,991
Prepaid expenses 12,644 977
Total current assets 13,070 162,968
Total assets 13,070 162,968
Current liabilities:    
Accounts payable 1,226,810 1,162,788
Accrued liabilities 1,940,471 1,549,200
Notes payable 420,000 420,000
Line of credit, related party 253,074 240,924
Note payable to a related party 200,000 200,000
Convertible notes payable, net of discount of $0 and $3,889, respectively 21,111
Derivative liability 27,104
Total current liabilities 4,040,355 3,621,127
Total liabilities 4,040,355 3,621,127
Commitments and contingencies (Note 4)
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Stockholders’ deficit:    
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Common stock, $0.001 par value; 500,000,000 shares authorized; 462,680,109 and 408,235,664 shares issued; and 462,647,938 and 408,203,492 outstanding, as of September 30, 2017 and December 31, 2016, respectively 462,681 408,236
Additional paid-in capital 17,072,974 17,068,865
Treasury stock at cost, 32,172 shares at September 30, 2017 and December 31, 2016 (101,581) (101,581)
Accumulated deficit (22,320,736) (21,694,659)
Total stockholders’ deficit (4,886,662) (4,319,139)
Total liabilities and stockholders’ deficit $ 13,070 $ 162,968
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Sep. 30, 2017
Dec. 31, 2016
Statement of Financial Position [Abstract]    
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Preferred stock, no par value
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, shares issued 51 51
Preferred stock, shares outstanding 51 51
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 500,000,000 500,000,000
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Common stock, shares outstanding 462,647,938 408,203,492
Treasury stock, shares 32,172 32,172
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Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Revenues:        
Department of Energy grant revenue
Total revenues
Cost of revenue        
Consulting revenue
Gross margin
Operating expenses:        
Project development 14,668 67,622 87,449 238,049
General and administrative 158,784 206,627 483,756 715,253
Total operating expenses 173,452 274,249 571,205 953,302
Operating loss (173,452) (274,249) (571,205) (953,302)
Other income and (expense):        
Amortization of debt discount (4,167) (3,889) (37,033)
Interest expense (5,053) (11,574) (27,209) (52,314)
Related party interest expense (7,651) (5,334) (22,127) (10,117)
Gain on settlement of accounts payable and accrued liabilities 6,450 16,785
Change in fair value of warrant liability 199
Settlement expense   (25,000)   (25,000)
Loss on excess of derivative over face value (36,317) (36,317)
Change in fair value of derivative liability 2,133 (77,642) (3,250) 73,933
Total other income and (expense) (10,571) (153,584) (56,475) (69,864)
Loss before income taxes (184,023) (427,833) (627,680) (1,023,166)
Provision for income taxes 153
Net loss (184,023) (427,833) (627,680) (1,023,319)
Loss attributable to non-controlling interest (147) (1,044) (1,603) (3,591)
Net loss attributable to controlling interest $ (183,876) $ (426,789) $ (626,077) $ (1,019,728)
Basic and diluted loss per common share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Weighted average common shares outstanding, basic and diluted 443,194,227 408,139,405 421,921,630 391,390,961
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Consolidated Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Cash flows from operating activities:    
Net loss $ (627,680) $ (1,023,319)
Adjustments to reconcile net loss to net cash used in operating activities:    
Change in the fair value of warrant liability (199)
Change in fair value of derivative liability 3,250 (73,933)
Loss on excess fair value of derivative liability 36,317
Gain on settlement of accounts payable and accrued liabilities (16,785)
Share-based compensation 3,200 144
Amortization 3,889 37,033
Depreciation 276
Excess fair value of common stock issued for accrued interest 7,200
Changes in operating assets and liabilities:    
Prepaid expenses and other current assets (11,667) 8,314
Accounts payable 64,022 156,783
Accrued liabilities 391,271 674,029
Net cash used in operating activities (173,715) (194,140)
Cash flows from financing activities:    
Proceeds from related party line of credit/notes payable 12,150 168,556
Net cash provided by financing activities 12,150 168,556
Net decrease in cash and cash equivalents (161,565) (25,584)
Cash and cash equivalents beginning of period 161,991 26,922
Cash and cash equivalents end of period 426 1,338
Supplemental disclosures of cash flow information    
Interest
Income taxes
Supplemental schedule of non-cash investing and financing activities:    
Conversion of convertible notes payable into common stock 25,000 52,950
Interest converted to common stock 12,547
Derivative liability reclassed to additional paid-in capital 30,354 139,303
Gain on settlement of shares $ 10,335
XML 18 R6.htm IDEA: XBRL DOCUMENT v3.8.0.1
Organization and Business
9 Months Ended
Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Business

NOTE 1 – ORGANIZATION AND BUSINESS

 

BlueFire Ethanol, Inc. (“BlueFire” or the “Company”) was incorporated in the state of Nevada on March 28, 2006. BlueFire was established to deploy the commercially ready and patented process for the conversion of cellulosic waste materials to ethanol (“Arkenol Technology”) under a technology license agreement with Arkenol, Inc. (“Arkenol”). BlueFire’s use of the Arkenol Technology positions it as a cellulose-to-ethanol company with demonstrated production of ethanol from urban trash (post-sorted “MSW”), rice and wheat straws, wood waste and other agricultural residues. The Company’s goal is to develop and operate high-value carbohydrate-based transportation fuel production facilities in North America, and to provide professional services to such facilities worldwide. These “biorefineries” will convert widely available, inexpensive, organic materials such as agricultural residues, high-content biomass crops, wood residues, and cellulose from MSW into ethanol.

 

On September 30, 2015, the Company filed an amendment to the Company’s articles of incorporation with the Secretary of State of the State of Nevada, which, among other things, established the designation, powers, rights, privileges, preferences and restrictions of the Series A Preferred Stock, no par value per share (the “Series A Preferred Stock”). Among other things, each one (1) share of the Series A Preferred Stock shall have voting rights equal to(x) 0.019607 multiplied by the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. For purposes of illustration only, if the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote is 5,000,000, the voting rights of one share of the Series A Preferred Stock shall be equal to 102,036 (0.019607 x 5,000,000) / 0.49) – (0.019607 x 5,000,000) = 102,036).

 

The Series A Preferred Stock has no dividend rights, no liquidation rights and no redemption rights, and was created primarily to be able to obtain a quorum and conduct business at shareholder meetings. All shares of the Series A Preferred Stock shall rank (i) senior to the Company’s common stock and any other class or series of capital stock of the Company hereafter created, (ii) pari passu with any class or series of capital stock of the Company hereafter created and specifically ranking, by its terms, on par with the Series A Preferred Stock and (iii) junior to any class or series of capital stock of the Company hereafter created specifically ranking, by its terms, senior to the Series A Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.

 

Due to the Company’s struggles in securing sufficient financing necessary to enact its business plan, the Board is currently evaluating strategic alternatives which include, among other things, merging or selling the Company, in order to obtain additional capital sufficient to continue operating and meet both our operating and financial obligations. This evaluation is still under way and there can be no assurance that we will be successful in any of these efforts or that we will have sufficient funds to cover our operational and financial obligations over the next twelve months.

XML 19 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2017
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Going Concern

 

The Company has incurred losses since Inception. Management has funded operations primarily through proceeds received in connection with the reverse merger, loans from its Chief Executive Officer, the private placement of the Company’s common stock in December 2007 for net proceeds of approximately $14,500,000, the issuance of convertible notes with warrants in July and in August 2007, various convertible notes, and Department of Energy reimbursements from 2009 to 2015. The Company may encounter further difficulties in establishing operations due to the time frame of developing, constructing and ultimately operating the planned bio-refinery projects.

 

As of September 30, 2017, the Company has negative working capital of approximately $4,027,285. Management has estimated that operating expenses for the next 12 months will be approximately $625,000 excluding engineering costs related to the development of bio-refinery projects. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company intends to fund its operations with any additional funding that can be secured in the form of equity or debt. As of November 20, 2017, the Company expects the current resources available to them will only be sufficient for a period of approximately one month unless significant additional financing is received. Management has determined that the general expenditures must be reduced and additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short term capital we may consume all of our cash reserved for operations. There are no assurances that management will be able to raise capital on terms acceptable to the Company or at all. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. The financial statements do not include any adjustments that might result from these uncertainties.

 

As of December 31, 2010, the Company completed the detailed engineering on our proposed Fulton Project, procured all necessary permits for construction of the plant, and began site clearing and preparation work, signaling the beginning of construction. All site preparation activities have been completed, including clearing and grating of the site, building access roads, completing railroad tie-ins to connect the site to the rail system, and finalizing the layout plan to prepare for the site foundation. In addition, the County of Itawamba sent notice that it would terminate the lease for the Fulton Project on May 10, 2017 if full payment was not made. The Company was unable to make payment but received a letter stating that access to the site would be on a first-come, first-served basis. See Note 4.

 

We estimate the total construction cost of the bio-refinery to be in the range of approximately $300 million for the Fulton Project. These cost approximations do not reflect any increase/decrease in raw materials or any fluctuation in construction cost, since originally bid, that would be realized by the dynamic world metals markets or inflation of general costs of construction. The Company is looking for potential sources of financing for this facility but no definitive agreements are in place. The Company cannot continue significant development or furtherance of the Fulton project or any other opportunity until financing for the Company and the construction of the Fulton project is obtained.

 

Risks and Uncertainties

 

The Company has a limited operating history and has not generated revenues from our planned principal operations.

 

The Company’s business and operations are very sensitive to general business and economic conditions in the U.S. and worldwide. Specifically, these conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general price of crude oil and gasoline.

 

The risks related to the Company’s plans to sell engineering services are that the Company currently has no sales and limited marketing capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our services. Developing a marketing and sales force is also time consuming and could delay launch of our future bio-ethanol plants. In addition, the Company will compete with other engineering companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote to sales and marketing.

 

The Company’s business and industry is also subject to new innovations in technology. Significant technical changes can have an adverse effect on product lives. Design and development of new products and services are important elements to achieve profitability in the Company’s industry segment. As a result, the Company’s products may quickly become obsolete and unmarketable. The Company’s future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and services and enhance our current products on a timely and cost-effective basis.

 

The Company’s products must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company’s new products may not be favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.

 

Due to the continuing capital constraints at the Company, John Cuzens, our Chief Technology Officer and Senior VP, has begun employment as an engineer in an industry that we feel does not compete with the Company. His technical and engineering expertise, including his familiarity with the Arkenol Technology, is important to BlueFire and our failure to retain Mr. Cuzens on a full-time basis, or to attract and retain additional qualified personnel, could adversely affect our planned operations. We do not currently carry key-man life insurance on any of our officers.

 

The long time horizon of project development and financing for the Company’s intended biorefinery projects may make it difficult to keep key project contracts active and in force with the Company’s limited resources. There is no guarantee the Company can keep them active or find suitable replacements if they do expire or are canceled.

 

Due to the continuing capital constraints of the Company, as of September 30, 2017 the Company has only Arnold Klann, our chief executive officer and director, as a full time employee. We presently are entirely dependent upon his experience, abilities and continued servicesThe loss of his services would be detrimental to the business and could have a material adverse effect on our business, financial condition or force us to no longer operate.

 

Lastly, the Company may be subject to federal, state and local environmental laws and regulations. The Company does not anticipate material expenditures to comply with such laws and does not believe that regulations will have a material impact on the Company’s financial position, results of operations, or liquidity. The Company believes that its operations comply, in all material respects, with applicable federal, state, and local environmental laws and regulations.

 

Basis of Presentation

 

The accompanying unaudited consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities Exchange Commission. Certain information and disclosures normally included in the annual financial statements prepared in accordance with the accounting principles generally accepted in the Unites States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the full year.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of BlueFire Renewables, Inc., and its wholly-owned subsidiary, BlueFire Ethanol, Inc. BlueFire Ethanol Lancaster, LLC, BlueFire Fulton Renewable Energy LLC (excluding 1% interest sold) and SucreSource LLC are wholly-owned subsidiaries of BlueFire Ethanol, Inc. All intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of 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 disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could materially differ from those estimates.

 

Project Development

 

Project development costs are either expensed or capitalized. The costs of materials and equipment that will be acquired or constructed for project development activities, and that have alternative future uses, both in project development, marketing or sales, will be classified as property and equipment and depreciated over their estimated useful lives. To date, project development costs include the research and development expenses related to the Company’s future cellulose-to-ethanol production facilities with almost 100% of the allocation being employee salaries. During the three and nine months ended September 30, 2017 and 2016, development costs included in Project Development were approximately $14,668, $67,622, $87,449 and $238,049, respectively.

 

Fair Value of Financial Instruments

 

The Company follows the guidance of ASC 820 – “Fair Value Measurement and Disclosure”. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

 

Level 1. Observable inputs such as quoted prices in active markets;

 

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The Company did not have any Level 1 financial instruments at September 30, 2017 or December 31, 2016.

 

As of September 30, 2017 and December 31, 2016, the Company’s derivative liabilities are considered a Level 2 item (see Note 3).

 

As of September 30, 2017 and December 31, 2016 the Company’s redeemable non-controlling interest is considered a Level 3 item and changed during the nine months ended September 30, 2017 as follows.

 

Balance at December 31, 2016   $ 860,980  
Net loss attributable to non-controlling interest     (1,603 )
Balance at September 30, 2017   $ 859,377  

 

See Note 6 for details of valuation and changes during the years 2017 and 2016.

 

The carrying amounts reported in the accompanying consolidated financial statements for current assets and current liabilities approximate the fair value because of the immediate or short term maturities of the financial instruments.

 

Concentrations of Credit Risk

 

As of September 30, 2017 and December 31, 2016, four vendors made up approximately 87% and 82% of accounts payable, respectively. Except for the Company’s legal counsel, the loss of the other vendors would not have a significant impact on the Company’s operations.

 

Loss per Common Share

 

The Company presents basic income (loss) per share (“EPS”) and diluted EPS on the face of the consolidated statement of operations. Basic income (loss) per share is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. The Company has had convertible notes outstanding that are dilutive and convertible into the Company’s common stock. However, due to the net loss in each respective period, these were excluded from diluted EPS as their effects would be anti-dilutive.

 

New Accounting Pronouncements

 

The Financial Accounting Standards Board (“FASB”) issues Accounting Standard Updates (“ASU”) to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 840), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for a public entity. Early adoption of the amendments in this standard is permitted for all entities and the Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently in the process of evaluating the effect this guidance will have on its financial statements and related disclosures.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

XML 20 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
Notes Payable
9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
Notes Payable

NOTE 3 – NOTES PAYABLE

 

From time-to-time, the Company enters into convertible notes with third parties as indicated below.

 

For the below convertible notes, the Company determined that since the conversion prices are variable and do not contain a floor, the conversion feature represents a derivative liability upon the ability to convert the loan after the six month period. Since the conversion feature is only convertible after six months, there is no derivative liability upon issuance. However, the Company will account for the derivative liability upon the passage of time and the note becoming convertible if not extinguished.

 

JMJ Convertible Note

 

On April 2, 2015, the Company issued a convertible note in favor of JMJ Financial in the principal amount of $100,000 out of a total of a possible $250,000, with a maturity date of April 1, 2017 (the “JMJ Note”). The JMJ Note was issued with a 10% original issue discount, and was convertible at any time. The $10,000 on-issuance discount will be amortized over the life of the note. The Company was to repay any principal balance due under the note including a one-time charge of 12% interest on the principal balance outstanding if not repaid within 90 days. The Company had the option to prepay the JMJ Note prior to maturity. The JMJ Note was convertible into shares of the Company’s common stock as calculated by multiplying 60% of the lowest trade price in the 25 trading days prior to the conversion date.

 

Due to the variable conversion feature of the note, derivative accounting is required. The Company valued the derivative upon issuance and at each conversion, and reporting date. The initial value of the derivative liability was $412,212, resulting in a day one loss $312,212. The discount on the convertible note is being amortized over the life of the note. During the nine months ended September 30, 2016, amortization of the discount was $32,866 with $0 remaining.

 

    Final Conversion
April 5, 2016
(Excluding Inception)
    April 2, 2015  
Annual dividend yield     -       -  
Expected life (years)     0.99       2.00  
Risk-free interest rate     0.56 %     0.55 %
Expected volatility     188 %     301.07 %

 

During the nine months ended September 30, 2016, the Company issued 105,741,400 shares of common stock for the conversion of approximately $65,500, including approximately $52,950 of principal and $12,550 of accrued interest. As of April 5, 2016, the JMJ Note was fully converted into shares of Company stock and as such repaid in full.

 

AKR Promissory Note

 

On April 8, 2014, the Company issued a promissory note in favor of AKR Inc, (“AKR”) in the principal aggregate amount of $350,000 (the “AKR Note”). The AKR Note was due on April 8, 2015; however, the Company has received multiple extensions to the due date moving it to December 31, 2017. The AKR Note requires the Company to (i) incur interest at five percent (5%) per annum; (ii) issue on April 8, 2014 to AKR warrants allowing them to buy 7,350,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant A”); (iii) issue on August 8, 2014 to AKR warrants allowing them to buy 7,350,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant B”); and (iv) issue on November 8, 2014 to AKR warrants allowing them to buy 8,400,000 common shares of the Company at an exercise price of $0.007 per common share, such warrants to expire on April 8, 2016 (“AKR Warrant C”, together with AKR Warrant A and AKR Warrant B the “AKR Warrants”). All AKR Warrants were expired as of April 8, 2016. The Company had the ability to prepay the debt, prior to maturity, as extended, with no prepayment penalty.

 

The Company valued the AKR Warrants as of the date of the note and recorded a discount of $42,323 based on the relative fair value of the AKR Warrants compared to the debt. The discount was fully amortized as of the original maturity date of April 8, 2015. The Company assessed the fair value of the AKR Warrants based on the Black-Scholes pricing model. See below for variables used in assessing the fair value.

 

    April 8, 2014  
Annual dividend yield     -  
Expected life (years)     1.41 - 2.00  
Risk-free interest rate     0.40 %
Expected volatility     183% - 206 %

 

On April 24, 2014, the Company issued an additional promissory note in favor of AKR in the principal aggregate amount of $30,000 (“2nd AKR Note”). The 2nd AKR Note was due on July 24, 2014; however, the Company has received multiple extensions to the due date moving it to December 31, 2017. Pursuant to the terms of the 2ndAKR Note, the Company is to repay any principal balance and interest, at 5% per annum at maturity. The Company may prepay the debt prior to maturity with no prepayment penalty.

 

Tarpon Bay Convertible Note

 

Pursuant to a contemplated 3(a)10 transaction, which would be used to reduce aged liabilities of the Company, with Tarpon Bay Partners LLC (“Tarpon”), on August 31, 2016, the Company issued to Tarpon a convertible promissory note in the principal amount of $25,000 (the “Tarpon Initial Note”). Under the terms of the Tarpon Initial Note, the Company shall pay Tarpon $25,000 on the date of maturity which was February 28, 2017. This note was convertible by Tarpon into the Company’s common shares at a 50% discount to the lowest closing bid price for the common stock for the twenty (20) trading days ending on the trading day immediately before the conversion date.

 

The above note was issued without funds being received. Accordingly, the note was issued with a full on-issuance discount that was amortized over the term of the note. During the nine months ended September 30, 2017, amortization of $3,889, was recognized related to the discount on the note. As of September 30, 2017, a discount of $0 remained and was fully converted.

 

Because the conversion price was variable and did not contain a floor, the conversion feature represented a derivative liability upon issuance. Accordingly, the Company calculated the derivative liability using the Black-Sholes pricing model for the notes upon inception, resulting in a day one loss of approximately $36,000. The derivative liability was marked to market each quarter and as of the date of last conversion, August 21, 2017, which resulted in a loss of approximately $2,133. The Company used the following assumptions for the three months ended September 30, 2017:

 

    September 30, 2017  
Annual dividend yield     -  
Expected life (years)     0.001  
Risk-free interest rate     0.95% - 1.00 %
Expected volatility     143% - 149 %

 

During the nine months ended September 30, 2017, the Company issued 54,444,445 shares of common stock to pay down $25,000 of principal and $3,200 in fees of the Tarpon Bay Convertible Note. The note is fully converted as of September 30, 2017.

 

On September 27, 2017, BlueFire Renewables, Inc., a Nevada Corporation (the “Company”) entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Tarpon Bay Partners, LLC, a Florida limited liability company (“TBP”), pursuant to which the Company agreed to issue common stock to TBP in exchange for the settlement of $999,630.45 (the “Settlement Amount”) of past-due obligations and accounts payable of the Company. TBP purchased the obligations and accounts payable from certain employees, former employees, consultants and vendors of the Company as described below in Note 8.

 

The Company is moving forward with Tarpon Bay and with the proposed 3(a)10 transaction. (See Note 8)

 

Kodiak Promissory Note

 

On December 17, 2014, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Kodiak Capital Group, LLC (“Kodiak”). Pursuant to the terms of the Purchase Agreement, for a period of twenty-four (24) months commencing on the date of effectiveness of the registration statement, Kodiak shall commit to purchase up to $1,500,000 of Put Shares, pursuant to Puts (as defined in the Purchase Agreement), covering the Registered Securities (as defined in the Purchase Agreement, and below).

 

As further consideration for Kodiak entering into and structuring the Purchase Agreement, the Company issued Kodiak a promissory note in the principal aggregate amount of $60,000 (the “Kodiak Note”) that bears no interest and had a maturity date of July 17, 2015. No funds were received for this note. The Company is currently in default of the Kodiak Note.

 

As of September 30, 2017, the balance outstanding on the Kodiak Note was $40,000. 

XML 21 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies
9 Months Ended
Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

Fulton Project Lease

 

On July 20, 2010, the Company entered into a thirty year lease agreement with Itawamba County, Mississippi for the purpose of the development, construction, and operation of the Fulton Project. At the end of the primary 30 year lease term, the Company shall have the right for two additional thirty year terms. The current lease rate is computed based on a per acre rate per month that is approximately $10,300 per month. The lease stipulates the lease rate is to be reduced at the time of the construction start by a Property Cost Reduction Formula which can substantially reduce the monthly lease costs. The lease rate shall be adjusted every five years to the Consumer Price Index.

 

The Company is currently in default of the lease due to non payment. On May 1, 2017, the Company received a letter from the County of Itawamba stating that the lease for the Fulton Project would be cancelled unless the current balance outstanding plus default interest were paid in full by May 10, 2017. The Company appealed for an extension or forgiveness of the past due liability but was denied and told “The County is actively marketing the real property through its economic developer. The real property is available on a first-come, first-served basis.” Due to the uncertainty of access to the site, the Company stopped the accrual of lease payments on May 10, 2017 and considers the lease cancelled. The Company will work to reinstate when financing is obtained.

 

Rent expense under non-cancellable leases was approximately $0, $30,900, $44,600 and $92,600 during the three and nine months ended September 30, 2017 and 2016, respectively.

 

As of September 30, 2017 and December 31, 2016, $ 343,010 and $298,468, respectively, of the monthly lease payments were included in accounts payable on the accompanying consolidated balance sheets, respectively.

 

The Company considers the lease cancelled as of May 10, 2017. As of September 30, 2017, the Company has accrued $46,131 of default interest due to the nonpayment of the lease.

 

SEC Notice and Settlement

 

On May 2, 2016, the Company received a written notice from the Securities and Exchange Commission (SEC), as further described elsewhere in this quarterly report. In connection with such notice, on August 1, 2016, the Company entered into a settlement with the SEC. Pursuant to the settlement, the Company agreed to pay a civil penalty of $25,000 to the SEC. On July 29, 2016, the Company made an initial payment of $5,000 to the SEC. The remaining $20,000 balance was to be paid to the SEC over a nine-month period ending on or about June 30, 2017. The Company has accrued the balance on the accompanying consolidated financial statements for such settlement. The Company has yet to make an additional payment due to capital constraints and as of November 17, 2017 the Company has received no further communication from the SEC in regards to the settlement or further payment.

 

Legal Proceedings

 

We are currently not involved in litigation that we believe will have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision is expected to have a material adverse effect. 

XML 22 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions
9 Months Ended
Sep. 30, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 5 – RELATED PARTY TRANSACTIONS

 

Loan Agreement

 

On December 15, 2010, the Company entered into a loan agreement (the “Loan Agreement”) by and between Arnold Klann, the Chief Executive Officer, Chairman of the board of directors and majority shareholder of the Company, as lender (the “Lender”), and the Company, as borrower. Pursuant to the Loan Agreement, the Lender agreed to advance to the Company a principal amount of Two Hundred Thousand United States Dollars ($200,000) (the “Loan”). The Loan Agreement requires the Company to (i) pay to the Lender a one-time amount equal to fifteen percent (15%) of the Loan (the “Fee Amount”) in cash or shares of the Company’s common stock at a value of $0.50 per share, at the Lender’s option; and (ii) issue the Lender warrants allowing the Lender to buy 500,000 common shares of the Company at an exercise price of $0.50 per common share. The Company has promised to pay in full the outstanding principal balance of any and all amounts due under the Loan Agreement within thirty (30) days of the Company’s receipt of investment financing or a commitment from a third party to provide One Million United States Dollars ($1,000,000) to the Company or one of its subsidiaries (the “Due Date”), to be paid in cash. These warrants expired on December 15, 2013.

 

Related Party Lines of Credit

 

On November 10, 2011, the Company obtained a line of credit in the amount of $40,000 from its Chairman/Chief Executive Officer and, at the time, the majority shareholder to provide additional liquidity to the Company as needed, at his sole discretion. Under the terms of the note, the Company is to repay any principal balance and interest, at 12% per annum, within 30 days of receiving qualified investment financing of $100,000 or more. On April 10, 2014, the line of credit was increased to $55,000. On March 13, 2016, the line of credit was increased to $125,000, and then incrementally increased to $275,000 on August 17, 2017. As of September 30, 2017, the outstanding balance on the line of credit was approximately $253,074 with $21,926 remaining under the line. Although the Company has received over $100,000 in financing since this agreement was put into place, Mr. Klann does not hold the Company in default.

 

As of September 30, 2017 and December 31, 2016, $61,144 and $31,709 in accrued interest is owed under this line of credit and included with accrued liabilities, respectively.

 

Accrued Salaries

 

As of September 30, 2017 and December 31, 2016, accrued salary due to the Chief Executive Officer included within accrued liabilities was $508,500 and $339,000, respectively.

 

Total accrued and unpaid salary of all employees is $1,672,984 and $1,330,777 as of September 30, 2017, and December 31, 2016, respectively, representing 28 months of accrual at September 30, 2017. Of the total accrued salaries, $867,000 is included in the 3a10 transaction with Tarpon Bay Partners.

XML 23 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
Redeemable Non-controlling Interest
9 Months Ended
Sep. 30, 2017
Noncontrolling Interest [Abstract]  
Redeemable Non-controlling Interest

NOTE 6 – REDEEMABLE NON-CONTROLLING INTEREST

 

On December 23, 2010, the Company sold a one percent (1%) membership interest in its operating subsidiary, BlueFire Fulton Renewable Energy, LLC (“BlueFire Fulton” or the “Fulton Project”), to an accredited investor for a purchase price of $750,000 (“Purchase Price”). The Company maintains a 99% ownership interest in the Fulton Project. In addition, the investor received a right to require the Company to redeem the 1% interest for $862,500, or any pro-rata amount thereon. The redemption is based upon future contingent events based upon obtaining financing for the construction of the Fulton Project. The third party equity interests in the consolidated joint ventures are reflected as redeemable noncontrolling interests in the Company’s consolidated financial statements outside of equity. The Company accreted the redeemable noncontrolling interest for the total redemption price of $862,500 through the estimated forecasted financial close, originally estimated to be the end of the third quarter of 2011.

 

Net loss attributable to the redeemable non-controlling interest during for the three and nine months ended September 30, 2017 and 2016 was $(142), $(1,598), $(1,044) and $(3,591), respectively, which netted against the value of the redeemable non-controlling interest in temporary equity. The allocation of loss was presented on the statement of operations.

XML 24 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Stockholders' Deficit
9 Months Ended
Sep. 30, 2017
Equity [Abstract]  
Stockholders' Deficit

NOTE 7 – STOCKHOLDERS’ DEFICIT

 

Please see Note 3 for information on current conversion of notes payable to the Company’s common stock.

XML 25 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Subsequent Events
9 Months Ended
Sep. 30, 2017
Subsequent Events [Abstract]  
Subsequent Events

NOTE 8 – SUBSEQUENT EVENTS

 

On September 27, 2017, BlueFire Renewables, Inc., a Nevada Corporation (the “Company”) entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Tarpon Bay Partners, LLC, a Florida limited liability company (“TBP”), pursuant to which the Company agreed to issue common stock to TBP in exchange for the settlement of $999,630.45 (the “Settlement Amount”) of past-due obligations and accounts payable of the Company. TBP purchased the obligations and accounts payable from certain employees, former employees, consultants, and vendors of the Company as described below. On October 11, 2017, the Circuit Court of Leon County, Florida (the “Court”), entered an order (the “TBP Order”) approving, among other things, the fairness of the terms and conditions of an exchange pursuant to Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in accordance with a stipulation of settlement, pursuant to the Settlement Agreement between the Company and TBP, in the matter entitled Tarpon Bay Partners, LLC v. BlueFire Renewables, Inc. (the “TBP Action”). TBP commenced the TBP Action against the Company to recover an aggregate of $999,630.45 of past-due obligations and accounts payable of the Company (the “TBP Claim”), which TBP had purchased from certain vendors of the Company pursuant to the terms of separate receivable purchase agreements between TBP and each of such vendors (the “TBP Assigned Accounts”). The TBP Assigned Accounts relate to certain contractual obligations and legal services provided to the Company. The TBP Order provides for the full and final settlement of the TBP Claim and the TBP Action. The Settlement Agreement became effective and binding upon the Company and TBP upon execution of the TBP Order by the Court on October 11, 2017. The parties reasonably estimate that the fair market value of the TBP Settlement Shares to be received by TBP is equal to approximately $1,666,000. In connection with the Settlement Agreement, on October 16, 2017, the Company issued 37,000,000 shares of the Company’s common stock to TBP. Additional tranche requests shall be made as requested by TBP until the TBP Settlement Amount is paid in full. The Company is currently determining the impact of this transaction on its financial statements.

 

On October 26, 2017, the Company filed a Preliminary 14C with the US Securities and Exchange Commission to increase in the number of authorized shares of Common Stock from five hundred million (500,000,000) shares of Common Stock to five billion (5,000,000,000) shares of Common Stock (the “Share Increase”). On September 28, 2017, the Company received a unanimous written consent in lieu of a meeting of the holders of all 51 shares of Series A Preferred, as permitted by the Company’s Certificate of Incorporation, as may be amended (“Amended Certificate”) authorizing the Share Increase, Each share of Series A Preferred has voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. As there are currently 499,680,109 shares of Common Stock issued and 499,647,938 outstanding, the 51 shares of Series A Preferred Stock have the voting equivalent of 520,019,358 shares of Common Stock.

XML 26 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2017
Accounting Policies [Abstract]  
Going Concern

Going Concern

 

The Company has incurred losses since Inception. Management has funded operations primarily through proceeds received in connection with the reverse merger, loans from its Chief Executive Officer, the private placement of the Company’s common stock in December 2007 for net proceeds of approximately $14,500,000, the issuance of convertible notes with warrants in July and in August 2007, various convertible notes, and Department of Energy reimbursements from 2009 to 2015. The Company may encounter further difficulties in establishing operations due to the time frame of developing, constructing and ultimately operating the planned bio-refinery projects.

 

As of September 30, 2017, the Company has negative working capital of approximately $4,027,285. Management has estimated that operating expenses for the next 12 months will be approximately $625,000 excluding engineering costs related to the development of bio-refinery projects. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The Company intends to fund its operations with any additional funding that can be secured in the form of equity or debt. As of November [•], 2017, the Company expects the current resources available to them will only be sufficient for a period of approximately one month unless significant additional financing is received. Management has determined that the general expenditures must be reduced and additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short term capital we may consume all of our cash reserved for operations. There are no assurances that management will be able to raise capital on terms acceptable to the Company or at all. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. The financial statements do not include any adjustments that might result from these uncertainties.

 

As of December 31, 2010, the Company completed the detailed engineering on our proposed Fulton Project, procured all necessary permits for construction of the plant, and began site clearing and preparation work, signaling the beginning of construction. All site preparation activities have been completed, including clearing and grating of the site, building access roads, completing railroad tie-ins to connect the site to the rail system, and finalizing the layout plan to prepare for the site foundation. In addition, the County of Itawamba sent notice that it would terminate the lease for the Fulton Project on May 10, 2017 if full payment was not made. The Company was unable to make payment but received a letter stating that access to the site would be on a first-come, first-served basis. See Note 4.

 

We estimate the total construction cost of the bio-refinery to be in the range of approximately $300 million for the Fulton Project. These cost approximations do not reflect any increase/decrease in raw materials or any fluctuation in construction cost, since originally bid, that would be realized by the dynamic world metals markets or inflation of general costs of construction. The Company is looking for potential sources of financing for this facility but no definitive agreements are in place. The Company cannot continue significant development or furtherance of the Fulton project or any other opportunity until financing for the Company and the construction of the Fulton project is obtained.

Risks and Uncertainties

Risks and Uncertainties

 

The Company has a limited operating history and has not generated revenues from our planned principal operations.

 

The Company’s business and operations are very sensitive to general business and economic conditions in the U.S. and worldwide. Specifically, these conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general price of crude oil and gasoline.

 

The risks related to the Company’s plans to sell engineering services are that the Company currently has no sales and limited marketing capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our services. Developing a marketing and sales force is also time consuming and could delay launch of our future bio-ethanol plants. In addition, the Company will compete with other engineering companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote to sales and marketing.

 

The Company’s business and industry is also subject to new innovations in technology. Significant technical changes can have an adverse effect on product lives. Design and development of new products and services are important elements to achieve profitability in the Company’s industry segment. As a result, the Company’s products may quickly become obsolete and unmarketable. The Company’s future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and services and enhance our current products on a timely and cost-effective basis.

 

The Company’s products must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company’s new products may not be favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.

 

Due to the continuing capital constraints at the Company, John Cuzens, our Chief Technology Officer and Senior VP, has begun employment as an engineer in an industry that we feel does not compete with the Company. His technical and engineering expertise, including his familiarity with the Arkenol Technology, is important to BlueFire and our failure to retain Mr. Cuzens on a full-time basis, or to attract and retain additional qualified personnel, could adversely affect our planned operations. We do not currently carry key-man life insurance on any of our officers.

 

The long time horizon of project development and financing for the Company’s intended biorefinery projects may make it difficult to keep key project contracts active and in force with the Company’s limited resources. There is no guarantee the Company can keep them active or find suitable replacements if they do expire or are canceled.

 

Due to the continuing capital constraints of the Company, as of September 30, 2017 the Company has only Arnold Klann, our chief executive officer and director, as a full time employee. We presently are entirely dependent upon his experience, abilities and continued servicesThe loss of his services would be detrimental to the business and could have a material adverse effect on our business, financial condition or force us to no longer operate.

 

Lastly, the Company may be subject to federal, state and local environmental laws and regulations. The Company does not anticipate material expenditures to comply with such laws and does not believe that regulations will have a material impact on the Company’s financial position, results of operations, or liquidity. The Company believes that its operations comply, in all material respects, with applicable federal, state, and local environmental laws and regulations.

Basis of Presentation

Basis of Presentation

 

The accompanying unaudited consolidated interim financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities Exchange Commission. Certain information and disclosures normally included in the annual financial statements prepared in accordance with the accounting principles generally accepted in the Unites States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the full year.

Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements include the accounts of BlueFire Renewables, Inc., and its wholly-owned subsidiary, BlueFire Ethanol, Inc. BlueFire Ethanol Lancaster, LLC, BlueFire Fulton Renewable Energy LLC (excluding 1% interest sold) and SucreSource LLC are wholly-owned subsidiaries of BlueFire Ethanol, Inc. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

 

The preparation of 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 disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could materially differ from those estimates.

Project Development

Project Development

 

Project development costs are either expensed or capitalized. The costs of materials and equipment that will be acquired or constructed for project development activities, and that have alternative future uses, both in project development, marketing or sales, will be classified as property and equipment and depreciated over their estimated useful lives. To date, project development costs include the research and development expenses related to the Company’s future cellulose-to-ethanol production facilities with almost 100% of the allocation being employee salaries. During the three and nine months ended September 30, 2017 and 2016, development costs included in Project Development were approximately $14,668, $67,622, $87,449 and $238,049, respectively.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company follows the guidance of ASC 820 – “Fair Value Measurement and Disclosure”. Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

 

Level 1. Observable inputs such as quoted prices in active markets;

 

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

The Company did not have any Level 1 financial instruments at September 30, 2017 or December 31, 2016.

 

As of September 30, 2017 and December 31, 2016, the Company’s derivative liabilities are considered a Level 2 item (see Note 3).

 

As of September 30, 2017 and December 31, 2016 the Company’s redeemable non-controlling interest is considered a Level 3 item and changed during the nine months ended September 30, 2017 as follows.

 

Balance at December 31, 2016   $ 860,980  
Net loss attributable to non-controlling interest     (1,603 )
Balance at September 30, 2017   $ 859,377  

 

See Note 6 for details of valuation and changes during the years 2017 and 2016.

 

The carrying amounts reported in the accompanying consolidated financial statements for current assets and current liabilities approximate the fair value because of the immediate or short term maturities of the financial instruments.

Concentrations of Credit Risk

Concentrations of Credit Risk

 

As of September 30, 2017 and December 31, 2016, four vendors made up approximately 87% and 82% of accounts payable, respectively. Except for the Company’s legal counsel, the loss of the other vendors would not have a significant impact on the Company’s operations.

Loss Per Common Share

Loss per Common Share

 

The Company presents basic income (loss) per share (“EPS”) and diluted EPS on the face of the consolidated statement of operations. Basic income (loss) per share is computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. The Company has had convertible notes outstanding that are dilutive and convertible into the Company’s common stock. However, due to the net loss in each respective period, these were excluded from diluted EPS as their effects would be anti-dilutive.

New Accounting Pronouncements

New Accounting Pronouncements

 

The Financial Accounting Standards Board (“FASB”) issues Accounting Standard Updates (“ASU”) to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 840), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for a public entity. Early adoption of the amendments in this standard is permitted for all entities and the Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently in the process of evaluating the effect this guidance will have on its financial statements and related disclosures.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

XML 27 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2017
Accounting Policies [Abstract]  
Schedule of Redeemable Non-controlling Interest Considered Level Three

As of September 30, 2017 and December 31, 2016 the Company’s redeemable non-controlling interest is considered a Level 3 item and changed during the nine months ended September 30, 2017 as follows.

 

Balance at December 31, 2016   $ 860,980  
Net loss attributable to non-controlling interest     (1,603 )
Balance at September 30, 2017   $ 859,377  

XML 28 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
Notes Payable (Tables)
9 Months Ended
Sep. 30, 2017
JMJ Convertible Note [Member]  
Short-term Debt [Line Items]  
Schedule of Fair Market Value of the Conversion Features Using the Black-Scholes Pricing Model

    Final Conversion
April 5, 2016
(Excluding Inception)
    April 2, 2015  
Annual dividend yield     -       -  
Expected life (years)     0.99       2.00  
Risk-free interest rate     0.56 %     0.55 %
Expected volatility     188 %     301.07 %

AKR Promissory Note [Member]  
Short-term Debt [Line Items]  
Schedule of Fair Market Value of the Conversion Features Using the Black-Scholes Pricing Model

    April 8, 2014  
Annual dividend yield     -  
Expected life (years)     1.41 - 2.00  
Risk-free interest rate     0.40 %
Expected volatility     183% - 206 %

Tarpon Bay Convertible Note [Member]  
Short-term Debt [Line Items]  
Schedule of Fair Market Value of the Conversion Features Using the Black-Scholes Pricing Model

    September 30, 2017  
Annual dividend yield     -  
Expected life (years)     0.001  
Risk-free interest rate     0.95% - 1.00 %
Expected volatility     143% - 149 %

XML 29 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
Organization and Business (Details Narrative)
9 Months Ended
Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Preferred stock voting rights description On September 30, 2015, the Company filed an amendment to the Company’s articles of incorporation with the Secretary of State of the State of Nevada, which, among other things, established the designation, powers, rights, privileges, preferences and restrictions of the Series A Preferred Stock, no par value per share (the “Series A Preferred Stock”). Among other things, each one (1) share of the Series A Preferred Stock shall have voting rights equal to(x) 0.019607 multiplied by the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. For purposes of illustration only, if the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote is 5,000,000, the voting rights of one share of the Series A Preferred Stock shall be equal to 102,036 (0.019607 x 5,000,000) / 0.49) – (0.019607 x 5,000,000) = 102,036).
XML 30 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2007
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Dec. 23, 2010
SignificantAccountingPoliciesLineItems [Line Items]              
Proceeds from issuance of common stock sold for cash $ 14,500,000            
Working capital deficit   $ 4,027,285   $ 4,027,285      
Estimated operating expenses   173,452 $ 274,249 571,205 $ 953,302    
Percentage of ownership interest sold             99.00%
Research and development costs   $ 14,668 $ 87,449 $ 67,622 $ 238,049    
Four Vendors [Member] | Accounts Payable [Member]              
SignificantAccountingPoliciesLineItems [Line Items]              
Concentration of credit risk percentage       87.00%   82.00%  
Investor [Member]              
SignificantAccountingPoliciesLineItems [Line Items]              
Percentage of ownership interest sold   100.00%   100.00%      
Fulton Project [Member]              
SignificantAccountingPoliciesLineItems [Line Items]              
Estimated construction costs       $ 300,000,000      
Next Twelve Months [Member]              
SignificantAccountingPoliciesLineItems [Line Items]              
Estimated operating expenses       $ 625,000      
XML 31 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
Summary of Significant Accounting Policies - Schedule of Redeemable Non-controlling Interest Considered Level Three (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Accounting Policies [Abstract]        
Balance at the beginning     $ 860,980  
Net loss attributable to non-controlling interest $ (147) $ (1,044) (1,603) $ (3,591)
Balance at the end $ 859,377   $ 859,377  
XML 32 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
Notes Payable (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended
Apr. 02, 2015
Dec. 17, 2014
Nov. 08, 2014
Aug. 08, 2014
Apr. 24, 2014
Apr. 08, 2014
Aug. 31, 2016
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Sep. 27, 2017
Short-term Debt [Line Items]                        
Loss on excess fair value of derivative liability               $ 36,317 $ 36,317  
Amortization of debt discount               4,167 3,889 37,033  
Note converted into stock, amount                   $ 25,000 52,950  
Settlement Agreement [Member] | Tarpon Bay Partners LLC [Member]                        
Short-term Debt [Line Items]                        
Settlement liabilities amount                       $ 999,630
Purchase Agreement With Kodiak [Member]                        
Short-term Debt [Line Items]                        
Maximum value commitment to purchase shares   $ 1,500,000                    
AKR Warrants [Member]                        
Short-term Debt [Line Items]                        
Notes payable maturity date                   Apr. 08, 2015    
Discount on notes payable                   $ 42,323    
JMJ Convertible Note [Member]                        
Short-term Debt [Line Items]                        
Principal amount on notes payable $ 100,000               52,950   52,950  
Convertible note description Company issued a convertible note in favor of JMJ Financial in the principal amount of $100,000 out of a total of a possible $250,000, with a maturity date of April 1, 2017 (the “JMJ Note”).                      
Notes payable maturity date Apr. 01, 2017                      
Percentage of debt discount 10.00%                      
Amortized discount on notes $ 10,000                      
Percentage of onetime charge of interest on principal balance outstanding 12.00%                      
Percentage of convertible debt 60.00%                      
Fair value of derivative liability $ 412,212                      
Loss on excess fair value of derivative liability                   312,212    
Amortization of debt discount                     32,866  
Remaining value of notes, net of discount                     $ 0  
Note converted into stock                     105,741,400  
Note converted into stock, amount                     $ 65,500  
Accrued interest                 $ 12,550   $ 12,550  
AKR Promissory Note [Member]                        
Short-term Debt [Line Items]                        
Principal amount on notes payable           $ 350,000            
Notes payable maturity date           Apr. 08, 2015            
Percentage of debt interest rate           5.00%            
AKR Promissory Note [Member] | AKR Warrant B [Member]                        
Short-term Debt [Line Items]                        
Warrants maturity date       Apr. 08, 2016                
AKR Promissory Note [Member] | AKR Warrant C [Member]                        
Short-term Debt [Line Items]                        
Warrants to buy common shares     8,400,000                  
Warrants exercise price per share     $ 0.007                  
Warrants maturity date     Apr. 08, 2016                  
AKR Promissory Note [Member] | AKR Warrant A [Member]                        
Short-term Debt [Line Items]                        
Warrants to buy common shares           7,350,000            
Warrants exercise price per share           $ 0.007            
Warrants maturity date           Apr. 08, 2016            
AKR Promissory Note [Member] | AKR Warrant B [Member]                        
Short-term Debt [Line Items]                        
Warrants to buy common shares       7,350,000                
Warrants exercise price per share       $ 0.007                
Second AKR Note [Member]                        
Short-term Debt [Line Items]                        
Principal amount on notes payable         $ 30,000              
Notes payable maturity date         Jul. 24, 2014              
Percentage of debt interest rate         5.00%              
Tarpon Bay Convertible Note [Member]                        
Short-term Debt [Line Items]                        
Principal amount on notes payable             $ 25,000          
Notes payable maturity date             Feb. 28, 2017          
Percentage of debt discount             50.00%          
Amortization of debt discount                   3,889    
Remaining value of notes, net of discount                   $ 0    
Note converted into stock                   54,444,445    
Note converted into stock, amount                   $ 25,000    
Day one loss value                   36,000    
Gain loss on derivative liability                   2,133    
Debt fee               3,200   3,200    
Kodiak Promissory Note [Member]                        
Short-term Debt [Line Items]                        
Principal amount on notes payable   $ 60,000           $ 40,000   $ 40,000    
Notes payable maturity date   Jul. 17, 2015                    
XML 33 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
Notes Payable - Schedule of Fair Market Value of the Conversion Features Using the Black-Scholes Pricing Model (Details)
9 Months Ended
Apr. 05, 2016
Apr. 02, 2015
Apr. 08, 2014
Sep. 30, 2017
JMJ Convertible Note [Member]        
Short-term Debt [Line Items]        
Annual dividend yield 0.00% 0.00%    
Expected life (year) 11 months 26 days 2 years    
Risk-free interest rate 0.56% 0.55%    
Expected volatility 188.00% 301.07%    
AKR Promissory Note [Member]        
Short-term Debt [Line Items]        
Annual dividend yield     0.00%  
Risk-free interest rate     0.40%  
AKR Promissory Note [Member] | Minimum [Member]        
Short-term Debt [Line Items]        
Expected life (year)     1 year 4 months 28 days  
Expected volatility     183.00%  
AKR Promissory Note [Member] | Maximum [Member]        
Short-term Debt [Line Items]        
Expected life (year)     2 years  
Expected volatility     206.00%  
Tarpon Bay Convertible Note [Member]        
Short-term Debt [Line Items]        
Annual dividend yield       0.00%
Expected life (year)       4 days
Tarpon Bay Convertible Note [Member] | Minimum [Member]        
Short-term Debt [Line Items]        
Risk-free interest rate       0.95%
Expected volatility       143.00%
Tarpon Bay Convertible Note [Member] | Maximum [Member]        
Short-term Debt [Line Items]        
Risk-free interest rate       1.00%
Expected volatility       149.00%
XML 34 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
Commitments and Contingencies (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Jul. 29, 2016
Jul. 20, 2010
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Jun. 30, 2017
Dec. 31, 2016
May 02, 2016
Fulton Project Lease [Member]                  
Primary lease term   30 year              
Lease rate per acre, per month   $ 10,300              
Lease rate renewal term   5 years              
Rent expense under non-cancellable leases     $ 0 $ 44,600 $ 30,900 $ 92,600      
Accrued lease payments     343,010   343,010     $ 298,468  
Fulton Project Lease [Member] | Itawamba [Member]                  
Accrued lease payments     $ 46,131   $ 46,131        
SEC Notice and Settlement [Member]                  
Civil penalties payable amount                 $ 25,000
Civil penalties paid $ 5,000                
Civil penalties balance outstanding amount             $ 20,000    
XML 35 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions (Details Narrative) - USD ($)
9 Months Ended
Aug. 17, 2017
Mar. 13, 2016
Apr. 10, 2014
Dec. 15, 2010
Sep. 30, 2017
Dec. 31, 2016
Nov. 10, 2011
Net proceeds from related party notes payable       $ 200,000      
Loan agreement, one-time fees as a percentage of loan       15.00%      
Loan agreement, one-time fees payable in shares of common stock, per-share value       $ 0.50      
Loan agreement, warrants issued       500,000      
Warrants exercise price       $ 0.50      
Loan amount received from a third party       $ 1,000,000      
Warrant expiration date       Dec. 15, 2013      
Line of credit, amount outstanding         $ 253,074    
Line of credit, maximum amount of credit line $ 275,000 $ 125,000          
Line of credit, remaining balance         21,926    
Line of credit, additional borrowing         100,000    
Accrued interest         61,144 $ 31,709  
Tarpon Bay Partners LLC [Member] | Settlement Agreement [Member]              
Accrued salary         867,000    
Chief Executive Officer [Member]              
Line of credit, amount outstanding             $ 40,000
Notes, repayment of principal balance and interest             12.00%
Minimum amount of financing to be received for repayment of principal and interest             $ 100,000
Line of credit, maximum amount of credit line     $ 55,000        
Accrued salary         508,500 339,000  
Employees [Member]              
Accrued salary         $ 1,672,984 $ 1,330,777  
XML 36 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
Redeemable Non-controlling Interest (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended
Dec. 23, 2010
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Sep. 30, 2011
Noncontrolling Interest [Abstract]              
Ownership interest in BlueFire Fulton Renewable Energy LLC sold 1.00%            
Proceeds from sale of LLC Unit $ 750,000            
Ownership interest in BlueFire Fulton Renewable Energy LLC 99.00%            
Redeemable noncontrolling interest $ 862,500 $ 859,377   $ 859,377   $ 860,980 $ 862,500
Net income (loss) attributable to redeemable noncontrolling interest   $ (142) $ (1,044) $ (1,598) $ (3,591)    
XML 37 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
Subsequent Events (Details Narrative) - USD ($)
9 Months Ended
Oct. 16, 2017
Sep. 28, 2017
Sep. 30, 2017
Oct. 26, 2017
Oct. 11, 2017
Sep. 27, 2017
Dec. 31, 2016
Common stock, shares authorized     500,000,000       500,000,000
Preferred stock voting rights description     On September 30, 2015, the Company filed an amendment to the Company’s articles of incorporation with the Secretary of State of the State of Nevada, which, among other things, established the designation, powers, rights, privileges, preferences and restrictions of the Series A Preferred Stock, no par value per share (the “Series A Preferred Stock”). Among other things, each one (1) share of the Series A Preferred Stock shall have voting rights equal to(x) 0.019607 multiplied by the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. For purposes of illustration only, if the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote is 5,000,000, the voting rights of one share of the Series A Preferred Stock shall be equal to 102,036 (0.019607 x 5,000,000) / 0.49) – (0.019607 x 5,000,000) = 102,036).        
Common stock, shares issued     462,680,109       408,235,664
Common stock, shares outstanding     462,647,938       408,203,492
Subsequent Event [Member]              
Preferred stock voting rights description   Each share of Series A Preferred has voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator.          
Common stock, shares issued   499,680,109          
Common stock, shares outstanding   499,647,938          
Subsequent Event [Member] | Series A Preferred Stock [Member]              
Common stock issued during period, shares   51          
Preferred stock voting equivalent to common shares   520,019,358          
Subsequent Event [Member] | Minimum [Member]              
Common stock, shares authorized       500,000,000      
Subsequent Event [Member] | Maximum [Member]              
Common stock, shares authorized       5,000,000,000      
Settlement Agreement [Member] | Subsequent Event [Member]              
Settlement liabilities amount           $ 999,630  
Estimated value of all settlement shares when issued         $ 1,666,000    
Common stock issued during period, shares 37,000,000            
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