| 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 a 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 August of 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 March 31, 2018, the Company has negative
working capital of approximately $4,919,847. Management has estimated that operating expenses for the next 12 months will be approximately
$120,000, excluding any salary costs, for full-time or part-time employees, or 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.
Throughout 2018, the Company intends to fund its operations with any additional funding that can be secured in the form of equity
or debt the potential sale of Fulton Project equity ownership, and from a potential merger or sale of the Company. As of May 21,
2018, the Company expects the current resources available to them will only be sufficient for a period of less than one month unless
significant additional financing is received. Management has determined that the general expenditures must remain 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, operating results, and ability
to continue operating. 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. As of December 31, 2013, the construction-in-progress
through such date was deemed impaired due to the discontinuance of future funding from the DOE. 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 that would be realized by the dynamic world metals
markets or inflation of general costs of construction. The Company is currently in discussions with 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 until financing for the construction of the Fulton plant 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. 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, seeking a strategic merger, selling the Company or potentially selling equity in the Company’s
proposed projects, if possible, 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. We have no definitive agreement with respect to engaging in a merger with, joint venture
with or acquisition of, a private or public entity. No assurances can be given that we will successfully identify and evaluate
suitable business opportunities. We cannot guarantee that we will be able to negotiate a business combination or merger on favorable
terms. Throughout 2018, the Company intends to fund its operations by seeking additional funding in the form sales of equity or
debt instruments, the potential sale of Fulton Project equity ownership, or other projects, and/or from a potential merger. No
assurances can be given that we will be able to fund our operations from the sales of equity or debt instruments, the potential
sale of the Fulton Project equity ownership, or other projects, and/or from a potential merger. The Company’s business, industry and
operations are subject to new innovations in product design and function. Significant technical changes can have an adverse effect
on product lives. Design and development of new products are important elements to achieving and maintaining 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 may be subject to federal, state
and local environmental laws and regulations. The Company does not anticipate non-compliance 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. 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 the 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 sales and marketing. 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. Mr. Cuzens remains the Chief Technology Officer of the Company, however, his time spent
working on BlueFire projects is severely limited and is on a consulting basis. 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. 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, 2017. The results of operations for the three months ended March 31, 2018 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. During the three months ended March 31, 2018
and 2017, research and development costs included in Project Development were approximately $0 and $31,000, respectively. Convertible Debt Convertible debt is accounted for under the
guidelines established by Accounting Standards Codification (“ASC”) 470-20 “Debt with Conversion and Other Options”.
ASC 470-20 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the instruments
where derivative accounting (explained below) does not apply. The amount of the value of warrants and beneficial conversion feature
may reduce the carrying value of the instrument to zero, but no further. The discounts relating to the initial recording of the
derivatives or beneficial conversion features are accreted over the term of the debt. The Company calculates the fair value of warrants
and conversion features issued with the convertible instruments using the Black-Scholes valuation method, using the same assumptions
used for valuing employee options for purposes of ASC 718 “Compensation – Stock Compensation”, except that the
contractual life of the warrant or conversion feature is used. Under these guidelines, the Company allocates the value of the proceeds
received from a convertible debt transaction between the conversion feature and any other detachable instruments (such as warrants)
on a relative fair value basis. The allocated fair value is recorded as a debt discount or premium and is amortized over the expected
term of the convertible debt to interest expense. The Company accounts for modifications of its
BCF’s in accordance with ASC 470-50 “Modifications and Extinguishments”. ASC 470-50 requires the modification
of a convertible debt instrument that changes the fair value of an embedded conversion feature and the subsequent recognition of
interest expense or the associated debt instrument when the modification does not result in a debt extinguishment. Income Taxes The Company accounts for income taxes in accordance
with ASC 740 “Income Taxes” requires the Company to provide a net deferred tax asset/liability equal to the expected
future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating
loss or tax credit carry forwards. This interpretation sets forth a recognition
threshold and valuation method to recognize and measure an income tax position taken, or expected to be taken, in a tax return.
The evaluation is based on a two-step approach. The first step requires an entity to evaluate whether the tax position would “more
likely than not,” based upon its technical merits, be sustained upon examination by the appropriate taxing authority. The
second step requires the tax position to be measured at the largest amount of tax benefit that is greater than 50 percent likely
of being realized upon ultimate settlement. The Company does not have any uncertain positions which require such analysis. F air 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 March 31, 2018 or December 31, 2017. As of March 31, 2018 and December 31, 2017,
the Company’s derivative liabilities are considered a Level 2 item (see Notes 3 and 4). As of March 31, 2018 and December 31, 2017
the Company’s redeemable noncontrolling interest is considered a Level 3 item and changed during the three months ended March
31, 2018 as follows.
Balance at December 31, 2017 $ 859,377
Net loss attributable to noncontrolling interest -
Balance at March 31, 2018 $ 859,377 See Note 8 for details of valuation and changes
during the years 2018 and 2017. 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 The Company maintains its cash accounts in
a commercial bank and in an institutional money-market fund account. The total cash balances held in a commercial bank are secured
by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, per insured bank. At times, the Company has cash
deposits in excess of federally insured limits. In addition, the Institutional Funds Account is insured through the Securities
Investor Protection Corporation (“SIPC”) up to $500,000 per customer, including up to $250,000 for cash. At times,
the Company may have cash deposits in excess of federally and institutional insured limits. Loss per Common Share The Company presents basic loss per share (“EPS”)
and diluted EPS on the face of the consolidated statement of operations. Basic loss per share is computed as net 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. As of March 31, 2018 and 2017,
the Company had no warrants or other instruments outstanding. Pursuant to the 3a10 transaction entered into with Tarpon Bay Partner’s,
there is potentially up to our current authorized amount of common shares issuable available to be issued to settle liabilities
and the note payable to Tarpon Bay Partners. 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. On February 25, 2016, the Financial Accounting
Standards Board (FASB) issued authoritative guidance intended to improve financial reporting about leasing transactions. The new
guidance requires entities to recognize assets and liabilities for leases with lease terms of more than 12 months. The new guidance
also requires qualitative and quantitative disclosures regarding the amount, timing, and uncertainty of cash flows arising from
leases. The new guidance is effective for the Company beginning January 1, 2019. The Company is evaluating the impact of the standard
on its consolidated financial statements. In May 2014, FASB issued authoritative guidance
that provides principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration
to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires that reporting companies
disclose the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. On July 9,
2015, FASB agreed to delay the effective date by one year and, accordingly, the new standard is effective for the Company beginning
in the first quarter of fiscal 2018. Early adoption is permitted, but not before the original effective date of the standard. The
new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative
effect of initially applying it recognized at the date of initial application. The Company has adopted the selected transition
method and has determined there is no impact of the new standard on its consolidated financial statements. Management does not believe that any recently
issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated
financial statements. |
