[X]
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
[ ]
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
NEVADA
|
20-4590982
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
31
MUSICK, IRVINE, CALIFORNIA
|
92618
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
PART
I
|
||
ITEM
1.
|
DESCRIPTION
OF BUSINESS
|
2
|
ITEM
2.
|
DESCRIPTION
OF PROPERTY
|
8
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
8
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
9
|
PART
II
|
||
ITEM
5.
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|
10
|
ITEM
6.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|
11
|
ITEM
7.
|
FINANCIAL
STATEMENTS
|
20
|
ITEM
8.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
22
|
ITEM
8A.
|
CONTROLS
AND PROCEDURES
|
22
|
ITEM
8A(T)
|
MANAGEMENT'S
ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
|
22
|
ITEM
8B.
|
OTHER
INFORMATION
|
23
|
PART
III
|
||
ITEM
9.
|
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
|
24
|
ITEM
10.
|
EXECUTIVE
COMPENSATION
|
27
|
ITEM
11.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
37
|
ITEM
12.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
39
|
ITEM
13.
|
EXHIBITS
|
41
|
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
41
|
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-1
|
·
|
the
availability and adequacy of our cash flow to meet our
requirements,
|
·
|
economic,
competitive, demographic, business and other conditions in our local and
regional markets,
|
·
|
changes
or developments in laws, regulations or taxes in the ethanol or energy
industries,
|
·
|
actions
taken or not taken by third-parties, including our suppliers and
competitors, as well as legislative, regulatory, judicial and other
governmental authorities,
|
·
|
competition
in the ethanol industry,
|
·
|
the
failure to obtain or loss of any license or
permit,
|
·
|
success
of the Arkenol Technology,
|
·
|
changes
in our business and growth strategy (including our plant building strategy
and co-location strategy), capital improvements or development
plans,
|
·
|
the
availability of additional capital to support capital improvements and
development, and
|
·
|
other
factors discussed under the section entitled “Risk Factors” or elsewhere
in this registration statement.
|
Quarter
ended
|
Low Price
|
High Price
|
||||||
September 30,
2006
|
$ | 1.35 | $ | 6.80 | ||||
December 31,
2006
|
$ | 1.47 | $ | 4.00 | ||||
March 31,
2007
|
$ | 3.99 | $ | 7.70 | ||||
June 30,
2007
|
$ | 5.40 | $ | 7.15 | ||||
September 30,
2007
|
$ | 3.30 | $ | 6.40 | ||||
December 31,
2007
|
$ | 3.15 | $ | 5.01 |
Plan
category
|
Number of securities to be issued
upon exercise of outstanding options, warrants and rights and number of
shares of restricted stock
|
Weighted average
exercise price of outstanding options, warrants and rights(2) |
Number of securities remaining
available for future issuance
|
Equity compensation
plans approved by security holders under the Amended and Restated
Plan
|
3,440,159
(1)
|
$2.48
|
6,559,841
|
Equity compensation
not pursuant to a plan
|
602,203(3)
|
$3.88
|
|
Total
|
4,022,362
|
·
|
Obtain
additional operating capital from joint venture partnerships, debt
financing or equity financing to fund our ongoing operations and the
development of initial biorefineries in North
America.
|
·
|
The
Energy Policy Act of 2005 provides for grants and loan guarantee programs
to incentivize the growth of the cellulosic ethanol market. These programs
include a Cellulosic Biomass Ethanol and Municipal Solid Waste Guarantee
Program under which the U.S. Department of Energy (“DOE”) could provide
loan guarantees up to $250 million per qualified project. We have received
approval of its pre-application and must now submit a formal application
for a loan guarantee of up to $200 million to support the development of a
55 million gallon per year project in California to be located adjacent to
an existing biomass power plant.
|
·
|
The
Energy Policy Act of 2005 created a Biorefinery Demonstration Project
Program under which $384 million or another amount appropriated by
Congress is available to fund up to three biorefinery demonstration
projects. Ultimately the DOE was appropriated $385 million for
the program and granted awards of various size to six companies of which
we are one. In October, 2007, we signed the contract for the first phase
of the grant program referred to by the DOE as “Award 1” for
pre-construction activities on our El Sobrante
project.
|
·
|
As
available and as applicable to our business plans, applications for public
funding will be submitted to leverage private capital raised by
us.
|
·
|
A
facility that will process approximately 170 tons of green waste material
to produce roughly 3 million gallons of ethanol annually. On
November 9, 2007, we purchased the facility site which is located in
Lancaster, California. Permit applications were filed on
June 24, 2007 to allow for construction of the Lancaster
facility. We are currently in preliminary engineering. Although
the cost of construction is not readily determinable, we estimate the cost
to be approximately $30 million for this first plant. We are
currently in discussions with potential sources of financing for this
facility but no definitive agreements are in
place.
|
·
|
A
facility proposed for development and construction at the El Sobrante
Landfill located in Corona, California. This facility will use
approximately 700 metric dry tons of green waste and wood waste currently
disposed in the landfill to produce about 16.6 to 18 million gallons of
ethanol annually. Preliminary engineering design is in progress and
permitting for this facility will commence once all required preliminary
engineering design is completed. A definitive agreement is being finalized
with Petro-Diamond for the purchase and sale of the ethanol produced from
the facility. We have received an Award from the DOE of up to
$40 million for the El Sobrante Facility. On or around October
4, 2007, we finalized Award 1 for a total approved budget of just under
$10,000,000 with the DOE. This award is a 60%/40% cost share,
whereby 40% of approved costs may be reimbursed by the DOE pursuant to the
total $40 million award amount in February 2007. The remainder
of financing for this project is yet to be
determined.
|
·
|
Several
other opportunities are being evaluated by us in North America but no
definitive plans have been made. Discussions with various
landfill owners are underway to duplicate the proposed development at the
El Sobrante landfill although no definitive agreements have been
reached.
|
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated
Balance Sheet as of December 31, 2007
|
F-2
|
Consolidated Statements of Operations for the year ended December 31,
2007, for the period from March 28, 2006 (Inception) to December 31, 2006
and for the period from March 28, 2006 (Inception) to December 31,
2007
|
F-3
|
Consolidated
Statements of Stockholders Equity (Deficit) for the period from March 28,
2006 (Inception) to December 31, 2006, and for the year ended December 31,
2007
|
F-4
|
Consolidated
Statements of Cash Flows for the year ended December 31, 2007, the period
from March 28, 2006 (Inception) to December 31, 2006, and for the period
from March 28, 2006 (Inception) to December 31, 2007
|
F-6
|
Notes to Consolidated Financial Statements
|
F-7
|
December
31, 2007
|
||||
ASSETS
|
||||
Current
assets:
|
||||
Cash
and cash equivalents
|
$ | 13,031,939 | ||
Accounts
receivable
|
49,000 | |||
Prepaid
expenses
|
16,542 | |||
Total
current assets
|
13,097,481 | |||
Prepaid
fees to related party
|
30,000 | |||
Property
and equipment, net of accumulated
depreciation
of $406
|
151,007 | |||
Total
assets
|
$ | 13,278,488 | ||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||
Current
liabilities:
|
||||
Accounts
payable
|
$ | 382,679 | ||
Accrued
liabilities
|
267,671 | |||
Total
current liabilities
|
650,350 | |||
Commitments
and contingencies (Note6)
|
- | |||
Stockholders’
equity (deficit):
|
||||
Preferred
stock, no par value, 1,000,000 shares
authorized;
none issued and outstanding
|
- | |||
Common
stock, $0.001 par value; 100,000,000
|
||||
shares
authorized; 28,061,553 shares
|
||||
issued
and outstanding
|
28,061 | |||
Additional
paid-in capital
|
28,431,992 | |||
Deficit
accumulated during the development stage
|
(15,831,915 | ) | ||
Total
stockholders’ equity
|
12,628,138 | |||
Total
liabilities and stockholders’ equity
|
$ | 13,278,488 |
For
the year ended December 31,
|
From
March 28, 2006 (Inception) Through December 31,
|
From
March 28, 2006 (Inception) Through December 31,
|
||||||||||
2007
|
2006
|
2007
|
||||||||||
Revenues
|
$ | 49,000 | $ | - | $ | 49,000 | ||||||
Operating
expenses:
|
||||||||||||
Project
development, including stock based compensation of $2,387,634,
$2,500 and $2,390,134, respectively
|
4,930,739 | 466,002 | 5,396,741 | |||||||||
General
and administrative, including stock based compensation of $4,061,808,
$112,311 and $4,174,119, respectively
|
5,595,125 | 1,083,195 | 6,678,320 | |||||||||
Total
operating expenses
|
10,525,864 | 1,549,197 | 12,075,061 | |||||||||
Operating
loss
|
(10,476,864 | ) | (1,549,197 | ) | (12,026,061 | ) | ||||||
Other
income and (expense):
|
||||||||||||
Other
income
|
18,903 | 2,800 | 21,703 | |||||||||
Financing
related charge
|
(211,660 | ) | - | (211,660 | ) | |||||||
Amortization
of debt discount
|
(676,982 | ) | - | (676,982 | ) | |||||||
Interest
expense
|
(56,097 | ) | - | (56,097 | ) | |||||||
Related
party interest expense
|
(55,348 | ) | (9,100 | ) | (64,448 | ) | ||||||
Loss
on extinguishment of debt
|
(2,818,370 | ) | - | (2,818,370 | ) | |||||||
Net
loss
|
$ | (14,276,418 | ) | $ | (1,555,497 | ) | $ | (15,831,915 | ) | |||
Basic
and diluted loss per common share
|
$ | (0.65 | ) | $ | (0.08 | ) | ||||||
Weighted
average common shares outstanding, basic and diluted
|
21,848,126 | 19,711,225 |
Common
Stock
|
|
|||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Deficit
Accumulated
During
Development Stage |
Stockholders'
Equity
(Deficit)
|
||||||||||||||||
Balance
at March 28, 2006 (inception)
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Issuance
of founder’s share at $.001 per share
|
17,000,000 | 17,000 | 17,000 | |||||||||||||||||
Common
shares retained by Sucre Agricultural Corp., Shareholders
|
4,028,264 | 4,028 | 685,972 | - | 690,000 | |||||||||||||||
Costs
associated with the acquisition of Sucre Agricultural
Corp.
|
(3,550 | ) | (3,550 | ) | ||||||||||||||||
Common
shares issued for services in November 2006 at $2.99 per share
(Note 5)
|
37,500 | 38 | 111,962 | - | 112,000 | |||||||||||||||
Common
shares issued for services in November 2006 at $3.35 per share (Note
5)
|
20,000 | 20 | 66,981 | - | 67,001 | |||||||||||||||
Common
shares issued for services in December 2006 at $3.65 per share (Note
5)
|
20,000 | 20 | 72,980 | - | 73,000 | |||||||||||||||
Common
shares issued for services in December 2006 at $3.65 per share (Note
5)
|
20,000 | 20 | 72,980 | - | 73,000 | |||||||||||||||
Estimated
value of common shares at $3.99 per share and warrants at $2.90 issuable
for services upon vesting in February 2007 (Note 5)
|
- | - | 160,000 | - | 160,000 | |||||||||||||||
Share-based
compensation related to options (Note 6)
|
- | - | 114,811 | - | 114,811 | |||||||||||||||
Share-based
compensation related to warrants (Note 6)
|
- | - | 100,254 | - | 100,254 | |||||||||||||||
Net
Loss
|
- | - | - | (1,555,497 | ) | (1,555,497 | ) | |||||||||||||
Balances
at December 31, 2006
|
21,125,764 | $ | 21,126 | $ | 1,382,390 | $ | (1,555,497 | ) | $ | (151,981 | ) |
Common
Stock
|
|
|
||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Deficit
Accumulated
During
Development Stage |
Stockholders'
Equity
(Deficit)
|
||||||||||||||||
Balances at December 31,
2006
|
21,125,764 | $ | 21,126 | $ | 1,382,390 | $ | (1,555,497 | ) | $ | (151,981 | ) | |||||||||
Common shares issued for cash in
January 2007, at $2.00 per share to unrelated individuals, including costs
associated with private placement of 6,250 common shares and $12,500 cash
paid
|
284,750 | 285 | 755,875 | - | 756,160 | |||||||||||||||
Amortization of share based
compensation related to employment agreement in January 2007 $3.99 per
share
|
10,000 | 10 | 39,890 | - | 39,900 | |||||||||||||||
Common shares issued for services
in February 2007 at $5.92 per share
|
37,500 | 38 | 138,837 | - | 138,875 | |||||||||||||||
Adjustment to record remaining
value of warrants at $4.70 per share issued for services in February
2007
|
- | - | 158,118 | - | 158,118 | |||||||||||||||
Common shares issued for services
in March 2007 at $7.18 per share
|
37,500 | 37 | 269,213 | - | 269,250 | |||||||||||||||
Fair value of warrants at $6.11
for services vested in March 2007
|
- | - | 305,307 | - | 305,307 | |||||||||||||||
Fair value of warrants at $5.40
for services vested in June 2007
|
- | - | 269,839 | - | 269,839 | |||||||||||||||
Common shares issued for services
in June 2007 at $6.25 per share
|
37,500 | 37 | 234,338 | - | 234,375 | |||||||||||||||
Share-based compensation related
to employment agreement in February 2007 $5.50 per
share
|
50,000 | 50 | 274,951 | - | 275,001 | |||||||||||||||
Common shares issued for services
in August 2007 at $5.07 per share
|
13,000 | 13 | 65,901 | - | 65,914 | |||||||||||||||
Share-based compensation related
to options
|
- | - | 4,692,863 | - | 4,692,863 | |||||||||||||||
Fair value of warrants issued in
August 2007 for debt placement services valued at $4.18 per
share
|
- | - | 107,459 | - | 107,459 | |||||||||||||||
Relative fair value of warrants
associated with July 2007 convertible note
agreement
|
- | - | 332,255 | - | 332,255 | |||||||||||||||
Exercise of stock options in July
2007 at $2.00 per share
|
20,000 | 20 | 39,980 | - | 40,000 | |||||||||||||||
Relative fair value of warrants
and beneficial conversion feature in connection with the $2,000,000
convertible note payable in August 2007
|
- | - | 2,000,000 | - | 2,000,000 | |||||||||||||||
Stock issued in lieu of Interest
payments on the senior secured convertible note at $4.48 and $2.96 per
share in October and December 2007
|
15,143 | 15 | 55,569 | - | 55,584 | |||||||||||||||
Conversion of $2,000,000 note
payable in August 2007 at $2.90 per share
|
689,655 | 689 | 1,999,311 | - | 2,000,000 | |||||||||||||||
Common shares issued for cash at
$2.70 per share, December 2007, net of legal costs of $90,000 and
placement agent cost of $1,050,000
|
5,740,741 | 5,741 | 14,354,259 | - | 14,360,000 | |||||||||||||||
Loss on extinguishment of
debt in December 2007
|
- | - | 955,637 | - | 955,637 | |||||||||||||||
Net loss
|
- | - | - | (14,276,418 | ) | (14,276,418 | ) | |||||||||||||
Balances at December 31,
2007
|
28,061,553 | $ | 28,061 | $ | 28,431,992 | $ | (15,831,915 | ) | $ | 12,628,138 |
For
the Year ended December 31,
|
From
March 28, 2006 (Inception) to December 31,
|
From
March 28, 2006 (Inception) to December 31,
|
||||||||||
2007
|
2006
|
2007
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
loss
|
$ | (14,276,418 | ) | $ | (1,555,497 | ) | $ | (15,831,915 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Founders
shares
|
- | 17,000 | 17,000 | |||||||||
Costs
associated with purchase of Sucre
Agricultural
Corp
|
- | (3,550 | ) | (3,550 | ) | |||||||
Interest
expense on beneficial conversion feature
of
convertible notes
|
676,983 | - | 676,983 | |||||||||
Loss
on extinguishment of convertible debt
|
2,718,370 | - | 2,718,370 | |||||||||
Common
stock issued for interest on convertible
notes
|
55,585 | - | 55,585 | |||||||||
Discount
on sale of stock associated with private
placement
|
211,660 | - | 211,660 | |||||||||
Share-based
compensation
|
6,449,441 | 700,066 | 7,149,507 | |||||||||
Depreciation
|
409 | - | 409 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
(49,000 | ) | - | (49,000 | ) | |||||||
Prepaid
fees to related party
|
- | (30,000 | ) | (30,000 | ) | |||||||
Prepaid
expenses and other current assets
|
(16,542 | ) | - | (16,542 | ) | |||||||
Accounts
payable
|
315,729 | 66,949 | 382,678 | |||||||||
Accrued
liabilities
|
249,978 | 17,692 | 267,670 | |||||||||
Accrued
interest to related party
|
(9,100 | ) | 9,100 | - | ||||||||
Net
cash used in operating activities
|
(3,672,905 | ) | (778,240 | ) | (4,451,145 | ) | ||||||
Cash
flows from investing activities:
|
||||||||||||
Acquisition
of property and equipment
|
(151,416 | ) | - | (151,416 | ) | |||||||
Cash
flows from financing activities:
|
||||||||||||
Cash
received in acquisition of
Sucre
Agricultural Corp.
|
- | 690,000 | 690,000 | |||||||||
Proceeds
from sale of stock through
private
placement
|
544,500 | - | 544,500 | |||||||||
Proceeds
from exercise of stock options
|
40,000 | - | 40,000 | |||||||||
Proceeds
from issuance of common stock
|
14,360,000 | - | 14,360,000 | |||||||||
Proceeds
from convertible notes payable
|
2,500,000 | - | 2,500,000 | |||||||||
Repayment
of notes payable
|
(500,000 | ) | - | (500,000 | ) | |||||||
Proceeds
from related party notes payable
|
25,000 | 91,000 | 116,000 | |||||||||
Repayment
of related party notes payable
|
(116,000 | ) | - | (116.000 | ) | |||||||
Net
cash provided by financing activities
|
16,853,500 | 781,000 | 17,634,500 | |||||||||
Net
increase in cash and cash equivalents
|
13,029,179 | 2,760 | 13,031,939 | |||||||||
Cash
and cash equivalents beginning of period
|
2,760 | - | - | |||||||||
Cash
and cash equivalents end of period
|
$ | 13,031,939 | $ | 2,760 | $ | 13,031,939 | ||||||
Supplemental
disclosures of cash flow information
|
||||||||||||
Cash
paid during the period for:
|
||||||||||||
Interest
|
$ | 56,375 | $ | - | $ | 56,375 | ||||||
Income
taxes
|
$ | 800 | $ | 800 | $ | 800 | ||||||
Supplement schedule of noncash investing and financing activities: | ||||||||||||
Conversion of senior secured convertible notes payable | $ | 2,000,000 | $ | - | $ | 2,000,000 | ||||||
Interest converted to common stock | $ | 55,569 | $ | - | $ | 55,569 | ||||||
Fair value of warrents issued to placement agents | $ | 725,591 | $ | - | $ | 725,591 |
|
December 31,
2007
|
||||
Land
|
$
|
109,108 | |||
Furniture and
fixtures
|
35,629 | ||||
Office
equipment
|
6,676 | ||||
151,413 | |||||
Accumulated
depreciation
|
(406 | ) | |||
$ | 151,007 |
Options
|
Weighted Average Exercise
Price
|
Weighted Average Remaining
Contractual Term (Years)
|
Aggregate Intrinsic
Value
|
|||||||||||||
Outstanding January 1,
2007
|
1,990,000 | $ | 2.00 | |||||||||||||
Granted during the
year
|
1,317,159 | 3.21 | ||||||||||||||
Exercised during the
year
|
(20,000 | ) | 2.00 | |||||||||||||
Outstanding December 31,
2007
|
3,287,159 | $ | 2.48 | 4.40 | $ | 4,162,847 | ||||||||||
Options exercisable
at
December 31,
2007
|
1,724,659 | $ | 2.52 | 4.43 | $ | 2,121,472 | ||||||||||
Options expected to vest
at
December 31,
2007
|
3,287,159 | $ | 2.48 | 4.40 | $ | 4,162,847 |
Warrants
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term
(Years)
|
||||||||||
Outstanding
January 1, 2007
|
200,000 | $ | 5.00 | |||||||||
Issued
during the year
|
7,186,694 | 2.96 | ||||||||||
Outstanding
and exercisable at December 31, 2007
|
7,386,694 | $ | 3.02 | 4.60 |
NAME
|
AGE
|
POSITION
|
OFFICER
AND/OR DIRECTOR SINCE
|
|||
Arnold
Klann
|
56
|
President,
CEO and Director
|
June
2006
|
|||
Necitas
Sumait
|
48
|
Secretary,
SVP and Director
|
June
2006
|
|||
Christopher
Scott
|
34
|
Chief
Financial Officer
|
March
2007
|
|||
John
Cuzens
|
57
|
SVP,
Chief Technology Officer
|
June
2006
|
|||
Chris
Nichols
|
41
|
Director
|
June
2006
|
|||
Joseph
Emas
|
53
|
Director
|
July
2007
|
|||
Victor
Doolan
|
67
|
Director
|
July
2007
|
NAME
AND PRINCIPAL
POSITION
|
YEAR
|
SALARY($)
|
BONUS($)
|
STOCK
AWARDS
(3)
|
OPTIONS
AWARDS
($) (3)
|
NON-
EQUITYINCENTI
VE
PLAN
COMPENSATION
($)
|
CHANGE
IN
PENSION
VALUE
AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)
|
ALL
OTHER
COMPENSATION
($)
|
TOTAL
($)
|
||||||||||||||||||||||||
Arnold
Klann Dire
c
tor and President
|
2007
|
216,583 | 51,780 | 5,070 | (1) | 750,519 | 1,023,952 | ||||||||||||||||||||||||||
2006
|
113,000 | 16,750 | (1) | 2,477,415 | 2,607,165 | ||||||||||||||||||||||||||||
Necitas
Sumait Dire
c
tor,
Secretary and VP
|
2007
|
149,500 | 51,780 | 5,070 | (1) | 556,521 | 762,871 | ||||||||||||||||||||||||||
2006
|
78,000 | 16,750 | (1) | 1,114,850 | 1,209,600 | ||||||||||||||||||||||||||||
John
Cuzens Treasurer and VP
|
2007
|
149,500 | 51,780 | 556,521 | 757,801 | ||||||||||||||||||||||||||||
2006
|
75,000 | 16,750 | (1) | 1,114,850 | 1,206,600 | ||||||||||||||||||||||||||||
Christopher
Scott Chief Financial Officer
|
2007
|
86,250 | 51,780 | 275,001 | (2) | 556,521 | 969,552 | ||||||||||||||||||||||||||
Chris
Nichols Director
|
2007
|
7,500 | (5) | 5,070 | (1) | 12,570 | |||||||||||||||||||||||||||
2006
|
2,500 | 16,750 | (1) | 73,000 | (4) | 92,250 | |||||||||||||||||||||||||||
Joseph
Emmas Director
|
2007
|
5,000 | 25,350 | (1) | 30,350 | ||||||||||||||||||||||||||||
Victor
Doolan Director
|
2007
|
5,000 | 25,350 | (1) | 30,350 |
(1)
|
Reflects
value of shares of restricted common stock received as compensation as
Director. See notes to consolidated financial statements for
valuation.
|
(2)
|
Reflects
value of 50,000 shares of restricted common stock received as compensation
related to February 2007 employment
agreement.
|
(3)
|
Valued
based on the Black-Scholes valuation model at the date of grant, see note
to the consolidated financial
statements.
|
(4)
|
Reflects
value of consideration received as compensation for consultant
services.
|
(5)
|
Includes
partial 2006 compensation of $2,500 paid in
2007.
|
ESTIMATED
FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS
|
ESTIMATED
FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN
AWARDS
|
Name
|
Grant
Date
|
Approval
Date
|
Number
of Non-Equity Incentive Plan Units Granted (#)
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
All
Other Stock Awards: Number of Shares of Stock or Units (#)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price of Option Awards ($ / SH)
|
Closing
Price on Grant Date ($ / SH)
|
||||||||||||
Arnold
Klann
|
12/20/07
|
12/20/07
|
250,000 | (1) | $ | 3.20 | $ | 3.20 | |||||||||||||||||
28,409 | (2) | $ | 3.52 | $ | 3.20 | ||||||||||||||||||||
Necitas
Sumait
|
12/20/07
|
12/20/07
|
206,250 | (3) | $ | 3.20 | $ | 3.20 | |||||||||||||||||
Christopher
Scott
|
12/20/07
|
12/20/07
|
50,000 | (4) | 206,250 | (3) | $ | 3.20 | $ | 3.20 | |||||||||||||||
John
Cuzens
|
12/20/07
|
12/20/07
|
206,250 | (3) | $ | 3.20 | $ | 3.20 | |||||||||||||||||
Chris
Nichols
|
None
|
||||||||||||||||||||||||
Joseph
Emmas
|
None
|
||||||||||||||||||||||||
Victor
Doclan
|
None
|
(1) | 50% vest immediately, 25% vests on closing remainder of Lancaster Project Funding, 25% vests at the start of construction of Lancaster Project |
(2) | Vested immediately |
(3) | Of this amount, 31,250 vest immediately, of the remaining 175,000 options 50% vest immediately, 25% vests on closing remainder of Lancaster Project Funding, 25% vests at the start of construction of Lancaster Project |
(4) | Issued to E-Info Solutions an entity controlled by Christopher Scott |
OPTION
AWARDS
|
STOCK
AWARDS
|
||||||||
NAME
|
NUMBER
OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
(#)
EXERCISABLE
|
NUMBER
OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
(#)
UNEXERCISABLE
|
EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER
OF
SECURITIES
UNDERLYING
UNEXERCISED
UNEARNED
OPTIONS
(#)
|
OPTION
EXERCISE
PRICE
(5)
|
OPTION
EXPIRATION
DATE
|
NUMBER
OF
SHARES
OR
UNITS
OF
STOCK
THAT
HAVE
NOT
VESTED
(#)
|
MARKET
VALUE
OF
SHARES
OR
UNITS
OF
STOCK
THAT
HAVE
NOT
VESTED
($)
|
EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER
OF
UNEARNED
SHARES,
UNITS
OR
OTHER
RIGHTS
THAT
HAVE
NOT
VESTED
(#)
|
EQUITY
INCENTIVE PLAN AWARDS:
MARKET
OR
PAYOUT
VALUE
OF
UNEARNED
SHARES,
UNITS
OR
OTHER
RIGHTS
THAT
HAVE
NOT
VESTED
($)
|
Arnold
Klann
|
500,000
|
500,000
|
2.00
|
12/14/11
|
|||||
28,409
|
-
|
3.52
|
12/20/12
|
||||||
125,000
|
125,000
|
3.20
|
12/20/12
|
||||||
Necitas
Sumait
|
225,000
|
225,000
|
2.00
|
12/14/11
|
|||||
118,750
|
87,500
|
3.20
|
12/20/12
|
||||||
John
Cuzens
|
225,000
|
225,000
|
2.00
|
12/14/11
|
|||||
118,750
|
87,500
|
3.20
|
12/20/12
|
||||||
Christopher
Scott
|
118,750
|
87,500
|
3.20
|
12/20/12
|
|||||
Chris
Nichols
|
|||||||||
Joseph Emmas
|
|||||||||
Victor
Doolan
|
OPTION AWARDS
|
STOCK
AWARDS
|
Number
of Shares Acquired
on
Exercise
(#)
|
Value
Realized on
Exercise
($)
|
Number
of Shares Acquired
on
Vesting
(#)
|
Value
Realized on
Vesting ($) |
|
Arnold
Klann
|
||||
Necitas
Sumait
|
||||
Christopher
Scott
|
||||
John
Cuzens
|
||||
Chris
Nichols
|
||||
Joseph
Emmas
|
||||
Victor
Doclan
|
NAME
|
PLAN
NAME
|
NUMBER
OF YEARS CREDITED
SERVICE
(#)
|
PRESENT
VALUE OF ACCUMULATED
BENEFIT
($)
|
PAYMENTS DURING LAST
FISCAL YEAR ($)
|
Arnold
Klann
|
||||
Necitas
Sumait
|
||||
Christopher
Scott
|
||||
John
Cuzens
|
||||
Chris
Nichols
|
||||
Joseph
Emmas
|
||||
Victor
Doclan
|
NAME
|
EXECUTIVE
CONTRIBUTION IN LAST FISCAL
YEAR
($)
|
REGISTRANT
CONTRIBUTIONS
IN LAST FISCAL YEARS ($) |
AGGREGATE
EARNINGS IN LAST FISCAL
YEAR
($)
|
AGGREGATE
WITHDRAWALS /
DISTRIBUTIONS
($)
|
AGGREGATE
BALANCE
AT LAST FISCAL YEAR-END ($) |
Arnold
Klann
|
|||||
Necitas
Sumait
|
|||||
Christopher
Scott
|
|||||
John
Cuzens
|
|||||
Chris
Nichols
|
|||||
Joseph
Emmas
|
|||||
Victor
Doclan
|
NAME
|
FEES
EARNED OR PAID IN CASH
($)
|
STOCK
AWARDS
($)
(1)
|
OPTION
AWARDS
($)
|
NON-EQUITY
INCENTIVE PLAN COMPENSATION
($)
|
CHANGE
IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION
EARNINGS
($)
|
ALL
OTHER COMPENSATION
($)
|
TOTAL
($)
|
Arnold
Klann
|
5,070
|
5,070
|
|||||
Necitas
Sumait
|
5,070
|
5,070
|
|||||
Chris
Nichols
|
7,500
(2)
|
5,070
|
10,070
|
||||
Joseph
Emmas
|
5,000
|
25,350
|
30,350
|
||||
Victor
Doclan
|
5,000
|
25,350
|
30,350
|
(1)
|
Reflects
value of shares of restricted common stock received as compensation as
Director. See notes to consolidated financial statements for
valuation.
|
(2)
|
Includes
partial 2006 compensation of $2,500 paid in
2007.
|
NAME
|
YEAR
|
PERQUISITES
AND OTHER PERSONAL BENEFITS
($)
|
TAX
REIMBURSEMENTS
($)
|
INSURANCE
PREMIUMS
($)
|
COMPANY
CONTRIBUTIONS TO RETIREMENT AND 401(K) PLANS
($)
|
SEVERANCE
PAYMENTS/
ACCRUALS ($) |
CHANGE
IN
CONTROL PAYMENTS/ ACCRUALS ($) |
TOTAL
($)
|
Arnold
Klann
|
||||||||
Necitas
Sumait
|
||||||||
Christopher
Scott
|
||||||||
John
Cuzens
|
||||||||
Chris
Nichols
|
||||||||
Joseph
Emmas
|
||||||||
Victor
Doclan
|
NAME
|
YEAR
|
PERSONAL
USE OF COMPANY CAR/PARKING
|
FINANCIAL
PLANNING LEGAL FEES
|
CLUB
DUES
|
EXECUTIVE
RELOCATION
|
TOTAL
PERQUISITES AND OTHER PERSONAL BENEFITS
|
Arnold
Klann
|
||||||
Necitas
Sumait
|
||||||
Christopher
Scott
|
||||||
John
Cuzens
|
||||||
Chris
Nichols
|
||||||
Joseph
Emmas
|
||||||
Victor
Doclan
|
NAME
|
BENEFIT
|
BEFORE
CHANGE IN CONTROL TERMINATION W/O CAUSE OR FOR GOOD REASON
|
AFTER
CHANGE IN CONTROL TERMINATION W/O CAUSE OR GOOD REASON
|
VOLUNTARY
TERMINATION
|
DEATH
|
DISABILITY
|
CHANGE
IN CONTROL
|
Arnold
Klann
|
Full
comp. first 2 months, 50% of comp. next 4 months
|
||||||
Necitas
Sumait
|
Full
comp. first 2 months, 50% of comp. next 4 months
|
||||||
Christopher
Scott
|
N/A
|
||||||
John
Cuzens
|
Full
comp. first 2 months, 50% of comp. next 4 months
|
||||||
Chris
Nichols
|
Full
comp. first 2 months, 50% of comp. next 4 months
|
||||||
Joseph
Emmas
|
Full
comp. first 2 months, 50% of comp. next 4 months
|
||||||
Victor
Doclan
|
Full
comp. first 2 months, 50% of comp. next 4 months
|
Title
of Class
|
Name
of Beneficial Owner (1)
|
Number
of
shares
|
Percent
of
Class
(2)
|
||||||
Common
|
Arnold
Klann, Chairman and Chief Executive Officer
|
14,335,242 | (4) | 49.78 | % | ||||
Common
|
Necitas
Sumait, Senior Vice President and Director
|
1,587,250 | (5) | 5.58 | % | ||||
Common
|
John
Cuzens, Chief Technology Officer and Senior Vice President
|
1,584,750 | (6) | 5.57 | % | ||||
Common
|
Chris
Scott, Chief Financial Officer
|
217,730 | (7) | * | |||||
Common
|
Chris
Nichols, Director
|
58,000 | * | ||||||
Common
|
Victor
Doolan, Director
|
5,000 | * | ||||||
Common
|
Joseph
Emas, Director
|
5,000 | * | ||||||
Common
|
Quercus
Trust (3)
|
11,111,112 | (8) | 33.05 | % | ||||
All
officers and directors as a group (7 persons)
|
17,792,972 | 59.93 | % | ||||||
All
officers, directors and 5% holders as a group (8 persons)
|
28,904,084 | 82.01 | % |
(1)
|
Beneficial
ownership is determined in accordance with Rule 13d-3(a) of the Exchange
Act and generally includes voting or investment power with respect to
securities.
|
(2)
|
Figures
may not add up due to rounding of percentages.
|
(3)
|
David
Gelbaum and Monica Chavez Gelbaum are co-trustees of The Quercus
Trust. Each of David Gelbaum and Monica Chavez Gelbaum, acting
alone, has the power to exercise voting and investment control over the
shares of common stock owned by the Trust.
|
(4)
|
Includes
options to purchase 736,742 shares of common stock vested within sixty
days of December 31, 2007.
|
(5)
|
Includes
options to purchase 381,250 shares of common stock vested within sixty
days of December 31, 2007.
|
(6)
|
Includes
options to purchase 381,250 shares of common stock vested within sixty
days of December 31, 2007.
|
(7)
|
Includes
options and warrants to purchase 128,750 shares of common stock vested
within sixty days of December 31, 2007.
|
(8)
|
Includes
a warrant to purchase 5,555,556 shares of common
stock.
|
DATE
ISSUED:
|
OPTIONEE
NAME
|
NUMBER
OF OPTIONS
|
TYPE
|
PRICE
|
EXPIRATON
DATE
|
December
20, 2007
December
20, 2007
|
Arnold
Klann, Officer and Director
|
28,409
250,000
|
ISO
(1)
NSO
(2)
|
$3.52
$3.20
|
December
20, 2012
December
20, 2012
|
December
20, 2007
December
20, 2007
|
Necitas
Sumait, Officer and Director
|
31,250
175,000
|
ISO
(1)
NSO
(2)
|
$3.20
$3.20
|
December
20, 2012
December
20, 2012
|
December
20, 2007
December
20, 2007
|
John
Cuzens, Officer
|
31,250
175,000
|
ISO
(1)
NSO
(2)
|
$3.20
$3.20
|
December
20, 2012
December
20, 2012
|
December
20, 2007
December
20, 2007
|
Chris
Scott, Officer
|
31,250
175,000
|
ISO
(1)
NSO
(2)
|
$3.20
$3.20
|
December
20, 2012
December
20, 2012
|
December
20, 2007
December
20, 2007
|
Bill
Davis, Employee
|
31,250
175,000
|
ISO
(1)
NSO
(2)
|
$3.20
$3.20
|
December
20, 2012
December
20, 2012
|
December
20, 2007
December
20, 2007
|
Rigel
Stone, Employee
|
31,250
150,000
|
ISO
(1)
NSO
(2)
|
$3.20
$3.20
|
December
20, 2012
December
20, 2012
|
December
20, 2007
|
Barbi
Rios, Employee
|
5,000
|
ISO
(1)
|
$3.20
|
December
20, 2012
|
December
20, 2007
|
Scott
Olson, Outside Consultant
|
10,000
|
NSO
(3)
|
$3.20
|
December
20, 2012
|
December
20, 2007
|
Aleshia
Knickerbocker, Outside Consultant
|
2,500
|
NSO
(3)
|
$3.20
|
December
20, 2012
|
December
20, 2007
|
Bill
Orr, Outside Consultant
|
10,000
|
NSO
(3)
|
$3.20
|
December
20, 2012
|
December
20, 2007
|
Elsa
Ebro, Outside Consultant
|
5,000
|
NSO
(3)
|
$3.20
|
December
20, 2012
|
Totals
|
1,317,159
|
EXHIBIT
NO.
|
DESCRIPTION
|
2.1
|
Stock
Purchase Agreement and Plan of Reorganization dated May 31, 2006, filed
December 13, 2006.(1)
|
3.1
|
Amended
and Restated Articles of Incorporation dated July 2, 2006, filed December
13, 2006.(1)
|
3.2
|
Amended
and Restated Bylaws dated May 27, 2006, filed December 13,
2006.(1)
|
4.1
|
Form
of Promissory Note.(2)
|
4.2
|
Form
of Subscription Agreement.(2)
|
4.3
|
Description
of Promissory Note dated July 13, 2007. (4)
|
4.4
|
Form
of Convertible Promissory Note dated August 22, 2007.
(5)
|
4.5
|
Form
of Warrant Agreement dated August 22, 2007. (5)
|
4.6
|
Stock
Purchase Agreement dated December 3, 2007. (7)
|
4.7
|
Securities
Purchase Agreement dated December 14, 2007. (7)
|
4.8
|
Form
of Warrant dated December 14, 2007 (7)
|
10.1
|
Form
Directors Agreement, filed December 13, 2006.(1)
|
10.2
|
Form
Executive Employment Agreement, filed December 13,
2006.(1)
|
10.3
|
Arkenol
Technology License Agreement, dated March 1, 2006, filed December 13,
2006.(1)
|
10.4
|
ARK
Energy Asset Transfer and Acquisition Agreement, dated March 1, 2006,
filed December 13, 2006.(1)
|
10.5
|
Form
of the Consulting Agreement. (2)
|
10.6
|
Amended
and Restated 2006 Incentive and Nonstatutory Stock Option Plan, dated
December 13, 2006 (6)
|
10.7
|
CFO
Employment Agreement (3)
|
14.1
|
Code
of Ethics (9)
|
21.1
|
List
of Subsidiaries (3)
|
24.1
|
Power
of Attorney (8)
|
31.1
|
Rule
13a-14(a)/15d-14(a) certification of Arnold Klann
|
31.2
|
Rule
13a-14(a)/15d-14(a) certification of Christopher Scott
|
32.1
|
Certification
pursuant to 18 USC, section 1350 of Arnold Klann
|
32.2
|
Certification
pursuant to 18 USC, section 1350 of Christopher Scott
|
99.1
|
Audit
Committee Charter (2)
|
99.2
|
Compensation
Committee Charter (2)
|
BLUEFIRE ETHANOL FUELS, INC. | |
By:
|
/s/
Arnold R. Klann
|
Arnold
R. Klann,
|
|
President
and Chief Executive Officer (Principal
Executive Officer) |
|
By:
|
/s/
Christopher Scott
|
Christopher
Scott
|
|
Chief
Financial Officer (Principal Financial
Officer and Principal Accounting Officer) |
|
Signature
|
Title
|
Date
|
||
/s/
Arnold R. Klann
|
Director
and Chairman of the Board;
|
February 28,
2008
|
||
Arnold
R. Klann
|
President
and Chief Executive Officer
|
|||
/s/
Necitas Sumait
|
Director,
Secretary and Vice President
|
February 28,
2008
|
||
Necitas
Sumait
|
||||
/s/
Chris Nichols
|
Director
|
February 28,
2008
|
||
Chris
Nichols
|
||||
/s/
Joseph I. Emas
|
Director
|
February 28,
2008
|
||
Joseph
I. Emas
|
||||
/s/
Victor H. Doolan
|
Director
|
February 28,
2008
|
||
Victor
H. Doolan
|
||||
1.
|
Compliance with Laws,
Rules and Regulations.
|
2.
|
Conflicts of
Interest.
|
Ø
|
be
a consultant to, or a director, officer or employee of, or otherwise
operate an outside business that:
|
§
|
markets
products or services in competition with our current or potential products
and services;
|
§
|
supplies
products or services to the Company;
or
|
§
|
purchases
products or services from the
Company;
|
Ø
|
accept
any personal loan or guarantee of obligations from the Company, except to
the extent such arrangements have been approved by the Chief Executive
Officer and are legally permissible;
or
|
Ø
|
conduct
business on behalf of the Company with immediate family members, which
include your spouse, children, parents, siblings and persons sharing your
same home whether or not legal
relatives.
|
3.
|
Corporate
Opportunities.
|
4.
|
Confidentiality.
|
5.
|
Insider
Trading.
|
6.
|
Protection and Proper
Use of Company Assets.
|
7.
|
Fair
Dealing.
|
8.
|
Disclosures.
|
9.
|
Waivers.
|
10.
|
Compliance Guidelines
and Resources.
|
11.
|
Reporting
Procedures.
|
12.
|
Disciplinary
Action.
|
13.
|
No Rights
Created.
|
To:
|
All
Employees, Officers and Directors
|
From:
|
President
and Chief Executive Officer
|
Date:
|
January
___, 2007
|
Re:
|
Statement
of Company Policy
Securities
Trades By Company Personnel
|
Date:
February __, 2008
|
/s/
Arnold Klann
|
|
Arnold
Klann
|
||
CHIEF
EXECUTIVE OFFICER
|
||
/s/
Christopher Scott
|
||
Christopher
Scott
|
||
CHIEF
FINANCIAL OFFICER
|
||
/s/
Arnold Klann
|
||
Arnold
Klann
|
||
CHIEF
EXECUTIVE OFFICER
|
||
Date:
February __, 2008
|
/s/
Christopher Scott
|
|
Christopher
Scott
|
||
CHIEF
FINANCIAL OFFICER
|
||