BIOFUELS POWER CORP - FORM 10-K

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EX-31.2 - EX-31.2 - BIOFUELS POWER CORP	ex31-2.htm
EX-32.1 - EX-32.1 - BIOFUELS POWER CORP	ex32-1.htm
EX-31.1 - EX-31.1 - BIOFUELS POWER CORP	ex31-1.htm
EX-32.2 - EX-32.2 - BIOFUELS POWER CORP	ex32-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

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

For the transition period from ________________ to _________________.

Commission file number 000-52852

BIOFUELS POWER CORPORATION

(Exact name of registrant as specified in its charter)

TEXAS	56-2471691
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

20202 Hwy 59 N, Suite 210 Humble, Texas	77338
(Address of principal executive offices)	(zip code)

Registrant’s telephone number, including area code:

(281) 364-7590

Securities Registered pursuant to Section 12(g) of the Act

Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	Yes o	No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.	Yes o	No x

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 preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.	Yes x	No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

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

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

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

Yes o

No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

There has never been a public market for our stock. Based on the most recent price report on over the counter exchanges the aggregate market value of the Company is $5,204,000 at March 20, 2016.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Title of Class	Outstanding at April 4, 2016
Common Stock, $0.001 Par Value	34,691,827 Shares

No documents are incorporated by reference in this Form 10-K.

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TABLE OF CONTENTS

PART I

ITEM 1	Business	5

ITEM 1A	Risk Factors	9

ITEM 2	Properties	14

ITEM 3	Legal Proceedings	14

ITEM 4	Submission of Matters to a Vote Of Security Holders	14

PART II

ITEM 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15

ITEM 6	Selected Financial Data	17

ITEM 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

ITEM 7A	Quantitative and Qualitative Disclosures About Market Risks	19

ITEM 8	Financial Statements and Supplementary Data	20

ITEM 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	31

ITEM 9A	Controls And Procedures	31

PART III

ITEM 10	Directors, Executive Officers and Corporate Governance	33

ITEM 11	Executive Compensation	35

ITEM 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36

ITEM 13	Certain Relationships and Related Transactions, and Director Independence	37

ITEM 14	Principal Accounting Fees and Services	37

PART IV

ITEM 15	Exhibits, Financial Statement Schedules	38

	Signatures	39

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

“Forward-looking” statements have been included throughout this report on Form 10-K. These statements arise most frequently in connection with our attempt to predict future events. The words “may,” “will,” “expect,” “believe,” “plan,” “intend,” “anticipate,” “estimate,” “continue,” and similar expressions, as well as discussions of our strategy, are intended to identify forward-looking statements. Although we believe that these forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will in fact occur and caution that actual results may differ materially from those in the forward-looking statements. The important factors listed in the section entitled “Risk Factors,” as well as any cautionary language in this report on Form 10-K, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations described in any forward-looking statements. You should be aware that the occurrence of the events described in this Report on Form 10-K could have an adverse effect on our business or financial condition. You should also be aware that the “forward-looking” statements are subject to a number of risks, assumptions and uncertainties, such as:

·	Our early stage of development, our brief operating history and our rapidly evolving business plan which make our prospects difficult to evaluate;

·	Our need to raise substantial capital to finance our planned expansion, our history of significant operating losses and our inability to provide any assurances that our planned operations will be profitable;

·	Our history of significant related party transactions with former affiliates that may give rise to conflicts of interest, result in significant losses to our company or otherwise impair investor confidence;

·	Our reliance on part-time executive officers who are engaged in other activities and will face conflicts of interest in allocating their time among various interests;

·	Our need to obtain a premium price for our sales, successfully execute our growth strategy in a rapidly evolving market and develop ancillary sources of revenue;

·	Our exposure to substantial volatility in the market prices for feedstock and our inability to fully hedge against commodity price changes which may cause our results of operations to fluctuate;

·	Our exposure to a variety of risks associated with the construction, permitting and operation of our planned facilities;

·	Our inability to rely on pricing as a principal competitive advantage and our need to focus our marketing efforts;

·	Our ability to satisfy our future capital requirements and react to business opportunities;

·	Other factors including those detailed in this report on Form 10-K under the heading “Risk Factors.”

You should not unduly rely on forward-looking statements, which speak only as of the date of this report on Form 10-K. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the forward-looking statements in this report.

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PART I

ITEM 1— BUSINESS

History:

From inception through mid-2006, we engaged in a largely unsuccessful effort to complete live fire testing and obtain military procurement contracts for the Deto-Stop explosion prevention system. In December 2006, we changed our name to Biofuels Power Corporation, assumed control over two partnerships described below that were organized and syndicated by Texoga during 2006, raised approximately $1.5 million in equity from the sale of common stock and reformulated our business plan to focus on building and operating distributed electrical generating plants in the metropolitan Houston area that are fueled by alternative fuels. In addition, due to the low cost of natural gas in the U.S., the firm is diversifying to develop Gas-to-Liquids production plants.

Texoga Biofuels 2006-1 (“TBF-1”), a Texas limited partnership, was syndicated by Texoga in April 2006 and raised $3.5 million from the private sale of 3,500 units of limited partnership interest to 36 accredited investors. TBF-1 provided the principal financing for a biodiesel fueled electric power generating facility in Oak Ridge North, Texas. As of December 31, 2015 and 2014, the Company own all 3,500 TBF-1 units.

Texoga Biofuels 2006-2 (“TBF-2”), a Texas limited partnership, was syndicated by Texoga in August 2006 and raised $3.5 million from the private sale of 3,500 units of limited partnership interest to 45 accredited investors. TBF-2 provided substantial financing for a biodiesel fueled electric power generating facility in Montgomery County Texas. In December 2006, Texoga assigned its general partner interest in TBF-2 to us with the written consent of a 2/3 majority of the limited partners. While we assumed all of Texoga’s rights and obligations as general partner of TBF-2, we did not issue any securities or pay any consideration to Texoga in connection with the assignment. After assuming our role as general partner of TBF-2, we offered to exchange shares of our common stock for TBF-2 units. Since December 2006, we have issued 4,318,326 shares of our common stock to purchase 3,050 TBF-2 units. As of December 31, 2015 and 2014, Biofuels Power Corporation owns a 10% general partner interest in TBF-2, together with 87.1% of the limited partner interests.

The exchange of TBF-2 units for shares of our common stock has not changed the structure of TBF-2 or adversely impacted the rights of its limited partners. However, as the beneficial owner of 87.1% of the limited partner interests, we have voting control over the partnership and are entitled to receive the same distributions the original limited partners would have received. Under the applicable agreements, the holders of the TBF-2 units that we do not own are entitled to receive 12.9% of any federal tax credits generated by our turbine power facility until they receive cumulative distributions of $900,000. Thereafter, they will be entitled to receive 1.9% of any federal tax credits generated by our turbine power facility until we exercise the buy-out rights specified in the partnership agreement. Our consolidated financial statements reflect the rights of the TBF-2 limited partners as a minority interest. In light of our current ownership of 87.1% of the limited partnership interests, we do not expect the minority interests to have a material impact on our future net income.

References to “our company,” “we,” “us,” and “our” refer collectively to our company, the partnership that we manage as general partner and our recently formed subsidiaries Alternative Energy Consultants, Inc. and Independence Synfuel, LLC. Our executive office is located at 20202 Hwy 59 N, Suite 210, Humble, Texas 77338. Our telephone number is 281-364-7590.

Introduction: We are utilizing our prior experience in the use of alternative fuels in small-scale distributed electrical power generating plants to develop Gas-to-Liquids (“GTL”) field units that can take cheaper stranded natural gas reserves and produce higher valued liquid petroleum products. We began producing electricity and selling power into the ERCOT grid in 2007 and then we began selling power into the Entergy grid in the first quarter of 2008. Both of these projects utilized 100% renewable fuels to produce electricity during a period when power prices were high. By 2010, a glut in natural gas supplies reduced the power prices by over two-thirds. We discontinued power sales at this time and shifted to our current focus on GTL projects which could take advantage of low natural gas prices versus higher relative oil prices.

As part of the redirection of our business we signed a letter of intent in 2012 with RMBI International (now “Liberty GTL”) to perform an engineering study with ThyssenKrupp Industrial Solutions (“Krupp”) related to the construction of a small scale, modular gas-to-liquids (“GTL”) facility located at the company’s Houston Clean Energy Park (“HCEP”). Krupp was chosen because of their experience in the gas-to-liquids industry when the German government produced over one billion barrels of synthetic crude oil during the last eighty years. The technology under consideration for the engineering study is not new or untested but rather links conventional equipment in a unique way.

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The Front-End Engineering Design (“FEED”) study has been completed at a cost of over $3 million and on July 19th 2014 we entered into a Joint Cooperation Agreement with Krupp and Liberty GTL to build a small scale GTL demonstration facility at our HCEP site. Krupp agreed to provide technical services and contribute a syngas refinery (autothermal reformer) from an operating chemical plant of proven design. Liberty GTL has agreed to provide intellectual property and operating know how regarding crude oil synthesis along with the relevant catalyst supply. The purpose of the three year project is to commercially demonstrate converting stranded natural gas resources to synthetic crude oil and to test one or more GTL reactors that would still need to be acquired.

The current low cost of natural gas and abundant supplies produced from unconventional shale resources enhances the opportunity to profitably convert natural gas to higher value liquid fuels. The focus of the feasibility study will be on smaller units capable of converting 5 – 10 million cubic feet per day of natural gas into approximately 500 – 1,000 bbls per day of syncrude (a combination of petroleum components including diesel grade fuel and naptha waxes). A plant capacity expansion on the company’s HCEP site may be initiated on successful completion of the initial GTL Plant. The GTL Plant concept under consideration would also be capable of exporting power into the Texas ERCOT grid.

Future projects of this type may be attractive to the numerous oil operators drilling shale gas wells that may be confronted with curtailing production or, in the extreme case, ceasing production entirely. These “stranded gas wells” would be able to produce if the planned GTL units could process the natural gas immediately after completion of the well.

Business: The current focus of our business is the introduction of GTL process units to stranded gas wells located initially in Southern United States including Texas, Louisiana and Oklahoma. This area is best for our business model due to its proximity to the Houston Ship Channel with its numerous purchasers of petroleum products and chemicals. In addition, Texas is home to some of the top engineering firms and process equipment fabricators. Finally, these states have thousands of shale gas wells that would be suitable for the application of GTL technologies.

The current venture to construct a pilot plant GTL facility could result in both the operation of a GTL plant as well as the sale of these modular plants to others. There are a number of wells drilled for shale gas that are shut in due to lack of a pipeline connection. These wells could produce quicker if modular systems were available to convert the natural gas into salable petroleum products. We would like to build, sell and commission small plants such as these.

Operations: Our current operations are conducted at two sites near Houston, Texas. Currently our operations are suspended as noted on page 10. All of our facilities are located within 20 miles of downtown Houston.

At the date of this annual report on Form 10-K, we have:

Purchased a 79 acre industrial site (now 54.3 acres) in Houston, Texas which was the location of the decommissioned H. O. Clarke Power Plant formerly owned by Houston Light and Power. The decommissioned generating plant generated up to 288 MW from gas fired steam turbines from the 1940’s to the late 1990’s when the industry was deregulated. At that time, Texas Genco acquired the generation assets and Centerpoint Energy acquired the transmission and distribution assets including the 12 kV and 138 kV substations adjacent to the site. Texas Genco installed six GE Frame 5 gas-fired combustion turbines providing over 80 MW as peaker units into the Centerpoint distribution 12 kV system. These combustion turbines were decommissioned in 2004 but the interconnection assets remain intact and the substation is still used continuously. We relocated our remaining power generation equipment to this site but we have redirected our focus to our GTL project. We plan to build a pilot scale GTL project at a site other than the H. O. Clarke facility that can be used to demonstrate the technology outlined in the recently completed FEED study. Following the successful demonstration of the pilot plant, we plan to develop well site GTL plants to be used on the numerous stranded gas wells in Texas and surrounding states. Significant additional funds are required to implement these plans and there is no assurance that we will be successful in raising the necessary capital to proceed. We plan to sell the H. O. Clarke property and the equipment that was moved there in 2009.

The current low cost of natural gas and abundant supplies produced from unconventional shale resources enhances the opportunity to profitably convert natural gas to higher value liquid fuels. The focus of the company’s GTL development will be on smaller units capable of converting 5 – 10 million cubic feet per day of natural gas into feasibility approximately 500 – 1,000 bbls per day of syncrude. A plant capacity expansion on the company’s Houston Clean Energy Park may be initiated on successful completion of the initial GTL Plant. The GTL Plant concept under consideration would also be capable of exporting power into the Texas ERCOT grid.

Future projects of this type may be attractive to the numerous oil operators drilling shale gas wells that may be confronted with curtailing production or, in the extreme case, ceasing production entirely. These “stranded gas wells” would be restored to production if the planned GTL units could process the natural gas immediately after completion of the well.

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In January 2008, we began operations at our Montgomery County power plant, which was connected to Entergy’s grid. This facility was the first biofuel-fired power plant in the United States to deliver electricity into an inter-connected transmission network. We operated both the Oak Ridge North and Montgomery County facilities as “peaking plants,” which means they were dispatched during periods of peak demand when prices for electricity were higher and idled during low-demand periods when electricity prices were lower. In light of damage to the ERCOT and Entergy transmission networks resulting from Hurricane Ike, high biodiesel and renewable diesel supply costs, lower power prices and ongoing negotiations to acquire the 79 acre industrial site in Houston, we elected to suspend operations at both Oak Ridge North and Montgomery County facilities. Subsequently, we moved equipment from the Montgomery County facility to the new 79 acre industrial site. For these reasons, we have no revenue from power sales and we have operated in a cash conservation mode while we attempted to raise expansion capital. There is no assurance that sufficient capital can be raised to continue company operations.

Operating Revenues:

By suspending operations at the Conroe and Oak Ridge North sites and relocating equipment to the H. O. Clarke site, we achieved no operating revenue for 2015 and 2014. Should we be successful in constructing a GTL plant on our site, we hope to derive operating revenue in excess of our expenses.

There is no assurance that our plans to augment any future revenue from our GTL project will be successful. Even if we realize substantial revenues from these sources and others, there are no assurances that our revenues will ever exceed our operating costs or that we will be able to generate operating profits on a sustained basis. If we are unable to significantly increase our operating revenue or significantly reduce our fuel costs, our business will fail.

Sales and Marketing:

Since we have not yet built a GTL plant, we cannot specifically identify the principal potential markets or likely customers for these projects. However, we believe that GTL plants will be attractive to natural gas field owners that do not have ready access to a pipeline to allow for the sale of the gas. In addition, there are numerous oil operators with wells that produce economic amounts of oil with a small amount of natural gas but no pipeline connection. In the past, these wells could flare the gas to atmosphere to allow for the production of the oil volumes. The governmental rules have changed to drastically reduce the air emissions associated with flare gas, so many of these gas fields cannot be brought to economic production.

Company subsidiaries: In August 2007, we organized a subsidiary company named Alternative Energy Consultants, Inc. (“AEC”), which will engage in the business of designing and building standardized GTL plants for our company and third parties. Our ultimate goal for AEC is to develop an engineering staff for the design work; a fabrication division to manufacture key components; and a field staff to provide procurement, construction and operating services. As we develop additional experience in the development and construction of new GTL facilities, those designs will also be made available to third parties through AEC. AEC has no operations and its assets are fully depreciated.

In December 2014, we organized a subsidiary limited liability company named Independence Synfuel, LLC (“Independence”), which will fund and operate our pilot scale GTL plant on our HCEP site. Our goal for Independence is to develop joint venture opportunities with Krupp and Liberty GTL.

Competition: In the oil and gas process equipment markets, we compete with all major oilfield service companies that provide equipment to the major and independent oil and gas producers. Until we are able to sell GTL plants to others or operate them for our own account, we will be forced to operate in a largely non-competitive market segment consisting of major oilfield service companies selling to major oil companies.

Most of our competitors have greater financial resources than we do; are able to produce equipment cheaper than we can; and are better able to withstand periods of negative cash flows while they introduce new products to the marketplace. In the specific GTL marketplace, there are approximately eight equipment suppliers that have proprietary reactor designs that will require IP agreements or royalty agreements to be negotiated with customers. We have elected to avoid this method of product placement by becoming “first to market” with off the shelf technologies that have been used for decades, are robust and are duplicable for modular field applications.

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Regulatory Compliance: All phases of designing, constructing and operating GTL plants are subject to environmental regulation by various federal and state government agencies, including, but not limited to, the EPA, the Texas Commission on Environmental Quality (“TCEQ”) and other agencies in each jurisdiction where our existing and proposed facilities are located. Environmental laws and regulations relating to exhaust emissions, air and water quality and the discharge of pollutants in general are extensive and have become progressively more stringent. Since emissions from GTL processes can be lower than emissions from the combustion of other liquid fuels, we may have lesser costs to ensure compliance with applicable environmental laws and regulations than petroleum-fueled projects. Nevertheless, applicable laws and regulations are subject to change, which could be made retroactively. Violations of environmental laws and regulations or permit conditions can result in substantial penalties, injunctive orders compelling installation of additional controls, civil and criminal sanctions, permit revocations and/or facility shutdowns. If significant unforeseen liabilities arise for corrective action or other compliance, our sales and profitability could be adversely affected.

Our current and planned operations require licenses, permits and in some cases renewals of these licenses and permits from various governmental authorities. Our ability to obtain, amend, comply with, sustain, or renew such licenses and permits on acceptable, commercially viable terms are subject to change, as, among other things, the regulations and policies of applicable governmental authorities may change. Our inability to obtain, amend to conform to our operations, or extend a license or a loss of any of these licenses or permits may have a material adverse effect on our business, financial condition and results of operations.

Failure to comply with government regulations could subject us to civil and criminal penalties requiring us to forfeit property rights and may affect the value of our assets or our ability to conduct our business. We may also be required to take corrective actions, including, but not limited to, installing additional equipment, which could require us to make substantial capital expenditures. We could also be required to indemnify our employees in connection with any expenses or liabilities that they may incur individually in connection with regulatory action against them. These could result in a material adverse effect on our business, financial condition and results of operation. To date, our expenditures for regulatory compliance have not been material, but we expect the cost of regulatory compliance to increase as our business develops.

Research and Development, Patents and Intellectual Property: During the last four years, we have no material expenditures for activities that are properly classified as research and development. We do not own any patents and our business plan is not based on intellectual property other than the know-how and experience of our directors, officers and key employees.

Employees: We have four statutory employees at the date of this annual report on Form 10-K including a three-member management and business development team and one administrative employee. We also use part-time independent contractors to perform a variety of specialized services. We are not subject to any collective bargaining agreements. For construction of facilities, the company plans to use outside construction firms and subcontract labor to supplement our workforce.

Exchange Act Registration, Periodic Reporting and Audited Financial Statements

We have registered our common stock under the Securities Exchange Act of 1934 and are required to file annual and quarterly reports, proxy statements and other reports with the SEC. All reports and other filings we make with the SEC will be available on our corporate website at www.biofuelspower.com.

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ITEM 1A — RISK FACTORS

Our business involves a high degree of risk. The following risk factors should be considered carefully in addition to the other information contained in this annual report on Form 10-K.

We are an early stage company, our business is evolving and our prospects are difficult to evaluate.

From inception through mid-2006, we engaged in an unsuccessful effort to negotiate military procurement contracts for an explosion preventing aluminum mesh fuel tank filler. In December 2006, we changed our name to Biofuels Power Corporation, raised approximately $1.5 million in new capital and assumed operational and legal responsibility for two partnerships that were organized by Texoga during 2006. In 2011, we expanded our focus to include the development of GTL technologies. Our prospects must be carefully considered in light of our history, our high capital costs, our exposure to commodity price fluctuations and the other risks, uncertainties and difficulties that are typically encountered by companies that are implementing novel business models. Some of the principal risks and difficulties we expect to encounter include our ability to:

·	Raise substantial capital to finance our planned expansion, together with the losses we expect to incur as we begin a period of rapid growth;

·	Install our planned GTL pilot plant and design and build new GTL facilities while maintaining effective control over the cost of new facilities;

·	Reduce the risk of commodity price swings and optimize the value of the GTL project we produce through price hedging, forward contracts and similar activities;

·	Develop, implement and maintain financial and management control systems and processes to control the cost of our GTL activities;


·	Develop, implement and maintain systems to ensure compliance with a variety of governmental and quasi-governmental rules, regulations and policies;

·	Adapt and successfully execute our rapidly evolving and inherently unpredictable business plan and respond to competitive developments and changing market conditions;

·	Attract, retain and motivate qualified personnel; and

·	Manage each of the other risks identified in this annual report on Form 10-K.

Because of our lack of operating history and our early stage of development, we have limited insight into trends and conditions that may exist or might emerge and affect our business. There is no assurance that our business strategy will be successful or that we can or will successfully address these risks.

The auditors’ report on our consolidated financial statements includes a going concern qualification.

For the years ended December 31, 2015 and 2014, we incurred net (losses) of ($908,305) and ($1,089,109) respectively. At December 31, 2015 and 2014, we had ($8,224,671) and ($6,536,845) respectively, in working capital deficit and our accumulated deficit was ($19,314,268) and ($18,405,963) respectively. Therefore, the independent auditors’ reports on our financial statements for the years ended December 31, 2015 and December 2014 contain an emphasis paragraph that our financial statements have been prepared assuming that our company will continue as a going concern and that our history of operating losses and negative cash flow raise substantial doubt about that assumption.

We have significant weaknesses in our system of internal controls that could subject us to regulatory scrutiny or impair investor confidence, which could adversely affect our business and our stock price.

Section 404 of the Sarbanes-Oxley Act of 2002 requires companies to do a comprehensive evaluation of their internal controls. At present, our system of internal controls does not satisfy all applicable regulatory requirements. Future efforts to bring our system of internal controls into compliance with Section 404 and related regulations will likely require the commitment of significant financial and managerial resources. If we fail in that effort, we could be subject to regulatory scrutiny or suffer a loss of investor confidence, which could adversely affect our business and our stock price.

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We have engaged in significant related party transactions with former affiliates that may give rise to conflicts of interest, result in significant losses to our company or otherwise impair investor confidence, which could adversely affect our business and our stock price.

We have engaged in significant related party transactions with Texoga, a former affiliate of our company. The principal related party transactions during 2008 include participation under a rent sharing arrangement for the office space that both companies use as their principal executive office. While we are not controlled by or under common control with Texoga, the commonality of ownership between both companies is declining; and all related party transactions must be approved by the disinterested members of our board of directors; related party transactions in general have a higher potential for conflicts of interest than third-party transactions, could result in significant losses to our company and may impair investor confidence, which could adversely affect our business and our stock price.

All our officers are part-time employees who are engaged in other activities and will face conflicts of interest in allocating their time among their various interests.

Our CFO, Sam H. Lindsey, Jr. and our director Steve McGuire are both actively engaged in other business activities. While our officers or directors aren't engaged in activities that are competitive with our business, they will both face conflicts of interest in allocating their time among their various interests. To the extent that material conflicts of interest arise, those conflicts may have a material adverse impact on our business or stock price. We plan to hire a full-time CEO and a full time CFO, but can offer no assurance respecting the availability of suitably experienced executive officers, the amount of time required to complete our planned executive search, or the terms of any future employment agreement a newly hired executive officer will require.

Over the long-term, we must obtain a premium price for our GTL plants and product prices or our business will fail.

Since our business will rely on the sale and/or operation of GTL plants we must be able to sell enough plants with a high enough sales commission to generate sufficient revenue to maintain profitability. In operating our own GTL plant, we must receive a low enough feedstock natural gas price combined with a high enough liquid fuel sales price to remain profitable. Even if we realize substantial revenues from these sources and others, there are no assurances that our future revenues will ever exceed our operating costs or that we will be able to generate operating profits on a sustained basis. If we are unable to significantly generate operating revenue or significantly reduce our fuel costs, our business will fail.

Our growth strategy may not be executed as planned which could adversely impact our financial condition and results of operations.

There can be no assurance that our rapidly evolving and inherently unpredictable growth strategy will be successful. For example, there can be no assurance that the current spread between natural gas prices and crude prices will remain in the marketplace. Execution of our growth strategy, if achieved, may take longer than expected or cost more than expected. Our growth strategy is dependent upon many variables, including, but not limited to, market factors and technology risks. Any change to any of these dynamics could affect the execution our growth strategy, including causing management to change its strategy.

The sale, operation and maintenance of GTL facilities involves significant risks that could adversely affect our results of operations and financial condition.

The operation and maintenance of GTL facilities involves many risks, including start-up risks, breakdown or failure of facilities, lack of sufficient capital to maintain the facilities, the dependence on a specific fuel source or the impact of unusual or adverse weather conditions or other natural events, as well as the risk of performance below expected levels of output, efficiency or reliability, the occurrence of any of which could result in lost revenues and/or increased expenses. Even if our equipment is maintained in accordance with good engineering practices, it may require significant expenditures to maintain adequate levels of efficiency and reliability. Our ability to successfully and timely complete capital improvements to existing facilities or other capital projects is contingent upon many variables and subject to substantial risks. Should any such efforts be unsuccessful, our company could be subject to additional costs and/or the write-off of its investment in the project or improvement.

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We expect to incur substantial losses in the future as we expand our operations, build new facilities and develop new markets for our GTL plants.

We expect to generate recurring losses until we can establish our reliability as a GTL operator and equipment supplier. Moreover:

·	we will incur substantial additional costs for procurement, marketing and administrative overhead as we retain new management and hire suitable operating personnel;

·	we will incur substantial additional depreciation and amortization costs associated with new facilities and those costs may be significantly greater than anticipated; and

·	our activities as an active GTL operator and equipment supplier will expose our company to commodity price risks on both the natural gas we use and the liquids we produce.

In combination, the foregoing costs and expenses will likely give rise to substantial near-term operating losses and may prevent our company from achieving profitability for an extended period of time. We expect to rely on equity financing to fund our operating losses and other cash requirements until we are able to negotiate a power contracts and develop ancillary sources of revenue. If our net losses continue, we will experience negative cash flow, which will hamper current operations and prevent our company from expanding. We may be unable to attain, sustain or increase profitability on a quarterly or annual basis in the future, which could require us to scale back or terminate our operations.

The market prices for our natural gas feedstock are highly volatile, which may cause our results of operations to fluctuate.

The principal raw materials used in GTL plants are commodities that are subject to substantial price variations due to factors beyond our control. Commodity prices are determined from minute to minute based on supply and demand and can be highly volatile. There can be no assurances that any hedging activities will effectively insulate us from future commodity price volatility or that the value of the feedstock we use will not exceed the value of the product we generate. We cannot predict the future price of our feedstock and any material price increases will adversely affect our future operating performance.

Our activities cannot be fully hedged against changes in commodity prices and our hedging procedures may not work as planned or hedge counterparties may default on their obligations to us.

We cannot fully hedge the risk associated with changes in feedstock prices. To the extent that we have un-hedged positions, fluctuating commodity prices can materially impact our results of operations and financial position. To manage our financial exposure to commodity and energy price fluctuations, we will routinely enter into contracts to hedge portions of our feedstock requirements and may enter into contracts to hedge portions of our production capacity. As part of this strategy, we may enter into fixed-price forward purchase and sales contracts, futures, financial swaps and option contracts traded on exchanges. Although we intend to devote a considerable amount of management time and effort to the establishment of risk management procedures as well as the ongoing review of the implementation of these procedures, the procedures in place may not always be followed or may not always function as planned and we cannot eliminate all the risks associated with these activities. As a result of these and other factors, we cannot precisely predict the impact that risk management decisions may have on our business, results of operations or financial position.

To the extent that we engage in hedging and risk management activities, our company will be exposed to the risk that counterparties that owe us money or commodities as a result of market transactions will not perform their obligations. Should the counterparties to these arrangements fail to perform, we might be forced to make alternative hedging arrangements or honor the underlying commitment at then-current market prices. In such event, we might incur losses in addition to amounts, if any, already paid to the counterparties.

In connection with our possible hedging and risk management activities, we may be required to guarantee or indemnify our performance relating to such activities. We might not be able to satisfy all of these guarantees and indemnification obligations if they were to come due at the same time. In addition, reductions in credit quality or changes in the market prices could increase the cash collateral required to be posted in connection with hedging and risk management activities, which could materially impact our liquidity and financial position.

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Introducing GTL technologies to the market is time consuming and expensive and may not ultimately result in an operating profit.

To achieve profitable operations, we must convince potential customers that petroleum liquids produced from natural gas is worth a significant cost for capital equipment. The cost associated with GTL technology development can be very high and new product lines often generate substantial losses for an extended period of time before making a meaningful contribution to long term profitability. There is no assurance that our GTL plants will command a premium price in the market or that our marketing activities will be successful or profitable. Even if we are ultimately successful, delays, additional expenses and other factors may significantly impair our potential profitability and there is no assurance that our company will ever generate an operating profit.

We may be unable to obtain commercially reasonable terms on construction contracts for our planned GTL facilities.

We served as our own contractor for our Oak Ridge North and Montgomery County facilities and performed all necessary engineering, procurement and construction work in-house or using third-party consultants. We have recently created a wholly-owned subsidiary named Alternative Energy Consultants, Inc. (“AEC”) to manage our engineering, procurement and construction work and perform comparable services for third parties. We presently own 100% of AEC, although our percentage interest is expected to decline as it hires additional staff and expands its operations. We plan to rely on AEC in connection with planned future expansion of our generating capacity. If we are not able to obtain commercially reasonable terms from AEC for any future acquisition and construction projects, our operations and planned growth could be adversely affected.

We may need to increase cost estimates for the acquisition or construction of future GTL facilities.

The cost of engineering, procurement and construction for new GTL facilities could increase significantly and there is no assurance that the final cost of any GTL facilities we establish in the future will not be materially higher than anticipated. There may be design changes, material cost escalations or budgetary overruns associated with the construction of future plants. Any significant increase in the estimated construction cost of the plants could delay our ability to generate revenues or reduce the amount of revenues realized.

Various risks associated with the construction of our planned GTL facilities may adversely affect our sales and profitability.

We may experience delays in the construction of our planned GTL facilities that we decide to build or operate in the future. We may also encounter defects in materials and/or workmanship in connection with such projects. Any defects could delay the commencement of operations of the facilities, or, if such defects are discovered after operations have commenced, could halt or discontinue operation of a particular facility indefinitely. In addition, construction projects often involve delays in obtaining permits and encounter delays due to weather conditions, the provision of materials or labor or other events. In addition, changes in political administrations at the federal, state or local levels that result in policy change towards oilfield processing or our project in particular, could cause construction and operation delays. Any of these events may adversely affect our sales and profitability.

We will be a small player in an intensely competitive industry and may be unable to compete.

The oil and gas processing industry in Texas is large and intensely competitive. Potential end-users of our equipment are generally dependent on their equipment supplies and unlikely to accept our company as a reliable supplier until they are satisfied that our operations will not materially impair the reliability or efficiency of their operations. Therefore, we believe that potential end-users will be unlikely to sign a contract with us until they have completed an extensive and complex internal analysis. As a result, we anticipate a lengthy sales cycle and there can be no assurance that end-users will purchase our GTL plants and services.

We intend to offer generous equity compensation packages to our management and employees.

As a key component of our growth strategy, we intend to offer generous equity compensation packages to our management and employees. We believe such compensation packages will allow us to provide substantial incentives to our executives and employees while minimizing our cash outflow. Nevertheless, we will be required to account for the fair market value of compensatory stock issuances as operating expenses. The non-cash expenses arising from future incentive transactions are expected to materially and adversely affect our future operating results.

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We may issue additional shares of common stock or derivative securities that will dilute the percentage ownership interest of our existing shareholders and may dilute the book value per share of our common stock and adversely affect the terms on which our company may obtain additional capital.

Our authorized capital includes 50,000,000 shares of common stock. The Board of Directors has the authority, without action by or vote of our shareholders, to issue all or part of the authorized shares of common and preferred stock for any corporate purpose, including equity-based incentives under existing and future incentive stock plans. We are likely to seek additional equity capital in the future as we develop our business and expand our operations. Any issuance of additional shares of common stock or derivative securities will dilute the percentage ownership interest of our shareholders and may dilute the book value per share of our common stock. Additionally, the exercise or conversion of derivative securities could adversely affect the terms on which our company can obtain additional capital. Holders of derivative securities are most likely to voluntarily exercise or convert their derivative securities when the exercise or conversion price is less than the market price for the underlying common stock. Holders of the securities will have the opportunity to profit from any rise in the market value of our common stock or any increase in our net worth without assuming the risks of ownership of the underlying shares of our common stock.

We will not be required to comply with all of the requirements of the Sarbanes-Oxley Act of 2002 because we will not be quoted or listed on the Nasdaq or a national securities exchange and quotation of our shares on the OTC Bulletin Board will limit the liquidity and price of our securities more than if our securities were so quoted or listed.

Because our securities are not quoted on or expected to qualify for quotation on the Nasdaq or any other national securities exchange, we are not subject to all of the corporate governance requirements of the Sarbanes-Oxley Act of 2002, such as independent director standards and audit committee requirements. While we may choose to voluntarily adopt some of the requirements of Sarbanes-Oxley, you may not have all of the corporate governance protection afforded to investors in companies listed on Nasdaq or a national exchange. Quotation of our securities on the OTC Bulletin Board will limit the liquidity and price of our securities more than if our securities were quoted or listed on Nasdaq or a national exchange.

Under Rule 144, as recently amended by the SEC, the substantial bulk of our common stock is eligible for unrestricted resale into the public markets and future sales of large numbers of shares into a limited trading market or the perception that those sales could occur may cause our stock price to decline.

Fewer than 20% of our outstanding shares are owned by directors, officers and affiliates of our company and the substantial bulk of our remaining shares have been outstanding for more than six months. Under Rule 144, as recently amended by the SEC, all shares held by non-affiliates that have been issued and outstanding for more than one year are presently eligible for resale. Commencing 90 days after the effective date of our Form 10 registration statement, all shares held by non-affiliates that have been issued and outstanding for more than six months will be eligible for resale. Future sales of large numbers of shares into a limited trading market or the concerns that those sales may occur could cause the trading price of our common stock to decrease or to be lower than it might otherwise be. If an active, stable and sustained trading market does not develop, the market price for our shares will decline and such declines are likely to be permanent.

Our common stock will probably be subject to the “penny stock” rules which would make it a less attractive investment.

SEC rule 3a51-1 defines a “penny stock” as any equity security that is not listed on the NASDAQ system or a national securities exchange and has an inside bid price of less than $5 per share. Our common stock will probably be subject to the penny stock rules. Before effecting a transaction that is subject to the penny stock rules, a broker-dealer must make a determination respecting the suitability of the purchaser; deliver certain disclosure materials to the purchaser and receive the purchaser’s written approval of the transaction. Because of these restrictions, most broker-dealers refrain from effecting transactions in penny stocks and many actively discourage their clients from purchasing such securities. Therefore, both the ability of a broker-dealer to recommend our common stock and the ability of holders of our common stock to sell their shares in the secondary market are likely to be adversely affected. Until the inside bid price of our stock exceeds $5 per share, the penny stock rules will decrease market liquidity and make it difficult for you to use our stock as collateral.

We are unlikely to pay dividends for the foreseeable future.

We have never declared or paid cash dividends and we do not expect to pay cash dividends in the foreseeable future. While our dividend policy will be based on the operating results and capital needs of our business, we believe any future earnings will be retained to finance ongoing operations and the expansion of our business.

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ITEM 2 — PROPERTIES

Our executive office is located at 20202 Hwy 59 N, Suite 210, Humble, TX 77338. Our telephone number is 281-364-7590. We are utilizing the space on a monthly basis and are not under a lease agreement with regard to the space.

In addition to our executive office facilities, we had:

·	purchased a 79 acre industrial site in Houston, Texas called H. O. Clarke that has a decommissioned former Houston Light and Power generating plant that had supplied up to 288 MW from gas fired steam turbines to the city from the 1940’s to the late 1990’s when the industry was deregulated.

H.O. Clarke Facility: We purchased the 79 acre H.O. Clarke site from NRG Energy on March 25, 2008. A portion of this site was sold and we currently own just over 54 acres. The facility has a decommissioned 288 MW steam plant, a connection to the adjacent 138 kV Centerpoint Energy transmission substation, 65,000 bbl above ground fuel storage tankage, two 6” and one 12” natural gas pipelines previously connected to a Kinder Morgan high pressure gas pipeline and six turbine pad sites with connections to a 12Kv distribution power line and adjacent to Centerpoint Energy distribution substation.

ITEM 3 — LEGAL PROCEEDINGS

We are not a party to any material litigation, and we are not aware of any pending or threatened litigation against us that could have a material adverse effect on our business, operating results or financial condition.

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

We have not submitted any matters for a stockholders vote during 2014 and 2015.

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PART II

ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

We are currently trading on the OTCBB exchange as BFLS.PK.

Holders

As of March 20, 2016, there were 292 holders of record of our common stock, including 100 original Texoga Shareholders; 58 former holders of TBP-I and TBP-II units that exchanged their units for shares of our common stock; 58 shareholders who purchased shares in our private placements; 54 shareholders who purchased outstanding shares from our shareholders and 24 employees who received shares of our stock in compensatory transactions. See "Security Ownership of Certain Beneficial Owners and Management" for information on the holders of our common stock. Also see "Description of Registrant’s Securities to be Registered" for a description of our outstanding and issued capital stock.

Dividends

We have never paid cash dividends on our common stock and do not intend to pay cash dividends in the foreseeable future. Our company is not likely to pay cash dividends for an extended period of time, if ever. You should not subscribe to purchase our shares if you require current income from your investments.

2007 Stock Incentive Plan

Our Board of Directors adopted an incentive stock plan for the benefit of our employees. Under the terms of the plan, we are authorized to grant incentive awards for up to 2,000,000 shares of common stock. No incentive awards are outstanding at the date of this annual report on Form 10-K. When we are eligible to do so, we intend to file a registration statement under the Securities Act on Form S-8 to register the securities included in and authorized by our 2007 Incentive Stock Plan. That registration statement is expected to become effective upon filing Form S-8. Shares covered by the registration statement will thereupon be eligible for sale in the public market, subject in certain cases to vesting and other plan requirements.

The plan provides for the grant of incentive awards to full-time employees, non-employee directors and consultants. Within the limits of the plan, the Company will have absolute discretion in deciding who will receive awards and the terms of such awards. The plan authorizes the creation of incentive and/or non-qualified stock options, shares of restricted and/or phantom stock and stock bonuses. In addition, the plan will allow us to grant cash bonuses payable when an employee is required to recognize income for federal income tax purposes because of the vesting of shares of restricted stock or the grant of a stock bonus.

The Compensation Committee will administer the plan; decide which employees will receive incentive awards; make determinations with respect to the type of award to be granted; and make determinations with respect to the number of shares covered by the award. The Compensation Committee will also determine the exercise prices, expiration dates and other features of awards. The Compensation Committee will be authorized to interpret the terms of the plan and to adopt any administrative procedures it deems necessary. The Compensation Committee may not, however, increase the number of shares subject to the plan; materially increase the benefits accruing to holders of incentive awards; or materially modify the eligibility requirements. All decisions of the Compensation Committee will be binding on all parties. We will indemnify each member of the Compensation Committee for good faith actions taken in connection with the administration of the plan.

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The following table provides information as of December 31, 2015 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.

Plan Category

Number of

Securities to be

Issued Upon

Exercise of

Outstanding

Options, Warrants

and Rights

Weighted

Average Exercise

Price of

Outstanding

Options, Warrants

and Rights

Number of Securities

Remaining Available

For Future Issuance

Under Equity

Compensation Plan

Equity compensation plans

approved by security holders

2,000,000 (subject to shareholder approval)

Equity compensation plans

not approved by security holders

Total

2,000,000 (subject to shareholder approval)

Securities Eligible for Resale

Rule 144 Under Rule 144, as recently amended by the SEC, all shares held by non-affiliates that have been issued and outstanding for more than one year are presently eligible for resale and commencing 90 days after the effective date of our registration statement on Form 10, all shares held by non-affiliates that have been issued and outstanding for more than six months will be eligible for resale. Future sales of large numbers of shares into a limited trading market or the concerns that those sales may occur could cause the trading price of our common stock to decrease or to be lower than it might otherwise be. If an active, stable and sustained trading market does not develop, the market price for our shares will decline and such declines are likely to be permanent

Rule 701 Under Rule 701, as currently in effect, shares of common stock acquired in compensatory transactions by employees of privately held companies may be resold by persons, other than affiliates, beginning 90 days after the date of the effectiveness of this annual report on Form 10-K, subject to manner of sale provisions of Rule 144, and by affiliates in accordance with Rule 144 without compliance with its one-year minimum holding period.

Combined On the date of this annual report on Form 10-K, we had 34,691,827 shares outstanding, including 16,106,846 shares held by persons who are not directors, officers or affiliates of our company. Of this total:

·	21,374,720 shares held by non-affiliates have been outstanding since February 28, 2007 and are presently eligible for resale pursuant to Rule;

·	450,000 shares were issued to non-affiliates pursuant to Rule 701 during 2007 and are currently eligible for resale;

·	1,983,269 shares were issued to non-affiliates during 2007, and are currently eligible for resale.

Recent Sales of Unregistered Securities

Set forth below is information regarding common stock issued by our company. Also included is the consideration, if any, we received and information relating to the section of the Securities Act, or rule of the SEC, under which exemption from registration was claimed.

Sale of Common Stock for Cash

During the year ended December 31, 2015, there were no shares sold. During the year ended December 31, 2014, we sold 3,230,000 shares of our common stock to accredited investors for cash.

Purchases of Equity Securities

We have never purchased any shares of our common stock and we are not likely to purchase any shares in the foreseeable future. Our founders have not repurchased any shares of our common stock and are not likely to do so in the foreseeable future.

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ITEM 6 — SELECTED FINANCIAL DATA.

We are a smaller reporting issuer as defined in Item 10 of Regulation S-K and are not required to report the selected financial data specified in Item 301 of Regulation S-K.

ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of the financial condition and plan of operations contains forward-looking statements that involve risks and uncertainties. Please see “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this annual report on Form 10-K.

Financial condition

In December 2006, we became the general partner of TBF-1 and TBF-2; sold approximately 2 million shares of our common stock for approximately $1.5 million in cash; recorded 1,050,000 shares of common stock as unissued in exchange for 700 units of limited partnership interest in TBF-1; and issued 870,000 shares of common stock in exchange for 580 units of limited partnership interest in TBF-2. Since December 31, 2006, we have acquired all of the remaining TBF-1 units and dissolved the partnership. We have also acquired 2,470 additional TBF-2 units and presently own an 87.1% majority of the outstanding TBF-2 units. Our consolidated financial statements for the years ended December 31, 2015 and 2014 include the accounts of TBF-1 and TBF-2. The following table provides summary balance sheet information as of December 31, 2015 and 2014, and is based on the audited annual consolidated financial statements included elsewhere in this annual report on Form 10-K.

	December 31, 2015			December 31, 2014
ASSETS
Cash	$	-		$	2,245
Receivable from joint venture		-			833,110

Property and equipment, net		10,000			1,434,083

Other Assets
Receivable from joint venture		833,110			-
Real estate held for sale		1,370,493			-
Total assets	$	2,213,603		$	2,269,438

LIABILITIES
Current Liabilities	$	8,224,671		$	7,372,200
Notes Payable – related parties		191,250			191,250


Total liabilities	$	8,415,921		$	7,563,450

STOCKHOLDERS DEFICIT

Common stock, 34,691,827shares issued and outstanding at December 31, 2015 and 2014	$	34,692		$	34,692
Additional paid in capital		13,077,257			13,077,257

Accumulated deficit		(19,314,268	)		(18,405,963	)

Total stockholders' deficit	$	(6,202,318)		$	(5,294,012)

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Plan of Operation

We began producing electricity and selling power into the ERCOT grid in 2007 and then we began selling power into the Entergy grid in the first quarter of 2008. Both of these projects utilized 100% renewable fuels to produce electricity during a period when power prices were high. By 2010, a glut in natural gas supplies reduced the power prices by over two-thirds. We discontinued power sales at this time and shifted to our current focus on GTL projects which could take advantage of low natural gas prices versus higher relative oil prices.

As part of the redirection of our business we signed a letter of intent in 2012 with RMBI International (now “Liberty GTL”) to perform an engineering study with ThyssenKrupp Industrial Solutions (“Krupp”) related to the construction of a small scale, modular gas-to-liquids (“GTL”) facility located at the company’s Houston Clean Energy Park (“HCEP”). Krupp was chosen because of their experience in the gas-to-liquids industry when the German government produced over one billion barrels of synthetic crude oil during the last eighty years. The technology under consideration for the feasibility study is not new or untested but rather links conventional equipment in a unique way.

The Front-End Engineering Design (“FEED”) study has been completed at a cost of over $3 million and on July 19th 2014 we entered into a Joint Cooperation Agreement with Krupp and Liberty GTL to build a small scale Gas-to-Liquids demonstration facility at our HCEP site. Krupp agreed to provide technical services and contribute a syngas refinery (autothermal reformer) from an operating chemical plant of proven design. Liberty GTL has agreed to provide intellectual property and operating know how regarding crude oil synthesis along with the relevant catalyst supply. The purpose of the three year project is to commercially demonstrate converting stranded natural gas resources to synthetic crude oil and to test one or more GTL reactors that would still need to be acquired.

Future projects of this type may be attractive to the numerous oil operators drilling shale gas wells that may be confronted with curtailing production or, in the extreme case, ceasing production entirely. These “stranded gas wells” would be released for production if the planned GTL units could process the natural gas immediately after completion of the well.

Liquidity and capital resources

During the years ended December 31, 2015 and 2014, we incurred net (losses) of $(908,305) and $(1,089,109) respectively. At December 31, 2015 and 2014, we had $-0- and $835,355 respectively, in current assets and $8,224,671 and $7,372,200 respectively, in current liabilities, leaving us a working capital deficit of $(8,224,671) and $(6,536,845) respectively.

Our available resources are not sufficient to pay our current operating expenses and the anticipated capital costs and we are presently seeking additional financing. We believe we will need at least $20 million in additional capital to finance our planned GTL plant developments and future operations. Capital requirements are difficult to plan for companies like ours that are developing novel business models. We expect that we will need additional capital to pay our day-to-day operating costs, finance our feedstock and fuel inventories, finance additions to our infrastructure and pay for the development of GTL facilities. We intend to pursue additional financing as opportunities arise.

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Our ability to obtain additional financing will be subject to a variety of uncertainties. The inability to raise additional funds on terms favorable to us, or at all, could have a material adverse effect on our business, financial condition and results of operations. If we are unable to obtain additional capital when required, we would be forced to halt operations.

As a result of our limited operating history, our operating plan and our growth strategy are unproven and we have limited insight into the long-term trends that may impact our business. There is no assurance that our operating plan and growth strategy will be successful or that we will be able to compete effectively, achieve market acceptance for green electricity or address the risks associated with our existing and planned business activities.

Contractual obligations

We have no contractual obligations

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

We are a smaller reporting issuer as defined in Item 10 of Regulation S-K and are not required to report the selected financial data specified in Item 305 of Regulation S-K.

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ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Clay Thomas, P.C.

Certified Public Accountant

500 Chestnut Street

Suite 502

Abilene, Texas 79602

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Management of

Biofuels Power Corporation

Humble, Texas

I have audited the accompanying consolidated balance sheet of Biofuels Power Corporation as of December 31, 2014 and 2013 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the years ended December 31, 2014 and 2013. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Biofuels Power Corporation as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the period then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered significant losses and will require additional capital to develop its business until the Company either (1) achieves a level of revenues adequate to generate sufficient cash flows from operations; or (2) obtains additional financing necessary to support its working capital requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Clay Thomas, P.C.

www.claythomaspc.com

Abilene, Texas

May 1, 2015

clay.thomas@claythomaspc.com

www.claythomaspc.com

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Biofuels Power Corporation

We have audited the accompanying consolidated balance sheet of Biofuels Power Corporation (the “Company”), as of December 31, 2015, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2015. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Biofuels Power Corporation at December 31, 2015, and the results of its operations and its cash flows for the year ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

/s/ Briggs & Veselka Co.

Houston, Texas

April 19, 2016

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BIOFUELS POWER CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31, 2015 and 2014

	2015			2014
ASSETS

Current Assets
Cash	$	-		$	2,245
Receivable from joint venture					833,110

Total Current Assets		-			835,355

Property and equipment, net		10,000			1,434,083

Other Assets
Receivable from joint venture		833,110
Real estate held for sale		1,370,493			-
		2,203,603			-

Total Assets	$	2,213,603		$	2,269,438


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Cash overdraft	$	529		$	-
Accounts payable		969,651			953,487
Notes payable - related parties, unsecured		30,065			30,065
Notes payable - related parties, secured		3,373,447			3,131,668
Interest payable - related parties		3,850,979			3,256,980

Total Current Liabilities		8,224,671			7,372,200

Long Term Debt
Notes payable - related parties, unsecured		191,250			191,250

Total Liabilities		8,415,921			7,563,450

Stockholders' Deficit
Common stock, $.001 par value, 50,000,000 shares authorized; 34,691,827 shares issued and outstanding		34,692			34,692
Additional paid in capital		13,077,257			13,077,257
Accumulated deficit		(19,314,268	)		(18,405,963	)

Total Stockholders' Deficit		(6,202,318	)		(5,294,012	)

	$	2,213,603		$	2,269,438

See accompanying notes to consolidated financial statements.

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BIOFUELS POWER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31, 2015 and 2014

	2015			2014
Revenue
Sales	$	-		$	-

Cost of sales		-			-

Gross profit (deficit)		-			-

General and administrative expenses		314,307			520,789

Operating loss		(314,307	)		(520,789	)

Other Expense:
Interest expense		(593,998	)		(568,320	)

Total other expense		(593,998	)		(568,320	)

Net loss	$	(908,305	)	$	(1,089,109	)

Basic and diluted net loss per common share	$	(0.03	)	$	(0.03	)

Weighted average common shares outstanding - basic and diluted		34,691,827			32,984,431

See accompanying notes to consolidated financial statements.

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BIOFUELS POWER CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

For the years ended December 31, 2015 and 2014

					Additional
	Common Stock				Paid In		Accumulated
	Shares		Amount		Capital		Deficit			Total

Balance at December 31, 2013		31,461,827	$	31,462	$	12,434,487	$	(17,316,854	)	$	(4,850,904	)

Issuance of common stock		3,230,000		3,230		642,770					646,000

Net loss								(1,089,109	)		(1,089,109	)

Balance at December 31, 2014		34,691,827		34,692		13,077,257		(18,405,963	)		(5,294,012	)

Net loss		-		-		-		(908,305	)		(908,305	)

Balance at December 31, 2015		34,691,827	$	34,692	$	13,077,257	$	(19,314,268	)	$	(6,202,318	)

See accompanying notes to consolidated financial statements.

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BIOFUELS POWER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2015 and 2014

	2015			2014

Cash flows from operating activities:
Net loss	$	(908,305	)	$	(1,089,109	)
Adjustments to reconcile net loss to net cash used in operating activities
Fixed asset impairment		73,038			-
Changes in operating assets and liabilities:
Accounts receivable					(833,110	)
Accounts payable		16,164			927,373
Interest payable - related parties		593,998			568,318

Net Cash used in operating activities		(225,105	)		(426,528	)

Cash flows from investing activities:
Acquisition cost of property improvements		(19,448	)		(223,051	)

Cash flows from financing activities:
Proceeds from notes payable - related parties		241,779			5,600
Cash overdraft		529			-
Proceeds from sales of common stock		-			646,000

Net cash provided by financing activities		242,308			651,600

Net increase (decrease) in cash		(2,245	)		2,022

Cash beginning of year		2,245			222

Cash end year	$	-		$	2,245

See accompanying notes to consolidated financial statements.

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BIOFUELS POWER CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Background

Biofuels Power Corporation (“BPC”), a Texas corporation, was incorporated in 2004 as Aegis Products, Inc. The Company is a distributed energy company that is pioneering the use of biodiesel to fuel small electric generating facilities that are located in close proximity to end-users. BPC’s first power plant is located near Houston, Texas in the city of Oak Ridge North. During February 2007, BPC began generating and selling its power through Fulcrum Power to Centerpoint Energy. In January 2008, BPC’s second power plant located just north of its first facility near the City of Oak Ridge North began generating and selling its power directly to Entergy.

Aegis Products, Inc. was incorporated in Texas on January 20, 2004 as a wholly-owned subsidiary of Texoga Technologies Corp. (“Texoga”). Effective December 31, 2004 Aegis was spun off from Texoga through a share distribution to the Texoga shareholders with 87 owners receiving a total of 14,512,380 shares. During 2006 the Texoga BioFuels 2006-1 and 2006-2 partnerships were established and each raised $3.5 million to develop biofueled power projects in the Houston, Texas area. Texoga began serving as the general partner and on November 6, 2006, Texoga transferred its general partner role to Aegis which simultaneously changed its name to Biofuels Power Corporation.

During 2007, we created a subsidiary, Alternative Energy Consultants, Inc. (“AEC”). AEC will engage in the business of designing and building of standardized GTL plants. AEC is currently inactive.

In December 2014, we created a subsidiary, Independence Synfuel, LLC (“Independence”). Independence will further develop the joint venture with Krupp and Liberty GTL. Currently Independence is inactive.

Consolidation

In accordance with ASC Codification Topic 810: Consolidation of Variable Interest Entities, which requires the consolidation of certain variable interest entities, these consolidated financial statements include the accounts of BPC, Texoga BioFuels 2006-1, Ltd, (“TBF-1”) and Texoga BioFuels 2006-2, Ltd. (“TBF-2”). BPC, TBF-1 and TBF-2 are referred to collectively as the “Company”. All material intercompany transactions have been eliminated in consolidation. Some totals may not add because of rounding.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) 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. Significant estimates include collectability of receivables, evaluation of impairment on long-term assets, and utilization of net operating losses. Actual results could materially differ from those estimates.

Cash and Cash Equivalents

The Company considers any highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. There are no cash equivalents at December 31, 2015 and 2014.

Receivable from Joint Venture

The Company has entered into a joint venture agreement with Liberty GTL, SA for the purpose of funding and constructing a pilot gas to liquids (GTL) plant. The initial joint venture agreement was executed May 25, 2012, and has been amended December 10, 2013, July 9, 2014, and February 26, 2015. The equipment to be used has been billed to both Biofuels Power Corporation and to Liberty GTL, SA as of December 31, 2014. The equipment invoice is reflected in the accounts payable of the Company as well as engineering fees. Biofuels Power Corporation has recorded an account receivable from the joint venture as a result of recognizing the joint venture accounts payable. As of December 31, 2015 and 2014 the receivable from the joint venture was $833,110.

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Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Expenditures for normal repairs and maintenance are charged to expense as incurred. Fixed assets are depreciated using the straight-line method for financial reporting purposes over their estimated useful life of 5 years. The cost and related accumulated depreciation of assets sold or otherwise disposed of are removed from the accounts and any gain or loss is included in operations.

Impairment of Long-Lived Assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be realizable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying value amount to determine if an impairment of such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value. Beginning in the third quarter 2009, the Company began relocating to the newly acquired H. O. Clark facility. As a result the remaining un-depreciated value of leasehold improvements at the Oak Ridge North and Tamina facilities were expensed. Equipment at the Oak Ridge North facility that was not relocated, but was sold in the first quarter was written down to its net realizable value. Equipment that was moved from the Tamina facilities in 2009 that remains has been written down in prior years from its carrying value to fair market value. Management has determined that the carrying value of the Siemens Synox should be impaired from $63,000 to $10,000 resulting in a $53,000 impairment expense for the year ended December 31, 2015. The capitalized cost of the site preparation at Humble of $20,038 was impaired at December 31, 2015. There was no asset write down for the year ended December 31, 2014.

Income Taxes

The Company uses the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and income tax carrying amounts of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance to reduce deferred tax assets to their net realizable value.

The Partnership’s taxable income or loss for any period is included in the tax returns of the individual partners and, therefore, the Partnership does not provide for federal income taxes.

Loss Per Common Share

The Company provides basic and dilutive loss per common share information for each period presented. The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the year ended December 31, 2015 and 2014, the Company did not have any potential dilutive securities.

Stock-Based Compensation

The cost of employee services received in exchange for stock is measured based on the grant-date fair value (with limited exceptions). That cost is to be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period). The fair value of immediately vested shares is determined by reference to quoted prices for similar shares and the fair value of shares issued subject to a service period is estimated using an option-pricing model. Excess tax benefits are recognized as addition to paid-in-capital.

Fair Value of Financial Instruments

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made. Fair value estimates of financial instruments are based on relevant market information and may be subjective in nature and involve uncertainties and matters of significant judgment. The Company believes that the carrying value of its assets and liabilities approximates the fair value of such items. The Company does not hold or issue financial instruments for trading purposes.

Concentration of Credit Risk

Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents and accounts receivable. Balances periodically exceed the $100,000 federal depository insurance limit.

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Reclassifications

Certain reclassifications have been made to the prior year financial statements to conform to the current financial statement presentation. These reclassifications had no effect on the Company’s equity or net loss.

2. Going Concern

During the years ended December 31, 2015 and 2014, the Company has experienced negative financial results as follows:

	2015			2014
Net (loss)	$	(908,305	)	$	(1,089,109	)
(Negative) cash flows from operations		(225,105	)		(426,528	)
Accumulated deficit		(19,314,268	)		(18,405,963	)

Management has developed specific current and long-term plans to address its viability as a going concern as follows:

·	The Company is attempting to raise funds through debt and/or equity offerings. If successful, these additional funds will be used to provide working capital.

·	In the long-term, the Company believes that cash flows from growth in its operations will provide the resources for continued operations.

·	The Company is also pursuing other strategic initiatives including a merger or sale of the Company as opportunities are available.

There can be no assurance that the Company will have the ability to implement its business plan and ultimately attain profitability. The Company’s long-term viability as a going concern is dependent upon three key factors, as follows:

·	The Company’s ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations in the near term.

·	The ability of the Company to control costs and expand revenues.

·	The ability of the Company to ultimately achieve adequate profitability and cash flows from operations to sustain its operations.

3. Property and Equipment

Property and equipment consisted of the following at December 31, 2015 and 2014:

	2015			2014

Power generating equipment	$	1,995,000		$	2,048,000
Buildings and improvements		-			1,351,045
Machinery and equipment		31,029			51,067
Less accumulated depreciation		(2,016,029	)		(2,016,029	)

Total property and equipment, net	$	10,000		$	1,434,083

Power generating equipment and machinery and equipment for 2015 reflect impairment of $53,000 and $20,038 respectively. The H. O. Clarke property was reclassified from fixed assets to real estate held for sale on the consolidated balance sheet as of December 31, 2015. Depreciation expense for the years ended December 31, 2015 and 2014 was $-0-.

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4. Notes Payable – Related Parties

During 2007, the Company issued $456,450 of notes payable –related parties as payment for the purchase of certain limited partnership interests. Also during 2007, $265,200 of these notes payable – related parties were paid through the issuance of 353,592 shares of the Company’s common stock valued at $0.75 per share which was the fair value of the common stock on the date of grant based on the cash price received for the common stock in a private placement offering.

As of December 31, 2015 and 2014, there were three remaining notes payable – related parties of $191,250 due to the former limited partners of TBF-1. The notes payable – related parties are not collateralized.

The Company entered into a Securities Purchase Agreement with accredited investors for the purchase of the Company’s convertible promissory notes in the aggregate amount of up to 3,000,000 bearing interest at 18% per annum, payable on or before August 19, 2016. The Company has secured notes payable outstanding of $3,373,447 and $3,131,668 as of December 31, 2015 and 2014, respectively.

The Security Purchase Agreement contains provisions that if qualified financing is not secured by the maturity date, the Company will be required to issue warrants to the note holders resulting in a valuation of $5,000,000 providing that the strike price is $0.75. In addition, the note holder has the right, but not the obligation, to convert all or a portion of the principal and accrued interest outstanding under its note into shares of common stock. The rights to issue warrants and the right to convert portions of the principal and accrued interest have been preserved as the note has been extended.

We have evaluated these features of our convertible promissory notes and determined that they meet the definition of embedded derivative as defined by ASC Codification Topic 815 and have recorded derivative liabilities of $-0- as of December 31, 2015 and $-0- as of December 31, 2014.

5. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2015 and 2014 were as follows:

	2015			2014
Deferred tax assets:

Net operating loss carry-forward	$	5,236,000		$	4,927,176

Valuation allowance		(5,236,000	)		(4,927,176	)

Net deferred tax asset	$	-		$	-

The difference between the income tax provision (benefit) in the accompanying statement of operations and the amount that would result if the U.S. Federal statutory income tax rate of 34% were applied for the year-ended December 31, 2015 and 2014, are as follows:

	2015						2014
	Amount			%			Amount			%

Benefit for income tax at federal statutory rate	$	(308,824	)		(34.0	)	$	(370,297	)		(34.0	)

Increase in valuation allowance		308,824			34.0			370,297			34.0

	$	-0-			0.0		$	-0-			0.0

As of December 31, 2015, for U.S. federal income tax reporting purposes, the Company has approximately $15,400,000 of unused net operating losses (“NOL's”) available for carryforward to future years. The benefit from carryforward of such NOL's will expire during various years through 2030. Because United States tax laws limit the time during which NOL carryforwards may be applied against future taxable income, the Company may be unable to take full advantage of its NOL for federal income tax purposes should the Company generate taxable income. Further, the benefit from utilization of NOL carryforwards could be subject to limitations due to material ownership changes that may or may not occur in the Company. Based on such limitations, the Company has significant NOL’s for which realization of tax benefits is uncertain.

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6. Stockholders’ Equity

Under the terms of the Texoga BioFuels 2006-1 and 2006-2 Partnership agreements, the partners are entitled to receive 90% of net cash flow from operations of the distributed electrical generating plants in the metropolitan Houston area until they receive cumulative cash distributions of $14 million. Thereafter, the partners are entitled to receive 15% of the net cash flow from operations until the Company exercises the buy-out rights specified in the agreements.

During the period from formation of the Partnerships through 2007, market prices of feedstocks used in the production of the biodiesel fuel used to power the Company’s power generation facilities rose dramatically, making the Company’s projected operations less profitable than originally intended. In response to the adverse market conditions for biodiesel feedstocks the Company made a series of exchange offers.

As a result of the exchange offers the Company owns 3,500 Units of TBF-1 and 2,950 Units of TBF-2, representing 100% and 84% of the outstanding Units of TBF-1 and TBF-2, respectively.

7. Commitments and Contingencies

Operating Lease

The Company leases office space on a month to month basis.

Litigation

The Company does not have any litigation at December 31, 2015 or 2014.

8. Related Party Transaction

During 2014, the Company received an additional $5,600 from shareholders as part of loan commitment that was renewed and extended for the purposes of providing capital expenditures and working capital.

During 2015, the Company received an additional $241,779 from shareholders as part of loan commitment that was renewed and extended for the purposes of providing capital expenditures and working capital.

Note payable of $30,065 as of December 31, 2015 and 2014 is a no interest unsecured note to a former officer of the Company.

Note payable of $191,250 as of December 31, 2015 and 2014 is held by three individuals who elected to receive a note payable rather than convert their partnership interest into common stock of the Company.

9. Subsequent Events

The Company sold the office building located on the H. O. Clarke property on April 13, 2016 for gross proceeds of $150,000. As part of the transaction, the Company repaid their outstanding property taxes as of December 31, 2015, and the net proceeds from the transaction were approximately $50,000. The H. O. Clarke land continues to be marketed for sale.

The Company has evaluated subsequent events through April 19, 2016, the date when the financial statements were available to be issued, and no other such events were noted except as disclosed.

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ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

NOT APPLICABLE

ITEM 9A — CONTROLS AND PROCEDURES

Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that the information we are required to disclose in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information is accumulated and communicated to management, including our chief executive officer and our chief financial officer, to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. While the design of our disclosure controls and procedures is adequate for our current needs and anticipated future conditions, and there can be no assurance that our current design will succeed in achieving its stated goals under all possible future conditions. Accordingly we may be required to modify our disclosure controls and procedures in the future.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2015. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded the design of our system of disclosure controls and procedures was adequate as of those dates to ensure that material information relating to our Company would be made known to them and that our system of disclosure controls and procedures was operating to provide a reasonable level of assurance that information required to be disclosed in our reports would be recorded, processed, summarized and reported in a timely manner. These conclusions were based on the identification of the following material weaknesses:

·	We did not properly segregate duties and restrict access to accounting systems and data, spreadsheets used for critical calculations were not properly controlled, agreements and contracts were not always promptly provided to the accounting function; and

·	We do not have a comprehensive set of policies and procedures, related to corporate governance, accounting , human resources, and other significant matters.

We added or are initiating the following additional controls to the Company’s internal control over financial reporting, which we expect will improve such internal control subsequent to the date of the assessment and earlier assessments that also concluded internal controls were not effective. These changes are:

·	We have retained a qualified independent consultant to serve as our Chief Financial Officer and to supervise our accounting staff in matters relating to the identification and implementation of proper accounting procedures and provide guidance on financial reporting issues that apply to the Company;

·	We performed additional analysis and other procedures in order to identify weaknesses in order to develop an adequate system of disclosure and financial controls,

·	We are continuing to restructure certain departmental responsibilities as they relate to the financial reporting function,

As a result of these changes, management believes that all material weaknesses have been remediated.

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Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Exchange Act Rule 13a-15(f). Our system of internal control over financial reporting is designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements and the reliability of financial reporting. Because of their inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework. Based on that assessment, we believe that as of December 31, 2015, our internal control over financial reporting is effective.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary SEC rules that permit us to provide only management’s report in this annual report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our last fiscal year that materially affected, or is likely to materially affect, our internal control over financial reporting. Our auditor has not notified us that any material weakness exists with respect to our internal financial controls.

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PART III

ITEM 10 — DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our Board of Directors presently consists of three directors who are elected to serve for one-year terms at our annual meeting of stockholders. The following table identifies our executive officers and directors and specifies their respective ages and positions.

Name	Age	Position	Term Expires
Sam H. Lindsey, Jr	70	Interim CFO
Alan Schaffner	55	Independent Director	2016 Annual Meeting
Steven McGuire	60	Managing Director, Director	2016 Annual Meeting

Sam H. Lindsey, Jr. has served as part-time Chief Financial Officer of our company since March 2008. Mr. Lindsey is a 1971 accounting major graduate of the University of Houston with a BBA. Mr. Lindsey passed the CPA exam in 1973 and has been in public accounting and industry since that time. During his time in public accounting, Mr. Lindsey served a managing partner of his accounting firm and acquired extensive experience in tax, audit, accounting services and management advisory services. Since leaving public practice, Mr. Lindsey has served as CFO for four reporting companies and a large privately held oilfield service company.

Alan Schaffner, Esq. was appointed to a newly created seat on our Board of Directors in October 2007. Mr. Schaffner has been self-employed as an independent trader at the Chicago Board of Trade for 20 years. He has extensive expertise in the agricultural futures and options markets and specializes in relational derivative strategies and risk mitigation. Mr. Schaffner is a 1982 graduate of the University of Wisconsin where he earned a degree in accounting, and a 1986 graduate of the Chicago Kent College of Law where he earned a juris doctor degree. Mr. Schaffner is a certified public accountant and a licensed attorney in Illinois.

Steven S. McGuire, was appointed director on March 13, 2014 replacing Richard DeGarmo. Mr. McGuire is the president of Texoga, serves as Managing Director as well as Project Manager for the Houston Clean Energy Park project. Mr. McGuire served as the Company’s chief executive officer and was formerly Chairman, CEO or President of three energy and technology companies that had operations in three countries and over 200 employees. Mr. McGuire is a 1977 graduate of the University of Illinois, Champaign-Urbana (B.S. Physics) and is an active member of the Society of Petroleum Engineers and the Society of Professional Well Log Analysts.

Board Committees

The Board of Directors has created an Audit Committee that presently consists of Messrs. Schaffner and McGuire. Mr. Schaffner serves as chairman of the Audit Committee. All members have a basic understanding of finance and accounting, and are able to read and understand fundamental financial statements. The board has determined that all members of our Audit Committee would meet the independence requirements of the American Stock Exchange if such standards applied to our company. The Board of Directors has also determined that based on education and work history, Mr. Schaffner meets the definition of an “Audit Committee Financial Expert” as established by the Securities and Exchange Commission. The audit committee's responsibilities include:

·	appointing, approving the compensation of, and assessing the independence of our independent auditor;

·	overseeing the work of our independent auditor and approving the release of reports from our independent auditor;

·	reviewing and discussing with management and our independent auditor our annual and quarterly financial statements and related disclosures;

·	monitoring our internal control over financial reporting, disclosure controls and procedures, and code of business conduct and ethics;

·	discussing our risk management policies;

·	establishing policies regarding hiring employees from our independent auditor and procedures for the receipt and retention of accounting related complaints and concerns;

·	meeting independently with our independent auditor and management; and

·	preparing the audit committee report required by SEC rules to be included in our proxy statements.

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All audit services and all non-audit services, except de minimis non-audit services, must be approved in advance by the Audit Committee.

The Board of Directors has created a Compensation Committee that presently consists of Messrs. Schaffner and McGuire. Mr. McGuire serves as chairman of the Compensation Committee. The Board of Directors has determined that all members of the Compensation Committee meet the independence requirements of the American Stock Exchange if such standards applied to our company. The Compensation Committee's responsibilities include:

·	annually reviewing and approving corporate goals and objectives relevant to compensation of our chief executive officer;

·	determining the compensation of our chief executive officer;

·	reviewing and approving, or making recommendations to our Board of Directors with respect to, the compensation of our other executive officers;

·	overseeing an evaluation of our senior executives;

·	overseeing and administering our cash and equity incentive plans; and

·	reviewing and making recommendations to our board with respect to director compensation.

The Board of Directors does not have a separate nominating committee, and has determined that it is appropriate for the entire board to serve that function for the time being. Accordingly, Mr. McGuire will participate in decisions respecting director nominees until an independent nominating committee is established. With respect to director nominees, the Board of Directors will consider nominees recommended by stockholders that are submitted in accordance with our By-Laws.

Corporate Governance

Our Board of Directors believes that sound governance practices and policies provide an important framework to assist them in fulfilling their duty to stockholders. Our Board of Directors is working to adopt and implement many "best practices" in the area of corporate governance, including separate committees for the areas of audit and compensation, careful annual review of the independence of our Audit and Compensation Committee members, maintenance of a majority of independent directors, and written expectations of management and directors, among other things.

Potential Conflicts of Interest

Our officers and directors are not full time employees of our company and are actively involved in other business pursuits. Accordingly, they may be subject to a variety of conflicts of interest. Since our officers and directors are not required to devote any specific amount of time to our business, they will experience conflicts in allocating their time among their various business interests.

Our officers and directors intend to comply with the requirements of Texas law, and believe they can avoid most potential conflicts of interest. If our officers and directors are subjected to an irreconcilable conflict of interest, they may elect to submit the issue for a vote of the disinterested stockholders, but they are not required to do so.

Code of Business Conduct and Ethics

The Board of Directors has adopted a Code of Business Conduct and Ethics, which has been distributed to all directors, officers, and employees and will be given to new employees at the time of hire. The Code of Business Conduct and Ethics contains a number of provisions that apply principally to our President, Chief Financial Officer and other key accounting and financial personnel. A copy of our Code of Business Conduct and Ethics can be found under the "Investor Information" section of our website at www.biofuelspower.com. We intend to disclose any amendments or waivers of our Code of Business Conduct and Ethics on our website.

Indemnification of Officers and Directors

Our Articles of Incorporation allows us to indemnify our officers and directors to the fullest extent permitted by Texas law. The indemnification provisions are sufficiently broad to provide protection against monetary damages for breach or alleged breach of their duties as officers or directors, other than in cases of fraud or other willful misconduct. Our Articles of Incorporation also provide that, subject to specific exclusions required under Texas law, our directors will not have any personal liability to our company or our stockholders for monetary damages arising from a breach of fiduciary duty. Our bylaws require us to indemnify our officers and directors to the maximum extent permitted by Texas law. In addition, our bylaws require us to advance expenses to our officers and directors as incurred in connection with proceedings against them for which they may be indemnified. The SEC believes the indemnification of directors, officers and control persons for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act and is therefore unenforceable.

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ITEM 11 — EXECUTIVE COMPENSATION

Employment Agreements

Sam H. Lindsey, Jr., our interim CFO, is not a full-time employee and does not have a written employment agreement. Mr. Lindsey provides consulting services on a per diem basis

The following table provides summary information on the compensation paid to our interim CEO and interim Vice President Finance and interim CFO during the year ended December 31, 2015.

Summary Compensation Table

Name	Position	Year	Salary		Bonus		Vested stock awards		All other compensation		Total compensation
Steven McGuire	Managing Director	2015	$	-0-		—	$	—		—	$	-0-
Robert Wilson	Interim VP Finance	2015	$	-0-		—	$	—		—	$	-0-
Sam Lindsey	Interim CFO	2015	$	22,500		—	$	—		—	$	22,500

Equity-based Compensation During 2015 and 2014

We did not issue any stock options or other equity-based compensation to any of our officers or directors during the years ended December 31, 2015 or 2014.

2015 Executive Compensation Plan

This section contains a prospective discussion of the material elements of compensation that will be awarded to, earned by or paid to our three most highly compensated individuals on a go-forward basis. These individuals, who have not yet been retained by us, are referred to as the “Named Executive Officers.”

Compensation Decision-Making

The Compensation Committee Our Compensation Committee exercises the Board of Directors’ authority concerning compensation of the executive management team, non-employee directors and the administration of our stock-based incentive compensation plans. The Compensation Committee will typically meet in separate sessions independently of board meetings. The Compensation Committee will typically schedule telephone meetings as necessary to fulfill its duties. The Chairman will typically establish meeting agendas after consultation with other committee members and our CEO.

Role of Contracts Establishing Compensation When we identify individuals to assume the posts of Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, we are likely to negotiate formal employment agreements that have terms of three to four years and contain express provisions relating to annual salaries, bonuses, equity incentives and other non-cash compensation. Our Compensation Committee will bear primary responsibility for negotiating the terms of such agreements and passing on the reasonableness thereof.

Role of Executives in Establishing Compensation We believe that our CEO and other members of management will regularly discuss our compensation issues with Compensation Committee members. In general, the Compensation Committee will have the sole authority to establish salary, bonus and equity incentives for our CEO in consultation with other members of the management team. Subject to Compensation Committee review, modification and approval, we believe our CEO will typically make recommendations respecting bonuses and equity incentive awards for the other members of the executive management team.

Compensation Program

Compensation Program Design A significant portion of the compensation for our Named Executive Officers includes equity awards that have extended vesting periods. The purpose of these awards is to serve as an incentive mechanism that will encourage recipients to remain with our Company and create value for both the award recipient and our stockholders.

Elements of Compensation

Compensation arrangements for the Named Executive Officers under our fiscal 2015 compensation program will typically include four components: (a) a base salary; (b) a cash bonus program; (c) the grant of equity incentives in the form of non-qualified stock options; and (d) other compensation and employee benefits generally available to all of our employees.

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2007 Stock Incentive Plan

Subject to stockholder approval at our next annual meeting, our Board of Directors has adopted an incentive stock plan for the benefit of our employees. Under the terms of the plan, we are authorized to grant incentive awards for up to 2,000,000 shares of common stock. No incentive awards are outstanding at the date of this annual report on Form 10-K.

The Compensation Committee will administer the plan; decide which employees will receive incentive awards; make determinations with respect to the type of award to be granted; and make determinations with respect to the number of shares covered by the award. The Compensation Committee will also determine the exercise prices, expiration dates and other features of awards. The Compensation Committee will be authorized to interpret the terms of the plan and to adopt any administrative procedures it deems necessary. All decisions of the Compensation Committee will be binding on all parties. We will indemnify each member of the Compensation Committee for good faith actions taken in connection with the administration of the plan.

All of the options and restricted shares are subject to vesting requirements and the company has the right to cancel or repurchase at cost all unvested stock options or restricted shares at the time the recipient's employment or consulting relationship with the company is terminated.

Director Compensation

We expect our Board members to be actively involved in various aspects of our business ranging from relatively narrow Board oversight functions to providing hands-on guidance to our executives with respect to matters within their personal experience and expertise. We believe that the active involvement of all Board members in our principal business and policy decisions will increase the Board’s understanding of our needs and improve the overall quality of our management decisions.

ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MATTERS

We had 34,691,827 shares of common stock issued and outstanding on the date of this annual report on Form 10-K. We have no outstanding convertible securities and no warrants or options that are presently exercisable or will become exercisable within 60 days. The following table sets forth information with respect to the beneficial ownership of our common stock for each of our executive officers and directors; all of our executive officers and directors as a group; and any other beneficial owner of more than 5% of our outstanding common stock

Except as indicated by footnotes, and subject to applicable community property laws, each person identified in the table possesses sole voting and investment power with respect to all common stock held by that person. The address of each named beneficial owner, unless indicated otherwise by footnote, is 20202 Highway 59 North, Suite 210, Humble, TX 77338.

	Shares Beneficially Owned
	Number		Percent
David S. Holland, Sr. (1)		3,077,500		8.9	%
Alan Schaffner		1,161,668		3.3	%
Robert Wilson		255,808		0.7	%
Directors and officers as a group		1,417,476		4.0	%

(1)

David S. Holland, Sr. is a retired Pennzoil executive who provided substantial equity financing for Texoga in its early stages and ultimately became the largest stockholder of that company. Mr. Holland became deceased on January 5, 2013 and his interest is now held by his estate.

There are no agreements, arrangements or understandings that will result in a change in control at any time in the foreseeable future.

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Section 16(a) beneficial ownership reporting compliance

Based solely on our review of the reports on Forms 3, 4, and 5 that were filed by our officers during the year ended December 31, 2006, we have determined that John L. Petersen, Sally A. Fonner, Rachel A. Fefer and Mark R. Dolan each failed to file a Form 3 to report their initial beneficial ownership of our shares. Our founders do not intend to file Form 4 to report their distributions of gift shares until the entire gift share distribution is completed. At the date of this report on Form 10-K, our founders have agreed to give a combined total of 224,000 gift shares to 448 family members, friends and business associates selected by them.

Except as set forth above, we are not aware of any director, officer or beneficial owner of more than 10% of any class of our equity securities that failed to file the forms required by Section 16(a) on a timely basis.

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Director Independence

The Board of Directors has determined that one of our two directors would meet the independence requirements of the American Stock Exchange if such standards applied to our company. In the judgment of the board, Mr. McGuire does not meet such independence standards. In reaching its conclusions, the board considered all relevant facts and circumstances with respect to any direct or indirect relationships between the company and each of the directors, including those discussed under the caption "Certain Relationships and Related Transactions." The board determined that any relationships that exist or existed in the past between the company and each of the independent directors were immaterial on the basis of the information set forth in the above-referenced sections.

ITEM 14. — PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit and Audit-Related Fees The aggregate fees billed to our company by Clay Thomas, PC and Briggs & Veselka Co. for audit fees and services to interim financial statements and filing of various documents with the SEC for 2015 and 2014 were $44,500 and $46,500 respectively.

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PART IV

ITEM 15. — EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) The following is a list of the financial statements filed as part of this report on Form 10-K.

Report of Independent Registered Public Accountant for the years ended December 31, 2015 and 2014

Consolidated Balance Sheets as of December 31, 2015 and 2014

Consolidated Statements of Operations for the years ended December 31, 2015 and 2014

Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2015 and 2014

Consolidated Statements of Cash Flow for the years ended December 31, 2015 and 2014

Notes to Consolidated Financial Statements

(a)(2) The following is a list of the financial statement schedules filed as part of this report on Form 10-K.

None

(a)(3) The following is a list of the Exhibits filed as part of this report on Form 10-K:

Exhibit
Number	Description

3.1	Articles of Incorporation of Aegis Products Inc. (currently Biofuels Power Corporation) dated January 11, 2004	*
3.2	First Amendment to the Articles of Incorporation of Aegis Products Inc. (currently Biofuels Power Corporation) dated December 1, 2006	*
3.3	Curative Amendment to the Articles of Incorporation of Biofuels Power Corp. dated November 12, 2007	*
3.4	By-laws of Biofuels Power Corporation	*
4.1	Form of Common Stock Certificate	*
4.2	Form of 12.5% Senior Convertible Debenture Due 2011	*
10.1	2007 Stock Incentive Plan	*
10.2	Ground Lease for 1/2-half acre parcel in Oak Ridge North Texas	*
10.3	Ground Lease for 1.5 acre parcel in Montgomery County Texas	*
10.4	Master Real Estate Lease for executive offices located at 10003 Woodloch Forest Drive, Suite 900, The Woodlands, Texas, 77380	*
10.5	Rent Sharing Agreement for executive offices located at 10003 Woodloch Forest Drive, Suite 900, The Woodlands, Texas, 77380	*
10.6	Limited Partnership Agreement of Texoga Biofuels Partners 2006-II, as amended	*
10.7	Power Marketing Agreement with Fulcrum Power Services, LP,	*
10.8	Interconnect Agreement With Centerpoint Energy for Oak Ridge North facility	*
10.9	Interconnect Agreement With Entergy for Montgomery County facility	*
14.1	Code of Business Conduct and Ethics	*
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)	Exhibit 31.1
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)	Exhibit 31.2
32.1	Statement of Chief Executive Officer Pursuant to U.S.C. Title 18, Section 1350	Exhibit 32.1
32.2	Statement of Chief Financial Officer Pursuant to U.S.C. Title 18, Section 1350	Exhibit 32.2

* Incorporated by reference to Form 10-SB Registration Statement filed January 11, 2008.

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SIGNATURES

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

BIOFUELS POWER CORPORATION

By /s/ Steve McGuire

Steve McGuire, Managing Director

Date April 19, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By: /s/ Alan Schafner	Director	Date April 19, 2016
Alan Schafner

By: /s/ Steve McGuire	Director	Date April 19, 2016
Steve McGuire

By: /s/ Sam H. Lindsey, Jr.	Chief Financial Officer	Date April 19, 2016
Sam H. Lindsey, Jr.	(Principal Financial Officer and Principal Accounting Officer)

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