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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
       OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

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


                        Commission file number 000-52361

                          BLUEFIRE ETHANOL FUELS, INC.
                 (Name of small business issuer in its charter)

                NEVADA                                      20-4590982
   (State or other jurisdiction of                       (I.R.S. Employer
    incorporation or organization)                      Identification No.)


     31 MUSICK, IRVINE, CALIFORNIA                             92618
(Address of principal executive offices)                     (Zip Code)

                   (Issuer's telephone number): (949) 588-3767

         Securities registered under Section 12(b) of the Exchange Act:


         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.001 par value

                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [ ] NO [X]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

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

Issuers revenues for its most recent fiscal year was $0.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant on March 23, 2007 was $36,288,431 based on a
closing price of $6.80 as reported on the OTC Electronic Bulletin Board system.

On March 23, 2007, 21,470,514 shares of the Company's common stock, par value
$.001 per share, were outstanding.

Documents Incorporated By Reference: None.

Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]


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                                TABLE OF CONTENTS

PART I

ITEM 1.    DESCRIPTION OF BUSINESS                                             2
ITEM 2.    DESCRIPTION OF PROPERTY                                             9
ITEM 3.    LEGAL PROCEEDINGS                                                   9
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 9

PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS           10
ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION          11
ITEM 7.    FINANCIAL STATEMENTS                                               22
ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE                                           22
ITEM 8A.   CONTROLS AND PROCEDURES                                            22
ITEM 8B.   OTHER INFORMATION                                                  23

PART III

ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND
           CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE
           EXCHANGE ACT COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT     23
ITEM 10.   EXECUTIVE COMPENSATION                                             25
ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
           AND RELATED STOCKHOLDER MATTERS                                    36
ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
           INDEPENDENCE                                                       37
ITEM 13.   EXHIBITS                                                           39
ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES                             39

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                   F-1


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                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Included in this prospectus are "forward-looking" statements, as well as
historical information. Although we believe that the expectations reflected in
these forward-looking statements are reasonable, we cannot assure you that the
expectations reflected in these forward-looking statements will prove to be
correct. Our actual results could differ materially from those anticipated in
forward-looking statements as a result of certain factors, including matters
described in the section titled "Risk Factors." Forward-looking statements
include those that use forward-looking terminology, such as the words
"anticipate," "believe," "estimate," "expect," "intend," "may," "project,"
"plan," "will," "shall," "should," and similar expressions, including when used
in the negative. Although we believe that the expectations reflected in these
forward-looking statements are reasonable and achievable, these statements
involve risks and uncertainties and we cannot assure you that actual results
will be consistent with these forward-looking statements. Important factors that
could cause our actual results, performance or achievements to differ from these
forward-looking statements include the following:

      o     the availability and adequacy of our cash flow to meet our
            requirements,

      o     economic, competitive, demographic, business and other conditions in
            our local and regional markets,

      o     changes or developments in laws, regulations or taxes in the ethanol
            or energy industries,

      o     actions taken or not taken by third-parties, including our suppliers
            and competitors, as well as legislative, regulatory, judicial and
            other governmental authorities,

      o     competition in the ethanol industry,

      o     the failure to obtain or loss of any license or permit,

      o     changes in our business and growth strategy (including our plant
            building strategy and co-location strategy), capital improvements or
            development plans,

      o     adverse publicity, including but not limited to, the recent
            adjustments in calculating mileage per gallon; and

      o     the availability of additional capital to support capital
            improvements and development, and

      o     other factors discussed under the section entitled "Risk Factors" or
            elsewhere in this registration statement.


All forward-looking statements attributable to us are expressly qualified in
their entirety by these and other factors. We undertake no obligation to update
or revise these forward-looking statements, whether to reflect events or
circumstances after the date initially filed or published, to reflect the
occurrence of unanticipated events or otherwise.


                                       1



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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

COMPANY HISTORY

BlueFire Ethanol Fuels, Inc., a Nevada corporation (the "Company"), was
initially organized as Atlanta Technology Group, Inc., a Delaware corporation,
on October 12, 1993. The Company was re-named Docplus.net Corporation on
December 31, 1998, and further re-named Sucre Agricultural Corp. and
re-domiciled as a Nevada corporation on March 6, 2006. Finally, on May 24, 2006,
in anticipation of the reverse merger by which it would acquire BlueFire
Ethanol, Inc. ("BlueFire"), a privately held Nevada corporation organized on
March 28, 2006, as described below, the Company was re-named to its current name
BlueFire Ethanol Fuels, Inc.

On June 27, 2006, the Company purchased all 10,000 shares of the issued and
outstanding common stock, par value $1.00, of BlueFire in exchange for
17,000,000 shares of the Company's common stock, par value $0.001, pursuant to a
Stock Purchase Agreement and Plan of Reorganization ("Reverse Merger"). On June
21, 2006, prior to and in anticipation of the Reverse Merger, Sucre Agricultural
Corp. ("Sucre") sold 3,000,000 shares of its common stock to two related
investors in a private offering of shares pursuant to Rule 504 for proceeds of
$1,000,000. Prior to the Reverse Merger, Sucre was not operational and
considered a blank-check company, therefore, all references to the Company's
business and financials throughout this registration statement reflect the
operations of BlueFire. BlueFire is the Company's only wholly owned operating
subsidiary.

The Company's shares of common stock began trading under the symbol "BFRE" on
the Pink Sheets of the National Quotation Bureau on July 11, 2006. On March 23,
2007 the closing price of the common stock was $ 6.80 per share.

BUSINESS OF ISSUER

PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS

BlueFire has licensed for use a patented process from Arkenol, Inc., a Nevada
corporation ("Arkenol") which produces ethanol from cellulose ("Arkenol
Technology" - described below and see Item 7. Certain Relationships And Related
Transactions for discussion of relationship between the Company and Arkenol) for
sale into the transportation fuel market. The Company is the exclusive North
America licensee of the Arkenol Technology. BlueFire's goal is to develop, own
and operate high-value carbohydrate-based transportation fuel plants to provide
a viable alternative to fossil fuels, and to provide professional services to
such plants worldwide. These "biorefineries" will convert widely available,
inexpensive, organic materials such as agricultural residues, high-content
biomass crops, wood residues, and cellulose in municipal solid wastes into
ethanol. This versatility enables BlueFire to consider a wide variety of
feedstocks and locations in which to develop facilities to become a low cost
producer of ethanol.

ARKENOL TECHNOLOGY

The production of chemicals by fermenting various sugars is a well-accepted
science. Its use ranges from producing beverage alcohol and fuel-ethanol to
making citric acid and xantham gum for food uses. However, the high price of
sugar and the relatively low cost of competing petroleum based fuel has kept the
production of chemicals mainly confined to producing ethanol from corn sugar.

In the Arkenol Technology process, incoming biomass feedstocks are cleaned and
ground to reduce the particle size for the process equipment. The pretreated
material is then dried to a moisture content consistent with the acid
concentration requirements for breaking down the biomass, then hydrolyzed
(degrading the chemical bonds of the cellulose) to produce hexose and pentose
(C5 and C6) sugars at the high concentrations necessary for commercial
fermentation. The insoluble materials left are separated by filtering and
pressing into a cake and further processed into fuel for other beneficial uses.
The remaining acid-sugar solution is separated into its acid and sugar
components. The separated sulfuric acid is recirculated and reconcentrated to
the level required to breakdown the incoming biomass. The small quantity of acid
left in the sugar solution is neutralized with lime to make hydrated gypsum
which can be used as an agricultural soil conditioner. At this point the process
has produced a clean stream of mixed sugars (both C6 and C5) for fermentation.
In an ethanol production plant, naturally-occurring yeast, which Arkenol has
specifically cultured by a proprietary method to ferment the mixed sugar stream,
is mixed with nutrients and added to the sugar solution where it efficiently
converts both the C6 and C5 sugars to fermentation beer (an ethanol, yeast and
water mixture) and carbon dioxide. The yeast culture is separated from the
fermentation beer by a centrifuge and returned to the fermentation tanks for
reuse. Ethanol is separated from the now clear fermentation beer by conventional
distillation technology, dehydrated to 200 proof and denatured with unleaded
gasoline to produce the final fuel-grade ethanol product. The still bottoms,
containing principally water and unfermented sugar, is returned to the process
for economic water use and for further conversion of the sugars.

                                       2

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Simply put, the process separates the biomass into two main constituents:
cellulose and hemicellulose (the main building blocks of plant life) and lignin
(the "glue" that holds the building blocks together), converts the cellulose and
hemicellulose to sugars, ferments them and purifies the fermentation liquids
into ethanol and other end-products.

ARK ENERGY

BlueFire may also utilize certain biorefinery related rights, assets,
work-product, intellectual property and other know-how related to nineteen (19)
ethanol project opportunities originally developed by ARK Energy, Inc,, a Nevada
corporation ("ARK Energy" - see Item 7."Certain Relationships And Related
Transactions" for discussion of relationship between the Company and ARK Energy)
to accelerate BlueFire's deployment of the Arkenol Technology. The opportunities
consist of ARK Energy's previous relationships, analysis, site development,
permitting experience and market research on various potential project locations
within North America. ARK Energy has transferred these assets to BlueFire and
valued these business assets based on management best estimates as to its actual
costs of development. In the event BlueFire successfully finances the
construction of a project that utilizes any of the transferred assets from ARK
Energy, BlueFire shall pay ARK Energy for the costs ARK Energy incurred in the
development of the assets pertaining to that particular project or location. A
more detailed description of the nineteen (19) projects that the ARK Energy
assets pertain to (including plants in California, Florida, Texas, Hawaii,
Illinois, Minnesota, New Jersey and Pennsylvania as well as Canada) is shown on
Table 1 of the Asset Transfer and Acquisition Agreement, which is attached
hereto as Exhibit 10.4. Management did not incur the costs of a third party
valuation but based its valuation of the assets acquired by (i) an arms length
review of the value assigned by ARK Energy to the opportunities is based on the
actual costs it incurred in developing the project opportunities, and (ii)
anticipated financial benefits to the Company.

PILOT PLANTS

From 1994-2000, a test pilot biorefinery plant was built and operated by Arkenol
in Orange, California to test the effectiveness of the Arkenol Technology using
several different types of raw materials containing cellulose. The types of
materials tested included: rice straw, wheat straw, green waste, wood wastes,
and municipal solid wastes. Various equipment for use in the process was also
tested and process conditions were verified leading to the issuance of the
certain patents in support of the Arkenol Technology.

In 2002, using the results obtained from the Arkenol California test pilot plant
and also based in the Arkenol Technology, JGC Corporation, based in Japan, built
and operated a bench scale facility followed by another test pilot biorefinery
plant in Izumi, Japan. At the Izumi plant Arkenol retained the rights to the
Arkenol Technology while the operations of the facility were controlled by JGC
Corporation.

BLUEFIRE PROJECTS

BLUEFIRE IS CURRENTLY IN THE DEVELOPMENT STAGE OF BUILDING BIOREFINERIES IN
NORTH AMERICA.

BlueFire plans to use the Arkenol Technology and utilize JGC's operations
knowledge from the Izumi test pilot plant to assist in the design and
engineering of BlueFire facilities in North America. JGC will provide the
preliminary design package for BlueFire's first facility and work with the
Company's selected U.S. engineering company MECS (formerly Monsanto) to complete
the detailed engineering design of the plant. This completed design should
provide the blueprint for subsequent plant constructions.

The Company has proposed an initial facility for development and construction at
the El Sobrante Landfill located in Corona, California. Once completed this
facility is projected to use approximately 700 metric dry tons of green waste
and wood waste currently disposed in the landfill to produce about 18 million
gallons of ethanol annually. Preliminary engineering design is in progress and
permitting for this facility will commence once all required preliminary
engineering design is completed. .The Company is seeking financing for the
commencement of this project.

The Company is simultaneously researching and considering other suitable
locations for other similar biorefineries.

                                       3

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STATUS OF PUBLICLY ANNOUNCED NEW PRODUCTS AND SERVICES

None.

DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES

The Company will utilize existing distribution channels to sell the ethanol that
is produced from its plants. For example, the Company has entered into a Letter
of Intent with Petro-Diamond, Inc. ("PDI") to purchase the ethanol produced from
the Company's first North American biomass-to-ethanol conversion facility to be
located at a Southern California landfill. PDI is a significant blender of
denatured ethanol into motor fuel in Southern California. Ethanol is currently
blended year-round at PDI's terminal facility located in Long Beach, California.

COMPETITIVE BUSINESS CONDITIONS AND THE SMALL BUSINESS ISSUER'S COMPETITIVE
POSITION IN THE INDUSTRY AND METHODS OF COMPETITION

COMPETITION

Most of the ethanol supply in the United States is derived from corn according
to the Renewable Fuels Association ("RFA") website (HTTP://WWW.ETHANOLRFA.ORG/)
and as of Feb 12, 2007 is produced at approximately 113 facilities, ranging in
size from 300,000 to 110 million gallons per year, located predominately in the
corn belt in the Midwest. According to the RFA, about 20% of the current
production is by the Archer-Daniels-Midland Company with over 1 Billion gallons
annually and an additional 250 million gallons of capacity being
constructed/expanded currently. Traditional corn-based production techniques are
mature and well entrenched in the marketplace, and the entire industry's
infrastructure is geared toward corn as the principal feedstock.

With the Arkenol Technology the principle difference from traditional processes
apart from production technique (covered in "Arkenol Technology" section herein)
is the acquisition and choice of feedstock. The use of a non-commodity based
non-food related biomass feedstock enables BlueFire to use feedstock typically
destined for disposal, i.e. wood waste, yard trimmings and general green waste.
All ethanol producers regardless of production technique will fall subject to
market fluctuation in the end product, ethanol.

Due to the feedstock variety BlueFire is able to process, BlueFire is able to
locate production facilities in and around the markets where the ethanol will be
consumed thereby giving BlueFire a competitive advantage against much larger
traditional producers who must locate plants near their feedstock, i.e. the corn
belt in the Midwest and ship the ethanol to the end market.

However, in the area of biomass-to-ethanol production, there are few companies
and no commercial production infrastructure is built. As we continue to advance
our biomass technology platform, we are likely to encounter competition for the
same technologies from other companies that are also attempting to manufacture
ethanol from cellulosic biomass feedstocks.

Ethanol production is also expanding internationally. Ethanol produced or
processed in certain countries in Central American and the Caribbean region is
eligible for tariff reduction or elimination upon importation to the United
States under a program known as the Caribbean Basin Initiative. Large ethanol
producers, such as Cargill, have expressed interest in building dehydration
plants in participating Caribbean Basin countries, such as El Salvador, which
would convert ethanol into fuel-grade ethanol for shipment to the United States.
Ethanol imported from Caribbean Basin countries may be a less expensive
alternative to domestically produced ethanol and may affect our ability to sell
our ethanol profitably.

                                       4

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INDUSTRY OVERVIEW

On August 8, 2005, President Bush signed into law the Energy Policy Act of 2005.
The Energy Policy Act transformed ethanol from a gasoline additive under the
1990 Clean Air Act to a primary gasoline substitute, which we believe will serve
to strengthen and expand the role of ethanol in the U.S. fuel economy. A
highlight of the Energy Policy Act is the creation of a 7.5 billion gallon
renewable fuel standard (RFS) increasing use of renewable domestic fuels such as
ethanol and biodiesel. The newly approved RFS of the Energy Policy Act
establishes that a percentage of the U.S. fuel supply will be provided by
renewable, domestic fuels such as ethanol. In addition, the Energy Policy Act
establishes a 30% tax credit up to $30,000 for the cost of installing clean fuel
refueling equipment, such as an E85 ethanol fuel pump.

Historically, producers and blenders had a choice of fuel additives to increase
the oxygen content of fuels. MTBE (methyl tertiary butyl ether), a
petroleum-based additive, was the most popular additive, accounting for up to
75% of the fuel oxygenate market. However, in the United States, ethanol is
replacing MTBE as a common fuel additive. While both increase octane and reduce
air pollution, MTBE is a presumed carcinogen which contaminates ground water. It
has already been banned in California, New York, Illinois and 16 other states.
Major oil companies have voluntarily abandoned MTBE and it is scheduled to be
phased out under the Energy Policy Act. As MTBE is phased out, we expect demand
for ethanol as a fuel additive and fuel extender to rise. A blend of 5.5% or
more of ethanol, which does not contaminate ground water like MTBE, effectively
complies with U.S. Environmental Protection Agency requirements for reformulated
gasoline, which is mandated in most urban areas.

Ethanol is a clean, high-octane, high-performance automotive fuel commonly
blended in gasoline to extend supplies and reduce emissions. In 2004, according
to the American Coalition for Ethanol, 3% of all United States gasoline was
blended with some percentage of ethanol. The most common blend is E10, which
contains 10% ethanol and 90% gasoline. There is also growing federal government
support for E85, which is a blend of 85% ethanol and 15% gasoline.

Ethanol is a renewable fuel produced by the fermentation of starches and sugars
such as those found in grains and other crops. Ethanol contains 35% oxygen by
weight and, when combined with gasoline, it acts as an oxygenate, artificially
introducing oxygen into gasoline and raising oxygen concentration in the
combustion mixture with air. As a result, the gasoline burns more completely and
releases less unburnt hydrocarbons, carbon monoxide and other harmful exhaust
emissions into the atmosphere. The use of ethanol as an automotive fuel is
commonly viewed as a way to reduce harmful automobile exhaust emissions. Ethanol
can also be blended with regular unleaded gasoline as an octane booster to
provide a mid-grade octane product which is commonly distributed as a premium
unleaded gasoline.

Studies published by the Renewable Fuel Association indicate that approximately
5.0 billion gallons of ethanol will be consumed this year in the United States
and every automobile manufacturer approves and warrants the use of E10. Because
the ethanol molecule contains oxygen, it allows an automobile engine to more
completely combust fuel, resulting in fewer emissions and improved performance.
Fuel ethanol has an octane value of 113 compared to 87 for regular unleaded
gasoline. Domestic ethanol consumption has tripled in the last eight years, and
consumption increases in some foreign countries, such as Brazil, are even
greater in recent years. For instance, 40% of the automobiles in Brazil operate
on 100% ethanol, and others use a mixture of 22% ethanol and 78% gasoline. The
European Union and Japan also encourage and mandate the increased use of
ethanol.

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For every barrel of ethanol produced, the American Coalition for Ethanol
estimates that 1.2 barrels of petroleum are displaced at the refinery level, and
that since 1978, U.S. ethanol production has replaced over 14.0 billion gallons
of imported gasoline or crude oil. According to a Mississippi State University
Department of Agricultural Economics Staff Report in August 2003, a 10% ethanol
blend results in a 25% to 30% reduction in carbon monoxide emissions by making
combustion more complete. The same 10% blend lowers carbon dioxide emissions by
6% to 10%.

During the last 20 years, ethanol production capacity in the United States has
grown from almost nothing to an estimated 5 billion gallons per year in 2006. In
the United States, ethanol is primarily made from starch crops, principally from
the starch fraction of corn. Consequently, the production plants are
concentrated in the grain belt of the Midwest, principally in Illinois, Iowa,
Minnesota, Nebraska and South Dakota.

In the United States, there are two principal commercial applications for
ethanol. The first is as an oxygenate additive to gasoline to comply with clean
air regulations. The second is as a voluntary substitute for gasoline - this is
a purely economic choice by gasoline retailers who may make higher margins on
selling ethanol-blended gasoline, provided ethanol is available in the local
market. The U.S. gasoline market is currently approximately 140 billion gallons
annually, so the potential market for ethanol (assuming only a 10% blend) is 14
billion gallons per year. Increasingly, motor manufacturers are producing
flexible fuel vehicles (particularly sports utility vehicle models) which can
run off ethanol blends of up to 85% (known as E85) in order to obtain exemptions
from fleet fuel economy quotas. There are now in excess of 5 million flexible
fuel vehicles on the road in the United States and automakers will produce
several millions per year, offering further potential for significant growth in
ethanol demand.

CELLULOSE TO ETHANOL PRODUCTION

In a recent report, "Outlook For Biomass Ethanol Production Demand," the U.S.
Energy Information Administration found that advancements in production
technology of ethanol from cellulose could reduce costs and result in production
increases of 40% to 160% by 2010. Biomass (cellulosic feedstocks) includes
agricultural waste, woody fibrous materials, forestry residues, waste paper,
municipal solid waste and most plant material. Like waste starches and sugars,
they are often available for relatively low cost, or are even free. However,
cellulosic feedstocks are more abundant, global and renewable in nature. These
waste streams, which would otherwise be abandoned, land-filled or incinerated,
exist in populated metropolitan areas where ethanol prices are higher.

SOURCES AND AVAILABILITY OF RAW MATERIALS

The U.S. DOE and USDA in its April 2005 report BIOMASS AS FEEDSTOCK FOR A
BIOENERGY AND BIOPRODUCTS INDUSTRY: THE TECHNICAL FEASIBILITY OF A BILLION-TON
ANNUAL SUPPLY found that about one billion tons of cellulosic materials from
agricultural and forest residues are available to produce more than one-third of
the current U.S. demand for transportation fuels.

DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS

Currently, the Company has no dependence on one or a few major customers,
although it has entered into a non-binding letter of intent with Petro-Diamond,
Inc. to be BlueFire's sole purchaser of ethanol from its first scheduled plant
in Southern California. BlueFire is negotiating definitive agreements but no
definitive agreement has been signed with Petro-Diamond as of yet. See
"DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES."

                                       6

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PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS

On March 1, 2006, BlueFire entered into a Technology License Agreement with
Arkenol, for use of the Arkenol Technology. Arkenol holds the following patents
in relation to the Arkenol Technology: eleven U.S. patents, twenty one foreign
patents, and one pending foreign patent. According to the terms of the
agreement, BlueFire was granted an exclusive, non-transferable, North American
license to use and to sub-license the Arkenol technology. The Arkenol
Technology, converts cellulose and waste materials into ethanol and other high
value chemicals. As consideration for the grant of the license, BlueFire shall
make a one time payment of $1,000,000 at first project construction funding and
for each plant make the following payments: (1) royalty payment of 4% of the
gross sales price for sales by BlueFire or its sublicensees of all products
produced from the use of the Arkenol Technology (2) and a one time license fee
of $40.00 per 1,000 gallons of production capacity per plant. According to the
terms of the agreement, BlueFire made a one time exclusivity fee prepayment of
$30,000 during the period ended December 31, 2006. As of December 31, 2006,
BlueFire had not incurred any liabilities related to the agreement. All
sub-licenses issued by BlueFire will provide for payments of the license fees
and royalties due Arkenol.

NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES

The Company is not subject to any government oversight for its current
operations other than for corporate governance and taxes. However, the
production facilities that the Company will be constructing will be subject to
various federal, state and local environmental laws and regulations, including
those relating to the discharge of materials into the air, water and ground, the
generation, storage, handling, use, transportation and disposal of hazardous
materials, and the health and safety of our employees. In addition, some of
these laws and regulations will require our facilities to operate under permits
that are subject to renewal or modification. These laws, regulations and permits
can often require expensive pollution control equipment or operational changes
to limit actual or potential impacts to the environment. A violation of these
laws and regulations or permit conditions can result in substantial fines,
natural resource damages, criminal sanctions, permit revocations and/or facility
shutdowns.

EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS

Currently, the federal government encourages the use of ethanol as a component
in oxygenated gasoline as a measure to protect the environment as a viable
renewable domestic fuel to reduce U.S. dependence on foreign oil.

The ethanol industry is heavily dependent on several economic incentives to
produce ethanol, including federal ethanol supports. Ethanol sales have been
favorably affected by the Clean Air Act amendments of 1990, particularly the
Federal Oxygen Program which became effective November 1, 1992. The Federal
Oxygen Program requires the sale of oxygenated motor fuels during the winter
months in certain major metropolitan areas to reduce carbon monoxide pollution.
Ethanol use has increased due to a second Clean Air Act program, the
Reformulated Gasoline Program. This program became effective January 1, 1995,
and requires the sale of reformulated gasoline in nine major urban areas to
reduce pollutants, including those that contribute to ground level ozone, better
known as smog. Increasingly stricter EPA regulations are expected to increase
the number of metropolitan areas deemed in non-compliance with Clean Air
Standards, which could increase the demand for ethanol.

On August 8, 2005, President Bush signed the Energy Policy Act of 2005 (H.R. 6)
into law. The comprehensive energy legislation includes a nationwide renewable
fuels standard (RFS) that will double the use of ethanol and biodiesel by 2012.

                                       7

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Under the RFS, a small percentage of our nation's fuel supply will be provided
by renewable, domestic fuels. The increased use of renewable fuels will expand
U.S. fuel supplies while easing an overburdened refining industry. The Energy
Policy Act of 2005 established Renewable Fuel Standard (RFS) provisions that
mandates use of renewable fuels starting at 4 billion gallons in 2006 and
increases to 7.5 billion gallons in 2012. The Act also provides that, beginning
in 2013, a minimum of 250 million gallons a year of cellulosic derived ethanol
be included in the RFS. Flexibility in meeting RFS is provided for refiners
through a credit trading program that allows refiners to use renewable fuels
where and when it is most efficient and cost-effective for them to do so. The
credit trading program will result in lower costs to refiners and thus,
consumers. RFS credits have a lifespan of 12 months. The credit trading program
allows for every gallon of cellulose-derived ethanol to be equal to 2.5 gallons
of renewable fuel. The reformulated gasoline (RFG) 2.0 wt percentage oxygenate
standard under the Clean Air Act is eliminated 270 days after enactment.
(Requirement was lifted by U.S. EPA May 8, 2006).

The use of ethanol as an oxygenate to blend with fuel to comply with federal
mandates also has been aided by federal tax policy. The Energy Tax Act of 1978
exempted ethanol blended gasoline from the federal gas tax as a means of
stimulating the development of a domestic ethanol industry and mitigating the
country's dependence on foreign oil. As amended, the federal tax exemption
currently allows the market price of ethanol to compete with the price of
domestic gasoline. The exemption for a 10% ethanol blend is the equivalent of
providing a per gallon "equalization" payment that allows blenders to pay more
for ethanol than the wholesale price of gasoline and still retain profit margins
equal to those received upon the sale of gasoline that is not blended with
ethanol. Under current legislation, the federal gasoline tax exemption for a 10%
ethanol blend is 5.2 cents per gallon. This exemption was to gradually drop to
5.1 cents per gallon in 2005, however, as of January 1, 2005, this federal tax
incentive was be replaced by a new volumetric ethanol excise tax credit
discussed below.

On October 22, 2004, President Bush signed H.R. 4520, which contained the
Volumetric Ethanol Excise Tax Credit ("VEETC") and amended the federal excise
tax structure effective as of January 1, 2005. Currently, ethanol-blended fuel
is taxed at a lower rate than regular gasoline (13.2 cents on a 10% blend).
Under VEETC, the existing ethanol excise tax exemption is eliminated, thereby
allowing the full federal excise tax of 18.4 cents per gallon of gasoline to be
collected on all gasoline and allocated to the highway trust fund. This would
add approximately $1.4 billion to the highway trust fund revenue annually. In
place of the current exemption, the bill creates a new volumetric ethanol excise
tax credit of 5.1 cents per gallon of ethanol blended. Refiners and gasoline
blenders would apply for this credit on the same tax form as before only it
would be a credit from general revenue, not the highway trust fund. Based on
volume, the VEETC is expected to allow much greater refinery flexibility in
blending ethanol.

ESTIMATE OF THE AMOUNT SPENT DURING EACH OF THE LAST TWO FISCAL YEARS ON
RESEARCH AND DEVELOPMENT ACTIVITIES

None. The Company has not developed its own proprietary technology but rather is
a licensee of the Arkenol Technology.

COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS (FEDERAL, STATE AND
LOCAL)

We will be subject to extensive air, water and other environmental regulations
and we will have to obtain a number of environmental permits to construct and
operate our plants, including, air pollution construction permits, a pollutant
discharge elimination system general permit, storm water discharge permits, a
water withdrawal permit, and an alcohol fuel producer's permit. In addition, we
may have to complete spill prevention control and countermeasures plans.

The production facilities that we will build are subject to oversight activities
by the federal, state, and local regulatory agencies. There is always a risk
that the federal agencies may enforce certain rules and regulations differently
than state environmental administrators. State or federal rules are subject to
change, and any such changes could result in greater regulatory burdens on plant
operations. We could also be subject to environmental or nuisance claims from
adjacent property owners or residents in the area arising from possible foul
smells or other air or water discharges from the plant.

NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES

We had five (5) full time employees as of March 23, 2007 and no part time
employees. None of our employees are subject to a collective bargaining
agreement, and the Company believes that its relationship with its employees is
good.

                                       8

<Page>

REPORTS TO SECURITY HOLDERS

As a result of filing its Form 10-SB on December 13, 2006, the Company has
become subject to the reporting obligations of the Securities Exchange Act of
1934, as amended (the "Exchange Act") as of February 12, 2007. These obligations
include filing an annual report under cover of Form 10-KSB, with audited
financial statements, unaudited quarterly reports on Form 10-QSB and the
requisite proxy statements with regard to annual shareholder meetings. The
public may read and copy any materials the Company files with the Securities and
Exchange Commission (the "Commission") at the Commission's Public Reference Room
at 100 F Street, NE, Washington, DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the Commission at
1-800-SEC-0030. The Commission maintains an Internet site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission.

ITEM 2.  DESCRIPTION OF PROPERTY

BlueFire leases from FR Systems, LLC on a month-to-month basis, approximately
1950 square feet of furnished office space at 31 Musick, Irvine, California
92618, for $3,500 per month.

ITEM 3.  LEGAL PROCEEDINGS

None.

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

On December 14, 2006, a majority of the Company's stockholders (approximately
75%) ratified the adoption of the Company's 2006 Incentive and Nonstatutory
Stock Option Plan by consent in lieu of a stockholder meeting.


                                       9

<Page>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's common stock has traded on the Pink Sheets of the National
Quotation Bureau under the symbol BFRE since July 11, 2006. The following table
sets forth the high and low sale prices for the Company's common stock for the
periods indicated. The prices below reflect inter-dealer quotations, without
retail mark-up, mark-down or commissions and may not represent actual
transactions.

        ------------------------------------------------------------
        QUARTER ENDED                    LOW PRICE      HIGH PRICE
        ------------------------------------------------------------

        ------------------------------------------------------------
        September 30, 2006               $    1.30      $     7.25
        ------------------------------------------------------------
        December 31, 2006                $    1.40      $     4.60
        ------------------------------------------------------------

HOLDERS

As of March 23, 2007 a total of 21,470,514 shares of the Company's common stock
are currently outstanding held by approximately 1,868 shareholders of record.

DIVIDENDS

The Company has not paid any dividends since its inception. The Company
currently intends to retain any earnings for use in its business, and therefore
does not anticipate paying dividends in the foreseeable future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

2006 INCENTIVE AND NONSTATUTORY STOCK OPTION PLAN

On December 14, 2006, the Board of Directors approved and a majority of the
Company's stockholders ratified by consent the Company's 2006 Incentive and
Nonstatutory Stock Option Plan ("Plan").

<TABLE>
<CAPTION>
                                                 PLAN INFORMATION


             Plan category                Number of securities to       Weighted average        Number of securities
                                          be issued upon exercise      exercise price of      remaining available for
                                          of outstanding options,     outstanding options,        future issuance
                                            warrants and rights       warrants and rights

                                                    (a)                       (b)                       (c)
<S>                                              <C>                         <C>                     <C>
Equity compensation plans approved by            1,990,000                   $2.00                   8,010,000
security holders: 2006 Incentive and
Nonstatutory Stock Option Plan

Equity compensation plans not approved
by security holders

Total                                            1,990,000                   $2.00                   8,010,000

WARRANT SHARES
</TABLE>

On November 21, 2006, for consulting services, the Company issued a warrant to
purchase 200,000 shares of its common stock at an exercise price of $5.00 per
share to a certain consultant.

                                       10

<Page>

RECENT SALES OF UNREGISTERED SECURITIES

In March 2006, upon incorporation BlueFire issued 10,000 shares of $1.00 par
value common stock to various individuals. In connection with the reverse
acquisition, these individuals received an aggregate of 17,000,000 shares of the
Company's restricted common stock. No solicitation was made nor was any
underwriter involved in this issuance. The offer and sale of the securities
above were effected in reliance on the exemptions for sales of securities not
involving a public offering, as set forth in Rule 506 promulgated under the
Securities Act and in Section 4(2) and Section 4(6) of the Securities Act and/or
Rule 506 of Regulation D.

Prior to the reverse acquisition, Sucre entered into an agreement with two
related investors for the sale of 3,000,000 shares of the Sucre's common stock
for gross proceeds of $1,000,000. The previous management of Sucre erroneously
issued 4,000,000 shares of the Sucre's common stock to the investors. To date,
the excess shares of 1,000,000 have not been returned to the transfer agent. The
Company has demanded the return of the 1,000,000 and is actively pursuing every
possible channel to get the shares returned. Since the Company cannot predict
the ultimate outcome, the 1,000,000 shares have been accounted for as
outstanding and included in the common shares retained by Sucre's shareholders.

On January 5, 2007, we completed a private placement of 278,500 unregistered
shares of its common stock at a price of $2.00 per share to five accredited
investors in consideration for $557,000 in gross proceeds from this offering. No
solicitation was made nor was any underwriter involved in this issuance. The
offer and sale of the securities above were effected in reliance on the
exemptions for sales of securities not involving a public offering, as set forth
in Rule 506 promulgated under the Securities Act and in Section 4(2) and Section
4(6) of the Securities Act and/or Rule 506 of Regulation D.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION SHOULD BE READ IN CONJUNCTION
WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS
INCLUDED ELSEWHERE IN THIS REGISTRATION STATEMENT. THIS DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL
PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE
OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF
ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE
FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER FACTORS INCLUDE, AMONG OTHERS,
THOSE LISTED UNDER "FORWARD-LOOKING STATEMENTS" AND "RISK FACTORS" AND THOSE
INCLUDED ELSEWHERE IN THIS REGISTRATION STATEMENT.

PLAN OF OPERATION

Management plans to raise additional funds through joint venture partnerships,
project debt financings or through future sales of the Company's common stock,
until such time as the Company's revenues are sufficient to meet its cost
structure, and ultimately achieve profitable operations. There is no assurance
that the Company will be successful in raising additional capital or achieving
profitable operations. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties. The
Company will need financing within 12 months to continue its operations.

The Company has not developed its own proprietary technology but rather is a
licensee of the Arkenol Technology and therefore has benefited from Arkenol's
research and development efforts and cost expenditures.

The Company's business will encompass development activities culminating in the
construction and long-term operation of ethanol production biorefineries, as
such, BlueFire is currently in the development-stage of finding suitable
locations and deploying project opportunities for converting cellulose fractions
of municipal solid waste and other opportunistic feedstock into ethanol fuels.

                                       11

<Page>

For the next 12 months, the Company's Plan of Operations is as follows:

      o     Obtain additional operating capital from joint venture partnerships,
            debt financing or equity financing to fund ongoing Company
            operations and the development of initial biorefineries in North
            America.

      o     The Energy Policy Act provides for grants and loan guarantee
            programs to incentivize the growth of the cellulosic ethanol market.
            These programs include a Cellulosic Biomass Ethanol and Municipal
            Solid Waste Guarantee Program under which the U.S. Department of
            Energy could provide loan guarantees up to $250,000,000 per
            qualified project. The Company has filed a pre- application for loan
            guarantees to support the development of a 55 million gallon per
            year project in California to be located adjacent to an existing
            biomass power plant.

      o     The 2005 Energy Act created a Biorefinery Demonstration Project
            Program under which $100,000,000 or another amount appropriated by
            Congress is available to fund up to three (3) biorefinery
            demonstration projects. The Company submitted a proposal for funding
            under this solicitation for its projected El Sobrante, California
            biorefinery. In February 2007, the Company was rewarded a grant of
            up to $40 million from the U.S. Department of Energy under this
            biorefinery grant program. The specifics of the grant are to be
            determined during the second quarter of 2007.

      o     The California Energy Commission has provided a competitive grant
            solicitation with the intent of accelerating research, development
            and demonstration of biofuel energy conversion technologies and
            refineries using lignocellulosic biomass (such as agricultural and
            forest residues, and urban waste), food waste, beverages, waste
            grease, purpose-grown or energy crops. This solicitation will help
            advance science, technology, and market acceptance of ethanol in
            California that will help reduce petroleum consumption and help meet
            the Governor's Executive Order S-06-06, the Bioenergy Action Plan,
            and AB 32 (Nunez & Pavley 2006). In March 2007, the Company received
            notice that it has been accepted as a recipient of up to $1 million
            under this program for equipment testing and preliminary engineering
            for use in its proposed project under this solicitation.

      o     As available and as applicable to the business plans of the Company,
            applications for public funding will be submitted to leverage
            private capital raised by the Company.

      BlueFire's initial planned projects in North America are projected as
follows:

      o     A facility that will process approximately 100 tons of green waste
            material to produce about 2.5 million gallons per year of ethanol.
            The Company has entered into an Option and Purchase Agreement on a
            parcel located in Los Angeles County the location of this facility.
            . Permits will be filed to allow for construction once all the
            necessary preliminary engineering information is available. BlueFire
            is currently working on the preliminary engineering design to allow
            for filing of permits in the next 30-45 days. Although the cost of
            construction is not readily determinable, the Company estimates the
            cost to be approximately $20 million for this first plant. The
            Company is currently in discussions with potential sources of
            financing for this facility but no definitive agreements are in
            place.

      o     A facility proposed for development and construction at the El
            Sobrante Landfill located in Corona, California. This facility will
            use approximately 700 metric dry tons of green waste and wood waste
            currently disposed in the landfill to produce about 18 million
            gallons of ethanol annually. Preliminary engineering design is in
            progress and permitting for this facility will commence once all
            required preliminary engineering design is completed. A definitive
            agreement is being finalized with Petro-Diamond for the purchase and
            sale of the ethanol produced from the facility. An application for
            funding of the El Sobrante Project has been submitted to the
            Department of Energy. Status of the funding request has not been
            received to date. Proposed terms and conditions for financing from
            private sources have been received by BlueFire but no definitive
            agreements have been reached.

      o     Several other opportunities are being evaluated by BlueFire in North
            America but no definitive plans have been made. However, the project
            proposed at the El Sobrante Landfill provides a model that can be
            replicated at the over 3,000 landfills located in North America
            (U.S. EPA website). Discussions with various landfill owners are
            underway to duplicate the proposed development at the El Sobrante
            landfill although no definitive agreements have been reached.

                                       12

<Page>

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalents totaled $2,760 during the period ending December
31, 2006. During the same period, our working capital deficit was $151,981. This
deficit resulted from start-up expenses, and the fact that we are a development
stage company, as described below.

Total assets were $32,760 at December 31, 2006, of which $30,000 were prepaid
fees as described in Note 5 of our financials. The Shareholders' deficit was
$151,981 as of December 31, 2006.

The Company has had limited operations and has incurred net losses of $1,555,497
for the period from March 28, 2006 (Inception) through December 31, 2006 and has
not generated any revenues from operations. The Company has yet to begin ethanol
production or construction of ethanol producing plants. Since the reverse
acquisition, we have been engaged in organizational activities, including
developing a strategic operating plan, entering into contracts, hiring
personnel, developing processing technology, and raising private capital. Our
continued existence is dependent upon our ability to obtain additional debt
and/or equity financing. Management anticipates beginning construction of a
plant within the next 6 months and expects to complete the project and to begin
production of ethanol within the next 24 months. Although the cost of
construction is not readily determinable, we estimate the cost to be
approximately $20 million per plant. Management plans to raise additional funds
through project financings or through future sales of our common stock, until
such time as our revenues are sufficient to meet its cost structure, and
ultimately achieve profitable operations. There is no assurance we will be
successful in raising additional capital or achieving profitable operations.
Wherever possible, our board of directors will attempt to use non-cash
consideration to satisfy obligations. In many instances, we believe that the
non-cash consideration will consist of restricted shares of our common stock.
These actions will result in dilution of the ownership interests of existing
shareholders may further dilute common stock book value, and that dilution may
be material.

To date, we have financed our operations through the combination of equity and
debt financing (in connection with which we have at times incurred significant
costs), loans from related parties, and the use of shares of our common stock
issued as payment for services rendered to us by third parties. In the future we
may have to issue shares of our common stock and warrants in private placement
transactions to help finance our operations, and to pay for professional
services (such as financial consulting, market development, legal services, and
public relations services). As we are in development phase, we do not intend to
pay dividends to shareholders in the foreseeable future. To date, we have not
paid any dividends.

On March 16, 2007, the Company obtained a 10% annual interest line of credit in
the amount of $1,500,000 from it's Chairman/Chief Executive Officer and majority
shareholder Arnold Klann to provide additional liquidity to the Company as
needed. Under the terms of the note, the Company is to repay any principle
balance and interest within 30 days of receiving qualified investment financing
of $5,000,000 or more.

In order for the Company's operations to continue, management will need to
generate revenues from their intended operations sufficient to meet the
Company's anticipated cost structure. The Company may encounter difficulties in
establishing these operations due to the time frame of developing, constructing
and ultimately operating the planned bio-refinery projects.

                                       13

<Page>

In order to ensure sufficient funds to meet our future needs for capital,
management believes that, from time to time, we will continue to evaluate
opportunities to raise financing through some combination of the private sale of
equity, or issuance of convertible debt securities. However, future equity or
debt financing may not be available to us at all, or if available, may not be on
terms acceptable to us.

Subsequent to year end, the Company raised approximately $557,000 through the
sale of common stock. The funds are currently being used to fund the operations
of the Company and are expected to last through March 2007. Management has
estimated that operating expenses for the period from April 2007 to December
2007 will approximate roughly $1,200,000, excluding engineering costs related to
the development of our bio-refinery projects.

If we do not raise additional capital, or we are unable to obtain additional
financing, or begin to generate revenues from our intended operations, we have
to scale back or postpone the preliminary engineering design and permitting for
our initial facility until such financing is available.

CRITICAL ACCOUNTING POLICIES

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

The methods, estimates, and judgment we use in applying our most critical
accounting policies have a significant impact on the results we report in our
financial statements. The SEC has defined "critical accounting policies" as
those accounting policies that are most important to the portrayal of our
financial condition and results, and require us to make our most difficult and
subjective judgments, often as a result of the need to make estimates of matters
that are inherently uncertain. Based upon this definition, our most critical
estimates are described below under the heading "Revenue Recognition." We also
have other key accounting estimates and policies, but we believe that these
other policies either do not generally require us to make estimates and
judgments that are as difficult or as subjective, or it is less likely that they
would have a material impact on our reported results of operations for a given
period. For additional information see Note 1, "Summary of Organization and
Significant Accounting Policies" in the notes to our audited financial
statements appearing elsewhere in this report. Although we believe that our
estimates and assumptions are reasonable, they are based upon information
presently available, and actual results may differ significantly from these
estimates.

CASH AND CASH EQUIVALENTS

For purpose of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.

REVENUE RECOGNITION

The Company is currently a developmental-stage company and has recognized
minimal revenues to date. The Company will recognize revenues from 1) consulting
services rendered to potential sub licensees for development and construction of
cellulose to ethanol projects, 2) sales of ethanol from its production
facilities when (a) persuasive evidence that an agreement exists; (b) the
products have been delivered; (c) the prices are fixed and determinable and not
subject to refund or adjustment; and (d) collection of the amounts due is
reasonably assured.

                                       14

<Page>

PROJECT DEVELOPMENT

Project development costs are expensed as incurred. The costs of materials and
equipment that will be acquired or constructed for project development
activities, and that have alternative future uses, both in project development,
marketing or sales, will be classified as property and equipment and depreciated
over their estimated useful lives. To date, project development costs include
the development, engineering, and marketing expenses related to the Company's
cellulose fractions of municipal solid waste into ethanol fuels.

INCOME TAXES

The Company accounts for income taxes in accordance with FASB Statement No. 109
"Accounting for Income Taxes." SFAS No. 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book and tax
accounting methods and any available operating loss or tax credit carry
forwards.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments approximated their carrying values at
December 31, 2006. The financial instruments consist of cash and accounts
payable.

LOSS PER COMMON SHARE

The Company presents basic loss per share ("EPS") and diluted EPS on the face of
the consolidated statement of operations. Basic loss per share is computed as
net loss divided by the weighted average number of common shares outstanding for
the period. Diluted EPS reflects the potential dilution that could occur from
common shares issuable through stock options, warrants, and other convertible
securities. During the period ended December 31, 2006, there were no dilutive
instruments outstanding.

CONCENTRATIONS OF CREDIT RISK

The Company, at times, maintains cash balances at certain financial institutions
in excess of amounts insured by federal agencies.

RECENT ACCOUNTING PRONOUNCEMENTS

SHARE-BASED PAYMENT

In December 2004, the FASB issued a revision of SFAS 123 ("SFAS 123(R)") that
requires compensation costs related to share-based payment transactions to be
recognized in the statement of operations. With limited exceptions, the amount
of compensation cost will be measured based on the grant-date fair value of the
equity or liability instruments issued. In addition, liability awards will be
re-measured each reporting period. Compensation cost will be recognized over the
period that an employee provides service in exchange for the award. SFAS 123(R)
replaces SFAS 123 and is effective as of the first interim period beginning
after January 1, 2006. During the period ended December 31, 2006, the Company
adopted the provisions of SFAS 123(R).

In July 2006, the FASB issued FASB Interpretation No.48, "Accounting for
Uncertainty in Income Taxes" ("FIN 48") which clarifies the accounting for
uncertainty in income taxes recognized in the financial statements in accordance
with FASB Statement No. 109, "Accounting for Income Taxes". This pronouncement
recommends a recognition threshold and measurement process for recording in the
financial statements uncertain tax positions taken or expected to be taken in
the Company's tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods and
disclosure requirements for uncertain tax positions. The accounting provisions
of FIN 48 will be effective for the Company beginning January 1, 2007. The
Company is in the process of evaluating the impact, if any, the adoption of FIN
48 will have on its financial statements.

                                       15

<Page>

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". SFAS
157 defines fair value, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements. This statement clarifies fair
value as permitted under other accounting pronouncements but does not require
any new fair value measurements. However, for some entities, the application of
this statement will change current practice. The Company will be required to
adopt SFAS No. 157 as of January 1, 2008 and is currently in the process of
evaluating the impact, if any, the adoption of SFAS No. 157 will have on its
financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

There are no off-balance sheet arrangements.

RISK FACTORS

This registration statement contains forward-looking statements that involve
risks and uncertainties. These statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "intends," "plans,"
"may," "will," "should," or "anticipation" or the negative thereof or other
variations thereon or comparable terminology. Actual results could differ
materially from those discussed in the forward-looking statements as a result of
certain factors, including those set forth below and elsewhere in this
Registration Statement. The following risk factors should be considered
carefully in addition to the other information in this Registration Statement,
before purchasing any of the Company's securities.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

The Company has had limited operations and has incurred net losses of $1,555,497
for the period from March 28, 2006 (Inception) through December 31, 2006 and has
not generated any revenues from operations. The Company has yet to begin ethanol
production or construction of ethanol producing plants. Since the reverse
acquisition, we have been engaged in organizational activities, including
developing a strategic operating plan, entering into contracts, hiring
personnel, developing processing technology, and raising private capital. Our
continued existence is dependent upon our ability to obtain additional debt
and/or equity financing. Management anticipates beginning construction of a
plant within the next 6 months and expects to complete the project and to begin
production of ethanol within the next 24 months. Although the cost of
construction is not readily determinable, we estimate the cost to be
approximately $20 million per plant. Management plans to raise additional funds
through project financings or through future sales of our common stock, until
such time as our revenues are sufficient to meet its cost structure, and
ultimately achieve profitable operations. There is no assurance we will be
successful in raising additional capital or achieving profitable operations.
Wherever possible, our board of directors will attempt to use non-cash
consideration to satisfy obligations. In many instances, we believe that the
non-cash consideration will consist of restricted shares of our common stock.
These actions will result in dilution of the ownership interests of existing
shareholders may further dilute common stock book value, and that dilution may
be material.

OUR CELLULOSE-TO-ETHANOL TECHNOLOGIES ARE UNPROVEN ON A LARGE-SCALE COMMERCIAL
BASIS AND PERFORMANCE COULD FAIL TO MEET PROJECTIONS, WHICH COULD HAVE A
DETRIMENTAL EFFECT ON THE LONG-TERM CAPITAL APPRECIATION OF OUR STOCK.

While production of ethanol from corn, sugars and starches is a mature
technology, newer technologies for production of ethanol from cellulose biomass
have not been built at large commercial scales.. The technologies being pursued
by us for ethanol production from biomass have not been demonstrated on a
commercial scale. All of the tests conducted to date by us with respect to our
technologies have been performed on limited quantities of feedstocks, and we
cannot assure you that the same or similar results could be obtained at
competitive costs on a large-scale commercial basis. We have never utilized
these technologies under the conditions or in the volumes that will be required
to be profitable and cannot predict all of the difficulties that may arise. It
is possible that the technologies, when used, may require further research,
development, design and testing prior to larger-scale commercialization.
Accordingly, we cannot assure you that these technologies will perform
successfully on a large-scale commercial basis or that they will be profitable
to us.

                                       16

<Page>

OUR BUSINESS EMPLOYS LICENSED ARKENOL TECHNOLOGY WHICH MAY BE DIFFICULT TO
PROTECT AND MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

We currently license our technology from Arkenol. Arkenol owns eleven U.S.
patents, twenty-one foreign patents, and has one foreign patent pending and may
file more patent applications in the future. Our success depends, in part, on
our ability to use the Arkenol Technology, and for Arkenol to obtain patents,
maintain trade secrecy and not infringe the proprietary rights of third parties.
We cannot assure you that the patents of others will not have an adverse effect
on our ability to conduct our business, that we will develop additional
proprietary technology that is patentable or that any patents issued to us or
Arkenol will provide us with competitive advantages or will not be challenged by
third parties. Further, we cannot assure you that others will not independently
develop similar or superior technologies, duplicate elements of the Arkenol
Technology or design around it.

It is possible that we may need to acquire other licenses to, or to contest the
validity of, issued or pending patents or claims of third parties. We cannot
assure you that any license would be made available to us on acceptable terms,
if at all, or that we would prevail in any such contest. In addition, we could
incur substantial costs in defending ourselves in suits brought against us for
alleged infringement of another party's patents in bringing patent infringement
suits against other parties based on our licensed patents.

In addition to licensed patent protection, we also rely on trade secrets,
proprietary know-how and technology that we seek to protect, in part, by
confidentiality agreements with our prospective joint venture partners,
employees and consultants. We cannot assure you that these agreements will not
be breached, that we will have adequate remedies for any breach, or that our
trade secrets and proprietary know-how will not otherwise become known or be
independently discovered by others.

WE ARE DEPENDENT UPON ARNOLD KLANN, OUR CHAIRMAN AND PRESIDENT, AND JOHN CUZENS,
OUR VP ENGINEERING, WHO WE NEED TO SUCCEED.

We believe that our continued success will depend to a significant extent upon
the efforts and abilities of (i) Arnold Klann, our Chairman and President, due
to his contacts in the ethanol and cellulose industries and his overall insight
into our business direction, and (ii) John Cuzens, our VP Engineering for his
comprehension of the Arkenol Technology. Our failure to retain Mr. Klann or Mr.
Cuzens, or to attract and retain additional qualified personnel, could adversely
affect our operations. We do not currently carry key-man life insurance on any
of our officers. See "Management."

COMPETITION FROM LARGE PRODUCERS OF PETROLEUM-BASED GASOLINE ADDITIVES AND OTHER
COMPETITIVE PRODUCTS MAY IMPACT OUR PROFITABILITY.

Our proposed ethanol plants will also compete with producers of other gasoline
additives made from other raw materials having similar octane and oxygenate
values as ethanol. The major oil companies have significantly greater resources
than we have to develop alternative products and to influence legislation and
public perception of ethanol. These other companies also have significant
resources to begin production of ethanol should they choose to do so. Ethanol is
sold into the gasoline blending market where it competes with other oxygenates
and octane components and with gasoline itself. Therefore, ethanol's price is
significantly affected by its value to refiners in these markets. Ethanol prices
are highly correlated with the price of gasoline and gasoline blending
components. The price of corn has very little to do with the price of ethanol.
That is why low corn prices do not always indicate low ethanol prices and high
corn prices do not always indicate high ethanol prices. Ethanol prices are
determined by the supply and demand for ethanol in specific markets.

We will also compete with producers of other gasoline additives having similar
octane and oxygenate values as ethanol. An example of such other additives is
MTBE, a petrochemical derived from methanol. MTBE costs less to produce than
ethanol. Many major oil companies produce MTBE and because it is
petroleum-based, its use is strongly supported by major oil companies.
Alternative fuels, gasoline oxygenates and alternative ethanol production
methods are also continually under development. The major oil companies have
significantly greater resources than we have to market MTBE, to develop
alternative products, and to influence legislation and public perception of MTBE
and ethanol.

                                       17

<Page>

OUR PROFITS ARE IMPACTED BY CORN SUPPLY.

Our ethanol will be produced from cellulose, however currently most ethanol is
produced from corn, which is affected by weather, governmental policy, disease
and other conditions. A significant increase in the availability of corn and
resulting reduction in the price of corn may decrease the price of ethanol and
harm our business.

IF ETHANOL AND GASOLINE PRICES DROP SIGNIFICANTLY, WE WILL ALSO BE FORCED TO
REDUCE OUR PRICES, WHICH POTENTIALLY MAY LEAD TO FURTHER LOSSES.

Prices for ethanol products can vary significantly over time and decreases in
price levels could adversely affect our profitability and viability. The price
of ethanol has some relation to the price of gasoline. The price of ethanol
tends to increase as the price of gasoline increases, and the price of ethanol
tends to decrease as the price of gasoline decreases. Any lowering of gasoline
prices will likely also lead to lower prices for ethanol and adversely affect
our operating results. We cannot assure you that we will be able to sell our
ethanol profitably, or at all.

INCREASED ETHANOL PRODUCTION FROM CELLULOSE IN THE UNITED STATES COULD INCREASE
THE DEMAND FOR FEEDSTOCKS AND THE RESULTING PRICE OF FEEDSTOCKS, REDUCING OUR
PROFITABILITY.

New ethanol plants that utilize cellulose as their feedstock may be under
construction or in the planning stages throughout the United States. This
increased ethanol production could increase cellulose demand and prices,
resulting in higher production costs and lower profits.

PRICE INCREASES OR INTERRUPTIONS IN NEEDED ENERGY SUPPLIES COULD CAUSE LOSS OF
CUSTOMERS AND IMPAIR OUR PROFITABILITY.

Ethanol production requires a constant and consistent supply of energy. If there
is any interruption in our supply of energy for whatever reason, such as
availability, delivery or mechanical problems, we may be required to halt
production. If we halt production for any extended period of time, it will have
a material adverse effect on our business. Natural gas and electricity prices
have historically fluctuated significantly. We purchase significant amounts of
these resources as part of our ethanol production. Increases in the price of
natural gas or electricity would harm our business and financial results by
increasing our energy costs.

OUR BUSINESS PLANS REQUIRES ACHIEVING CERTAIN MILESTONES AND THE FAILURE TO
REACH SUCH MILESTONES WILL WHICH POTENTIALLY REDUCE OUR PROFITABILITY AND MAY
LEAD TO LOSSES.

Our business plan calls for the completion of up to 19 numerous biorefinery
projects. Although each facility will have specific funding requirements a
proposed facility in Los Angeles County will require approximately $20 million
to fund. We will be relying on additional financing, funding from such sources
as The Energy Policy Act grants and loan guarantee programs, Biorefinery
Demonstration Project Program or The California Energy Commission. The Company
is currently in discussions with potential sources of financing but no
definitive agreements are in place. If we cannot achieve the requisite financing
or complete the projects as anticipated, this could adversely affect our
business, the results of our operations, prospects and financial condition.

                                       18

<Page>

RISKS RELATED TO GOVERNMENT REGULATION AND SUBSIDIZATION

FEDERAL REGULATIONS CONCERNING TAX INCENTIVES COULD EXPIRE OR CHANGE, WHICH
COULD CAUSE AN EROSION OF THE CURRENT COMPETITIVE STRENGTH OF THE ETHANOL
INDUSTRY.

Congress currently provides certain federal tax credits for ethanol producers
and marketers. The current ethanol industry and our business initially depend on
the continuation of these credits. The credits have supported a market for
ethanol that might disappear without the credits. The credits are scheduled to
expire December 31, 2010. These credits may not continue beyond their scheduled
expiration date or, if they continue, the incentives may not be at the same
level. The revocation or amendment of any one or more of these tax incentives
could adversely affect the future use of ethanol in a material way, and we
cannot assure investors that any of these tax incentives will be continued. The
elimination or reduction of federal tax incentives to the ethanol industry could
have a material adverse impact on the industry as a whole. If BlueFire is
successful in meeting its target production costs, our business could continue
to compete in the market in the event the existing tax incentives are
eliminated. If the federal ethanol tax incentives are eliminated or sharply
curtailed, we believe that a decreased production from corn could result.

LAX ENFORCEMENT OF ENVIRONMENTAL AND ENERGY POLICY REGULATIONS MAY ADVERSELY
AFFECT DEMAND FOR ETHANOL

Our success will depend in part on effective enforcement of existing
environmental and energy policy regulations. Many of our potential customers are
unlikely to switch from the use of conventional fuels unless compliance with
applicable regulatory requirements leads, directly or indirectly, to the use of
ethanol. Both additional regulation and enforcement of such regulatory
provisions are likely to be vigorously opposed by the entities affected by such
requirements. If existing emissions-reducing standards are weakened, or if
governments are not active and effective in enforcing such standards, our
business and results of operations could be adversely affected. Even if the
current trend toward more stringent emissions standards continues, we will
depend on the ability of ethanol to satisfy these emissions standards more
efficiently than other alternative technologies. Certain standards imposed by
regulatory programs may limit or preclude the use of our products to comply with
environmental or energy requirements. Any decrease in the emission standards or
the failure to enforce existing emission standards and other regulations could
result in a reduced demand for ethanol. A significant decrease in the demand for
ethanol will reduce the price of ethanol, adversely affect our profitability and
decrease the value of your stock.

COSTS OF COMPLIANCE WITH BURDENSOME OR CHANGING ENVIRONMENTAL AND OPERATIONAL
SAFETY REGULATIONS COULD CAUSE OUR FOCUS TO BE DIVERTED AWAY FROM OUR BUSINESS
AND OUR RESULTS OF OPERATIONS TO SUFFER

Ethanol production involves the emission of various airborne pollutants,
including particulate matter, carbon monoxide, carbon dioxide, nitrous oxide,
volatile organic compounds and sulfur dioxide. The production facilities that we
will build will discharge water into the environment. As a result, we are
subject to complicated environmental regulations of the U.S. Environmental
Protection Agency and regulations and permitting requirements of the states
where our plants are to be located. These regulations are subject to change and
such changes may require additional capital expenditures or increased operating
costs. Consequently, considerable resources may be required to comply with
future environmental regulations. In addition, our ethanol plants could be
subject to environmental nuisance or related claims by employees, property
owners or residents near the ethanol plants arising from air or water
discharges. Ethanol production has been known to produce an odor to which
surrounding residents could object. Environmental and public nuisance claims, or
tort claims based on emissions, or increased environmental compliance costs
could significantly increase our operating costs.

                                       19

<Page>

OUR PROPOSED NEW ETHANOL PLANTS WILL ALSO BE SUBJECT TO FEDERAL AND STATE LAWS
REGARDING OCCUPATIONAL SAFETY

Risks of substantial compliance costs and liabilities are inherent in ethanol
production. We may be subject to costs and liabilities related to worker safety
and job related injuries, some of which may be significant. Possible future
developments, including stricter safety laws for workers and other individuals,
regulations and enforcement policies and claims for personal or property damages
resulting from operation of the ethanol plants could reduce the amount of cash
that would otherwise be available to further enhance our business.

RISKS RELATED TO OUR COMMON STOCK

OUR COMMON STOCK PRICE HAS FLUCTUATED CONSIDERABLY AND STOCKHOLDERS MAY NOT BE
ABLE TO RESELL THEIR SHARES AT OR ABOVE THE PRICE AT WHICH SUCH SHARES WERE
PURCHASED

The market price of our common stock may fluctuate significantly (since July 11,
2006, the day we began trading publicly as BFRE and March 23, 2007, the high and
low bid price for our common stock has been $1.30 and $7.90 per share,
respectively) in response to factors, including not yet beginning construction
of first plant and therefore operational results, due to needing time to
organize engineering resources, feedstock sources, locating suitable plant
locations, locating distributors and finding funding sources.

OUR COMMON STOCK MAY BE CONSIDERED "A PENNY STOCK" AND MAY BE DIFFICULT FOR YOU
TO SELL

The SEC has adopted regulations which generally define "penny stock" to be an
equity security that has a market price of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to specific exemptions. The
market price of our common stock has been for much of its trading history since
July 11, 2006, and may continue to be less than $5.00 per share, and therefore
may be designated as a "penny stock" according to SEC rules. This designation
requires any broker or dealer selling these securities to disclose certain
information concerning the transaction, obtain a written agreement from the
purchaser and determine that the purchaser is reasonably suitable to purchase
the securities. These rules may restrict the ability of brokers or dealers to
sell our common stock and may affect the ability of investors to sell their
shares. In addition, since our common stock is currently traded OTC on the Pink
Sheets, investors may find it difficult to obtain accurate quotations of our
common stock and may experience a lack of buyers to purchase such stock or a
lack of market makers to support the stock price.

FAILURE TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH
SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002 COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS AND OPERATING RESULTS

It may be time consuming, difficult and costly for us to develop and implement
the additional internal controls, processes and reporting procedures required by
the Sarbanes-Oxley Act. We may need to hire additional financial reporting,
internal auditing and other finance staff in order to develop and implement
appropriate additional internal controls, processes and reporting procedures. If
we are unable to comply with these requirements of the Sarbanes-Oxley Act, we
may not be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires publicly traded companies to obtain.

If we fail to comply in a timely manner with the requirements of Section 404 of
the Sarbanes-Oxley Act of 2002 regarding internal control over financial
reporting or to remedy any material weaknesses in our internal controls that we
may identify, such failure could result in material misstatements in our
financial statements, cause investors to lose confidence in our reported
financial information and have a negative effect on the trading price of our
common stock.

                                       20

<Page>

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and current SEC
regulations, beginning with our annual report on Form 10-KSB for our fiscal
period ending December 31, 2007 we will be required to prepare assessments
regarding internal controls over financial reporting and beginning with our
annual report on Form 10-KSB for our fiscal period ending December 31, 2008
furnish a report by our management on our internal control over financial
reporting. We will soon begin the process of documenting and testing our
internal control procedures in order to satisfy these requirements, which is
likely to result in increased general and administrative expenses and may shift
management time and attention from revenue-generating activities to compliance
activities. While our management is expending significant resources in an effort
to complete this important project, there can be no assurance that we will be
able to achieve our objective on a timely basis. There also can be no assurance
that our auditors will be able to issue an unqualified opinion on management's
assessment of the effectiveness of our internal control over financial
reporting. Failure to achieve and maintain an effective internal control
environment or complete our Section 404 certifications could have a material
adverse effect on our stock price.

In addition, in connection with our on-going assessment of the effectiveness of
our internal control over financial reporting, we may discover "material
weaknesses" in our internal controls as defined in standards established by the
Public Company Accounting Oversight Board, or the PCAOB. A material weakness is
a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the
annual or interim financial statements will not be prevented or detected. The
PCAOB defines "significant deficiency" as a deficiency that results in more than
a remote likelihood that a misstatement of the financial statements that is more
than inconsequential will not be prevented or detected.

In the event that a material weakness is identified, we will employ qualified
personnel and adopt and implement policies and procedures to address any
material weaknesses that we identify. However, the process of designing and
implementing effective internal controls is a continuous effort that requires us
to anticipate and react to changes in our business and the economic and
regulatory environments and to expend significant resources to maintain a system
of internal controls that is adequate to satisfy our reporting obligations as a
public company. We cannot assure you that the measures we will take will
remediate any material weaknesses that we may identify or that we will implement
and maintain adequate controls over our financial process and reporting in the
future.

Any failure to complete our assessment of our internal control over financial
reporting, to remediate any material weaknesses that we may identify or to
implement new or improved controls, or difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the results of the
periodic management evaluations of our internal controls and, in the case of a
failure to remediate any material weaknesses that we may identify, would
adversely affect the annual auditor attestation reports regarding the
effectiveness of our internal control over financial reporting that are required
under Section 404 of the Sarbanes-Oxley Act of 2002. Inadequate internal
controls could also cause investors to lose confidence in our reported financial
information, which could have a negative effect on the trading price of our
common stock.

OUR PRINCIPAL STOCKHOLDER HAS SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS THAT
MAY NOT BE IN THE BEST INTEREST OF ALL OTHER STOCKHOLDERS

The Company's Chairman and President controls approximately 63.7% of its current
outstanding shares of common stock. He may be able to exert significant control
over our management and affairs requiring stockholder approval, including
approval of significant corporate transactions. This concentration of ownership
may expedite approvals of company decisions, or have the effect of delaying or
preventing a change in control, adversely affect the market price of our common
stock, or be in the best interests of all our stockholders.

YOU COULD BE DILUTED FROM THE ISSUANCE OF ADDITIONAL COMMON STOCK.

As of March 23, 2007 the Company had 21,470,514 shares of common stock
outstanding and no shares of preferred stock outstanding. The Company is
authorized to issue up to 100,000,000 shares of common stock and 1,000,000
shares of preferred stock. To the extent of such authorization, the Company's
board of directors will have the ability, without seeking shareholder approval,
to issue additional shares of common stock or preferred stock in the future for
such consideration as the board may consider sufficient. The issuance of
additional common stock or preferred stock in the future may reduce your
proportionate ownership and voting power.

                                       21

<Page>

ITEM 7.  FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm                     F-1

Consolidated Balance Sheet as of December 31, 2006                          F-2

Consolidated Statement of Operations from March 28, 2006 (Inception)
  to December 31, 2006                                                      F-3

Consolidated Statements of Stockholders' Deficit for the period from
  March 28, 2006 (Inception) to December 31, 2006                           F-4

Consolidated Statements of Cash Flows for the period from March 28,
  2006 (Inception) to December 31, 2006                                     F-5

Notes to Consolidated Financial Statements                                  F-6

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 8A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We have reviewed the effectiveness of the design and operation of our disclosure
controls and procedures and our internal controls over financial reporting
during the period ended December 31, 2006 that have materially affected or are
reasonably likely to materially affect such controls. Our certifying officers
have disclosed, based on our most recent evaluation of the internal control over
financial reporting, to the small business issuer's auditors and the small
business issuer's board of directors (or persons performing the equivalent
functions):

All significant material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the small business issuer's ability to record, process, summarize and report
financial information; and Disclosure controls and procedures are controls and
other procedures that are designed to ensure that information required to be
disclosed in our reports filed or submitted under the Exchange Act are recorded,
processed, summarized and reported, within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

Our management does not expect that our disclosure controls and procedures or
our internal control over financial reporting will necessarily prevent all fraud
and material error. Our disclosure controls and procedures are designed to
provide reasonable assurance of achieving our objectives and our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may deteriorate.

                                       22

<Page>

ITEM 8B.  OTHER INFORMATION

None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The following table and biographical summaries set forth information, including
principal occupation and business experience, about our directors and executive
officers at December 31, 2006. There is no familial relationship between or
among the nominees, directors or executive officers of the Company.

                                                               OFFICER AND
NAME                   AGE           POSITION                 DIRECTOR SINCE
-------------------- ------- ------------------------------ ------------------

Arnold Klann            55    President, CEO and Director       June 2006
Necitas Sumait          46    Secretary, SVP and Director       June 2006
John Cuzens             55    Treasurer, SVP and Director       June 2006
Chris Nichols           40    Director                          June 2006

The Company's directors serve in such capacity until the first annual meeting of
the Company's shareholders and until their successors have been elected and
qualified. The Company's officers serve at the discretion of the Company's Board
of Directors, until their death, or until they resign or have been removed from
office.

There are no agreements or understandings for any director or officer to resign
at the request of another person and none of the directors or officers is acting
on behalf of or will act at the direction of any other person. The activities of
each director and officer are material to the operation of the Company. No other
person's activities are material to the operation of the Company.

ARNOLD R. KLANN - CHAIRMAN OF THE BOARD / PRESIDENT / CHIEF EXECUTIVE OFFICER
Mr. Klann has been BlueFire's Chairman of the Board, and President/Chief
Executive Officer since its inception in March 2006. Mr. Klann is President of
ARK Energy, Inc. and Arkenol, Inc. from January 1989 to present. Mr. Klann has
an AA from Lakeland College in Electrical Engineering.

JOHN E. CUZENS - CHIEF TECHNOLOGY OFFICER / SENIOR VICE PRESIDENT / TREASURER /
DIRECTOR
Mr. Cuzens has been BlueFire's Director, CTO and Senior VP since its inception
in March 2006. Prior to this, he was Director of Projects Wahlco Inc.from 2004
to June 2006. He was employed by Applied Utility Systems Inc from 2001 to 2004
and Hydrogen Burner Technology form 1997-2001. He was with ARK Energy and
Arkenol from 1991 to 1997 and is the co-inventor on seven of Arkenol's eight
U.S. foundation patents for the conversion of cellulosic materials into
fermentable sugar products using a modified strong acid hydrolysis process. Mr.
Cuzens has a B.S. Chemical Engineering degree from the University of California
at Berkeley.

NECITAS SUMAIT - SENIOR VICE PRESIDENT / SECRETARY / DIRECTOR
Mrs. Sumait has been BlueFire's Director and Senior VP since its inception in
March 2006. Prior to this, Mrs. Sumait was Vice President of ARK Energy/Arkenol
from December 1992 to July 2006. Mrs. Sumait has a MBA in Technological
Management from Illinois Institute of Technology and a B.S. in Biology from De
Paul University.

CHRIS NICHOLS - DIRECTOR
Mr. Nichols is currently the Chairman and President/CEO of Advanced Growing
Systems, Inc. Since 2003 Mr. Nichols was the Senior Vice President of Westcap
Securities' Private Client Group where he was in charge of sales and marketing.
Prior to this, Mr. Nichols was a Registered Representative at Fisher Investments
from December 2002 to October 2003. He was a Registered Representative with
Interfirst Capital Corporation from 1997 to 2002. Mr. Nichols is a graduate of
California State University in Fullerton with a B.A. degree in Marketing.

                                       23

<Page>

SIGNIFICANT EMPLOYEES AND CONSULTANTS

WILLIAM DAVIS - VP PROJECT MANAGEMENT.
Mr. Davis is currently Vice President of Project Management for BlueFire. Prior
to this he was Director of Power Plant Project Development for Diamond Energy
from 2001 to 2006. Prior to this he was VP of Business Development for Oxbow
Power. He has over 30 years in the energy business and was an energy advisor to
the Governor of California. He has been involved in domestic and international
power project development. Mr. Davis is a registered Architect in three states
and graduated from California State University at San Luis Obispo with a
Bachelors of Architecture and a Masters of Science in Architecture.

KEY CONSULTANT

KENT A. LARSEN - VP PROJECT FINANCE.
Mr. Larsen is currently Vice President of Project Finance for BlueFire. From
2001 to 2006, Mr. Larsen was President of Power Partners International to
develop power plant projects. From 1998 to 2001 he was Managing Director for
Entergy Development Corporation and from 1994-1998 he was the Executive Managing
Director of International Power Partners, Ltd. From 1991 to 1994 Mr. Larsen was
Director of Project Finance for of ARK Energy. He holds an MBA-Finance from UCLA
Graduate School of Business, and BS degrees in Civil Engineering and Mathematics
from the University of Washington.

The Company has also entered into consulting agreements with accounting, legal,
marketing and investor relations firms. These agreements are fee based and do
not include issuance of any stocks. However, the Company may enter into future
agreements that may include issuance of restricted stock.

SUBSEQUENT EXECUTIVE RELATIONSHIPS

On March 16, 2007, Christopher Scott was appointed by the Board as the Company's
Chief Financial Officer.

CHRISTOPHER SCOTT - CHIEF FINANCIAL OFFICER

Mr. Scott has been BlueFire's Chief Financial Officer since March 2007. Prior to
this, from 2002 to March 2007, Mr. Scott was most recently the CFO/CCO and FinOp
of Westcap Securities, Inc, an NASD Member Broker/Dealer and Investment Bank
headquartered in Irvine, CA. Mr. Scott currently holds the Series 7, 63, 24, 4,
27, 55, and Series 53 NASD licenses. From 1997 to 2002, Mr. Scott was a General
Securities and Registered Options Principal at First Allied Securities Inc. Mr.
Scott earned his Bachelors Degree in Business Administration, with a
concentration in Finance, from CSU, Fullerton.

There are no family relationships among our directors and executive officers. No
director or executive officer has been a director or executive officer of any
business which has filed a bankruptcy petition or had a bankruptcy petition
filed against it during the past five years. No director or executive officer
has been convicted of a criminal offense or is the subject of a pending criminal
proceeding during the past five years. No director or executive officer has been
the subject of any order, judgment or decree of any court permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities during the past five
years. No director or officer has been found by a court to have violated a
federal or state securities or commodities law during the past five years.

None of our directors or executive officers or their respective immediate family
members or affiliates are indebted to us.

                                       24

<Page>

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of the Company has adopted charters for an Audit
Committee and Compensation Committee, but, for the time being, the Board of
Directors shall assume the responsibilities of the Audit and Compensation
Committees.

DIRECTOR COMPENSATION

On June 27, 2006 BlueFire Ethanol Fuels, Inc. issued 5,000 restricted shares to
each of the Directors of BlueFire Ethanol Fuels, Inc. All directors receive
reimbursement for out-of-pocket expenses in attending meetings of the Board of
Directors. From time to time the Company may engage certain members of the Board
of Directors to perform services on behalf of the Company and will compensate
such persons for such services.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's directors, executive
officers and persons who beneficially own 10% or more of a class of securities
registered under Section 12 of the Exchange Act to file reports of beneficial
ownership and changes in beneficial ownership with the SEC. Directors, executive
officers and greater than 10% stockholders are required by the rules and
regulations of the SEC to furnish the Company with copies of all reports filed
by them in compliance with Section 16(a).

No persons were required to make such filings during the 2006 fiscal year.

CODE OF ETHICS

The Company has adopted a Code of Ethics that applies to the small business
issuer's directors, officers and key employees.

ITEM 10.  EXECUTIVE COMPENSATION

<TABLE>
<S>     <C>
                                                               2006
                                                    SUMMARY COMPENSATION TABLE
                                                                        Long Term Compensation
                               ---------------------------------------- ------------------------------------
                                         Annual Compensation                          Awards                 Payouts
------------------- ---------- ---------------------------------------- ------------------------------------ ---------- ------------
(A)                 (b)        (C)           (d)        (e)               (f)             (g)                  (h)        (i)
------------------- --------- ----------- ---------- ----------------- --------------- -------------------- ---------- ------------
                                                                          Restricted      Securities          LTIP       All other
 Name and Principle                                    Other annual         Stock         Underlying         Payouts    Compensation
      Position        Year     Salary ($)  Bonus ($)  compensation ($)   Award(s) ($)    Options/SARs (#)      ($)          ($)
------------------- --------- ----------- ---------- ----------------- --------------- --------------------  ---------- ------------
Arnold Klann            2006     113,000          -        16,750 (1)               -                    -          -             -
Director and
President
------------------- --------- ----------- ---------- ----------------- --------------- -------------------- ---------- ------------
Necitas Sumait          2006      78,000          -        16,750 (1)               -                    -          -             -
Director, Secretary
and VP
------------------- --------- ----------- ---------- ----------------- --------------- -------------------- ---------- ------------
John Cuzens             2006      75,000          -        16,750 (1)               -                    -          -             -
Director, Treasurer
and VP
------------------- --------- ----------- ---------- ----------------- --------------- -------------------- ---------- ------------
Chris Nichols           2006       2,500          -        16,750 (1)               -                    -          -   73,000 (2)
Director
------------------- --------- ----------- ---------- ----------------- --------------- -------------------- ---------- ------------

(1) Reflects value of 5,000 shares of restricted common stock received as
compensation as Director.
(2) Reflects value of consideration received as compensation for consultant
services.


                                                                25

<Page>

2006 GRANTS OF PLAN-BASED AWARDS TABLE


                                          NUMBER OF     ESTIMATED FUTURE PAYOUTS UNDER     ESTIMATED FUTURE PAYOUTS UNDER
                                          NON-EQUITY    NON-EQUITY INCENTIVE PLAN AWARDS     EQUITY INCENTIVE PLAN AWARDS
                                        INCENTIVE PLAN  --------------------------------   ------------------------------
                GRANT       APPROVAL    UNITS GRANTED   THRESHOLD    TARGET     MAXIMUM     THRESHOLD   TARGET   MAXIMUM
NAME             DATE        DATE           (#)            ($)         ($)        ($)          (#)        (#)      (#)
----             ----        ----           ---            ---         ---        ---          ---        ---      ---

Arnold Klann    12/14/06   12/14/06

Necitas Sumait  12/14/06   12/14/06

John Cuzens     12/14/06   12/14/06

Chris Nichols


(continued below)
-----------------

                        ALL OTHER       ALL OTHER
                       STOCK AWARDS:  OPTION AWARDS:   EXERCISE OR    CLOSING
                        NUMBER OF       NUMBER OF       BASE PRICE    PRICE ON
                        SHARES OF      SECURITIES       OF OPTION      GRANT
                        STOCK OR       UNDERLYING        AWARDS         DATE
                        UNITS (#)      OPTIONS(#)       ($ / SH)      ($ / SH)
                        ---------      ----------       --------      --------

Arnold Klann                            1,000,000           $2.00      $3.05

Necitas Sumait                           450,000           $2.00      $3.05

John Cuzens                              450,000           $2.00      $3.05

Chris Nichols


---------------------
*


                                       26

<Page>

2006 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

                                         OPTION AWARDS                                             STOCK AWARDS
                    ----------------------------------------------------------- ----------------------------------------------------
                                                                                                                          EQUITY
                                                                                                                         INCENTIVE
                                                 EQUITY                                               EQUITY INCENTIVE  PLAN AWARDS:
                                                INCENTIVE                                               PLAN AWARDS:     MARKET OR
                                               PLAN AWARDS:                                  MARKET       NUMBER OF    PAYOUT VALUE
                     NUMBER OF    NUMBER OF     NUMBER OF                       NUMBER OF   VALUE OF      UNEARNED      OF UNEARNED
                    SECURITIES    SECURITIES   SECURITIES                       SHARES OR   SHARES OR   SHARES, UNITS  SHARES, UNITS
                    UNDERLYING    UNDERLYING   UNDERLYING                       UNITS OF     UNITS OF    OR OTHER        OR OTHER
                    UNEXERCISED  UNEXERCISED  UNEXERCISED   OPTION              STOCK THAT  STOCK THAT  RIGHTS THAT     RIGHTS THAT
                      OPTIONS      OPTIONS      UNEARNED   EXERCISE   OPTION     HAVE NOT    HAVE NOT    HAVE NOT        HAVE NOT
                        (#)          (#)        OPTIONS      PRICE  EXPIRATION    VESTED      VESTED     VESTED           VESTED
NAME              EXERCISABLE  UNEXERCISABLE      (#)         ($)      DATE        (#)         ($)         (#)             ($)
----              -----------  -------------      ---         ---      ----        ---         ---         ---             ---

Arnold Klann           83,333       916,667                 2.00     12/14/11

Necitas Sumait         37,500       412,500                 2.00     12/14/11

John Cuzens            37,500       412,500                 2.00     12/14/11

Chris Nichols


                                       27



<Page>

2006 OPTION EXERCISES AND STOCK VESTED TABLE


                                                 OPTION AWARDS                               STOCK AWARDS
                                  ---------------------------------------------   ----------------------------------------
                                    NUMBER OF SHARES        VALUE REALIZED        ACQUIRED ON VESTING    NUMBER OF SHARES
                                  ACQUIRED ON EXERCISE       ON EXERCISE             ON VESTING           VALUE REALIZED
NAME                                      (#)                   ($)                     (#)                    ($)
----                                      ---                   ---                     ---                    ---

Arnold Klann

Necitas Sumait

John Cuzens

Chris Nichols


                                       28



<Page>

2006 PENSION BENEFITS TABLE

                                                                  PRESENT VALUE
                                             NUMBER OF YEARS     OF ACCUMULATED      PAYMENTS DURING LAST
                                             CREDITED SERVICE        BENEFIT              FISCAL YEAR
NAME                        PLAN NAME              (#)                 ($)                    ($)
----------               ----------------- ---------------------- ----------------- --------------------------

Arnold Klann

Necitas Sumait

John Cuzens

Chris Nichols


                                       29



<Page>

2006 NONQUALIFIED DEFERRED COMPENSATION TABLE


                                                 REGISTRANT                                   AGGREGATE
                   EXECUTIVE CONTRIBUTION   CONTRIBUTIONS IN LAST    AGGREGATE EARNINGS      WITHDRAWALS /     AGGREGATE BALANCE AT
                    IN LAST FISCAL YEAR         FISCAL YEAR          IN LAST FISCAL YEAR     DISTRIBUTIONS      LAST FISCAL YEAR-END
NAME                        ($)                     ($)                     ($)                   ($)                  ($)
----                        ---                     ---                     ---                   ---                  ---
Arnold Klann

Necitas Sumait

John Cuzens

Chris Nichols


                                       30



<Page>

2006 DIRECTOR COMPENSATION TABLE
                                                                                           CHANGE
                                                                                         IN PENSION
                                                                                          VALUE AND
                                                                                        NONQUALIFIED
                                                                        NON-EQUITY        DEFERRED
                  FEES EARNED OR                                       INCENTIVE PLAN   COMPENSATION     ALL OTHER
                   PAID IN CASH     STOCK AWARDS       OPTION AWARDS    COMPENSATION      EARNINGS     COMPENSATION        TOTAL
 NAME                   ($)             ($)                 ($)            ($)              ($)             ($)             ($)
 ----                   ---             ---                 ---            ---              ---             ---             ---

Arnold Klann                           16,750                                                                             16,750

Necitas Sumait                         16,750                                                                             16,750

John Cuzens                            16,750                                                                             16,750

Chris Nichols           2,500          16,750                                                             73,000 (1)      92,250


(1) Reflects value of consideration received as compensation for consultant services.


                                       31



<Page>

2006 ALL OTHER COMPENSATION TABLE


                             PERQUISITES                                     COMPANY                     CHANGE
                              AND OTHER                                    CONTRIBUTIONS     SEVERANCE  IN CONTROL
                              PERSONAL          TAX         INSURANCE    TO RETIREMENT AND    PAYMENTS/  PAYMENTS/
                              BENEFITS     REIMBURSEMENTS   PREMIUMS       401(K) PLANS       ACCRUALS   ACCRUALS
NAME                  YEAR       ($)            ($)           ($)              ($)              ($)       ($)       TOTAL ($)
----                  ----       ---            ---           ---              ---              ---       ---       ---------

Arnold Klann

Necitas Sumait

John Cuzens

Chris Nichols


                                       32



<Page>

2006 PERQUISITES TABLE


                                 PERSONAL USE OF
                                     COMPANY     FINANCIAL PLANNING                                          TOTAL PERQUISITES AND
NAME                     YEAR      CAR/PARKING      LEGAL FEES         CLUB DUES    EXECUTIVE RELOCATION   OTHER PERSONAL BENEFITS
----                     ----      -----------      ----------         ---------    --------------------   ------------------------

Arnold Klann

Necitas Sumait

John Cuzens

Chris Nichols


                                       33



<Page>

2006 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE


                                     BEFORE CHANGE IN   AFTER CHANGE IN
                                         CONTROL            CONTROL
                                        TERMINATION       TERMINATION
                                      W/O CAUSE OR FOR   W/O CAUSE OR     VOLUNTARY                               CHANGE IN
NAME               BENEFIT             GOOD REASON      OR GOOD REASON    TERMINATION   DEATH    DISABILITY         CONTROL
----               -------             -----------      --------------    -----------   ----- ------------------    -------

Arnold Klann                                                                                  Full comp. first 2
                                                                                              months, 50% of
                                                                                              comp. next 4 months

Necitas Sumait                                                                                Full comp. first 2
                                                                                              months, 50% of
                                                                                              comp. next 4 months

John Cuzens                                                                                   Full comp. first 2
                                                                                              months, 50% of
                                                                                              comp. next 4 months

Chris Nichols                                                                                 Full comp. first 2
                                                                                              months, 50% of
                                                                                              comp. next 4 months


------------
*  List each applicable type of benefit in a separate row, e.g., severance pay,
   bonus payment, stock option vesting acceleration, health care benefits
   continuation, relocation benefits, outplacement services, financial planning
   services or tax gross-ups.

</TABLE>

                                       34

<Page>

EMPLOYMENT CONTRACTS

On June 27, 2006, the Company entered into form employment agreements with its
three executive officers. The employment agreements are for a period of three
years, with prescribed percentage increases beginning in 2007 and can be
cancelled upon a written notice by either employee or employer (if certain
employee acts of misconduct are committed). The total aggregate annual amount
due under the employment agreements is approximately $520,000.

In addition, on June 27, 2006, the Company entered into a Directors agreement
with four individuals to join the Company's board of directors. Under the terms
of the agreement the non-employee Director (Chris Nichols) will receive annual
compensation in the amount of $5,000 and all Directors receive a one time grant
of 5,000 shares of the Company's common stock. The common shares vest over the
period of one year. The value of the common stock granted was determined to be
approximately $67,000 based on the estimated fair market value of the Company's
common stock over a reasonable period of time.

SUBSEQUENT MATERIAL EMPLOYMENT CONTRACT

In connection with Christopher Scott's appointment as the Company's CFO on March
16, 2007, the Company and Mr. Scott entered into an at-will letter Employment
Agreement containing the following material terms: (i) initial monthly salary of
$7,500, to be raised to $10,000 on the earlier of April 30, 2007 or receipt by
the Company of a qualified investment financing, and (ii) standard employee
benefits

                                       35



<Page>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table sets forth the current common stock ownership of (i) each
person known by the Company to be the beneficial owner of five percent or more
of the Company's common stock based upon 21,470,514 shares outstanding as of
March 23, 2007, (ii) each director of the Company individually and (iii) all
officers and directors of the Company as a group. In computing the number of
shares beneficially owned by a person and the percentage of ownership of that
person, shares of common stock subject to options held by that person that are
currently exercisable, as appropriate, or will become exercisable within 60 days
of the reporting date are deemed outstanding, even if they have not actually
been exercised. Those shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other person. Unless
otherwise indicated, each person has sole voting and investment power with
respect to the shares of common stock shown, and all ownership is of record and
beneficial. The address of each owner who is an officer or director is in care
of the Company at 31 Musick, Irvine, California 92618.

<TABLE>

TITLE OF                                                          NUMBER OF   PERCENT OF
CLASS      NAME OF BENEFICIAL OWNER                                SHARES        CLASS
------------------------------------------------------------------------------------------
<S>         <C>                                                 <C>                 <C>
 Common     Arnold Klann, President, CEO and Director           13,805,833 (1)      63.7%

 Common     Necitas Sumait, Secretary, VP and Director           1,298,750 (2)       6.0%

 Common     John Cuzens, Treasurer, VP and Director              1,298,750 (3)       6.0%

 Common     Christopher Scott, CFO                                  43,980 (4)          *

 Common     Chris Nichols, Director                                 70,000              *

            All officers and directors as a group (5 persons)   16,517,313          75.6%
</TABLE>

(1) Includes 208,333 shares issuable to Mr. Klann pursuant to options to
purchase shares of our common stock within 60 days of March 30, 2007.
(2) Includes 93,750 shares issuable to Mrs. Sumait pursuant to options to
purchase shares of our common stock within 60 days of March 30, 2007.
(3) Includes 93,750 shares issuable to Mr. Cuzens pursuant to options to
purchase shares of our common stock within 60 days of March 30, 2007.
(4) 20,000 of these shares are held by E-Info Solutions LLC, an entity owned
50% by Mr. Scott and 50% by his spouse.

*Less than 1%.

SHARE ISSUANCES/CONSULTING AGREEMENTS

On December 18, 2006 the Company engaged two consultants on a non-exclusive
basis to prepare, review and comment on various presentations, press releases,
or other public relations documentation as requested by the Company. Consultants
shall also provide the Company with capital market support through its network
of portfolio managers, hedge funds, brokers, market-makers, institutions and
other market support professionals and organizations. Consultants may also
advise the Company from time to time, as requested by the Company, on potential
development and business relationships that may benefit the Company's financial
market positioning.. Consultants were compensated in the form of 20,000 shares
each of restricted stock.

On November 21, 2006, the Company entered into an agreement with a certain
consultant. Under the terms of the agreement the Company is to receive market
capitalization and support services in exchange for the a monthly fee of $7,500,
restricted stock totaling 150,000 shares, 200,000 warrants to buy stock at $5
for 5 years, and certain travel expenses.

                                       36

<Page>

On January 1, 2007, the Company entered into an employment agreement with a
former consultant to be Vice President of Project Management. Pursuant to the
terms of this agreement, the consultant was issued 10,000 shares of the
Company's restricted common stock.

On Feb 13, 2007, the Company entered into a consulting agreement with a
corporate technology consultant. The consultant shall review, comment, and
implement as requested by the Company on any Information Technology rollout.
Under the terms of the agreement consultant will receive 12,500 restricted
shares of the Company's common stock at the signing of the agreement, 12,500
shares on June 1, 2007, 12,500 shares on September 1, 2007, and 12,500 shares on
December 1, 2007.

STOCK OPTION ISSUANCES UNDER 2006 PLAN

On December 14, 2006 the Company's Board of Directors granted the following
stock options to employees and outside consultants as compensation:

<TABLE>
<CAPTION>
                                                                    NUMBER OF   EXERCISE
DATE ISSUED:                          OPTIONEE NAME                  OPTIONS      PRICE      EXPIRATON DATE
--------------------------------------------------------------------------------------------------------------
<S>                          <C>                                    <C>           <C>       <C>
December 14, 2006            Arnold Klann, Officer and Director     1,000,000     $2.00     December 14, 2011
December 14, 2006            Necitas Sumait, Officer and Director     450,000     $2.00     December 14, 2011
December 14, 2006            John Cuzens, Officer and Director        450,000     $2.00     December 14, 2011
December 14, 2006            Scott Olson, outside consultant           40,000     $2.00     December 14, 2011
December 14, 2006            Kent Larsen, outside consultant           20,000     $2.00     December 14, 2011
                                                                   ----------
December 14, 2006            Bill Davis, employee                      20,000     $2.00     December 14, 2011
                                                                   ----------
December 14, 2006            Barbie Rios, outside consultant            5,000     $2.00     December 14, 2011
                                                                   ----------
December 14, 2006            Elsa Ebro, outside consultant              5,000     $2.00     December 14, 2011
                                                                   ----------
Totals                                                              1,990,000
                                                                   ==========
</TABLE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On March 1, 2006, BueFire entered into a Technology License agreement with
Arkenol, a company in which the Company's Chairman, CEO and majority shareholder
Arnold Klann holds a 25% interest. Arkenol has its own management and board
separate and apart from the Company. According to the terms of the agreement,
BlueFire was granted an exclusive, non-transferable, North American license to
use and to sub-license the Arkenol Technology (discussed above in Business of
Issuer). As consideration for the grant of the license, BlueFire shall make a
one time payment of $1,000,000 at first project construction funding and for
each plant make the following payments: (1) royalty payment of 4% of the gross
sales price for sales by BlueFire or its sublicensees of all products produced
from the use of the Arkenol Technology (2) and a one time license fee of $40.00
per 1,000 gallons of production capacity per plant. According to the terms of
the agreement, BlueFire made a one time exclusivity fee prepayment of $30,000
during the period ended August 31, 2006.

                                       37

<Page>

On March 1, 2006, BlueFire entered into an Asset Transfer and Acquisition
Agreement with ARK Energy, a company which is fifty percent (50%) owned by the
Company's Chairman, CEO and majority shareholder, Arnold Klann. There are no
other common stockholders, officers or directors. ARK Energy has its own
management and board separate and apart from the Company. Based upon the terms
of the agreement, ARK Energy transferred certain rights, assets, work-product,
intellectual property and other know-how on project opportunities that may be
used to deploy the Arkenol Technology. In consideration, BlueFire has agreed to
pay a performance bonus of up to $16,000,000 when certain milestones are met.
These milestones include, but are not limited to, transferee's project
implementation which would be demonstrated by start of the construction of a
facility or completion of financial closing which ever is earlier. Management
did not incur the costs of a third party valuation but based its valuation of
the assets acquired by (1) an arms length review of the value assigned by ARK
Energy to the opportunities is based on the actual costs it incurred in
developing the project opportunities and (ii) anticipated financial benefits to
the Company.

In December 2006, the Company entered into a Promissory Note with its Chairman,
CEO and majority shareholder Arnold Klann, whereby Mr. Klann loaned the Company
$90,000 with a flat fee of 10% of the principal, or lower if required by law, to
be repaid upon the Company achieving certain investor financing milestones. In
addition, on January 5, 2007 the Company entered into a $25,000 promissory note
with the Company's Chairman, CEO and majority shareholder. Under the terms of
the note, the Company is to repay any principal balance within 30 days of
receiving qualified investment financing and a maximum fee of $2,500. The
principal balance and all accrued interest were paid in full during the month of
January of 2007.

On December 18, 2006 the Company engaged Director Christopher Nichols as a
consultant on a non-exclusive basis to prepare, review and comment on various
presentations, press releases, or other public relations documentation as
requested by the Company. Consultant shall also provide the Company with capital
market support through its network of portfolio managers, hedge funds, brokers,
market-makers, institutions and other market support professionals and
organizations. Consultant may also advise the Company from time to time, as
requested by the Company, on potential development and business relationships
that may benefit the Company's financial market positioning. Consultant was
compensated in the form of 20,000 shares of restricted common stock.

SUBSEQUENT RELATED PARTY TRANSACTION

On February 13, 2007, the Company entered into a consulting agreement with a
corporate technology consultant. The consultant shall review, comment, and
implement as requested by the Company on any Information Technology rollout.
Under the terms of the agreement consulting entity will receive 12,500
restricted shares of the Company's common stock at the signing of the agreement
and 37,500 shares after effectiveness of the agreement in equal parts on June 1,
2007, September 1, 2007, and December 1, 2007.

On March 16, 2007, the Company obtained a 10% annual interest line of credit in
the amount of $1,500,000 from it's Chairman/Chief Executive Officer and majority
shareholder Arnold Klann to provide additional liquidity to the Company as
needed. Under the terms of the note, the Company is to repay any principle
balance and interest within 30 days of receiving qualified investment financing
of $5,000,000 or more.

                                       38

<Page>

ITEM 13.  EXHIBITS

(a)   The following documents are filed as a part of this Report.

EXHIBIT
   NO.                             DESCRIPTION
2.1       Stock Purchase Agreement and Plan of Reorganization dated May 31,
          2006, filed December 13, 2006.(1)
3.1       Amended and Restated Articles of Incorporation dated July 2, 2006,
          filed December 13, 2006.(1)
3.2       Amended and Restated Bylaws dated May 27, 2006, filed December 13,
          2006.(1)
4.1       Form of Promissory Note, filed February 28, 2007.(2)
4.2       Form of Subscription Agreement, filed February 28, 2007.(2)
4.3       Revolving Line of Credit dated March 16, 2007.(3)
10.1      Form Directors Agreement, filed December 13, 2006.(1)
10.2      Form Executive Employment Agreement, filed December 13, 2006.(1)
10.3      Arkenol Technology License Agreement, dated March 1, 2006, filed
          December 13, 2006.(1)
10.4      ARK Energy Asset Transfer and Acquisition Agreement, dated March 1,
          2006, filed December 13, 2006.(1)
10.5      Form of the Consulting Agreement, filed February 28, 2007.(2)
10.6      Company's 2006 Incentive and Nonstatutory Stock Option Plan and Form
          of Stock Option Agreement, filed February 28, 2007.(2)
10.7      Chief Financial Officer Employment Agreement, effective March 16,
          2007. (3)
21.1      Subsidiaries, filed herewith.
31.1      Rule 13a-14(a)/ 15d-14(a) Certification of Arnold Klann.
31.2      Rule 13a-14(a)/ 15d-14(a) Certification of Christopher Scott.
32.1      Certification Pursuant to 18 U.S.C. section 1350 of Arnold Klann.
32.2      Certification Pursuant to 18 U.S.C. section 1350 of Christopher Scott.
99.1      Audit Committee Charter, filed February 28, 2007.(2)
99.2      Compensation Committee Charter, filed February 28, 2007.(2)

(1) Incorporated by reference to the Company's Form 10-SB, as filed with the SEC
    on December 13, 2006.
(2) Incorporated by reference to the Company's Form 10-SB/A, as filed with the
    SEC on February 28, 2007.
(3) Incorporated by reference to the Company's Form 10-SB/A, as filed with the
    SEC on March 26, 2007.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

a. Audit Fees: Aggregate fees billed for professional services rendered for the
audit of our annual financial statements for the period ended August 31, 2006
and the period ended December 31, 2006 were approximately $15,000 and
$13,000, respectively.

b. Audit-Related Fees: No fees were billed for assurance and related services
reasonably related to the performance of the audit or review of our financial
statements and not reported under "Audit Fees" above in the period ended
December 31, 2006.

c. Tax Fees. Fees billed for tax services were approximately $0 in the period
ended December 31, 2006

d. All Other Fees: Aggregate fees billed for services other than those described
above were approximately $5,000 in the period ended December 31, 2006.
These fees were primarily for review of our Form 10-SB.

                                       39

<Page>

                                   SIGNATURES

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


DATED: March 31, 2007                   BLUEFIRE ETHANOL FUELS, INC.

                                        /s/ ARNOLD KLANN
                                        ----------------
                                        ARNOLD KLANN
                                        Chief Executive Officer


                                        /s/ CHRISTOPHER SCOTT
                                        ---------------------
                                        CHRISTOPHER SCOTT
                                        Chief Financial Officer and
                                        Principal Accounting Officer


      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature                               Title                          Date

/s/ ARNOLD KLANN          President, Chief Executive Officer,     March 31, 2007
---------------------     and Director
ARNOLD KLANN


/s/ NECITAS SUMAIT        Senior VP and Director                  March 31, 2007
---------------------
NECITAS SUMAIT


/s/ JOHN CUZENS           Senior VP and Director                  March 31, 2007
---------------------
JOHN CUZENS


/s/ CHRIS NICHOLS         Director                                March 31, 2007
---------------------
CHRIS NICHOLS

                                       40




<Page>

                                    PART F/S


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm                     F-1

Consolidated Balance Sheet as of December 31, 2006                          F-2

Consolidated Statement of Operations from March 28, 2006 (Inception)
  to December 31, 2006                                                      F-3

Consolidated Statements of Stockholders' Deficit for the period from
  March 28, 2006 (Inception) to December 31, 2006                           F-4

Consolidated Statements of Cash Flows for the period from March 28,
  2006 (Inception) to December 31, 2006                                     F-5

Notes to Consolidated Financial Statements                                  F-6




<Page>

             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------



Board of Directors
BlueFire Ethanol Fuels, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of BlueFire Ethanol
Fuels, Inc. (formerly Sucre Agricultural Corp.) and subsidiary, a
development-stage company, (the "Company") as of December 31, 2006, and the
related consolidated statements of operations, stockholders' deficit, and cash
flows for the period from March 28, 2006 (Inception) to December 31, 2006. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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
consolidated 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
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated 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 BlueFire Ethanol
Fuels, Inc. and subsidiary, as of December 31, 2006, and the results of their
operations and their cash flows for the period from March 28, 2006 (Inception)
to December 31, 2006, in conformity with accounting principles generally
accepted in the United States of America.


Irvine, California
March 21, 2007

                                                /s/ McKennon Wilson & Morgan LLP
                                                --------------------------------


                                      F-1



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                                  BALANCE SHEET


                                                              December 31, 2006
                                                              -----------------
ASSETS

Current assets-
  Cash and cash equivalents                                   $          2,760

Prepaid fees to related party (Note 5)                                  30,000
                                                              ----------------
         Total assets                                         $         32,760
                                                              ================


LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable                                            $         66,949
  Accrued liabilities                                                   17,692
  Related party note and accrued interest                              100,100
                                                              ----------------
         Total liabilities                                             184,741
                                                              ----------------

Commitments and contingencies (Note 3)

Stockholders' deficit:
  Preferred stock, no par value, 1,000,000
    shares authorized; none issued and outstanding                          --
  Common stock, $0.001 par value; 100,000,000
    shares authorized; 21,125,764 shares
    issued and outstanding                                              21,126
  Additional paid-in capital                                         1,382,390
  Deficit accumulated during the development stage                  (1,555,497)
                                                              ----------------
         Total stockholders' deficit                                  (151,981)
                                                              ----------------

         Total liabilities and stockholders' deficit          $         32,760
                                                              ================


           See accompanying notes to consolidated financial statements

                                      F-2



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF OPERATIONS
       FOR THE PERIOD FROM MARCH 28, 2006 (INCEPTION) TO DECEMBER 31, 2006


Revenues                                                           $         --

Operating expenses:
  Project development                                                   466,002
  General and administrative                                          1,083,195
                                                                   ------------
     Total operating expenses                                         1,549,197

     Operating loss                                                  (1,549,197)

Other income and (expense):
  Other income                                                            2,800
  Related party interest expense                                         (9,100)
                                                                   ------------

     Net loss                                                      $ (1,555,497)
                                                                   ============

Basic and diluted loss per common share                            $      (0.08)
                                                                   ============
Weighted average common shares outstanding, basic and diluted        19,711,225
                                                                   ============


           See accompanying notes to consolidated financial statements

                                      F-3



<Page>
<TABLE>
<S>     <C>
                                                    BLUEFIRE ETHANOL FUELS, INC.
                                         (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                                                    (A DEVELOPMENT-STAGE COMPANY)
                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                                     PERIOD FROM MARCH 28, 2006 (INCEPTION) TO DECEMBER 31, 2006


                                                                                                    Deficit
                                                                                                   Accumulated
                                                                              Additional           During the
                                               Common Stock                    Paid-in             Development
Stockholders'
                                         Shares             Amount             Capital                Stage               Deficit
                                      -----------         -----------         -----------          -----------          -----------
Balances at March 28, 2006
 (Inception)                                   --         $        --         $        --          $        --          $        --
Issuance of founder's share at
 $0.001 per share (Note 4)             17,000,000              17,000                  --                   --               17,000
Common shares retained
 by Sucre Agricultural
 Corp. Shareholders (Note 4)            4,028,264               4,028             685,972                   --              690,000
Costs associated with the
 acquisition of Sucre
 Agricultural Corp.                            --                  --              (3,550)                  --               (3,550)
Common shares issued
 for services in November 2006
 at $2.99 per share (Note 3)               37,500                  38             111,962                   --              112,000
Common shares issued
 for services in November 2006
 at $3.35 per share (Note 3)               20,000                  20              66,981                   --               67,001
Common shares issued
 for services in December 2006
 at $3.65 per share (Note 3)               20,000                  20              72,980                   --               73,000
Common shares issued
 for services in December 2006
 at $3.65 per share (Note 3)               20,000                  20              72,980                   --               73,000
Estimated value of common
 shares at $3.99 per share and
 warrants at $2.90 issuable for
 services upon vesting in
 February 2007                                 --                  --             160,000                   --              160,000
Stock based compensation
 related to options  (Note 4)                  --                  --             114,811                   --              114,811
Stock based compensation
 related to warrants (Note 4)                  --                  --             100,254                   --              100,254
Net loss                                       --                  --                  --           (1,555,497)          (1,555,497)
                                      -----------         -----------         -----------          -----------          -----------
Balances at December 31, 2006          21,125,764         $    21,126         $ 1,382,390          $(1,555,497)         $  (151,981)
                                      ===========         ===========         ===========          ===========          ===========


                                     See accompanying notes to consolidated financial statements

                                                                F-4



<Page>

                                BLUEFIRE ETHANOL FUELS, INC.
                    (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                               (A DEVELOPMENT-STAGE COMPANY)
                            CONSOLIDATED STATEMENT OF CASH FLOWS
            FOR THE PERIOD FROM MARCH 28, 2006 (INCEPTION) TO DECEMBER 31, 2006


Cash flows from operating activities:
         Net loss                                                              $(1,555,497)
         Adjustments to reconcile net loss to net
           cash used in operating activities:
         Costs associated with acquisition of Sucre Agricultural Corp.              (3,550)
         Founders' shares expense                                                   17,000
         Stock based compensation                                                  700,066
         Changes in operating assets and liabilities:
           Prepaid fees to related party                                           (30,000)
           Accounts payable                                                         66,949
           Accrued liabilities                                                      17,692
           Accrued interest to related party                                         9,100
                                                                               -----------
                  Net cash used in operating activities                           (778,240)
                                                                               -----------

Cash flows from financing activities:
         Proceeds from related party notes                                          91,000
         Cash received in acquisition of Sucre Agricultural Corp.                  690,000
                                                                               -----------
                  Net cash provided by financing activities                        781,000
                                                                               -----------

Net increase in cash and cash equivalents                                            2,760

Cash and cash equivalents beginning of period                                           --
                                                                               -----------

Cash and cash equivalents end of period                                        $     2,760
                                                                               ===========

Supplemental disclosures of cash flow information
         Cash paid during the period for:
         Interest                                                              $        --
                                                                               ===========
         Income taxes                                                          $        --
                                                                               ===========


                See accompanying notes to consolidated financial statements

                                            F-5
</TABLE>



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND BUSINESS

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

BlueFire's business will encompass development activities leading to the
construction and long-term operation of production facilities. BlueFire is
currently in the development stage of deploying project opportunities for
converting cellulose fractions of municipal solid waste and other opportunistic
feedstock into ethanol fuels. The Company entered into an Asset Transfer and
Acquisition Agreement with ARK Energy, Inc. ("ARK Energy"). Based upon the terms
of the agreement, ARK Energy transferred certain rights, assets, work-product,
intellectual property and other know-how on 19 project opportunities, that
management estimates is worth approximately $16,000,000, which may be used by
BlueFire to accelerate its deployment of the Arkenol technology.

On June 27, 2006, BlueFire completed a reverse acquisition of Sucre Agricultural
Corp. ("Sucre"), a Delaware corporation. At the time of acquisition, Sucre had
no operations, revenues or liabilities. The only asset possessed by Sucre was
$690,000 in cash which was included in the acquisition. Sucre was considered a
blank-check company prior to the acquisition. In connection with the acquisition
Sucre issued BlueFire 17,000,000 shares of common stock, approximately 85% of
the outstanding common stock of Sucre, for all the issued and outstanding
BlueFire common stock. The Sucre stockholders retained 4,028,264 shares of Sucre
common stock. BlueFire and Sucre will be collectively referred herein to as the
"Company". Immediately prior to the acquisition, Sucre changed its name to
BlueFire Ethanol Fuels, Inc.


                                      F-6



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

MANAGEMENTS' PLANS

The Company is a development-stage company which has incurred losses since
inception. Management has funded operations primarily through proceeds received
in connection with the reverse merger, loans from its majority shareholder, and
the private placement of the Company's common stock in January 2007. In order
for the Company's operations to continue, management will need to generate
revenues from their intended operations sufficient to meet the Company's
anticipated cost structure. The Company may encounter difficulties in
establishing these operations due to the time frame of developing, constructing
and ultimately operating the planned bio-refinery projects.

As of December 31, 2006, the Company has a working capital deficit of
approximately $151,981. Subsequent to year end, the Company raised approximately
$557,000 through the sale of common stock. The funds are currently being used to
fund the operations of the Company and are expected to last through March 2007.
Management has estimated that operating expenses for the period from April 2007
to December 2007 will approximate roughly $1,200,000, excluding engineering
costs related to the development of our bio-refinery projects. In February 2007,
the Company was awarded a grant for up to $40 million from the U.S. Department
of Energy's ("DOE") cellulosic ethanol grant program to develop a solid waste
bio-refinery project at a landfill in Southern California. In March 2007, the
Company was selected to receive $1,000,000 in funding from the California Energy
Commission ("CEC"). Under the DOE and CEC programs, the Company may be
reimbursed for project specific costs including salaries, engineering,
development, etc.

In addition in March 2007, the Company obtained a line of credit in the amount
of $1,500,000 from its Chairman/Chief Executive Officer and majority shareholder
to provide additional liquidity to the Company as needed. The Company is in the
process of reviewing term sheets for proposed equity financings of up to
$5,000,000 to replace the line of credit provided by the CEO. Management
believes its plans will enable the Company to operate in the normal course of
business until December 31, 2007.

BASIS OF PRESENTATION AND CHANGE IN REPORTING ENTITY

The acquisition of Sucre Agricultural Corp. by BlueFire Ethanol, Inc., as
discussed in Note 1, was accounted for as a reverse acquisition, whereby the
assets and liabilities of BlueFire are reported at their historical cost since
the entities are under common control immediately before and after the
acquisition in accordance with Statement of Financial Accounting Standards
("SFAS") No. 141 "Business Combinations." The assets and liabilities of Sucre
were recorded at estimated fair value on June 27, 2006, the date of the
acquisition. No goodwill was recorded in connection with the reverse acquisition
since Sucre had no business. The reverse acquisition resulted in a change in the
reporting entity of Sucre, for accounting and reporting purposes. Accordingly,
the financial statements herein reflect the operations of BlueFire from
Inception and Sucre from June 27, 2006, the date of acquisition, through
December 31, 2006. The 4,028,264 shares retained by the stockholders of Sucre
have been recorded on the date of acquisition of June 27, 2006.


                                      F-7



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of BlueFire Ethanol
Fuels, Inc., and its wholly-owned subsidiary BlueFire Ethanol, Inc. All
significant intercompany balances and transactions have been eliminated in
consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ from those
estimates.

CASH AND CASH EQUIVALENTS

For purpose of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.

REVENUE RECOGNITION

The Company is currently a developmental-stage company. The Company will
recognize revenues from 1) consulting services rendered to potential sub
licensees for development and construction of cellulose to ethanol projects, 2)
sales of ethanol from its production facilities when (a) persuasive evidence
that an agreement exists; (b) the products have been delivered; (c) the prices
are fixed and determinable and not subject to refund or adjustment; and (d)
collection of the amounts due is reasonably assured.

PROJECT DEVELOPMENT

Project development costs are expensed as incurred. The costs of materials and
equipment that will be acquired or constructed for project development
activities, and that have alternative future uses, both in project development,
marketing or sales, will be classified as property and equipment and depreciated
over their estimated useful lives. To date, project development costs include
the development, engineering, and marketing expenses related to the Company's
cellulose fractions of municipal solid waste into ethanol fuels.

INCOME TAXES

The Company accounts for income taxes in accordance with Financial Accounting
Standards Board ("FASB") Statement No. 109 "Accounting for Income Taxes." SFAS
No. 109 requires the Company to provide a net deferred tax asset/liability equal
to the expected future tax benefit/expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or tax
credit carry forwards.


                                      F-8



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments approximated their carrying values at
December 31, 2006. The financial instruments consist of cash and accounts
payable. The related party note cannot be evaluated because this is not an
arms-length transaction.

LOSS PER COMMON SHARE

The Company presents basic loss per share ("EPS") and diluted EPS on the face of
the consolidated statement of operations. Basic loss per share is computed as
net loss divided by the weighted average number of common shares outstanding for
the period. Diluted EPS reflects the potential dilution that could occur from
common shares issuable through stock options, warrants, and other convertible
securities. As of December 31, the Company had options and warrants to purchase
and aggregate of 2,190,000 shares of common stock that were excluded from the
calculation of diluted loss per share as their effects would have been
anti-dilutive.

RISKS AND UNCERTAINTIES

The Company's operations are subject to new innovations in product design and
function. Significant technical changes can have an adverse effect on product
lives. Design and development of new products are important elements to achieve
and maintain profitability in the Company's industry segment.

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

CONCENTRATIONS OF CREDIT RISK

The Company, at times, maintains cash balances at certain financial institutions
in excess of amounts insured by federal agencies.

SHARE-BASED PAYMENTS

The Company accounts for stock options issued to employees under SFAS No.
123(R), "Share-Based Payment". Under SFAS 123(R), share-based compensation cost
is measured at the grant date, based on the estimated fair value of the award,
and is recognized as expense over the employee's requisite service period. The
Company has no awards with market or performance conditions.


                                      F-9



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


RECENT ACCOUNTING PRONOUNCEMENTS

In July 2006, the FASB issued FASB Interpretation No.48, "Accounting for
Uncertainty in Income Taxes" ("FIN 48") which clarifies the accounting for
uncertainty in income taxes recognized in the financial statements in accordance
with FASB Statement No. 109, "Accounting for Income Taxes". This pronouncement
recommends a recognition threshold and measurement process for recording in the
financial statements uncertain tax positions taken or expected to be taken in
the Company's tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods and
disclosure requirements for uncertain tax positions. The accounting provisions
of FIN 48 will be effective for the Company beginning January 1, 2007. The
Company is in the process of evaluating the impact, if any, the adoption of FIN
48 will have on its financial statements.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". SFAS
157 defines fair value, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements. This statement clarifies fair
value as permitted under other accounting pronouncements but does not require
any new fair value measurements. However, for some entities, the application of
this statement will change current practice. The Company will be required to
adopt SFAS No. 157 as of January 1, 2008 and is currently in the process of
evaluating the impact, if any, the adoption of SFAS No. 157 will have on its
financial statements.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

On May 1, 2006, the Company began discussions with a certain consultant to
negotiate project and obtain financing for the Company. As of December 31, 2006,
the Company had not finalized the consulting agreement and the consultant did
not have any capital funding arrangements in which a commission was due.
However, the Company has made monthly payments in the amount of $7,500 to the
consultant since July 2006.

On June 27, 2006, the Company entered into employment agreements with three (3)
key employees. The employment agreements are for a period of three years, with
prescribed percentage increases beginning in 2007 and can be cancelled upon a
written notice by either employee or employer (if certain employee acts of
misconduct are committed). The total aggregate annual amount due under the
employment agreements is approximately $520,000.

On June 27, 2006, the Company entered into an agreement with four (4)
individuals to join the Company's board of directors. Under the terms of the
agreement, the individuals will receive annual compensation in the amount of
$5,000, and they received a one time grant of 5,000 shares of the Company's
common stock. The value of the common stock granted was determined to be
approximately $67,000 based on the estimated fair market value of the Company's
common stock near the date of grant. As of December 31 2006, the Company
recorded the value of the common stock issued as general and administrative
expenses in the accompanying statement of operations as the common stock was
issued to the individuals without risk of forfeiture and future performance.


                                      F-10



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


On November 21, 2006, the Company entered into an agreement with a consultant.
Under the terms of the agreement, the Company is to receive investor relations
and support services in exchange for the a monthly fee of $7,500, 150,000 shares
of common stock, warrants to purchase 200,000 shares of common stock at $5.00
per share, expiring in five years, and the reimbursement of certain travel
expenses. The common stock and warrants vest in equal amounts on November 21,
2006, February 1, 2007, April 1, 2007 and June 1, 2007. The Company accounts for
the agreement under the provisions of Emerging Issues Task Force 96-18
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services." Whereby the
Company values the common shares and warrants at each reporting period to
determine the amount to be recorded as an expense in the respective period. As
the common shares and warrants vest, they are valued on reporting date and an
adjustment will be recorded for the difference between the value already
recorded and the then current value.

On November 21, 2006 (date of grant), the consultant immediately vested in
37,500 shares of common stock and warrants to purchase 50,000 shares of common
stock. The common shares were valued at $112,000 based upon the closing market
price of the Company's common stock on the date of grant. The warrants were
valued on the grant date at $100,254 based on the Black-Scholes option pricing
model using the following assumptions: volatility of 88%, expected life of five
years, risk free interest rate of 4.75% and no dividends. The value of the
common stock and warrants was recorded in general and administrative expense in
the accompanying statement of operations.

On December 31, 2006, the fair value of the unvested common stock issuable under
the contract based on the closing market price of the Company's common stock was
$3.99 per share. The Company recorded $80,000 of estimated compensation expense
related to the value of common shares that had yet to vest. As of December 31,
2006, the Company estimated the fair value of the unvested warrants issuable
under the contract was $2.90 per share. The warrants were valued on December 31,
2006 based on the Black-Scholes option pricing model using the following
assumptions: volatility of 98%, expected life of five years, risk free interest
rate of 4.82% and no dividends. The Company recorded $80,000 of estimated
compensation expense related to the value of warrants that had yet to vest.

On December 18, 2006, the Company entered into a consulting agreement with two
individuals. Each consultant shall support the strategic, financial and market
objectives of the Company. Under the terms of the agreement each consultants
received 20,000 restricted shares of the Company's common stock. The value of
for each individuals common stock was determined to be approximately $73,000
based on the closing market price of the Company's common stock on the date of
the agreement and was expensed to general and administrative expenses on the
accompanying statement of operations. The shares vested immediately, do not
require future performance and are not at risk for forfeiture.


                                      F-11



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 -STOCKHOLDERS' DEFICIT

FOUNDER SHARES

In March 2006, upon incorporation BlueFire issued 10,000 shares of $1.00 par
value common stock to various individuals. The shares were recorded at their par
value of $10,000 and expensed. In connection with the reverse acquisition, as
discussed in Note 2, these individuals received an aggregate of 17,000,000
shares of Sucre's common stock with a par value of $0.001 per share. At the time
of the transaction, BlueFire did not have sufficient paid-in capital to reclass
the additional par value of the common shares to common stock, thus the Company
expensed an additional $7,000. The amounts were recorded as general and
administrative expense on the accompanying statement of operations.

ACQUISITION COSTS

In connection with the acquisition of Sucre, the Company incurred legal costs of
$3,550. The costs have been treated as a reduction of additional paid-in
capital.

FINANCINGS PRIOR TO REVERSE ACQUISITION

Prior to the reverse acquisition, Sucre entered into an agreement with an
investor for the sale of 3,000,000 shares of the Sucre's common stock for gross
proceeds of $1,000,000. The previous management of Sucre erroneously issued
4,000,000 shares of Sucre's common stock to the investor. To date, the excess
shares of 1,000,000 have not been returned to the transfer agent. The Company
has demanded the return of the 1,000,000 and is actively pursuing every possible
channel to get the shares returned. Since the Company cannot predict the
ultimate outcome, the 1,000,000 shares have been accounted for as outstanding
and included in the common shares retained by Sucre shareholders. At the time of
the reverse acquisition, Sucre had $690,000 in cash as reflected in the
accompanying statements of stockholders deficit.

STOCK OPTION PLAN

On December 14, 2006, the Company established an incentive and nonstatutory
stock option plan. The plan is intended to further the growth and financial
success of the Company by providing additional incentives to selected employees,
directors, and consultants. Stock options granted under the Plan may be either
"Incentive Stock Options," or "Nonstatutory Options" at the discretion of the
Board of Directors. The total number of shares of Stock which may be purchased
through exercise of Options granted under this Plan shall not exceed ten million
(10,000,000) shares, they become exercisable over a period of no longer than
five (5) years and no less than 20% of the shares covered thereby shall become
exercisable annually. As of December 31, 2006, 1,990,000 options have been
issued under the plan and thus 8,010,000 are still issuable.


                                      F-12



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


On December 14, 2006, the Company granted options to purchase 1,990,000 shares
of common stock to various employees and consultants having a $2.00 exercise
price. The value of the options granted was determined to be approximately
$4,900,000 based on the Black-Scholes option pricing model using the following
assumptions: volatility of 99%, expected life of five years, risk free interest
rate of 4.73%, market price per share of $3.05, and no dividends. The Company is
currently expensing the value of the common stock over the vesting period of two
years for the employees. For non-employees the Company is revaluing the fair
market value of the options at each reporting period. As of December 31, 2006,
the value per the Black-Scholes option pricing model was immaterially different
to the initial value calculated.

As of December 31, 2006, the Company amortized approximately $112,000 to general
and administrative expense and $2,500 to project development expense. Related to
these options, the Company will record future compensation expense of
approximately $2,500,000 and $2,300,000 during the year ending December 31, 2007
and December 31, 2008, respectively. As of December 31, 2006, none of the
options were vested and had an estimated remaining life of five years. In
addition, the average fair market value of the Company's common stock on the
date of grant was $3.05.

NOTE 5 -RELATED PARTY TRANSACTIONS

TECHNOLOGY AGREEMENT WITH ARKENOL, INC.

On March 1, 2006, the Company entered into a Technology License agreement with
Arkenol, Inc. ("Arkenol"), which the Company's majority shareholder and other
family members hold an interest in. Arkenol has its own management and board
separate and apart from the Company. According to the terms of the agreement,
the Company was granted an exclusive, non-transferable, North American license
to use and to sub-license the Arkenol technology. The Arkenol Technology,
converts cellulose and waste materials into Ethanol and other high value
chemicals. As consideration for the grant of the license, the Company shall make
a one time payment of $1,000,000 at first project construction funding and for
each plant make the following payments: (1) royalty payment of 4% of the gross
sales price for sales by the Company or its sub licensees of all products
produced from the use of the Arkenol Technology (2) and a one time license fee
of $40.00 per 1,000 gallons of production capacity per plant. According to the
terms of the agreement, the Company made a one-time exclusivity fee prepayment
of $30,000 during the period ended December 31, 2006. As of December 31, 2006,
the amount has been reflected as a long-term prepaid asset as the Company does
not expect to incur any liabilities under this agreement prior to one year from
the balance sheet date. As of December 31, 2006, the Company had not incurred
any liabilities related to the agreement.


                                      F-13



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


ASSET TRANSFER AGREEMENT WITH ARK ENERGY, INC.

On March 1, 2006, the Company entered into an Asset Transfer and Acquisition
Agreement with ARK Energy, Inc. ("ARK Energy"), which is owned (50%) by the
Company's CEO and majority shareholder. ARK Energy has its own management and
board separate and apart from the Company. Based upon the terms of the
agreement, ARK Energy transferred certain rights, assets, work-product,
intellectual property and other know-how on project opportunities that may be
used to deploy the Arkenol technology (as described in the above paragraph). In
consideration, the Company has agreed to pay a performance bonus of up to
$16,000,000 when certain milestones are met. These milestones include
transferee's project implementation which would be demonstrated by start of the
construction of a facility or completion of financial closing which ever is
earlier. The payment is based on ARK Energy's cost to acquire and develop 19
sites which are currently at different stages of development. As of December 31,
2006, the Company had not incurred any liabilities related to the agreement.

RELATED PARTY PROMISSORY NOTE

In addition, on December 12, 2006 the Company entered into a $90,000 promissory
note with the Company's Chairman, CEO and majority shareholder. Under the terms
of the note, the Company is to repay any principal balance within 30 days of
receiving a qualified investment financing and a mandatory 10% interest fee of
$9,000. As of December 31, 2006, the outstanding principal balance was $90,000
which is included in related party notes and accrued interest of $9,000. The
principal balance and all accrued interest was paid in full in January 2007.

NOTE 6 - INCOME TAXES

Income tax reporting primarily relates to the business of the parent company
Sucre which experienced a change in ownership on June 27, 2006. A change in
ownership requires management to compute the annual limitation under Section 382
of the Internal Revenue Code. The amount of benefits the Company may receive
from the operating loss carry forwards for income tax purposes is further
dependent, in part, upon the tax laws in effect, the future earnings of the
Company, and other future events, the effects of which cannot be determined.

The Company's deferred tax assets consist of net operating loss carry forwards
of approximately $346,000 and stock based compensation related to the issuance
of common stock, options and warrants of approximately $177,000. Both items are
considered long-term. For federal tax purposes these carry forwards expire in 20
years beginning in 2026 and for the State of California purposes they expire in
five years beginning in 2011. A full valuation allowance has been placed on 100%
of the Company's deferred tax assets as it cannot be determined if the assets
will be ultimately used. During the period from Inception to December 31, 2006,
the Company's valuation allowance increased by approximately $523,000.

In addition, the Company expects that Sucre is not current in their federal and
state income tax filings. The Company has not determined how delinquent the
filings are. However, the effect of non filing is not expected to be significant
as Sucre has not had active operations for a significant period of time.


                                      F-14



<Page>

                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - SUBSEQUENT EVENTS

ISSUANCE OF COMMON STOCK RELATED TO EMPLOYMENT AGREEMENTS

In January 2007, the Company entered into an employment agreement with a key
employee. The employment agreement can be cancelled upon a written notice by
either employee or employer (if certain employee acts of misconduct are
committed). The total aggregate amount due over the next twelve months is
approximately $160,000 which includes compensation consisting of 10,000 shares
of the Company's common stock valued at approximately $40,000 based on the
closing market of the Company's common stock on the date of the agreement.

On February 12, 2007, the Company entered into an employment agreement with a
key employee, and simultaneously entered into a consulting agreement with an
entity controlled by such employee; both agreements were effective March 16,
2007, the employee's start date. Under the terms of the consulting agreement,
the employee will receive a total of 50,000 shares of common stock vesting at
the following periods; 12,500 shares February 12, 2007, 12,500 shares on June 1,
September 1, and December 1, 2007. The value of the common stock due at contract
signing was determined to be approximately $275,000 based on the closing market
price of the Company's common stock on the date of the agreement and is being
amortized over the vesting period.

PRIVATE OFFERING

On January 5, 2007, the Company completed a private offering of its stock, and
entered into subscription agreements with four accredited investors. In this
offering, the Company sold an aggregate of 278,500 shares of the Company's
common stock at a price of $2.00 per share for total proceeds of $557,000. The
shares of common stock were offered and sold to the investors in private
placement transactions made in reliance upon exemptions from registration
pursuant to Section 4(2) under the Securities Act of 1933. Costs associated with
three of these offerings are included in the November 21, 2006 agreement
mentioned in Note 3. In addition, the Company paid $12,500 in cash and issued
6,250 shares of their common stock as a placement fee for one of the
subscription agreements.

RELATED PARTY PROMISSORY NOTE AND LINE OF CREDIT

On January 5, 2007 the Company entered into a $25,000 promissory note with the
Company's Chairman, CEO and majority shareholder. Under the terms of the note,
the Company is to repay any principal balance within 30 days of receiving a
qualified investment financing and a maximum fee of $2,500. The principal
balance and all accrued interest were paid in full during the month of January
of 2007.

In addition in March 2007, the Company obtained a $1,500,000 line of credit from
its Chairman/Chief Executive Officer and majority shareholder to provide
additional liquidity to the Company as needed. The line of credit incurs
interest at 10% per annum. The Company is to repay any principal balance and
interest within 30 days of receiving qualified investment financing of
$5,000,000 or more.


                                      F-15



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                          BLUEFIRE ETHANOL FUELS, INC.
               (FORMERLY SUCRE AGRICULTURAL CORP.) AND SUBSIDIARY
                          (A DEVELOPMENT-STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


OPTION TO PURCHASE LAND

On February 9, 2007, the Company paid a one time fee of $4,000 and signed a
six-month option agreement to purchase 95 acres of vacant land in Lancaster,
California for $95,000.

PROFESSIONAL SERVICES AGREEMENT

On February 15, 2007, the Company entered into a "professional services
agreement" with a client. The Company was retained to develop, build and operate
one or more facilities in the country of Sri Lanka to produce ethanol using the
"Arkenol Technology" (see Note 5). The agreement shall begin upon the earlier of
the client requesting to commence activities, or two hundred seventy days (270)
from the date of the agreement. The agreement will terminate on the earlier of
(i) non payment of the $100,000 initial retainer, (ii), five years from the date
of the agreement, or (iii) the completion of the project.

DEPARTMENT OF ENERGY

In February 2007, the Company was awarded a grant for up to $40 million from the
U.S. Department of Energy's ("DOE") cellulosic ethanol grant program to develop
a solid waste bio-refinery project at a landfill in Southern California.

CALIFORNIA ENERGY COMMISSION

In March 2007, the Company was selected to receive $1,000,000 in funding from
the California Energy Commission ("CEC"). Under the DOE and CEC programs, the
Company will be reimbursed for project specific costs including salaries,
engineering, development, etc.


                                      F-16