COMMITMENTS AND CONTINGENCIES	6 Months Ended
COMMITMENTS AND CONTINGENCIES	Jun. 30, 2014
COMMITMENTS AND CONTINGENCIES [Abstract]
COMMITMENTS AND CONTINGENCIES	NOTE 7 - COMMITMENTS AND CONTINGENCIES Design-Build Contract On December 1, 2012, the Company entered into a Design-Build Contract with a third party to provide design and construction services for the Technology Innovation Center the Company is constructing at its site in Lima, Ohio. The cost of constructing the Technology Innovation Center is estimated at $9,500,000. The cost of the work for this Phase 1 is $2,000,000. The parties may amend the contract at any time to include the additional phases of the project. The Company established an escrow account for payments under the contract. The Company invested $575,661 into the Technology Innovation Center through 2013. In November 2013 the Company paused the work schedule under this contract to match overall project timing. As of June 30, 2014 there is no balance in the previously established escrow account. BOE Purchase and Sale Agreement On October 3, 2013, the parties to the BOE Purchase and Sale Agreement regarding the 1.02 Billion BOE Wyoming Energy Asset (the Energy Contract), agreed that the contract terms as written in the June 18, 2010 agreement remain in force, subject to availability of the asset. Confirmation of availability will come in conjunction with the $70 million activation payment, at which time it is anticipated that the schedules for construction and operations of Cleantech Energy will be reset. The December 10, 2011 clarification points and terms are no longer valid or applicable. Interfuel E&P Ltd., in which Mr. Graves has a 17% ownership interest, is one of the parties to this agreement. Litigation In 2012, an action was filed in Hennepin County, Minnesota on behalf of Dorsey & Whitney LLP against Global Energy, Inc. and the Company seeking payment of a potential balance owed by Global Energy, Inc. dating back to 2007. The claim related to IPO work done by Dorsey & Whitney where they had agreed to carry costs to a successful completion, in order to win the assignment. Global Energy, Inc. has defended this case in its entirety as the balance in question relates only to legal services relating to Global Energy. On December 17, 2013, the Hennepin County District Court granted the Plaintiff's Motion for Summary Judgment and denied the Defendants' Motion for Judgment on the Pleadings. The Defendants' Motion would have dismissed the Company from the case. The amount of the judgment was $2,918,605 along with interest and costs. On March 20, 2014, the Court amended the judgment, increasing it to $3,234,184 to include pre-judgment interest. Global Energy plans to appeal the decision. While Global Energy has consistently represented, and continues to represent, that it will be fully responsible for the matter and fully indemnifies the Company, the Company has accrued $3,387,875 and $3,000,000 for the legal exposure costs, estimated interest and other costs as of June 30, 2014 and December 31, 2013, respectively, in connection with this matter. This accrual is recorded in accrued expenses in our consolidated balance sheets. This accrual would be reversed if Global Energy settles the matter. GEI is a related party to the Company since the chairman of our board of directors, Harry H. Graves, is also an executive officer and beneficial holder of 44% of the stock of GEI. Promissory Note to Global Energy, Inc. In recognition of a commitment that Lima Energy made to compensate Global Energy, Inc. ("GEI") for services it provided during the 10-year development stage of the Lima Energy Project, Lima Energy issued a non-interest bearing promissory note ("Note") in the amount of $38 million to GEI in March 2010. The services provided by GEI in development of the Lima Energy Project for the prior ten year period included, but are not limited to, all aspects of siting, permitting, economic modeling, analysis, EPC contracting, off-take contracting, financing, community relations (city, state and federal), fuel procurement, strategic partnering, operations and maintenance contracting, licensing, connection agreements, technology selection and system integration. GEI is a related party to the Company since the chairman of our board of directors, Harry H. Graves, is also an executive officer and beneficial holder of 44% of the stock of GEI. The principal of the Note will be payable to GEI upon the earlier of (a) Lima Energy receiving at least $400 million, from any source whatsoever, for the construction, purchase, assignment or operation of a Btu Converter facility, whether undertaken solely by Lima Energy or in conjunction with other partners, or in the event an affiliate of Lima Energy shall obtain any such financing to construct, purchase or operate a Btu Converter facility from which Lima Energy shall receive any beneficial interest, distribution, payment or proceeds, including options to purchase; or (b) the sale of Lima Energy or substantially all of its assets. The payment of the GEI Note mirrors the development sequence of the Project, which was originally planned as three phases - Gas 1, Gas 2, and the Combined Cycle Gas Turbine (the "CCGT"). At the respective financial closure, or full funding, of Gas 1 $11 million is due; for Gas 2 $20 million is due, and for the CCGT $7 million is due. While the CCGT is not currently contemplated as part of the Lima Energy Project, the Company may sell the rights to a third party to develop the CCGT in the future, at which time the commitment to pay the $7 million would pass to said third party. The commitment to pay this Note is contingent on securing financing for the Lima Energy Project which we have been pursuing, but the completion of which is not guaranteed. The payment of the Note is further subordinated to the payment of the obligations under the Third Eye Note Purchase Agreement and Unit Purchase Agreement, as recorded in the Subordination Agreement between the parties dated September 24, 2012. In addition to the aforementioned, the Company, in the normal course of business, is subject to claims, both asserted and unasserted. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes the likelihood is remote that any sum required to be paid in connection with liabilities recorded relating to this matter will have a material adverse effect on its financial position, results of operations or cash flows.

- Definition

The entire disclosure for commitments and contingencies.

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USA Synthetic Fuel Corp 10-Q