SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Jun. 30, 2014

Summary Of Significant Accounting Policies

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Corporate Information - Renewable Fuel Corp (A Development Stage Company) is a public reporting entity originally planned to be an integrated producer, blender and distributor of biodiesel and blended fuels. Renewable Fuel Corp ("Renewable Fuel" or the "Company") was incorporated in the State of Nevada on September 11, 2007. Renewable Fuel owns a license to produce biodiesel products in Malaysia and two additional biodiesel licenses in Indonesia. Renewable Fuel Corp anticipates entering the biofuel production and distribution business during fiscal year 2014.

The Company has incurred losses since inception, has not commenced operations, substantially all of their assets are impaired and the Company’s auditors have issued a going concern opinion on the audited financial statements for the most recent fiscal year ended September 30, 2013.

Renewable Fuel conducts its Indonesian operations through its two wholly-owned Malaysian subsidiaries, Century Corp Sdn. Bhd. ("Century") and Optimis Teguh Sdn. Bhd. ("Optimis"). Century and Optimis own two Indonesian entities, PT Plant Biofuel Indonesia ("PTPBI") and PT Optimis Teguh Indonesia ("PTOTI"), respectively, which own the licenses for the Company's planned biodiesel production in Indonesia.

Renewable Fuel acquired Century and Optimis through a transaction with their original parent Bio Refining Industries Inc. ("BRII") on September 5, 2008, through a share exchange agreement in a transaction accounted for as a reverse merger, with BRII as the accounting acquirer of Renewable Fuel. Since the original shareholders of Century received the largest portion of ownership and control of BRII, Century was treated as the accounting acquirer.

Renewable Fuel will conduct its Kuantan operations through its two Malaysian subsidiaries, Plant Biofuels Corporation Sdn. Bhd. ("PBC") and Research Fuel Corp Sdn. Bhd. ("Research"). PBC and Research were acquired by Renewable Fuel Corp through an acquisition accounted for as a reverse merger in December 2007.

The accounts of Optimis, PTOTI, Renewable Fuel, PBC and Research have been included in Renewable Fuel’s consolidated financial statements from the acquisition date of September 5, 2008, the date of the share exchange agreement between Renewable Fuel and BRII. The historical financial statements for the year ended September 30, 2008 and the period from inception (October 1, 2006) through September 5, 2008 are those of the accounting acquirer, Century. The historical financial results of the accounting acquirer consist of the combined operating results of Century, and its 99% owned subsidiary, PTPBI ("Century Consolidated").

Renewable Fuel’s biodiesel plant in Malaysia was substantially completed and available for glycerine production at its location in Kuantan. The Kuantan plant has a nameplate capacity license and underlying infrastructure to produce 60 million gallons annually (MGA), twice the current production capacity. The refinery is designed to produce biodiesel from multiple feedstocks. The plant, operated by Renewable Fuel’s subsidiary PBC is capable of producing 30 MGA of Palm Oil Methyl Ester ("PME") biodiesel and 2.4 MGA of refined glycerin. The glycerine refining unit has been designed to operate independently from the biodiesel production unit.

The Company is currently in non-compliance with debt covenants on the term loan facilities of approximately $31.6 million as of June 30, 2014 and has not made any installment repayments beginning with the due date of December 1, 2010. The term loans are secured by First Priority Interest over all existing property, plant and equipment, and all fixed and floating assets of PBC. The facilities are jointly and severally guaranteed by both of the PBC directors.

The Bank has not notified us that we are in default and has not taken any action as a result of default. If the Bank declares a default, which it has the current right to do, the Bank may foreclose on the note as a consequence and we could lose all PBC assets.

The Management of PBC is actively negotiating with the bank to restructure the facilities or reschedule the facilities repayment. The bank has verbally indicated their willingness to review and assess the biodiesel industry as a whole, including all key industry participants and to find a solution that would cure the distress.

The Company’s management is confident that their feedstock strategy using non-food based material, will lead the Company to a sustainable operation. Although the Company has held preliminary discussions concerning acquiring Crude Palm Oil (“CPO”) and alternative tallow-based feedstocks from regional suppliers, the Company has no contracts, agreements or commitments in place at this time. The Company’s management believes that the combined capacities of these suppliers or alternative available suppliers will be able to meet the production requirement per annum.

In addition, Renewable Fuel leases, under 20-year leases, two adjacent 10 acre sites, each with 60 MGA nameplate licenses and deep water access in Dumai, Indonesia. Plant construction has been minimal to date and primarily consists of design and engineering plans to accept multiple feedstock types.

Renewable Fuel's business strategy is to begin operations in the Kuantan plant, first producing and marketing only refined (pharmaceutical and technical grade) glycerine from purchased crude glycerine. Subsequently, Renewable Fuel plans to begin producing and selling refined glycerine from crude glycerine produced in the Kuantan plant, refined, bleached and deodorized ("RBD") CPO and biodiesel from tallow-based feedstocks. Management has impaired the asset value of the plant in Kuantan, and the fair value estimate, at the time of the impairment, for the Kuantan plant was based on what management believes a market participant would be willing to pay to purchase the plant based on the discounted cash flows the market participant could reasonably expect to generate operating the plant. The estimates are based on the company’s assumptions that it will be able to operate the plant profitably and includes the company’s estimates of the current status of the biodiesel market, estimates of revenues, costs of sales, general and administrative costs, shipping costs, and incentives. These assumptions and estimates are made without the Company having any historical information to rely on. To date, the Company has not operated the plant profitably. The two largest factors in projecting cash flows from operating the plant are the prices we receive for selling biodiesel and the cost of the feedstock necessary to produce the biodiesel. Any changes in the company’s assumptions and estimates and changes in market conditions could impact the value of the Company’s plant assets. Details of the impairment are further discussed in the paragraph "Impairment of Long-Lived Assets" in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

After the Kuantan plant is fully operational, management plans to leverage cash flows from operations to fund the Kuantan expansion of a second production unit, doubling production to the nameplate capacity and in turn fund sequential completion of the two plants in Dumai. Construction on the two Indonesian facilities is not anticipated until after the Kuantan plant is fully operational and construction financing is available.

It is currently not determinable when conditions will exist, if ever, to continue construction of the two Indonesian plants. The contract period for PTPBI Indonesian plant construction expired and both Century Corp, owner of PTPBI, and Plant & Offshore Technology Sdn Bhd, the contractor, mutually agreed to terminate the construction contract on August 23, 2011. Should funding become available and the construction portion of the licenses be re-approved, we believe we will be able to successfully negotiate a new construction contract.

The Company maintains a website at www.rfuelcorp.com. Nothing on that website is part of this Report.

The business strategy is dependent upon Renewable Fuel obtaining additional financing to acquire feedstock and to make the plant operational. Renewable Fuel is in discussion with the bank to extend the existing loan and provide additional funds to fund start-up of the plant. If Renewable Fuel and the bank cannot come to terms then the Company will look at refinancing the loan and obtaining a working capital line with another entity.

Interim Consolidated Financial Statements - The accompanying unaudited interim consolidated financial statements have been prepared pursuant to accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for the year ending September 30, 2013 have been omitted. These unaudited interim consolidated financial statements include the accounts of Renewable Fuel Corp and its subsidiaries.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

A Development Stage Company - The accompanying financial statements have been prepared in accordance with FASB ASC Topic 915 Development Stage Entities. A development stage enterprise is one in which planned principal operations have not commenced; or if its operations have commenced, there have been no significant revenues derived there from. As of June 30, 2014, Renewable Fuel has not fully commenced operations nor has it received significant revenues from its planned principal operations.

Inventories – Inventories, consisting of raw materials and finished goods are recorded using the lower of cost or market value with cost, determined using primarily the first in-first out (FIFO) method.

Property, Plant and Equipment, Net - Property and equipment are stated at historical cost net of accumulated depreciation and accumulated impairment charges. Maintenance and repairs are charged against operations as incurred and major replacements or betterments are capitalized. Depreciation is provided using the straight-line method based on the estimated useful lives of the assets as follows:

Description		Useful life (in years)
Office renovation		10
Furniture and equipment		4-10
Autos and trucks		5
Computer equipment		4-5
Leasehold improvements		Shorter of the useful life or term of the lease

Plants in progress represents costs associated with property, plant and equipment under construction at Renewable Fuel’s production facilities. Plants in progress is stated at cost, which includes the cost of construction and other direct costs attributable to the production facility construction, including a portion of interest costs incurred during the related construction period, as well as direct labor and related benefits. The amount of capitalized interest in a period is determined by applying an interest rate, which is based upon borrowings outstanding during the period, to the average amount of accumulated expenditures during the period not to exceed the total amount of interest cost incurred during the period. Such costs are reclassified to an appropriate fixed asset classification and depreciated when the asset is placed into service.

Impairment of Long-Lived Assets - Long-lived assets are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of, consisting of land plots held for sale, are reported at the lower of the carrying amount or fair value less costs to sell.

Debt Modifications – Debt modifications are evaluated to determine if resulting cash flows have been significantly affected by changes in principal amounts, interest rates, terms or maturity. Restructurings are evaluated for treatment as debt extinguishments or simple modifications. Restructurings to date have all been treated as modifications as the net present value of cash flow requirements have not been significantly affected.

Repurchase of Common Shares into Treasury – The Company utilizes the cost method to account for all treasury stock transactions, which are valued at the Company’s estimate of the consideration granted in return for the shares.

Non-controlling Interest – Non-controlling interest accounting is applied for any entities where the Company maintains less than 100% ownership. The Company clearly identifies the non-controlling interest in the balance sheet and income statement including all measures of: net loss, net loss attributable to non-controlling interest, and net loss attributable to Renewable Fuel. Operating cash flows in the consolidated statements of cash flows reflect net loss, while basic and diluted earnings per share calculations reflect net loss attributable to Renewable Fuel.

The net loss attributable to the non-controlling interest of PBC contributed approximately $1 million, $1 million and $5.6 million for the six months ended June 30, 2014 and 2013 and from Inception October 1, 2006 through June 30, 2014, respectively from RFC’s 49% ownership in PBC upon its spin-off of the 51% ownership to DCSB on February 2, 2010. (See Note 3: Spin Off of Plant Biofuels Corporation)

Warrants – The Company reviews the key terms of warrants issued, including all conversion rates and down round provisions which protect the holder from changes to our capitalization or future declines in our share price.

On October 1, 2009, the Company reclassified warrants granted through September 30, 2009 from paid in capital to a derivative liability. Holders of those warrants are generally protected from anti-dilution by adjustments for any stock dividends, stock splits, combinations or other recapitalization. The Company reviewed the terms of the warrants and determined that they represented an embedded derivative due to the fact that the warrant is not indexed to its own stock and it was previously presented as stockholders equity. The fair value of the related warrants is determined at the end of each accounting period, with any changes in fair value being recorded as other income or expense.

Revenue Recognition – The Company recognizes revenues from the sale of biodiesel, refined glycerine and related byproducts produced by the Company. Revenues are recognized when there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured.

The Company also earns revenue for consulting services rendered to other companies in the industry. Revenues under these contracts are recognized during the period when related services are rendered.

Foreign Currency Translation and Other Comprehensive Income - The reporting currency of Renewable Fuel is the US Dollar. The functional currency of Renewable Fuel’s Malaysian subsidiaries is the Malaysian Ringgit (RM) while the functional currency of the Indonesian subsidiaries is the Indonesian Rupiah (IDR).

For the subsidiaries whose functional currencies are other than the US Dollar, all assets and liabilities accounts were translated at the exchange rate on each respective balance sheet date; stockholders' deficit is translated at the historical rates and items in the income and cash flow statements are translated at the average rate for the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income on the balance sheets. The resulting translation gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

The average and closing rates used in the translated of foreign currency amounts are as follow:

	June 30, 2014				June 30, 2013
	Closing Rate USD		Average Rate USD		Closing Rate USD		Average Rate USD
RM		0.3114		0.3122		0.3168		0.3230
1,000 IDR		0.0834		0.0851		0.1010		0.1029

Net Loss per Common Share – Renewable Fuel presents earnings basic net loss per common share computed by dividing net loss attributable to the Company's common stockholders by the weighted-average number of commons shares outstanding during the period. Diluted net loss per common share is computed by giving effect to all potential dilutive common shares, including options, warrants, and convertible preferred stock. Basic and diluted net loss per common share was the same for all periods presented as the impact of all potentially dilutive securities outstanding was anti-dilutive.

New Accounting Pronouncements – The following accounting standards which may impact our financial statements were issued as of June 30, 2014. A description of the standards and an assessment of its impact on our financial reporting are noted below:

In June 2014, the Financial Accounting Standards Board issued ASU 2014-12: Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). This Update may impact the Company’s future stock compensation recognition.

In June 2014, the Financial Accounting Standards Board issued ASU 2014-10: Development Stage Entities (Topic 205): Elimination of certain financial reporting requirements, including an amendment to variable interest entities guidance in Topic 810, Consolidation. This Update eliminates the requirements to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. These amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. This Update will eliminate the Company’s reporting as a development stage company effective October 1, 2015.

In March 2014, the Financial Accounting Standards Board issued ASU 2014-06: Technical Corrections and Improvements Related to Glossary Terms: The amendments in this Update represent changes to clarify the Master Glossary of the Codification, consolidate multiple instances of the same term into a single definition, or make minor improvements to the Master Glossary that are not expected to result in substantive changes to the application of existing guidance or create a significant administrative cost to the Company. Additionally, the amendments will make the Master Glossary easier to understand, as well as reduce the number of terms appearing in the Master Glossary. This Update is not expected to have a material impact on the consolidated financial statements.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

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Renewable Fuel Corp 10-Q