10-Q 1 v383905_10-q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2014

or

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

For the transition period from to

Commission file number: 001-33530

BIOFUEL ENERGY CORP.

(Exact name of registrant as specified in its charter)

Delaware |  | 20-5952523
(State of incorporation) |  | (I.R.S. employer identification number)

1600 Broadway, Suite 1740 Denver, Colorado |  | 80202
(Address of principal executive offices) |  | (Zip Code)

(303) 640-6500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

Large accelerated filer ¨ |  | Accelerated filer ¨ |  | Non-accelerated filer ¨ (Do not check if a smaller reporting company) |  | Smaller reporting company x

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

Number of shares of Common Stock outstanding as of July 25, 2014: 5,456,625 exclusive of 40,481 shares held in treasury.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying interim unaudited condensed consolidated financial statements of BioFuel Energy Corp. (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America. The statements are unaudited but reflect all adjustments which, in the opinion of management, are necessary to fairly present the Company’s financial position and results of operations. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results for the full year. For further information, refer to the financial statements and notes presented in the Company’s Annual Report on Form 10-K for the twelve months ended December 31, 2013 (filed with the Securities and Exchange Commission on March 26, 2014).

2

BioFuel Energy Corp.

Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)

|  | June 30, 2014 |  |  | December 31, 2013 |
Assets |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 8,054 |  |  | $ | 12,605 |
Accounts receivable |  |  | — |  |  |  | 39 |
Prepaid expenses |  |  | 248 |  |  |  | 124 |
Deposits |  |  | 32 |  |  |  | 2,361 |
Other current assets |  |  | 450 |  |  |  | — |
Total current assets |  |  | 8,784 |  |  |  | 15,129 |
Non-current assets: |  |  |  |  |  |  |  |
Property, plant and equipment, net |  |  | 57 |  |  |  | 71 |
Other assets |  |  | — |  |  |  | 22 |
Total non-current assets |  |  | 57 |  |  |  | 93 |
Assets held for sale |  |  | — |  |  |  | 432 |
Total assets |  | $ | 8,841 |  |  | $ | 15,654 |
Liabilities and equity |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 47 |  |  | $ | 50 |
Other current liabilities |  |  | 1,359 |  |  |  | 4,262 |
Total current liabilities |  |  | 1,406 |  |  |  | 4,312 |
Liabilities held for sale |  |  | — |  |  |  | 289 |
Total liabilities |  |  | 1,406 |  |  |  | 4,601 |
Commitments and contingencies |  |  |  |  |  |  |  |
Equity |  |  |  |  |  |  |  |
BioFuel Energy Corp. stockholders’ equity |  |  |  |  |  |  |  |
Preferred stock, $0.01 par value; 5,000,000 shares authorized and no shares outstanding at June 30, 2014 and December 31, 2013 |  |  | — |  |  |  | — |
Common stock, $0.01 par value; 10,000,000 shares authorized and 5,497,106 shares outstanding at June 30, 2014 and 5,482,585 shares outstanding at December 31, 2013 |  |  | 54 |  |  |  | 54 |
Class B common stock, $0.01 par value; 3,750,000 shares authorized and 780,958 shares outstanding at June 30, 2014 and 795,479 shares outstanding at December 31, 2013 |  |  | 8 |  |  |  | 8 |
Less common stock held in treasury, at cost, 40,481 shares at June 30, 2014 and December 31, 2013 |  |  | (4,316 | ) |  |  | (4,316 | )
Additional paid-in capital |  |  | 191,056 |  |  |  | 191,197 |
Accumulated deficit |  |  | (171,789 | ) |  |  | (168,328 | )
Total BioFuel Energy Corp. stockholders’ equity |  |  | 15,013 |  |  |  | 18,615 |
Noncontrolling interest |  |  | (7,578 | ) |  |  | (7,562 | )
Total equity |  |  | 7,435 |  |  |  | 11,053 |
Total liabilities and equity |  | $ | 8,841 |  |  | $ | 15,654 |

The accompanying notes are an integral part of these consolidated financial statements.

3

BioFuel Energy Corp.

Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Revenues |  | $ | 56 |  |  | $ | — |  |  | $ | 156 |  |  | $ | — |
General and administrative expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation expense |  |  | (384 | ) |  |  | (786 | ) |  |  | (825 | ) |  |  | (1,764 | )
Other |  |  | (2,486 | ) |  |  | (625 | ) |  |  | (2,949 | ) |  |  | (967 | )
Operating loss |  |  | (2,814 | ) |  |  | (1,411 | ) |  |  | (3,618 | ) |  |  | (2,731 | )
Other income (expense) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |
Loss from continuing operations before income taxes |  |  | (2,814 | ) |  |  | (1,411 | ) |  |  | (3,618 | ) |  |  | (2,730 | )
Income tax provision (benefit) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Loss from continuing operations |  |  | (2,814 | ) |  |  | (1,411 | ) |  |  | (3,618 | ) |  |  | (2,730 | )
Discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss from discontinued operations |  |  | — |  |  |  | (3,326 | ) |  |  | — |  |  |  | (7,335 | )
Income tax provision (benefit) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Loss from discontinued operations |  |  | — |  |  |  | (3,326 | ) |  |  | — |  |  |  | (7,335 | )
Net Loss |  |  | (2,814 | ) |  |  | (4,737 | ) |  |  | (3,618 | ) |  |  | (10,065 | )
Less: Net loss from continuing operations attributable to the noncontrolling interest |  |  | 64 |  |  |  | 183 |  |  |  | 157 |  |  |  | 355 |
Less: Net loss from discontinued operations attributable to the noncontrolling interest |  |  | — |  |  |  | 430 |  |  |  | — |  |  |  | 951 |
Net loss attributable to BioFuel Energy Corp. common stockholders |  | $ | (2,750 | ) |  | $ | (4,124 | ) |  | $ | (3,461 | ) |  | $ | (8,759 | )
Amounts attributable to BioFuel Energy Corp.: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loss from continuing operations |  | $ | (2,750 | ) |  | $ | (1,228 | ) |  | $ | (3,461 | ) |  | $ | (2,375 | )
Loss from discontinued operations |  |  | — |  |  |  | (2,896 | ) |  |  | — |  |  |  | (6,384 | )
Net loss attributable to BioFuel Energy Corp. |  | $ | (2,750 | ) |  | $ | (4,124 | ) |  | $ | (3,461 | ) |  | $ | (8,759 | )
Basic and fully diluted loss per share attributable to BioFuel Energy Corp.: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations |  | $ | (0.51 | ) |  | $ | (0.23 | ) |  | $ | (0.64 | ) |  | $ | (0.45 | )
Discontinued operations |  |  | — |  |  |  | (0.54 | ) |  |  | — |  |  |  | (1.20 | )
|  | $ | (0.51 | ) |  | $ | (0.77 | ) |  | $ | (0.64 | ) |  | $ | (1.65 | )
Weighted average shares outstanding – basic and fully diluted |  |  | 5,443 |  |  |  | 5,342 |  |  |  | 5,443 |  |  |  | 5,325 |

The accompanying notes are an integral part of these consolidated financial statements.

4

BioFuel Energy Corp.

Consolidated Statement of Changes in Equity

(in thousands, except share data)

(Unaudited)

|  | Common Stock |  |  | Class B Common Stock |  |  | Treasury Stock |  |  | Additional Paid-in Capital |  |  | Accumulated Deficit |  |  | Total BioFuel Energy Corp. Stockholders’ Equity |  |  | Noncontrolling Interest |  |  | Total Equity |
|  | Shares |  |  | Amount |  |  | Shares |  |  | Amount |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2012 |  |  | 5,483,773 |  |  | $ | 54 |  |  |  | 795,479 |  |  | $ | 8 |  |  | $ | (4,316 | ) |  | $ | 189,604 |  |  | $ | (129,120 | ) |  | $ | 56,230 |  |  | $ | (1,120 | ) |  | $ | 55,110 |
Stock-based compensation |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,593 |  |  |  | — |  |  |  | 1,593 |  |  |  | — |  |  |  | 1,593 |
Issuance of restricted stock, (net of forfeitures) |  |  | (1,188 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (39,208 | ) |  |  | (39,208 | ) |  |  | (6,442 | ) |  |  | (45,650 | )
Balance at December 31, 2013 |  |  | 5,482,585 |  |  | $ | 54 |  |  |  | 795,479 |  |  | $ | 8 |  |  | $ | (4,316 | ) |  | $ | 191,197 |  |  | $ | (168,328 | ) |  | $ | 18,615 |  |  | $ | (7,562 | ) |  | $ | 11,053 |
Exchange of Class B shares to common |  |  | 14,521 |  |  |  | — |  |  |  | (14,521 | ) |  |  | — |  |  |  | — |  |  |  | (141 | ) |  |  | — |  |  |  | (141 | ) |  |  | 141 |  |  |  | — |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,461 | ) |  |  | (3,461 | ) |  |  | (157 | ) |  |  | (3,618 | )
Balance at June 30, 2014 |  |  | 5,497,106 |  |  | $ | 54 |  |  |  | 780,958 |  |  | $ | 8 |  |  | $ | (4,316 | ) |  | $ | 191,056 |  |  | $ | (171,789 | ) |  | $ | 15,013 |  |  | $ | (7,578 | ) |  | $ | 7,435 |

The accompanying notes are an integral part of these consolidated financial statements.

5

BioFuel Energy Corp.

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

|  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |
Cash flows from operating activities |  |  |  |  |  |  |  |
Net loss |  | $ | (3,618 | ) |  | $ | (10,065 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 14 |  |  |  | 14,176 |
Stock-based compensation expense |  |  | — |  |  |  | 399 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | 39 |  |  |  | (3,341 | )
Inventories |  |  | — |  |  |  | 1,701 |
Prepaid expenses |  |  | (123 | ) |  |  | 83 |
Accounts payable |  |  | (292 | ) |  |  | (4,394 | )
Other current liabilities |  |  | (2,903 | ) |  |  | 3,450 |
Other assets and liabilities |  |  | 2,065 |  |  |  | 1,031 |
Net cash provided by (used in) operating activities |  |  | (4,818 | ) |  |  | 3,040 |
Cash flows from investing activities |  |  |  |  |  |  |  |
Purchases of property, plant and equipment |  |  | — |  |  |  | (1,074 | )
Net cash used in investing activities |  |  | — |  |  |  | (1,074 | )
Cash flows from financing activities |  |  |  |  |  |  |  |
Repayment of notes payable and capital leases |  |  | — |  |  |  | (57 | )
Net cash used in financing activities |  |  | — |  |  |  | (57 | )
Net increase (decrease) in cash and cash equivalents |  |  | (4,818 | ) |  |  | 1,909 |
Cash and cash equivalents, beginning of period |  |  | 12,872 |  |  |  | 9,323 |
Cash and cash equivalents, end of period |  | $ | 8,054 |  |  | $ | 11,232 |
Cash paid for interest |  | $ | — |  |  | $ | 207 |
Non-cash investing and financing activities: |  |  |  |  |  |  |  |
Additions to property, plant and equipment unpaid during the period |  | $ | — |  |  | $ | 255 |
Additions to equity offering and debt issuance costs unpaid during period |  | $ | 450 |  |  | $ | — |

The accompanying notes are an integral part of these consolidated financial statements.

6

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

1. | Organization, Nature of Business, and Basis of Presentation

Organization, Nature of Business, and Basis of Presentation

BioFuel Energy Corp. (“we” or “the Company”) was incorporated as a Delaware corporation on April 11, 2006 to invest solely in BioFuel Energy, LLC (the “LLC”), a limited liability company organized on January 25, 2006 to build and operate ethanol production facilities in the Midwestern United States. The Company’s headquarters are located in Denver, Colorado. We are a holding company with no operations of our own. We are the sole managing member of the LLC, which is itself a holding company and indirectly owned all of our former operating assets. As the sole managing member of the LLC, the Company operates and controls all of the business and affairs of the LLC and its subsidiaries.

The Company operated two dry-mill ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota from June 2008 through November 22, 2013, which produced and sold ethanol and its related co-products, primarily distillers grain and corn oil. The Company’s ethanol plants were owned and operated by the operating subsidiaries of the LLC (“Operating Subsidiaries”). Those Operating Subsidiaries were party to a Credit Agreement (the “Senior Debt Facility”) with a group of lenders, and substantially all of the assets of the Operating Subsidiaries were pledged as collateral under the Senior Debt Facility. On November 22, 2013, the Company’s ethanol plants and all related assets were transferred to certain designees of the lenders (“Newco”) in full satisfaction of all outstanding obligations under the Senior Debt Facility. Newco simultaneously sold the ethanol plants to Green Plains Renewable Energy, Inc. The Company is currently providing engineering and/or business consulting services to a variety of next generation biofuel and bio-chemical companies. These services are expected to provide a negligible amount of revenue in 2014.

On March 28, 2014, the Company received a preliminary non-binding proposal (the “Proposal”) from James R. Brickman (together with certain trusts and family members, the “Brickman Parties”) and Greenlight Capital, Inc. (together with certain affiliates, “Greenlight”), one of our principal stockholders and an investment management company co-founded by David Einhorn, one of our directors, who serves as its President. The Brickman Parties and Greenlight proposed a transaction pursuant to which the Company would acquire all of the equity interests of JBGL Capital, LP and JBGL Builder Finance, LLC, and their direct and indirect subsidiaries (collectively, “JBGL”) for $275 million, payable in cash and shares of our common stock. JBGL is a series of real estate entities involved in the purchase and development of land for residential purposes, construction lending and home building operations. JBGL is currently owned and controlled by Greenlight and the Brickman Parties

In response to the Proposal, our Board of Directors established a special committee consisting of independent directors to evaluate the Proposal and alternatives for the Company. The special committee retained independent financial and legal advisors to assist in its evaluation of the Proposal.

On June 10, 2014, the Company entered into a definitive agreement (the “Transaction Agreement”) with Greenlight and the Brickman Parties pursuant to which the Company will acquire JBGL for $275 million (the “Acquisition”). The Transaction Agreement was unanimously approved by the special committee of independent directors, acting on the advice of its legal and financial advisors. The Transaction Agreement was also unanimously approved by the Board of Directors of the Company other than Mr. Einhorn, who recused himself from the board’s deliberations and approval.

As consideration for the Acquisition, the Company will issue a number of shares of common stock to each of Greenlight and the Brickman Parties such that, immediately after the closing of the Acquisition, Greenlight will own 49.9% of our outstanding common stock and the Brickman Parties will own 8.4% of our outstanding common stock. To fund a portion of the cash consideration, the Company is conducting a rights offering and certain related transactions to raise gross proceeds of approximately $70 million. The remaining portion of the cash consideration will be funded through cash on hand and approximately $150 million of debt financing to be provided by Greenlight.

Consummation of the Acquisition is subject to various conditions, including receipt of the approval of a majority of the Company’s stockholders (excluding Greenlight and its affiliates), the successful completion of the rights offering, and the continued authorization for listing of the Company’s common stock on The Nasdaq Stock Market LLC (“Nasdaq”). Subject to the satisfaction of such conditions, the Acquisition is expected to be consummated in October 2014.

On May 8, 2014, The Company received a letter from the Listing Qualifications Staff (the “Staff”) of Nasdaq indicating that the Staff believed the Company is a public shell and the continued listing of its securities was no longer warranted. The Company appealed the Staff’s determination to the Nasdaq Hearings Panel (the “Panel”) and on July 1, 2014, the Company received a written decision from Nasdaq indicating that the Panel had determined to grant the Company’s request for continued listing on The Nasdaq Capital Market, provided that (1) on or before November 4, 2014, the Company closes the Acquisition, and (2) the resulting combined company satisfies all requirements for initial listing on The Nasdaq Capital Market upon consummation of the Acquisition.

The Company is diligently working to complete the Acquisition and related transactions; however, there can be no assurance that the Company will be able to do so. On July 15, 2014 the Company filed a Registration Statement on Form S-1 with the Securities and Exchange Commission to register the rights and the underlying shares of common stock to be offered in the rights offering, and a Proxy Statement in connection with its upcoming annual meeting of stockholders at which it will seek approval of the Acquisition among other matters.

At June 30, 2014, the Company retained approximately $8.1 million in cash and cash equivalents on its consolidated balance sheet. As of June 30, 2014, the Company also retained federal net operating loss (“NOL”) carryforwards in the amount of $181.3 million, which have been fully reserved against.

The accompanying consolidated financial statements have accounted for the disposition of the ethanol plants as discontinued operations. Prior year amounts have been reclassified to reflect the disposition of the ethanol plants being accounted for as discontinued operations.

At June 30, 2014, the Company owned 87.6% of the LLC membership units with the remaining 12.4% owned by certain investment funds affiliated with one of the original equity investors of the LLC. As a result, the Company consolidates the results of the LLC. The amount of income or loss allocable to the 12.4% holders is reported as noncontrolling interest in our consolidated statements of operations. The Class B common shares of the Company are held by the same investment funds who held 780,958 membership units in the LLC as of June 30, 2014 that, together with the corresponding Class B shares, can be exchanged for newly issued shares of common stock of the Company on a one-for-one basis. The proportionate value of the LLC membership units held by the investment funds other than the Company are recorded as noncontrolling interest on the consolidated balance sheets.

7

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

2. | Discontinued Operations – Disposal of Ethanol Plants

On November 22, 2013, the Company disposed of its ownership in its two ethanol plants. The operating loss for the three and six months ended June 30, 2013 is summarized as follows (in thousands):

|  | Three Months Ended June 30, 2013 |  |  | Six Months Ended June 30, 2013 |
Net Sales |  | $ | 91,031 |  |  | $ | 180,072 |
Cost of goods sold |  |  | 93,313 |  |  |  | 184,225 |
Gross loss |  |  | (2,282 | ) |  |  | (4,153 | )
General and administrative expenses |  |  | 1,682 |  |  |  | 3,393 |
Operating loss |  |  | (3,964 | ) |  |  | (7,546 | )
Other income (expense): |  |  |  |  |  |  |  |
Other income |  |  | 2,597 |  |  |  | 4,055 |
Interest expense |  |  | (1,959 | ) |  |  | (3,844 | )
Loss before income taxes |  |  | (3,326 | ) |  |  | (7,335 | )
Income tax provision (benefit) |  |  | — |  |  |  | — |
Loss from discontinued operations |  | $ | (3,326 | ) |  | $ | (7,335 | )

The carrying amounts of the assets and liabilities of the ethanol plants as of December 31, 2013 are summarized as follows (in thousands):

Current assets: |  |  |  |
Cash and cash equivalents |  | $ | 267 |
Prepaid expenses |  |  | 1 |
Other current assets |  |  | 164 |
Assets held for sale |  | $ | 432 |
Current liabilities: |  |  |  |
Accounts payable |  | $ | 289 |
Liabilities held for sale |  | $ | 289 |

There were no assets and liabilities related to the ethanol plants as of June 30, 2014.

Revenue Recognition

During the time that the Company owned and operated its ethanol facilities, the Company sold its ethanol, distillers grain and corn oil products under the terms of marketing agreements. Revenue was recognized when risk of loss and title transferred upon shipment of ethanol, distillers grain or corn oil. In accordance with the marketing agreements, the Company recorded its revenues based on the amounts payable to us at the time of our sales of ethanol, distillers grain or corn oil. For our ethanol that was sold within the United States, the amount payable was equal to the average delivered price per gallon received by the marketing pool from Cargill Inc.’s (“Cargill”) customers, less average transportation and storage charges incurred by Cargill, and less a commission. We also sold a portion of our ethanol production to Cargill for export, which sales were shipped undenatured and were excluded from the marketing pool. For exported ethanol sales, the amount payable was equal to the contracted delivered price per gallon, less transportation and storage charges, and less a commission. The amount payable for distillers grain and corn oil was generally equal to the market price at the time of sale less a commission.

Cost of goods sold

During the time that the Company owned and operated its ethanol facilities, cost of goods sold primarily included costs of materials (primarily corn, natural gas, chemicals and denaturant), electricity, purchasing and receiving costs, inspection costs, shipping costs, lease costs, plant management, certain compensation costs and general facility overhead charges, including depreciation expense.

Concentrations of Credit Risk

During the time that the Company owned and operated its ethanol facilities, credit risk represented the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk, whether on- or off-balance sheet, that arose from financial instruments existed for groups of customers or counterparties when they had similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions described below.

During the three and six months ended June 30, 2013, the Operating Subsidiaries recorded sales to Cargill representing 76% and 75%, respectively, of total net sales. The Operating Subsidiaries purchased corn, the largest cost component in producing ethanol, from Cargill. During the three and six months ended June 30, 2013, corn purchases from Cargill totaled $72.1 million and $142.5 million, respectively.

Depreciation Expense

During the three and six months ended June 30, 2013, depreciation expense related to the property, plant and equipment at the ethanol plants and included in loss from discontinued operations was $6,832,000 and $13,699,000, respectively.

Rent Expense

During the three and six months ended June 30, 2013, rent expense related to the ethanol plants and included in loss from discontinued operations totaled $2,821,000 and $5,619,000, respectively.

8

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

3. | Summary of Significant Accounting Policies

Principles of Consolidation and Noncontrolling Interest

The accompanying consolidated financial statements include the Company, the LLC and its wholly-owned subsidiaries: BFE Holdings, LLC; BFE Operating Company, LLC; Buffalo Lake Energy, LLC; and Pioneer Trail Energy, LLC. All inter-company balances and transactions have been eliminated in consolidation. The Company treats all exchanges of LLC membership units for Company common stock as equity transactions, with any difference between the fair value of the Company’s common stock and the amount by which the noncontrolling interest is adjusted being recognized in equity.

Use of Estimates

Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures in the accompanying notes at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Our primary source of revenue is engineering and/or business consulting services that the Company is providing to certain next generation biofuel and bio-chemical companies. Consulting agreements are entered into which set forth the terms, including the rates charged, for all consulting services. Revenue is recognized and recorded at the time that the consulting services are performed and collectibility is reasonably assured.

General and administrative expenses

General and administrative expenses consist of salaries and benefits paid to our management and administrative employees, expenses relating to third party services, travel, office rent, marketing and other expenses, including certain expenses associated with being a public company, such as fees paid to our independent auditors associated with our annual audit and quarterly reviews, directors’ fees, and listing and transfer agent fees.

Cash and Cash Equivalents

Cash and cash equivalents include highly-liquid investments with an original maturity of three months or less. At June 30, 2014, we had $8.1 million of cash and cash equivalents invested in standard cash accounts held at one financial institution, which is in excess of FDIC insurance limits.

Other Current Assets

Other current assets is comprised of legal expenses incurred for the equity offering and debt issuance related to the Acquisition, which have been capitalized.

Property, Plant and Equipment

Property, plant and equipment is comprised of office furniture and equipment at the Company’s headquarters and is recorded at cost. Depreciation on office furniture and equipment is computed by the straight line method over a range of three to ten years.

Stock-Based Compensation

Expense associated with stock-based awards and other forms of equity compensation is based on fair value at grant and recognized on a straight line basis in the financial statements over the requisite service period for those awards that are expected to vest.

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company regularly reviews historical and anticipated future pre-tax results of operations to determine whether the Company will be able to realize the benefit of its deferred tax assets. A valuation allowance is required to reduce the potential deferred tax asset when it is more likely than not that all or some portion of the potential deferred tax asset will not be realized due to the lack of sufficient taxable income. The Company establishes reserves for uncertain tax positions that reflect its best estimate of deductions and credits that may not be sustained on a more likely than not basis. As the Company has incurred tax losses since its inception and expects to continue to incur tax losses for the foreseeable future, we will continue to provide a valuation allowance against deferred tax assets until the Company believes that such assets will be realized.

Fair Value of Financial Instruments

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, deposits, accounts payable, and severance payable are carried at cost, which approximates their fair value because of the short-term maturity of these instruments.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, our management believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

In May 2014, the FASB issued guidance on revenue from contracts with customers, which implements a five step process of how an entity should recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective at the beginning of fiscal year 2017, and early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the impact that the adoption will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

9

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

4. | Property, Plant and Equipment

Property, plant and equipment, stated at cost, consist of the following at June 30, 2014 and December 31, 2013 (in thousands):

|  | June 30, 2014 |  |  | December 31, 2013 |
Office furniture and equipment |  | $ | 788 |  |  | $ | 788 |
Accumulated depreciation |  |  | (731 | ) |  |  | (717 | )
Property, plant and equipment, net |  | $ | 57 |  |  | $ | 71 |

Depreciation expense related to property, plant and equipment was $7,000 and $14,000 for the three and six months ended June 30, 2014, respectively, and was $8,000 and $18,000 for the three and six months ended June 30, 2013, respectively.

5. | Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share are calculated using the treasury stock method and includes the effect of all dilutive securities, including stock options, restricted stock and Class B common shares. For those periods in which the Company incurred a net loss, the inclusion of the potentially dilutive shares in the computation of diluted weighted average shares outstanding would have been anti-dilutive to the Company’s loss per share, and, accordingly, all potentially dilutive shares have been excluded from the computation of diluted weighted average shares outstanding in those periods.

For both the three and six months ended June 30, 2014, 60,494 shares issuable upon the exercise of stock options were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive. For both the three and six months ended June 30, 2013, 65,481 shares issuable upon the exercise of stock options were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive.

A summary of the reconciliation of basic weighted average shares outstanding to diluted weighted average shares outstanding follows:

|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Weighted average common shares outstanding – basic |  |  | 5,443,061 |  |  |  | 5,342,064 |  |  |  | 5,442,585 |  |  |  | 5,325,206 |
Potentially dilutive common stock equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Class B common shares |  |  | 794,522 |  |  |  | 795,479 |  |  |  | 794,998 |  |  |  | 795,479 |
Restricted stock |  |  | — |  |  |  | 101,228 |  |  |  | — |  |  |  | 118,086 |
|  |  | 794,522 |  |  |  | 896,707 |  |  |  | 794,998 |  |  |  | 913,565 |
|  |  | 6,237,583 |  |  |  | 6,238,771 |  |  |  | 6,237,583 |  |  |  | 6,238,771 |
Less anti-dilutive common stock equivalents |  |  | (794,522 | ) |  |  | (896,707 | ) |  |  | (794,998 | ) |  |  | (913,565 | )
Weighted average common shares outstanding – diluted |  |  | 5,443,061 |  |  |  | 5,342,064 |  |  |  | 5,442,585 |  |  |  | 5,325,206 |

6. | Stockholders’ Equity

Stock Repurchase Plan

On October 15, 2007, the Company announced the adoption of a stock repurchase plan authorizing the repurchase of up to $7.5 million of the Company’s common stock. Purchases will be funded out of cash on hand and made from time to time in the open market. From the inception of the buyback program through June 30, 2014, the Company had repurchased 40,481 shares at an average price of $ 106.62 per share, leaving $3,184,000 available under the repurchase plan. The shares repurchased are being held as treasury stock. As of June 30, 2014, there were no plans to repurchase any additional shares.

Cash Dividends

The Company has not declared any cash dividends on its common stock and does not anticipate paying cash dividends in the foreseeable future.

Rights Agreement

On March 27, 2014, the Board of Directors (the “Board”) of the Company declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock of the Company, to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $0.01 per share, of the Company at a price of $13.50 per one one-thousandth of a share of Preferred Stock, subject to adjustment as provided in the Rights Agreement. The Rights will expire upon the triggering of certain events, but in no event later than March 27, 2017. The Rights are initially not exercisable but will become exercisable upon certain triggering events occurring, such as any person or group becoming the beneficial owner of 4.99% or more of the outstanding common stock of the Company. The dividend was payable to stockholders of record at the close of business on April 7, 2014. The Board adopted the Rights Agreement to protect the Company from a possible limitation on the Company’s ability to use its net operating loss carryforwards and other future tax benefits, which may be used to reduce potential future income tax obligations.

10

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

7. | Stock-Based Compensation

The following table summarizes the stock-based compensation expense incurred by the Company (in thousands):

|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Stock options |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 90 |
Restricted stock |  |  | — |  |  |  | 140 |  |  |  | — |  |  |  | 309 |
Total |  | $ | — |  |  | $ | 140 |  |  | $ | — |  |  | $ | 399 |

2007 Equity Incentive Compensation Plan

Immediately prior to the Company’s initial public offering, the Company adopted the 2007 Equity Incentive Compensation Plan (“2007 Plan”). The 2007 Plan provides for the grant of options intended to qualify as incentive stock options, non-qualified stock options, stock appreciation rights or restricted stock awards and any other equity-based or equity-related awards. The 2007 Plan is administered by the Compensation Committee of the Board of Directors. Subject to adjustment for changes in capitalization, the aggregate number of shares that may be delivered pursuant to awards under the 2007 Plan is currently 355,000. The term of the 2007 Plan is ten years, expiring in June 2017.

Stock Options — Except as otherwise directed by the Compensation Committee, the exercise price for options cannot be less than the fair market value of our common stock on the grant date. Other than the stock options issued to Directors, the options will generally vest and become exercisable with respect to 30%, 30% and 40% of the shares of our common stock subject to such options on each of the first three anniversaries of the grant date. Compensation expense related to these options is expensed on a straight line basis over the three year service period. Options issued to Directors generally vest and become exercisable on the first anniversary of the grant date. All stock options have a five year term from the date of grant. During the three and six months ended June 30, 2014 and June 30, 2013, the Company did not issue any stock options under the 2007 Plan.

A summary of stock option activity under the 2007 Plan as of June 30, 2014, and the changes during the six months ended June 30, 2014 is as follows:

|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Life (years) |  |  | Aggregate Intrinsic Value |
Options outstanding, January 1, 2014 |  |  | 65,481 |  |  | $ | 58.94 |  |  |  |  |  |  |  |  |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Exercised |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Forfeited |  |  | (4,987 | ) |  |  | 45.73 |  |  |  |  |  |  |  |  |
Options outstanding, June 30, 2014 |  |  | 60,494 |  |  | $ | 60.03 |  |  |  | 0.5 |  |  | $ | 0.00 |
Options exercisable, June 30, 2014 |  |  | 60,494 |  |  | $ | 60.03 |  |  |  | 0.5 |  |  | $ | 0.00 |

Restricted Stock — Other than restricted stock issued to Directors, the restricted stock issued will generally vest in equal increments of 25% on each of the first four anniversaries of the grant date. Compensation expense related to restricted stock issued is expensed on a straight line basis over the four year vesting period. Restricted stock issued to Directors generally vests on the first anniversary of the grant date with compensation expense being expensed on a straight line basis over the one year vesting period. During the three and six months ended June 30, 2014 and June 30, 2013, the Company did not grant any restricted stock shares under the 2007 Plan.

Under the Company’s Change of Control Plan, 97,852 shares of unvested restricted stock automatically vested due to the disposition of the Company’s ethanol plants therefore there is no restricted stock currently outstanding. After considering the stock option and restricted stock awards issued and outstanding, the Company had 119,540 shares of common stock available for future grant under our 2007 Plan at June 30, 2014.

11

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

8. | Income Taxes

The Company has not recognized any income tax provision (benefit) for the three and six months ended June 30, 2014, and June 30, 2013 due to continuing losses from operations.

The U.S. statutory federal income tax rate is reconciled to the Company’s effective income tax rate as follows (in thousands):

|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Tax benefit at 35% federal statutory rate |  | $ | 984 |  |  | $ | 1,266 |  |  | $ | 491 |  |  | $ | 3,523 |
State tax benefit, net of federal benefit |  |  | 85 |  |  |  | 109 |  |  |  | 42 |  |  |  | 50 |
Noncontrolling interest |  |  | (24 | ) |  |  | (60 | ) |  |  | (60 | ) |  |  | (464 | )
Valuation allowance |  |  | (1,662 | ) |  |  | (3,116 | ) |  |  | (2,379 | ) |  |  | (2,957 | )
Other |  |  | 617 |  |  |  | 1,801 |  |  |  | 1,906 |  |  |  | (152 | )
Total |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |

The effects of temporary differences and other items that give rise to deferred tax assets and liabilities are presented below (in thousands):

|  | June 30, 2014 |  |  | December 31, 2013 |
Deferred tax assets: |  |  |  |  |  |  |  |
Capitalized start up costs |  | $ | 23 |  |  | $ | 24 |
Deferred transaction costs |  |  | 842 |  |  |  | — |
Stock-based compensation |  |  | 622 |  |  |  | 622 |
Net operating loss carryover |  |  | 63,453 |  |  |  | 62,372 |
Other |  |  | 3 |  |  |  | 18 |
Deferred tax assets |  |  | 64,943 |  |  |  | 63,036 |
Valuation allowance |  |  | (64,311 | ) |  |  | (61,111 | )
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | (8 | ) |  |  | (11 | )
Investment in partnership |  |  | (624 | ) |  |  | (1,914 | )
Deferred tax liabilities |  |  | (632 | ) |  |  | (1,925 | )
Net deferred tax asset |  | $ | — |  |  | $ | — |

The Company assesses the recoverability of deferred tax assets and the need for a valuation allowance on an ongoing basis. In making this assessment, management considers all available positive and negative evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized in future periods. This assessment requires significant judgment and estimates involving current and deferred income taxes, tax attributes relating to the interpretation of various tax laws, historical bases of tax attributes associated with certain assets and limitations surrounding the realization of deferred tax assets.

As of June 30, 2014, the net operating loss carryforward was $181.3 million, which will begin to expire if not used by December 31, 2029. The U.S. federal statute of limitations remains open for our 2010 and subsequent tax years.

9. | Employee Benefits

401K Plan

The LLC sponsors a 401(k) profit sharing and savings plan for its employees. Employee participation in this plan is voluntary and the LLC matches 50% of eligible employee contributions, up to an amount equal to 3% of employee compensation, on a biweekly basis. For the three and six months ended June 30, 2014, contributions to the plan by the LLC totaled $12,000 and $21,000, respectively. For the three and six months ended June 30, 2013, contributions to the plan by the LLC totaled $16,000 and $36,000, respectively.

Severance

The LLC adopted a Change of Control Plan (the “COC Plan”) in November 2006. As a result of the disposition of the Company’s ethanol plants, a change of control under the COC Plan occurred, and therefore as of December 31, 2013 the Company accrued $4,180,000 in other current liabilities related to certain change of control severance payments owed to its corporate employees, which payments were made in the first quarter of 2014.

10. | Commitments and Contingencies

In October 2013, the LLC entered into a ten month lease that began November 1, 2013 for office space for its corporate headquarters. The monthly rent expense of $11,000 is being recognized on a straight line basis over the term of the lease.

For the three and six months ended June 30, 2014, rent expense totaled $42,000 and $88,000, respectively. For the three and six months ended June 30, 2013, rent expense totaled $68,000 and $131,000, respectively.

The Company is not currently a party to any material legal, administrative or regulatory proceedings that have arisen in the ordinary course of business or otherwise that would result in loss contingencies.

12

BioFuel Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

11. | Noncontrolling Interest

Noncontrolling interest consists of equity issued to members of the LLC upon the Company’s initial public offering in June 2007. As provided in the LLC agreement, the exchange ratio of the various existing classes of equity of the LLC for the single class of equity at the time of the Company’s initial public offering was based on the Company’s initial public offering price of $ 210.00 per share and the resulting implied valuation of the Company. The exchange resulted in the issuance of 897,903 LLC membership units and Class B common shares. Each LLC membership unit combined with a share of Class B common stock is exchangeable at the holder’s option into one share of Company common stock. The LLC may make distributions to members as determined by the Company.

At the time of its initial public offering, the Company owned 28.9% of the LLC membership units of the LLC. As of June 30, 2014, the Company owned 87.6% of the LLC membership units. The noncontrolling interest will continue to be reported until all Class B common shares and LLC membership units have been exchanged for the Company’s common stock.

The table below shows the effects of the changes in BioFuel Energy Corp.’s ownership interest in the LLC on the equity attributable to BioFuel Energy Corp.’s common stockholders for the three and six months ended June 30, 2014 and June 30, 2013 (in thousands):

Net Loss Attributable to BioFuel Energy Corp.’s Common Stockholders and

Transfers from the Noncontrolling Interest

|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Net loss attributable to BioFuel Energy Corp. |  | $ | (2,750 | ) |  | $ | (4,124 | ) |  | $ | (3,461 | ) |  | $ | (8,759 | )
Decrease in BioFuel Energy Corp. stockholders’ equity from issuance of common shares in exchange for Class B common shares and units of BioFuel Energy, LLC |  |  | (141 | ) |  |  | — |  |  |  | (141 | ) |  |  | — |
Change in equity from net loss attributable to BioFuel Energy Corp. and transfers from noncontrolling interest |  | $ | (2,891 | ) |  | $ | (4,124 | ) |  | $ | (3,602 | ) |  | $ | (8,759 | )

Tax Benefit Sharing Agreement

Membership units in the LLC combined with the related Class B common shares held by the historical equity investors may be exchanged in the future for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. The LLC will make an election under Section 754 of the IRS Code effective for each taxable year in which an exchange of membership units and Class B shares for common shares occurs, which may result in an adjustment to the tax basis of the assets owned by the LLC at the time of the exchange. Increases in tax basis, if any, would reduce the amount of tax that the Company would otherwise be required to pay in the future, although the IRS may challenge all or part of the tax basis increases, and a court could sustain such a challenge. The Company has entered into tax benefit sharing agreements with its historical LLC investors that will provide for a sharing of these tax benefits, if any, between the Company and the historical LLC equity investors. Under these agreements, the Company will make a payment to an exchanging LLC member of 85% of the amount of cash savings, if any, in U.S. federal, state and local income taxes the Company actually realizes as a result of this increase in tax basis. The Company and its common stockholders will benefit from the remaining 15% of cash savings, if any, in income taxes realized. For purposes of the tax benefit sharing agreement, cash savings in income tax will be computed by comparing the Company’s actual income tax liability to the amount of such taxes the Company would have been required to pay had there been no increase in the tax basis in the assets of the LLC as a result of the exchanges. The term of the tax benefit sharing agreement commenced on the Company’s initial public offering in June 2007 and will continue until all such tax benefits have been utilized or expired, unless a change of control occurs and the Company exercises its resulting right to terminate the tax benefit sharing agreement for an amount based on agreed payments remaining to be made under the agreement.

13

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the unaudited consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Specifically, forward-looking statements may be preceded by, followed by or may include such words as “estimate”, “plan”, “project”, “forecast”, “intend”, “expect”, “is to be”, “anticipate”, “goal”, “believe”, “seek”, “target” or other similar expressions. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Form 10-Q, or in the case of a document incorporated by reference, as of the date of that document. Except as required by law, we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. Our actual results may differ materially from those discussed in or implied by any of the forward-looking statements as a result of various factors, including but not limited to those listed elsewhere in this Form 10-Q and those listed in our Annual Report on Form 10-K for the year ended December 31, 2013 or in any other documents we have filed with the Securities and Exchange Commission.

Overview

BioFuel Energy Corp. (“we” or “the Company”) was incorporated as a Delaware corporation on April 11, 2006 to invest solely in BioFuel Energy, LLC (the “LLC”), a limited liability company organized on January 25, 2006 to build and operate ethanol production facilities in the Midwestern United States. The Company’s headquarters are located in Denver, Colorado. We are a holding company with no operations of our own. We are the sole managing member of the LLC, which is itself a holding company and indirectly owned all of our former operating assets. As the sole managing member of the LLC, the Company operates and controls all of the business and affairs of the LLC and its subsidiaries.

The Company operated two dry-mill ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota from June 2008 through November 22, 2013, which produced and sold ethanol and its related co-products, primarily distillers grain and corn oil. The Company’s ethanol plants were owned and operated by the operating subsidiaries of the LLC (“Operating Subsidiaries”). Those Operating Subsidiaries were party to a Credit Agreement (the “Senior Debt Facility”) with a group of lenders, and substantially all of the assets of the Operating Subsidiaries were pledged as collateral under the Senior Debt Facility. On November 22, 2013, the Company’s ethanol plants and all related assets were transferred to certain designees of the lenders (“Newco”) in full satisfaction of all outstanding obligations under the Senior Debt Facility. Newco simultaneously sold the ethanol plants to Green Plains Renewable Energy, Inc. The Company is currently providing engineering and/or business consulting services to a variety of next generation biofuel and bio-chemical companies. These services are expected to provide a negligible amount of revenue in 2014.

On March 28, 2014, the Company received a preliminary non-binding proposal (the “Proposal”) from James R. Brickman (together with certain trusts and family members, the “Brickman Parties”) and Greenlight Capital, Inc. (together with certain affiliates, “Greenlight”), one of our principal stockholders and an investment management company co-founded by David Einhorn, one of our directors, who serves as its President. The Brickman Parties and Greenlight proposed a transaction pursuant to which the Company would acquire all of the equity interests of JBGL Capital, LP and JBGL Builder Finance, LLC, and their direct and indirect subsidiaries (collectively, “JBGL”) for $275 million, payable in cash and shares of our common stock. JBGL is a series of real estate entities involved in the purchase and development of land for residential purposes, construction lending and home building operations. JBGL is currently owned and controlled by Greenlight and the Brickman Parties

In response to the Proposal, our Board of Directors established a special committee consisting of independent directors to evaluate the Proposal and alternatives for the Company. The special committee retained independent financial and legal advisors to assist in its evaluation of the Proposal.

On June 10, 2014, the Company entered into a definitive agreement (the “Transaction Agreement”) with Greenlight and the Brickman Parties pursuant to which the Company will acquire JBGL for $275 million (the “Acquisition”). The Transaction Agreement was unanimously approved by the special committee of independent directors, acting on the advice of its legal and financial advisors. The Transaction Agreement was also unanimously approved by the Board of Directors of the Company other than Mr. Einhorn, who recused himself from the board’s deliberations and approval.

As consideration for the Acquisition, the Company will issue a number of shares of common stock to each of Greenlight and the Brickman Parties such that, immediately after the closing of the Acquisition, Greenlight will own 49.9% of our outstanding common stock and the Brickman Parties will own 8.4% of our outstanding common stock. To fund a portion of the cash consideration, the Company is conducting a rights offering and certain related transactions to raise gross proceeds of approximately $70 million. The remaining portion of the cash consideration will be funded through cash on hand and approximately $150 million of debt financing to be provided by Greenlight.

Consummation of the Acquisition is subject to various conditions, including receipt of the approval of a majority of the Company’s stockholders (excluding Greenlight and its affiliates), the successful completion of the rights offering, and the continued authorization for listing of the Company’s common stock on The Nasdaq Stock Market LLC (“Nasdaq”). Subject to the satisfaction of such conditions, the Acquisition is expected to be consummated in October 2014.

On May 8, 2014, The Company received a letter from the Listing Qualifications Staff (the “Staff”) of Nasdaq indicating that the Staff believed the Company is a public shell and the continued listing of its securities was no longer warranted. The Company appealed the Staff’s determination to the Nasdaq Hearings Panel (the “Panel”) and on July 1, 2014, the Company received a written decision from Nasdaq indicating that the Panel had determined to grant the Company’s request for continued listing on The Nasdaq Capital Market, provided that (1) on or before November 4, 2014, the Company closes the Acquisition, and (2) the resulting combined company satisfies all requirements for initial listing on The Nasdaq Capital Market upon consummation of the Acquisition.

The Company is diligently working to complete the Acquisition and related transactions; however, there can be no assurance that the Company will be able to do so. On July 15, 2014 the Company filed a Registration Statement on Form S-1 with the Securities and Exchange Commission to register the rights and the underlying shares of common stock to be offered in the rights offering, and a Proxy Statement in connection with its upcoming annual meeting of stockholders at which it will seek approval of the Acquisition among other matters.

At June 30, 2014, the Company retained approximately $8.1 million in cash and cash equivalents on its consolidated balance sheet. As of June 30, 2014, the Company also retained federal net operating loss (“NOL”) carryforwards in the amount of $181.3 million, which have been fully reserved against.

14

Basis for Consolidation

At June 30, 2014, the Company owned 87.6% of the LLC membership units with the remaining 12.4% owned by certain investment funds affiliated with one of the original equity investors of the LLC. As a result, the Company consolidates the results of the LLC. The amount of income or loss allocable to the 12.4% holders is reported as noncontrolling interest in our consolidated statements of operations. The Class B common shares of the Company are held by the same investment funds who held 780,958 membership units in the LLC as of June 30, 2014 that, together with the corresponding Class B shares, can be exchanged for newly issued shares of common stock of the Company on a one-for-one basis. The proportionate value of the LLC membership units held by the investment funds other than the Company are recorded as noncontrolling interest on the consolidated balance sheets.

Revenues

Our primary source of revenue is engineering and/or business consulting services that the Company is providing to certain next generation biofuel and bio-chemical companies.

General and administrative expenses

General and administrative expenses consist of salaries and benefits paid to our management and administrative employees, expenses relating to third party services, travel, office rent, marketing and other expenses, including expenses associated with being a public company, such as fees paid to our independent auditors associated with our annual audit and quarterly reviews, directors’ fees, listing and transfer agent fees, and legal and financial advisor expenses related to the Acquisition.

Results of operations

The following discussion summarizes the significant factors affecting the consolidated operating results of the Company for the three and six months ended June 30, 2014 and June 30, 2013. This discussion should be read in conjunction with the unaudited consolidated financial statements and notes to the unaudited consolidated financial statements contained in this Form 10-Q.

The following table sets forth general and administrative expenses, loss from continuing operations, and loss from discontinued operations (in thousands):

|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Revenues |  | $ | 56 |  |  | $ | — |  |  | $ | 156 |  |  | $ | — |
General and administrative expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation expense |  |  | (384 | ) |  |  | (786 | ) |  |  | (825 | ) |  |  | (1,764 | )
Other |  |  | (2,486 | ) |  |  | (625 | ) |  |  | (2,949 | ) |  |  | (967 | )
Operating loss |  |  | (2,814 | ) |  |  | (1,411 | ) |  |  | (3,618 | ) |  |  | (2,731 | )
Other income (expense) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |
Loss from continuing operations |  |  | (2,814 | ) |  |  | (1,411 | ) |  |  | (3,618 | ) |  |  | (2,730 | )
Loss from discontinued operations |  |  | — |  |  |  | (3,326 | ) |  |  | — |  |  |  | (7,335 | )
Net Loss |  |  | (2,814 | ) |  |  | (4,737 | ) |  |  | (3,618 | ) |  |  | (10,065 | )
Less: Net loss from continuing operations attributable to the noncontrolling interest |  |  | 64 |  |  |  | 183 |  |  |  | 157 |  |  |  | 355 |
Less: Net loss from discontinued operations attributable to the noncontrolling interest |  |  | — |  |  |  | 430 |  |  |  | — |  |  |  | 951 |
Net loss attributable to BioFuel Energy Corp. common stockholders |  | $ | (2,750 | ) |  | $ | (4,124 | ) |  | $ | (3,461 | ) |  | $ | (8,759 | )

Three Months Ended June 30, 2014 Compared to the Three Months Ended June 30, 2013

Revenues: Revenues were $0.1 million for the three months ended June 30, 2014 and related to engineering and/or business consulting services that the Company is providing to certain next generation biofuel and bio-chemical companies. There was no such revenue for the three months ended June 30, 2013.

General and administrative expenses: General and administrative expenses increased $1.5 million or 103.4%, to $2.9 million for the three months ended June 30, 2014, as compared to $1.4 million for the three months ended June 30, 2013. The increase was primarily attributable to $2.2 million in legal and financial advisor costs related to the Acquisition that were incurred during the three months ended June 30, 2014, which were offset by a decrease in stock compensation expense and salary expense, as the Company had fewer employees during the three months ended June 30, 2014 as compared to the three months ended June 30, 2013.

Loss from discontinued operations: Loss from discontinued operations was $3.3 million for the three months ended June 30, 2013 and related to the loss incurred from the operation of the Company’s ethanol plants. There was no such loss for the three months ended June 30, 2014 as the ethanol plants were disposed of in November 2013.

Six Months Ended June 30, 2014 Compared to the Six Months Ended June 30, 2013

Revenues: Revenues were $0.2 million for the six months ended June 30, 2014 and related to engineering and/or business consulting services that the Company is providing to certain next generation biofuel and bio-chemical companies. There was no such revenue for the six months ended June 30, 2013.

General and administrative expenses: General and administrative expenses increased $1.1 million or 38.2%, to $3.8 million for the six months ended June 30, 2014, as compared to $2.7 million for the six months ended June 30, 2013. The increase was primarily attributable to $2.2 million in legal and financial advisor costs related to the Acquisition that were incurred during the six months ended June 30, 2014, which were offset by a decrease in stock compensation expense and salary expense, as the Company had fewer employees during the six months ended June 30, 2014 as compared to the six months ended June 30, 2013.

Loss from discontinued operations: Loss from discontinued operations was $7.3 million for the six months ended June 30, 2013 and related to the loss incurred from the operation of the Company’s ethanol plants. There was no such loss for the six months ended June 30, 2014 as the ethanol plants were disposed of in November 2013.

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Liquidity and capital resources

Our cash flows from operating, investing and financing activities during the six months ended June 30, 2014 and June 30, 2013 are summarized below (in thousands):

|  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |
Cash provided by (used in): |  |  |  |  |  |  |  |
Operating activities |  | $ | (4,818 | ) |  | $ | 3,040 |
Investing activities |  |  | — |  |  |  | (1,074 | )
Financing activities |  |  | — |  |  |  | (57 | )
Net increase (decrease) in cash and cash equivalents |  | $ | (4,818 | ) |  | $ | 1,909 |

Cash provided by (used in) operating activities. Net cash used in operating activities was $4.8 million for the six months ended June 30, 2014, compared to net cash provided by operating activities of $3.0 million for the six months ended June 30, 2013. For the six months ended June 30, 2014, the amount was primarily comprised of a net loss of $3.6 million and working capital uses of $1.2 million. Working capital uses were primarily comprised of $2.2 million of working capital sources related to the collection of deposits, which were offset by working capital uses of $4.2 million related to the payment of severance under the Company’s COC Plan. For the six months ended June 30, 2013, the amount was primarily comprised of a net loss of $10.1 million that was offset by non-cash charges of $14.6 million, which was primarily depreciation and amortization.

Cash used in investing activities. Net cash used in investing activities was $1.1 million for the six months ended June 30, 2013 and related to capital expenditures for various plant improvement projects. There were no such expenditures for the six months ended June 30, 2014.

Cash used in financing activities. Net cash used in financing activities was nominal for the six months ended June 30, 2013 and related to payments on certain capital leases and notes payable. There were no such payments for the six months ended June 30, 2014.

The LLC’s principal source of liquidity at June 30, 2014 is its cash and cash equivalents of $8.1 million. Our principal liquidity needs are expected to be funding general corporate expenses and expenses relate to the Acquisition.

Summary of critical accounting policies and significant estimates

The consolidated financial statements of BioFuel Energy Corp. included in this Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States. Note 3 to the consolidated financial statements contains a summary of our significant accounting policies, certain of which require the use of estimates and assumptions. Accounting estimates are an integral part of the preparation of financial statements and are based on judgments by management using its knowledge and experience about the past and current events and assumptions regarding future events, all of which we consider to be reasonable. These judgments and estimates reflect the effects of matters that are inherently uncertain and that affect the carrying value of our assets and liabilities, the disclosure of contingent liabilities and reported amounts of expenses during the reporting period.

The accounting estimates and assumptions discussed in this section are those that we believe involve significant judgments and the most uncertainty. Changes in these estimates or assumptions could materially affect our financial position and results of operations and are therefore important to an understanding of our consolidated financial statements.

Income Taxes

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company regularly reviews historical and anticipated future pre-tax results of operations to determine whether the Company will be able to realize the benefit of its deferred tax assets. A valuation allowance is required to reduce the potential deferred tax asset when it is more likely than not that all or some portion of the potential deferred tax asset will not be realized due to the lack of sufficient taxable income. The Company establishes reserves for uncertain tax positions that reflect its best estimate of deductions and credits that may not be sustained on a more likely than not basis. As the Company has incurred tax losses since its inception and expects to continue to incur tax losses for the foreseeable future, we will continue to provide a valuation allowance against deferred tax assets until the Company believes that such assets will be realized.

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by standards setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, our management believes that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

In May 2014, the FASB issued guidance on revenue from contracts with customers, which implements a five step process of how an entity should recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective at the beginning of fiscal year 2017, and early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the impact that the adoption will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At June 30, 2014, we had $8.1 million of cash and cash equivalents invested in standard cash accounts held at one financial institution, which is in excess of FDIC insurance limits.

ITEM 4. CONTROLS AND PROCEDURES

Controls and Procedures

The Company’s management carried out an evaluation, as required by Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as of the end of the period covered by this report. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information relating to the Company and its consolidated subsidiaries required to be disclosed in our Exchange Act reports filed with the SEC (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In addition, the Company’s management carried out an evaluation, as required by Rule 13a-15(f) and 15d-15(f) of the Exchange Act, with the participation of our Chief Executive Officer and our Chief Financial Officer, of changes in the Company’s internal control over financial reporting. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that no change in internal control over financial reporting occurred during the quarter ended June 30, 2014, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

Number |  | Description
2.1 |  | Transaction Agreement, dated as of June 10, 2014, by and among BioFuel Energy Corp., JBGL Capital L.P., JBGL Exchange (Offshore), LLC, JBGL Willow Crest (Offshore), LLC, JBGL Hawthorne (Offshore), LLC, JBGL Inwood (Offshore), LLC, JBGL Chateau (Offshore), LLC, JBGL Castle Pines (Offshore), LLC, JBGL Lakeside (Offshore), LLC, JBGL Mustang (Offshore), LLC, JBGL Kittyhawk (Offshore), LLC, JBGL Builder Finance (Offshore), LLC, Greenlight Onshore Investments, LLC, JBGL Exchange, LLC, JBGL Willow Crest, LLC, JBGL Hawthorne, LLC, JBGL Inwood, LLC, JBGL Chateau, LLC, JBGL Castle Pines, LP, JBGL Castle Pines Management, LLC, JBGL Lakeside, LLC, JBGL Mustang, LLC, JBGL Kittyhawk, LLC, JBGL Builder Finance, LLC and Brickman Member Joint Venture. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed June 13, 2014).#
3.1 |  | Amended and Restated Certificate of Incorporation of BioFuel Energy Corp. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed February 8, 2011).
3.1.1 |  | Form of Charter Amendment (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed April 13, 2012).
3.1.2 |  | Terms of the Charter Amendment (incorporated by reference to Item 8.01 of the Company’s Current Report on Form 8-K filed May 25, 2012).
3.2 |  | Amended and Restated Bylaws of BioFuel Energy Corp, dated as of March 20, 2009, (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed March 23, 2009).
4.1 |  | Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Amendment #3 to Registration Statement on Form S-1 (file no. 333-139203) filed April 23, 2007).
4.2 |  | Certificate of Designation of Series B Junior Participating Preferred Stock of BioFuel Energy Corp. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 28, 2014).
4.3 |  | Section 382 Rights Agreement, dated as of March 27, 2014, between BioFuel Energy Corp. and Broadridge Corporate Issuer Solutions, Inc., as Rights Agent, which includes the Form of Certification of Designation of Series B Junior Participating Preferred Stock as Exhibit A, the Form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Preferred Stock as Exhibit C (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed March 28, 2014).
10.1 |  | Letter Agreement, dated as of July 15, 2014, by and among BioFuel Energy Corp., Greenlight Capital Offshore Partners, Greenlight Capital, L.P., Greenlight Capital Qualified, L.P., Greenlight Reinsurance, Ltd., Greenlight Capital (Gold), LP and Greenlight Capital Offshore Master (Gold), Ltd. (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed July 15, 2014).
10.2 |  | Letter Agreement, dated as of July 15, 2014, by and among BioFuel Energy Corp., Third Point Partners L.P., Third Point Partners Qualified L.P., Third Point Offshore Master Fund L.P., Third Point Ultra Master Fund L.P. and Third Point Reinsurance Company Ltd. (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed July 15, 2014).
10.3 |  | Letter Agreement, dated as of July 15, 2014, between BioFuel Energy Corp. and JMB Capital Partners Master Fund, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 15, 2014).
10.4 |  | Letter Agreement, dated as of July 15, 2014, between BioFuel Energy Corp. and Lonestar Partners, LP (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed July 15, 2014).
10.5 |  | Letter Agreement, dated as of July 15, 2014, between BioFuel Energy Corp. and North Run Master Fund, LP (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed July 15, 2014).
10.6 |  | Letter Agreement, dated as of July 15, 2014, between BioFuel Energy Corp. and Scoggin LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed July 15, 2014).
10.7 |  | Voting Agreement, dated as of June 10, 2014, by and among BioFuel Energy Corp., Greenlight Capital Offshore Partners, Greenlight Capital, L.P., Greenlight Capital Qualified, L.P., Greenlight Reinsurance, Ltd., Greenlight Capital (Gold), LP and Greenlight Capital Offshore Master (Gold), Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 13, 2014).
10.8 |  | Commitment Letter, dated as of June 10, 2014, between BioFuel Energy Corp. and Greenlight Capital, Inc., on behalf of its affiliated funds and managed accounts (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 13, 2014).
31.1 |  | Certification of the Company’s Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
31.2 |  | Certification of the Company’s Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
32.1 |  | Certification of the Company’s Chief Executive Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2 |  | Certification of the Company’s Chief Financial Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
# | The Company hereby undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement to the U.S. Securities and Exchange Commission upon request.

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SIGNATURES

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

| BIOFUEL ENERGY CORP.
| (Registrant)
Date: July 29, 2014 | By: | /s/ Scott H. Pearce
|  | Scott H. Pearce
|  | President, Chief Executive Officer and Director
Date: July 29, 2014 | By: | /s/ Kelly G. Maguire
|  | Kelly G. Maguire
|  | Executive Vice President and Chief Financial Officer

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