Investors can bid farewell to International Biofuel and Biochemical
Corporation (Pink Sheets: IBBO). On September 29, 2005, the Securities
and Exchange Commission entered an order terminating registration of
International Biofuel and Biochemical's common stock because of the
Company's failure to file accurate, current public reports.
StockPatrol.com first reported on International Biofuel in March 2003, shortly after the Company changed its name from J Bird Music Group Ltd. and shifted its focus from selling music over the Internet to producing and marketing a soy-based fuel alternative. See, International Biofuel And Biochemical Corporation — The Day The Music Died. As we observed at the time, the Company faced serious hurdles in its effort to enter the biofuel industry. International Biofuel was counting on its strategic alliance with American Bio-Fuels, an entity that was owned, in part, by Green Star Products, Inc., (Pink Sheets: GSPI). Green Star faced its own financial challenges. According to that Company's financial statements – which are available only on the Green Star website since the Company does not file regular public reports with the SEC – Green Star had $852 in cash at the end of 2003. The Green Star web site does not contain any more recent financial information.
Soon after our article appeared, International Biofuel stopped filing financial reports with the SEC. The last available financial statement, a Form 10-Q for the quarter ended June 30, 2003, indicated that the Company had no revenues in 2003 and about $13,000 in cash. International Biofuel also claimed an "intercompany (sic) receivable" from J-Bird records of approximately $2.2 million, but conceded that the collectibility of that sum – essentially from itself – was problematic.
After that, the Company simply ceased filing reports – which eventually prompted the SEC to take action. As the order indicates, International Biofuel
• Failed to file annual reports for the years ended December 31, 2003 and December 31, 2004;
• Failed to file quarterly reports for the quarters ended September 30, 2003, March 31, 2004, June 30, 2004, September 30, 2004, and March 31, 2005;
• Failed to file audited financial statements in its annual report on Form 10-K for the year ended December 31, 2002. The auditor was unable to deliver an audit opinion for that year because the Company lacked sufficient internal controls to establish that the transactions were recorded so that financial statements could be prepared in accordance with generally accepted accounting principals.
But the failure to file reports was only part of the problem. The SEC also discovered that reports which were filed falsely claimed that:
• The Company was registered with the EPA as a biofuel producer;
• The Company was working with DQ University to establish a laboratory and biofuel plant;
• The continuous flow technology licensed by the Company was protected by patent;
• The Company planned to have 12 plants in production, with each plant producing a minimum of 35 million gallons of biodiesel a year.
• Net return to the Company was estimated at 20 cents a gallon.
• The Company was in the process of building a biodiesel plant in Connecticut;
• Each plant had potential production capacity of 20 million gallons a year; and
• The plant would be able to produce 240 million gallons by 2008
In truth, according to the SEC,
• The EPA had not approved the Company's registration;
• The Company was not in a position to work with DQ University because it did not even own a biofuel processor;
• A patent application was pending, but not approved;
• No company had produced the quantity of biofuel that International Biofuel was projecting;
• The Company and its CEO had no reasonable basis for their revenue projections of 20 cents a gallon since that result was dependent, in part, on a government tax credit that had not been approved; and
• The Company did not have the funding to build a plant in Connecticut – or a site;
Faced with these allegations, International Biofuels consented to the order which effectively ended its life as a public company. The music, which fell silent for J-Bird almost three years ago, has finally died.
About Hartley Bernstein: Hartley Bernstein is a corporate and securities attorney and civil litigator with a specialty in business transactions and civil litigation.
StockPatrol.com first reported on International Biofuel in March 2003, shortly after the Company changed its name from J Bird Music Group Ltd. and shifted its focus from selling music over the Internet to producing and marketing a soy-based fuel alternative. See, International Biofuel And Biochemical Corporation — The Day The Music Died. As we observed at the time, the Company faced serious hurdles in its effort to enter the biofuel industry. International Biofuel was counting on its strategic alliance with American Bio-Fuels, an entity that was owned, in part, by Green Star Products, Inc., (Pink Sheets: GSPI). Green Star faced its own financial challenges. According to that Company's financial statements – which are available only on the Green Star website since the Company does not file regular public reports with the SEC – Green Star had $852 in cash at the end of 2003. The Green Star web site does not contain any more recent financial information.
Soon after our article appeared, International Biofuel stopped filing financial reports with the SEC. The last available financial statement, a Form 10-Q for the quarter ended June 30, 2003, indicated that the Company had no revenues in 2003 and about $13,000 in cash. International Biofuel also claimed an "intercompany (sic) receivable" from J-Bird records of approximately $2.2 million, but conceded that the collectibility of that sum – essentially from itself – was problematic.
After that, the Company simply ceased filing reports – which eventually prompted the SEC to take action. As the order indicates, International Biofuel
• Failed to file annual reports for the years ended December 31, 2003 and December 31, 2004;
• Failed to file quarterly reports for the quarters ended September 30, 2003, March 31, 2004, June 30, 2004, September 30, 2004, and March 31, 2005;
• Failed to file audited financial statements in its annual report on Form 10-K for the year ended December 31, 2002. The auditor was unable to deliver an audit opinion for that year because the Company lacked sufficient internal controls to establish that the transactions were recorded so that financial statements could be prepared in accordance with generally accepted accounting principals.
But the failure to file reports was only part of the problem. The SEC also discovered that reports which were filed falsely claimed that:
• The Company was registered with the EPA as a biofuel producer;
• The Company was working with DQ University to establish a laboratory and biofuel plant;
• The continuous flow technology licensed by the Company was protected by patent;
• The Company planned to have 12 plants in production, with each plant producing a minimum of 35 million gallons of biodiesel a year.
• Net return to the Company was estimated at 20 cents a gallon.
• The Company was in the process of building a biodiesel plant in Connecticut;
• Each plant had potential production capacity of 20 million gallons a year; and
• The plant would be able to produce 240 million gallons by 2008
In truth, according to the SEC,
• The EPA had not approved the Company's registration;
• The Company was not in a position to work with DQ University because it did not even own a biofuel processor;
• A patent application was pending, but not approved;
• No company had produced the quantity of biofuel that International Biofuel was projecting;
• The Company and its CEO had no reasonable basis for their revenue projections of 20 cents a gallon since that result was dependent, in part, on a government tax credit that had not been approved; and
• The Company did not have the funding to build a plant in Connecticut – or a site;
Faced with these allegations, International Biofuels consented to the order which effectively ended its life as a public company. The music, which fell silent for J-Bird almost three years ago, has finally died.
About Hartley Bernstein: Hartley Bernstein is a corporate and securities attorney and civil litigator with a specialty in business transactions and civil litigation.
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