ITEM 5.02, DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

On December 20, 2007, the Company's Board of Directors granted the following options to purchase Company common stock as compensation, pursuant to, and according to the terms of the Company's 2006 Amended and Restated Incentive and Non-Statutory Stock Option Plan and form Stock Option Agreement:

(a) Arnold Klann, Chairman and CEO: 278,409 options broken down as follows:
i. 28,409 Incentive Stock Options ("ISO's") at an exercise price of $3.52 (110% of closing price on date of grant) with 100% vesting on the date of grant and a five year expiration.

ii. 250,000 Non-qualified Stock Options ("NSO's") at an $3.20 (2)

(b) Necitas Sumait, SVP and Director: 206,250 options broken down as follows:
i. 31,250 ISO's (1)
ii. 175,000 NSO's (2)

(c) John Cuzens, SVP: 206,250 options broken down as follows:
i. 31,250 ISO's (1)
ii. 175,000 NSO's (2)

(d) Christopher Scott, CFO: 206,250 options broken down as follows:
i. 31,250 ISO's (1)
ii. 175,000 NSO's (2)

(1) These stock options have an exercise price of $3.20 (100% of the closing price on the date of grant), with 100% vesting on the date of grant and a five year expiration.

(2) These stock options have an exercise price of $3.20 and a 5 year expiration. These stock options have the following vesting schedule:
a. 50% vest immediately
b. 25% vest when BlueFire closes the remainder of funding for Lancaster Project (defined as no less than $15 million at either the corporate or project level)
c. 25% vest at the start of construction of the Lancaster Project