U.S Fuel Corp. (fka USFF)

[PFA]

A Framework for Discussion of US Fuel Plans

In checking this message board, I noticed several posted questions were directed to me. Please understand that I only check this message board periodically, so pardon any delay between your posting a question and my posting an answer.

As a general proposition, the best source of information is the US Fuel website www.usfuelcorporation.com; in an attempt to make it easy find new content, we note the changes to the site on the home page. There are also a number of services that will notify you when sites are changed (google “sign up to monitor website changes” to see some examples.) All SEC filings are linked from the Investor Relations page.

If you hear a rumor of an event, but do not see it posted on the official website, that rumor is probably unfounded.

Our goal is to be truthful and accurate in all statements and to announce events that occur, not issue statements of speculation on what might occur. In other words, as we achieve milestones, we will make announcements.

I trust everyone realizes that the intro portion of this message board is grossly out of date; US Fuel management does not control that content. In early January, someone commented to me that we were not providing updates – during December, the website was updated three times, coupled with two SEC form 8k filings.

Please do not infer from any period of silence that work has stopped; negotiations take time, should not be conducted in public and are only complete when an agreement is signed.

As I am sure everyone understands, I cannot divulge non-public or sensitive information in responding to a question, nor would I be able to explain why I would not answer a particular question. Many responses will include forward looking statements. Any and all forward looking statements will be made in good faith and be based upon the best information available at the time of the posting. Needless to say, any forward looking statement is subject to change. I will not engage in speculation on stock price per share, stock pricing trends or trading volume.

I acknowledge in advance that whatever I post will likely never be acceptable to those on this board who dwell only in the past, assume that bad faith is behind all corporate actions and only see the dark side of any announcement. I was not part of the past, am only looking forward and will never attempt to dissuade you from your fundamental pessimism. I will not engage in speculative discussions, especially those derived from anonymous internet postings that libel members of the US Fuel team without any factual basis.

For example, what we announced last week was that two offers to acquire sites were accepted and would go into escrow. That is a precisely accurate statement of what happened. True, things fall out of escrow; real property acquisition is a process that starts with a written agreement, involves an escrow during which additional due diligence is performed and culminates in a closing and transfer of funds for title. We have started that process for a site in Muhlenberg County and a site in Perry County. In good faith, we believe we will complete that process for both sites. The proof will be at closing and that is a future event.

Nevertheless, those who choose to do so are welcome to wallow in negative speculation between now and the actual production of the first barrel of fuel; my choice is to ignore such postings in their entirety.

With that as a framework, I will attempt to respond to several of the questions I have noted in various messages.

Coal to Germany
The original coal-to-gas pyrolysis technology was from Germany. To obtain the performance guarantee offered with their equipment, we were required to ship 2,000 pounds of coal to their facility in Germany. They would test and characterize the syngas produced from that coal feedstock and use those test results as the basis for their performance guarantee. Siemens was never involved in the process. We shipped the coal and it arrived in Germany; before we needed to expend funds for testing, we found an improved process.

When we were able to improve our process (by increasing output from 400 to 525 barrels per day at a reduced capital cost), we changed technology vendors. That change made the coal testing in Germany irrelevant. We will be able to obtain the same form of performance guarantees from the new vendor, without the need to send the coal to Germany.

The cost of shipping the coal to Germany was minuscule compared to the long term savings achieved from the technology change. The benefits of the change in technology more than compensate for the slight slip in the original project timeline.

The Audit

We are in the midst of a comprehensive audit by our outside, independent CPA which is scheduled for completion on or before February 28, 2013. There are a number of questions that cannot be answered until the audit is complete, including but not limited to precise information on stock ownership and management compensation packages. There is no point in speculating on answers at this time, when we will have audited information in the very near future.

All information that is supposed to be public will be made public, as soon as we verify the truthfulness and accuracy of the information by completing the audit.

As for those who hypothesize that the books should not be too complicated and wonder aloud why it is not already complete, consider the following statement from the SEC form 10Q filed on November 11, 2012:

When Mr. Fairweather left the Company offices, he took with him a number of company files, records and computers, making it difficult to accurately determine the state of the Company. Mr. Fairweather refused to return the corporate materials and his actions are currently the subject of a case entitled The State of New Jersey v. John Fairweather, a criminal action pending in the Municipal Court of Waterford Township, Complaint number S 2012 00165, in which Mr. Fairweather is charged with theft of company property.

The audit will be complete when our Certifying Accountant is confident that the reconstructed information for the years 2010 and 2011 is truthful and accurate.

If you have not already done so, please review information on the different OTC Market tiers (see www.otcmarkets.com/companies-advisors/overview). Remember that once we complete the audit and publish the data, the OTC Market compliance department will still need to review those filings and determine if a tier change is appropriate or if something more is needed. We want to do this right to maximize our ability to qualify for a tier change.

Sites & Permitting
We now have coupled a strong technology team with a capable financing team and are working diligently toward the ultimate goal of building coal-to-liquid facilities.
We are engineering a proprietary template for a facility capable of the daily conversion of 300 tons of Kentucky coal into approximately 525 barrels (22,050 gallons) of liquid fuel, consisting of approximately 50% diesel and 50% jet fuel. Once developed, that template will be applied to each site.

Our approach to permitting as described below was developed after extensive consultation with experts in the permitting process of industrial operations in Kentucky.

The sites in Muhlenberg County and Perry County will require separate, site specific permits.

Muhlenberg County has been supportive of our effort for years and, in recognition of that support, the Muhlenberg County site will be US Fuel’s CTL Facility #1.

We will apply the template to the Muhlenberg County site and submit a permitting package as quickly as possible. The expected timeline is on the website and will be updated as necessary, when necessary.

In general, about 30 days after the submission of a permitting package, the permitting agency identifies any areas that are deficient or need clarification. After obtaining that initial feedback on the Muhlenberg County site permitting package, we will

• make any necessary modifications to the Muhlenberg County permit application,

• apply those changes to the generic facility template,

• apply the modified template to the Perry County site to develop a Perry County permitting package, and

• submit the permitting package for the Perry County site.

While this will likely stagger the actual issuance of the two permits, since there is already a building at the Perry County site, we would expect completion of construction at the two sites to be close in time.

Of course, we need more than just an air permit, but expect other permits to be issued in due course during the processing of the air permit application.

For more information on permitting, please visit the project permitting page on the US Fuel website.

The air permit will determine the earliest date that construction can commence. Until the permitting package is under review, we cannot provide a date when construction will commence. Suffice to say that we intend to begin construction as soon as allowed by the permits obtained from the appropriate agencies.

Global
We are extremely satisfied with our funding partners, Global Private Funding and Empyrean West. The screening process for acceptance into the Global incubation program was quite rigorous. Both Global and Empyrean conducted considerable analysis of the US Fuel business plan and financials to validate that the facilities can be built and that jobs will be created.

Long term job creation is critical to the Empyrean EB-5 funding mechanism. In the December 10, 2012 press release displayed on the NASDAQ tower in Times Square, Empyrean publically stated it was confident that the US Fuel plan will result in a facility that creates jobs. For more information on either Global or Empyrean, please see the pages for each on the US Fuel website.

Early in the relationship with Global, we developed an action plan and set milestones for that plan. We have achieved a number of those milestones:

- Become current in SEC filings - Since August 22, 2012, US Fuel has filed 17 SEC Form 8ks and 2 SEC Form 10Qs. The 10Qs contain a detailed corporate history filing in gaps during the extended period of non-reporting.

- Remove the caveat emptor from the stock – completed September 20, 2012.

- Create and maintain a proper corporate website as a repository of public information regarding company operations – the new site went live in September 2012 and is regularly updated.

- Review available technology and secure agreements with qualified technology providers – completed in December 2012, resulting in arrangements where US Fuel will

o own a key portion of the CTL technology,
o have exclusivity in Kentucky for the other component and
o build facilities with an improved economic value.

- Secure agreements for the real property to be the location for CTL facilities – negotiations began in November 2012 and were completed for the first two sites in January 2013.

- Refine the generic economic model to create site specific budgets to support project financing – completed in January 2013.

The bottom line is that we are on track with the plan.

Global will be adding two members to the US Fuel board; the selection and timing of the announcement of those selections is in Global’s sole discretion and will be announced when Global is ready to announce.