Executive Summary / Key Takeaways

• SAFX, the entity resulting from the business combination of Focus Impact BH3 Acquisition Company (FOIM) and XCF Global Capital, Inc., is positioned as a pure-play participant in the rapidly growing Sustainable Aviation Fuel (SAF) and renewable fuels market.
• The company's flagship New Rise Reno facility was commissioned in February 2025, commenced production shortly thereafter, and began fuel deliveries in March 2025, currently undergoing an initial ramp-up phase.
• XCF Global has outlined an ambitious strategic plan targeting nearly $1 billion in investment by 2028 to develop a network of multiple SAF production facilities, including a pipeline of three new U.S. sites and an international expansion initiative in Australia.
• The company leverages a modular, patent-pending facility design intended to offer quantifiable operational advantages, including higher energy efficiency and faster processing speeds, aiming to support capital-efficient global scaling.
• While the pre-merger entity faced going concern doubts due to lack of operations and cash, the successful business combination provides a pathway to address liquidity needs, though execution risk on the significant expansion plans and competition from larger, more established players remain key considerations for investors.

Fueling the Future: SAFX's Entry into the Decarbonization Race

SAFX emerges from the recent business combination between Focus Impact BH3 Acquisition Company and XCF Global Capital, Inc., positioning itself squarely within the burgeoning market for Sustainable Aviation Fuel (SAF) and other renewable fuels. This sector is driven by increasing global mandates and industry commitments to decarbonize aviation and transportation, presenting a significant long-term growth opportunity. The company's core business, inherited from XCF Global, focuses on the development and operation of clean fuel production facilities aimed at reducing the global carbon footprint.

The strategic vision centers on building a distributed network of production sites to meet the escalating demand for low-carbon fuels. This involves both domestic expansion within the U.S. and pursuing international partnerships. The company's approach emphasizes capital efficiency and adaptability, crucial factors in a market requiring rapid scaling and regional supply chain integration.

Technological Foundation and Operational Edge

Central to SAFX's strategy is its modular, patent-pending facility design. This technology is intended to provide tangible operational benefits compared to more traditional or less specialized biofuel production methods. Analysis suggests this design can offer 15-20% higher energy efficiency and 20% faster processing speeds.

These technical advantages are projected to translate into a 10-15% reduction in operating costs per gallon. For investors, this technological edge represents a potential competitive moat, contributing to better margins and supporting faster growth as the company executes its expansion plans. The modular nature of the design is also key to the company's stated goal of rapid deployment and scalability across different geographic locations.

Navigating a Competitive Landscape

SAFX operates within a competitive renewable fuels market that includes both specialized SAF producers and larger, diversified agricultural and energy companies. Key publicly traded competitors include Gevo (GEVO), Neste (NESTE), and Archer Daniels Midland (ADM). SAFX currently holds an estimated 5-8% aggregate market share, reflecting its early stage of commercial operation post-merger.

Compared to peers like Neste, which boasts established scale and profitability (Q1 2025 net margins around 10%), SAFX is earlier in its lifecycle, prioritizing growth over immediate profitability. SAFX's projected 200% revenue growth in 2025 significantly outpaces Neste's 10-15% and ADM's 8% growth, highlighting its rapid trajectory from a lower base. While SAFX's estimated gross margins (around 25%) appear competitive with ADM (25%) and better than Gevo (20%), its net margins are currently negative (-150%), reflecting significant investment and ramp-up costs, in contrast to Neste's and ADM's positive margins. SAFX's technological efficiency gains (15-25% better energy efficiency) position it favorably against ADM's less specialized processes and Gevo's higher energy consumption. However, SAFX's higher debt level (debt-to-equity ~0.7) and negative cash flow present financial vulnerabilities compared to the stronger financial stability of Neste and ADM. Indirect competitors, such as electric aviation technologies, could also pose a long-term challenge by offering potentially lower operating costs, although they face limitations in range and application compared to SAF.

Recent Milestones and Financial Footprint

The financial statements for Focus Impact BH3 NewCo, Inc. for the period ended March 31, 2025, primarily reflect the activities of a shell company preparing for a business combination. For the three months ended March 31, 2025, the entity reported a net loss of $6,100, resulting from $16,100 in operating and formation costs partially offset by a $10,000 gain from the change in fair value of a non-redemption agreement liability. This contrasts with a net loss of $2,953 for the period from inception (March 6, 2024) to March 31, 2024, consisting solely of operating and formation costs.

As of March 31, 2025, NewCo had no cash and a working capital deficit of $1.28 million. These conditions raised substantial doubt about its ability to continue as a going concern, underscoring its dependence on the successful completion of the business combination.

The merger with XCF Global, which closed on June 6, 2025, was the stated plan to alleviate this going concern issue. Operationally, the key recent development is the commissioning of the New Rise Reno facility in February 2025, with production commencing that same month and deliveries starting in March 2025. Approximately $350 million has been invested in bringing this facility online. The facility is currently in its initial ramp-up phase, a critical period for optimizing production towards full capacity.

Outlook and Expansion Ambitions

Looking ahead, SAFX's outlook is defined by XCF Global's ambitious expansion strategy. The company plans to invest nearly $1 billion by 2028 to significantly increase its renewable fuel production capacity. This includes identifying a pipeline of three new production sites within the United States.

Beyond domestic growth, SAFX is actively pursuing international expansion, exemplified by a Memorandum of Understanding signed in June 2025 to explore launching a SAF and renewable diesel platform in Australia through a partnership. This global expansion framework is designed to leverage the company's modular facility design for rapid, capital-efficient deployment in key markets, aligning with the growing global demand for low-carbon aviation fuel.

Risks and Execution Challenges

Despite the promising market opportunity and strategic vision, SAFX faces significant risks and execution challenges. The successful ramp-up of the New Rise Reno facility is critical; delays or operational issues during this phase could impact initial revenue generation and profitability. The ambitious plan to invest nearly $1 billion by 2028 and build multiple new facilities introduces substantial execution risk, requiring significant capital, successful project management, and favorable market conditions.

While the business combination addressed the pre-merger going concern issue, the combined entity's ability to fund its aggressive expansion plans and sustain operations depends on future financing and operational performance. Competition from larger, more established players with greater financial resources and existing infrastructure poses a constant challenge. Furthermore, the business remains susceptible to broader economic uncertainties, volatility in financial markets, inflation, interest rate fluctuations, supply chain disruptions, and geopolitical instability, many of which are beyond the company's direct control.

Conclusion

SAFX represents a compelling, albeit early-stage, opportunity in the high-growth Sustainable Aviation Fuel market. The company has successfully transitioned from a SPAC shell to an operational entity with the commissioning of its flagship Reno facility and has laid out a clear, ambitious plan for significant expansion underpinned by its proprietary modular technology. This technology offers quantifiable advantages in efficiency and cost, providing a potential competitive edge against rivals.

However, the investment thesis hinges critically on the successful execution of its aggressive expansion strategy and the ability to secure necessary funding while navigating a competitive landscape dominated by larger players. Investors should closely monitor the ramp-up progress at the Reno facility, milestones achieved in developing new sites, the realization of the promised technological efficiencies, and the company's overall financial health as it transitions from development to scaled production. The path ahead is one of significant opportunity, balanced by the inherent challenges of rapid growth and execution in a capital-intensive industry.