BLUE BIOFUELS INC

Previous wording

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

Current wording

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

Previous wording

This quarterly report contains forward-looking statements and information relating to the Company that are based on the beliefs of its management as well as assumptions made by, and information currently available to, its management. When used in this report, the words “believe,” “anticipate,” “expect,” “estimate,” “intend”, “plan” and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. These statements reflect management’s current view of the Company concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: a general economic downturn; a downturn in the securities markets; federal or state laws or regulations having an adverse effect on proposed transactions that the Company desires to effect; Securities and Exchange Commission regulations which affect trading in the securities of “penny stocks”; and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected. The accompanying information contained in this registration statement, including, without limitation, the information set forth under the heading “Management’s Discussion and Analysis and Plan of Operation — Risk Factors” identifies important additional factors that could materially adversely affect actual results and performance. You are urged to carefully consider these factors. All forward-looking statements attributable to the Company are expressly qualified in their entirety by the foregoing cautionary statement.

Current wording

This quarterly report contains forward-looking statements and information relating to the Company that are based on the beliefs of its management as well as assumptions made by, and information currently available to, its management. When used in this report, the words “believe,” “anticipate,” “expect,” “estimate,” “intend”, “plan” and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. These statements reflect management’s current view of the Company concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: a general economic downturn; a downturn in the securities markets; federal or state laws or regulations having an adverse effect on proposed transactions that the Company desires to effect; Securities and Exchange Commission regulations which affect trading in the securities of “penny stocks”; and other risks and uncertainties. Some of those risks and uncertainties include the risk factors set forth in this report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected. The accompanying information contained in this financial statement identifies important additional factors that could materially adversely affect actual results and performance. You are urged to carefully consider these factors. All forward-looking statements attributable to the Company are expressly qualified in their entirety by the foregoing cautionary statement.

Previous wording

In early 2018, the Company’s chief executive officer (“CEO”) Ben Slager invented a new reactor technology with a higher yield and a continuous throughput in the Cellulose-to-Sugar process, or CTS, and the Company filed a process patent application for this technology. Mr. Slager has since further developed the system with the technical staff of the Company. The CTS patent was awarded in 2021 in the United States (U.S. Patent No. 10,994,255) and has subsequently been granted in Japan and El Salvador. The Company also filed this patent in other major jurisdictions of the world including the European Patent Organization, Australia, Brazil, China, the African Regional Intellectual Property Organization, and the Russian Federation. The patent applications are currently pending in all of these international jurisdictions. In addition to this patent, the Company has received one additional patent in the United States (U.S. Patent No. 11,484,858B2), for which it has also applied in all the above-mentioned jurisdictions. Further, the company has filed for 6 other patents in the United States which are currently pending.

Current wording

In early 2018, the Company’s chief executive officer (“CEO”) Ben Slager invented a new reactor technology with a higher yield and a continuous throughput in the Cellulose-to-Sugar process, or CTS, and the Company filed a process patent application for this technology. Mr. Slager has since further developed the system with the technical staff of the Company. The CTS patent was awarded in 2021 in the United States (U.S. Patent No. 10,994,255) and has subsequently been granted in Japan, Canada and El Salvador. The Company also filed this patent in other major jurisdictions of the world including the European Patent Organization, Australia, Brazil, China, the African Regional Intellectual Property Organization, and the Russian Federation. The patent applications are currently pending in all of these international jurisdictions. In addition to this patent, the Company has received one additional patent in the United States (U.S. Patent No. 11,484,858B2), for which it has also applied in all the above-mentioned jurisdictions. Further, the company has filed for 6 other patents in the United States which are currently pending.

Previous wording

In addition, the Company has licensed the Vertimass Process to convert ethanol into sustainable aviation fuel (SAF) and other renewable biofuels including bio-gasoline. The license agreement with Vertimass is the subject to a confidentiality agreement between the parties.

Current wording

In addition, the Company has licensed the patented Vertimass Process that is a single-step process that converts ethanol into sustainable aviation fuel (SAF) and other renewable biofuels including bio-gasoline. The license agreement with Vertimass is the subject to a confidentiality agreement between the parties.

Previous wording

In January 2024, the Company formed a 50-50 joint venture partnership with Vertimass called VertiBlue Fuels, LLC, that has the mission to build an ethanol-to-SAF facility in Florida with the initial goal to produce around 10 million gallons of Sustainable Aviation Fuel (SAF), and then expand SAF production to approximately 70 million gallon per year. VertiBlue Fuels plans to initially convert sugarcane ethanol, and then, when the Company’s CTS technology is fully commercialized, to build commercial CTS and ethanol facilities on the front-end to produce cellulosic SAF and generate the large D7 RIN and other government credits. Commencing commercial production will require project financing.

Current wording

In January 2024, the Company formed a 50-50 joint venture partnership with Vertimass called VertiBlue Fuels, LLC, that has the mission to build an ethanol-to-SAF facility in Florida with the initial goal to produce around 10 million gallons of Sustainable Aviation Fuel (SAF), and then expand SAF production to approximately 70 million gallon per year. VertiBlue Fuels plans to initially convert sugarcane ethanol, and then, when the Company’s CTS technology is fully commercialized, to build commercial CTS and ethanol facilities on the front-end to produce cellulosic SAF and generate the large D7 RIN and other government credits. The joint venture agreement requires that each party contribute $50,000 which has not yet been contributed by either party. In any event, commencing commercial production will require project financing.

Previous wording

The Energy Policy Act of 2005, which included the Renewable Fuel Standard Program enforced by the US Environmental Protection Agency (EPA), mandates a certain amount of renewable fuel be blended into the transportation fuel used by all vehicles in the country. This Program provides monetary incentives to companies that produce renewable transportation fuel, and establishes Renewable Identification Numbers (RINs) or credits for each gallon of renewable transportation fuel produced in the United States, and breaks down those fuels into different D-codes depending on the source of the renewable fuel. D3 is the code for renewable ethanol that comes from cellulosic materials. The EPA’s final D3 RIN volume mandates for cellulosic biofuel include 840 million gallons for 2023, 1.09 billion gallons for 2024, and 1.38 billion gallons for 2025 (the D3 mandate). This mandate has increased every year and is statutorily mandated to increase in the future and become a larger portion of the full renewable fuels mandate, if and when cellulosic biofuels can be produced profitably in larger and larger quantities. The RFS mandate for 2024 calls for 21.54 billion gallons of total renewable fuel, 15 billion from conventional biofuels (corn ethanol) and 6.54 billion from advanced biofuels, including cellulosic biofuels. The “blend wall” (or upper limit to the amount of ethanol that can be blended into U.S. gasoline and automobile performance and comply with the Clean Air Act) of limiting ethanol content in gasoline to 10%, limits the total amount of ethanol consumed in the United States. Recent proposals have make 15% blending available year around in some states. The value of the D3 RIN fluctuates, but as of this filing, it is approximately $3.27 per gallon of ethanol. For comparison, the D6 RIN for corn ethanol is $0.44. To profit from these incentives, the Company plans to apply for these D3 RIN credits as it brings its first plant into commercial operation.

Current wording

The Energy Policy Act of 2005, which included the Renewable Fuel Standard Program enforced by the US Environmental Protection Agency (EPA), mandates a certain amount of renewable fuel be blended into the transportation fuel used by all vehicles in the country. This Program provides monetary incentives to companies that produce renewable transportation fuel, and establishes Renewable Identification Numbers (RINs) or credits for each gallon of renewable transportation fuel produced in the United States, and breaks down those fuels into different D-codes depending on the source of the renewable fuel. D3 is the code for renewable ethanol that comes from cellulosic materials. The EPA’s final D3 RIN volume mandates for cellulosic biofuel include 840 million gallons for 2023, 1.09 billion gallons for 2024, and 1.38 billion gallons for 2025 (the D3 mandate). This mandate has increased every year and is statutorily mandated to increase in the future and become a larger portion of the full renewable fuels mandate, if and when cellulosic biofuels can be produced profitably in larger and larger quantities. The RFS mandate for 2024 calls for 21.54 billion gallons of total renewable fuel, 15 billion from conventional biofuels (corn ethanol) and 6.54 billion from advanced biofuels, including cellulosic biofuels. The “blend wall” (or upper limit to the amount of ethanol that can be blended into U.S. gasoline and automobile performance and comply with the Clean Air Act) of limiting ethanol content in gasoline to 10%, limits the total amount of ethanol consumed in the United States. Recent proposals have make 15% blending available year around in some states. The value of the D3 RIN fluctuates, but as of this filing, it is approximately $3.40 per gallon of ethanol. For comparison, the D6 RIN for corn ethanol is $0.67. To profit from these incentives, the Company plans to apply for these D3 RIN credits as it brings its first plant into commercial operation.

Previous wording

From January 1, 2024, through the date of filing, the Company issued an aggregate of 52,500 shares of its common stock for services valued at $4,200.

Current wording

From January 1, 2024, through the date of filing, the Company issued an aggregate of 114,545 shares of its common stock for services valued at $10,094.

Previous wording

From January 1, 2024, through the date of filing, the Company issued an aggregate of 87,500 warrants for services valued at $5,494.

Current wording

From January 1, 2024, through the date of filing, the Company issued an aggregate of 127,500 warrants for services valued at $8,588 and 150,000 warrants for interest valued at $9,949.

Previous wording

From January 1, 2024, through the date of filing, 483,333 warrants expired or were cancelled.

Current wording

From January 1, 2024, through the date of filing, 1,586,938 warrants expired or were cancelled.

Previous wording

The Company has incurred losses since inception, has a working capital deficiency, and may be unable to raise further capital. As of March 31, 2024, the Company had a working capital deficit of $1,791,029 and had incurred accumulated losses of $56,456,712 since its inception. The Company expects to incur significant additional losses in connection with its continued start-up activities. As a result, there is substantial doubt about the Company’s ability to continue as a going concern based upon recurring operating losses and its need to obtain additional financing to sustain operations. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities when they become due and to generate sufficient revenues from its operations to pay its operating expenses.

Current wording

The Company has incurred losses since inception, has a working capital deficiency, and may be unable to raise further capital. As of June 30, 2024, the Company had a working capital deficit of $1,549,579 and had incurred accumulated losses of $57,332,475 since its inception. The Company expects to incur significant additional losses in connection with its continued start-up activities. As a result, there is substantial doubt about the Company’s ability to continue as a going concern based upon recurring operating losses and its need to obtain additional financing to sustain operations. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities when they become due and to generate sufficient revenues from its operations to pay its operating expenses.

Previous wording

Comparison of the three and month period ended March 31, 2024 (unaudited) to March 31, 2023

Current wording

Comparison of the three and six month period ended June 30, 2024 to June 30, 2023

Previous wording

For the three and months ended March 31, 2024, the Company recognized $0 in revenue as opposed to $0 in 2023.

Current wording

For the three and six months ended June 30, 2024, the Company recognized $0 in revenue as opposed to $0 in 2023.

Previous wording

For the three months ended March 31, 2024, the Company’s general and administrative expenses decreased by $73,864 to $295,982 from $369,845 in 2023. This decrease is primarily the result of a $84,698 equity based compensation expense in 2023 versus $16,940 in 2024.

Current wording

For the three months ended June 30, 2024, the Company’s general and administrative expenses decreased by $105,569 to $249,755 from $355,324 in 2023. This decrease is primarily the result of a $28,781 stock-based compensation expense in 2024 versus $84,684 in 2023, and professional fees declining to $17,154 in 2024 from $74,244 in 2023.

Previous wording

Interest expense increased in the quarter ended March 31, 2024 by $33,942 to $43,255 from $9,314 in 2023.

Current wording

Interest expense decreased in the quarter ended June 30, 2024 by $28,482 to $7,679 from $36,160 in 2023. Interest expense increased in the six-month period ended June 30, 2024 by $5,459 to $50,934 from $45,474.

Previous wording

Research and development (R&D) costs for the quarter ended March 31, 2024, were $280,695, a decrease of $403,869 from $684,562 in 2023. The decrease in R&D expenses is primarily the result of equity-based compensation of $306,599 in 2023.

Current wording

Research and development (R&D) costs for the quarter ended June 30, 2024, were $291,389, a decrease of $471,325 from $762,714 in 2023. The decrease in R&D expenses is primarily the result of bonuses of $0 in 2024 versus $261,655 in 2023, and equity-based compensation of $985 in 2024 versus $161,048 in 2023.

Previous wording

As of March 31, 2024, the Company had $24,319 in cash, and total stockholders’ equity on March 31, 2024, was negative $4,219,012. As of December 31, 2023, the Company had $76,758 in cash, and total stockholders’ equity at December 31, 2023, was negative $3,561,082. Total debt, including advances, accounts payable and other notes payable at March 31, 2024, together with interest payable thereon and contingent liabilities, was $5,196,231 an increase of $604,930 from December 31, 2023, where it stood at $4,591,301. This increase is primarily attributable to new convertible notes due and deferred wages to related parties. $1,820,630 of the remaining debt has been renegotiated to be payable out of future revenue and $917,502 out of future profits and otherwise does not come due.

Current wording

As of June 30, 2024, the Company had $407,806 in cash, and total stockholders’ equity on June 30, 2024, was negative $4,752,553. As of December 31, 2023, the Company had $41,008 in cash, and total stockholders’ deficit at December 31, 2023, was $3,561,082. Total debt, including convertible notes, accounts payable and other notes payable at June 30, 2024, together with interest payable thereon and legacy liabilities, was $6,058,006 an increase of $1,466,705 from December 31, 2023, where it stood at $4,591,301. This increase is primarily attributable to new convertible notes due and deferred wages to related parties. $2,738,132 of the remaining debt has been renegotiated to be payable out of future revenue or out of future profits and otherwise does not come due.

Previous wording

During the three months ended March 31, 2024, the Company’s net cash used in operating activities decreased by $355,255 to $255,864 from $609,119 in the three months ending March 31, 2023. This is primarily attributed to the increase in accounts payable of $328,184 in 2024 versus $19,559 in 2023.

Current wording

During the six months ended June 30, 2024, the Company’s net cash used in operating activities decreased by $637,210 to $543,377 from $1,180,587 in the six months ending June 30, 2023. This is primarily attributed to the increase in accounts payable and accrued liabilities of $237,412 to $543,377 in 2024 versus $308,070 in 2023 as well as a reduction in overall expenses attributed to the completion of the pilot plant in the first half of 2023 versus its testing in 2024.

Previous wording

During the three months ended March 31, 2024, the Company’s investing activities used $20,824 in cash, as compared to $294,659 in the first three months of 2023. This can be primarily attributed to capitalizing $282,038 used to purchase machinery and equipment for a pilot plant in 2023, as compared to $0 in 2024.

Current wording

During the six months ended June 30, 2024, the Company’s investing activities used $19,825 in cash, as compared to $294,659 in the first six months of 2023. This can be primarily attributed to capitalizing $282,038 used to purchase machinery and equipment for a pilot plant in 2023, as compared to $0 in 2024.

Previous wording

During the three months ended March 31, 2024, the Company generated an aggregate of $260,000 through its financing activities versus $855,000 in the three months ended March 31, 2023, which is a decrease of $595,000. This decrease from the prior year can primarily be attributed to net proceeds of $582,750 for the issuance of common stock in 2023.

Current wording

During the six months ended June 30, 2024, the Company generated an aggregate of $930,000 through its financing activities versus $1,325,022 in the six months ended June 30, 2023, which is a decrease of $395,022. This decrease from the prior year can primarily be attributed to net proceeds of $677,772 for the issuance of common stock in 2023 and $97,250 from the exercise of warrants and options, versus $0 for both in 2024, partially offset by an increase of $380,000 in the issuance of Convertible Notes in 2024 to $930,000 versus $550,000 in 2023.

Previous wording

As of the date of this filing, in 2024 the Company has raised $330,000 through the issuance of convertible notes and $0 through the issuance of shares and the exercise of warrants. The Company previously raised $16,963,625 in shares and $1,970,916 through converted notes and $1,180,000 in debt or convertible notes. However, there is no guarantee that the company will be able to raise any additional capital on terms acceptable to the Company.

Current wording

As of the date of this filing, in 2024 the Company has raised $930,000 through the issuance of convertible notes and $0 through the issuance of shares and the exercise of warrants. The Company previously raised $16,963,625 in shares and $1,970,916 through converted notes and $700,000 in debt or convertible notes since inception. However, there is no guarantee that the company will be able to raise any additional capital on terms acceptable to the Company.

Previous wording

There were 302,803,463 shares of common stock issued and outstanding as of March 31, 2024.

Current wording

There were 302,865,508 shares of common stock issued and outstanding as of June 30, 2024.