BLUE BIOFUELS INC

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, 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.

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 3 other patents in the United States which are currently pending.

Previous wording

In 2023, the Company completed the build-out of a pilot plant based on a modified Komarek machine and is in the process of further testing and optimizing the plant. The Company believes that it can optimize the pre and post processing elements at this pilot scale plant to finalize design and operational parameters to provide operating cost estimates of a full-scale commercial volume system. Due to its mechanical nature and modularity, we anticipate that one plant would have multiple modular CTS systems.

Current wording

In 2023, the Company completed the build-out of a pilot plant based on a modified Komarek machine and is in the process of further testing and optimizing the plant. In September 2024, the Company received a $1.15 million grant from the Department of Energy to complete the commercialization of its CTS process. The Company believes that it can optimize the pre and post processing elements at this pilot scale plant to finalize design and operational parameters to provide operating cost estimates of a full-scale commercial volume system. Due to its mechanical nature and modularity, we anticipate that one plant would have multiple modular CTS systems.

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. 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.

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. 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 $3.40 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.

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 $3.17 per gallon of ethanol. For comparison, the D6 RIN for corn ethanol is $0.69. 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 127,500 warrants for services valued at $8,588 and 150,000 warrants for interest valued at $9,949.

Current wording

From January 1, 2024, through the date of filing, the Company issued an aggregate of 177,500 warrants for services valued at $11,844 and 150,000 warrants for interest with a fair value of $9,947.

Previous wording

From January 1, 2024, through the date of filing, 2,925,000 previously issued options vested. During the six months ended June 30, 2024, the Company recognized additional stock-based compensation of $146,509 in connection with modification of the exercise price of 7,475,000 vested options.

Current wording

From January 1, 2024, through the date of filing, 4,025,000 previously issued options vested. During the nine months ended September 30, 2024, the Company recognized additional stock-based compensation of $45,527 in connection with modification of the exercise price of 7,475,000 vested options.

Previous wording

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

Current wording

From January 1, 2024, through the date of filing, 3,397,981 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 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.

Current wording

The Company has incurred losses since inception, has a working capital deficiency, and may be unable to raise further capital. As of September 30, 2024, the Company had a working capital deficit of $1,743,047 and had incurred accumulated losses of $55,466,394 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 six month period ended June 30, 2024 to June 30, 2023

Current wording

Comparison of the three and nine month period ended September 30, 2024 to September 30, 2023

Previous wording

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

Current wording

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

Previous 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.

Current wording

For the three months ended September 30, 2024, the Company’s general and administrative expenses increased by $17,821 to $236,981 from $219,160 in 2023. This increase is primarily the result of $42,552 in accounting expenses in 2024 versus $5,500 in 2023.

Previous wording

For the six months ended June 30, 2024, the Company’s general and administrative expenses decreased by $179,433 to $545,736 from $725,169 in 2023. This decrease is primarily the result of $45,721 stock-based compensation expense in 2024 versus $169,382 in 2023, and professional fees declining to $78,094 in 2024 from $129,771 in 2023.

Current wording

For the nine months ended September 30, 2024, the Company’s general and administrative expenses decreased by $162,235 to $781,718 from $943,953 in 2023. This decrease is primarily the result of $53,262 in stock-based compensation expense in 2024 versus $169,382 in 2023, and advertising and promotion declining to $0 in 2024 from $46,579 in 2023.

Previous 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.

Current wording

Interest expense decreased in the quarter ended September 30, 2024 by $22,026 to $3,635 from $25,661 in 2023. Interest expense decreased in the nine-month period ended September 30, 2024 by $16,574 to $54,569 from $71,143.

Previous 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.

Current wording

Research and development (R&D) costs for the quarter ended September 30, 2024, were $410,805, an increase of $117,131 from $293,674 in 2023. The increase in R&D expenses is primarily the result of equity-based compensation of $127,446 in 2024 versus $0 in 2023.

Previous wording

Research and development (R&D) costs for the six months ended June 30, 2024 were $899,025, a decrease of $548,251 from $1,447,276 in 2023. The decrease in R&D expenses is primarily the result of a decrease in bonuses to $0 from $276,930 in 2023, and equity-based compensation of $263,293 from $467,646 in 2023.

Current wording

Research and development (R&D) costs for the nine months ended September 30, 2024 were $1,309,829, a decrease of $431,489 from $1,741,318 in 2023. The decrease in R&D expenses is primarily the result of a decrease in bonuses to $0 from $276,930 in 2023, and equity-based compensation of $390,739 from $467,646 in 2023.

Previous 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.

Current wording

As of September 30, 2024, the Company had $149,366 in cash and cash equivalents, and total stockholders’ equity on September 30, 2024, was negative $2,511,937. As of December 31, 2023, the Company had $41,008 in cash and cash equivalents, and total stockholders’ deficit at December 31, 2023, was $3,561,082. Total debt, including convertible notes, accounts payable and other notes payable at September 30, 2024, together with interest payable thereon and legacy liabilities, was $4,001,000 a decrease of $590,301 from December 31, 2023, where it stood at $4,591,301. This decrease is primarily attributable to the cancellation of $2,417,502 in legacy debt related to the Company’s restructuring, offset by an increased in deferred compensation of $718,625.

Previous 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.

Current wording

During the nine months ended September 30, 2024, the Company’s investing activities used $29,230 in cash, as compared to $307,782 in the first nine 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 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.

Current wording

During the nine months ended September 30, 2024, the Company generated an aggregate of $930,000 through its financing activities versus $1,675,022 in the nine months ended September 30, 2023, which is a decrease of $745,022. This decrease from the prior year can primarily be attributed to net proceeds of $1,002,772 for the issuance of common stock in 2023 and $97,250 from the exercise of warrants and options, versus $0 for both in 2024.

Previous wording

As of June 30, 2024, shareholders’ deficit was $4,752,553.

Current wording

As of September 30, 2024, shareholders’ deficit was $2,511,937.

Previous wording

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

Current wording

There were 305,678,008 shares of common stock issued and outstanding as of September 30, 2024.