BLUE BIOFUELS, INC.

Previous wording

In 2022, the Company partnered with K.R. Komarek to build its CTS machines going forward. Komarek is an industry leading manufacturing company that builds briquetting machines and compaction/granulation systems with throughput capacities up to 50 tons per hour. 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 2022, the Company partnered with K.R. Komarek to build its CTS machines going forward. Komarek is an industry leading manufacturing company that builds briquetting machines and compaction/granulation systems with throughput capacities up to 50 tons per hour. 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 upscaling and optimizing 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

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. (D6 is for corn ethanol). The value of the D3 RIN fluctuates, but as of this filing, it is approximately $3.06 per gallon of ethanol. 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. (D6 is for corn ethanol). The value of the D3 RIN fluctuates, but as of this filing, it is approximately $2.48 per gallon of ethanol. 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

A Low Carbon Fuel Standard Credit (LCFS) is offered by various states (primarily California) for any amount of reduced CO2 in the production lifecycle of transportation fuels as compared to the amount of CO2 emitted in the production lifecycle of fossil fuels. The production lifecycle includes transportation costs to the point of use. California is currently offering around $66 per metric ton of CO2 reduction. When it is closer to commercial production, the Company plans to analyze the cost effectiveness of applying for these LCFS credits to determine in which state it could earn the most credits.

Current wording

A Low Carbon Fuel Standard Credit (LCFS) is offered by various states (primarily California) for any amount of reduced CO2 in the production lifecycle of transportation fuels as compared to the amount of CO2 emitted in the production lifecycle of fossil fuels. The production lifecycle includes transportation costs to the point of use. California is currently offering around $57 per metric ton of CO2 reduction. When it is closer to commercial production, the Company plans to analyze the cost effectiveness of applying for these LCFS credits to determine in which state it could earn the most credits.

Previous wording

For the year ended December 31, 2023, the Company’s general and administrative expenses decreased by $202,170 to $1,339,789 from $1,541,959 in 2022. This decrease is primarily due to the vesting and expensing of options in 2022 valued at $526,636, as compared to $169,382 non-cash stock compensation in 2023.

Current wording

For the year ended December 31, 2024, the Company’s general and administrative expenses increased by $386,317 to $1,726,106 from $1,339,789 in 2023. This increase is primarily due to higher stock-based compensation recognized in 2024 which was $535,395 compared to $169,382 in 2023.

Previous wording

Interest expense increased in the year ended December 31, 2023 by $68,371 to $97,778 from $29,407 in 2022.

Current wording

Interest expense decreased in the year ended December 31, 2024 by $33,175 to $64,604 from $97,779 in 2023.

Previous wording

For the year ended December 31, 2023, the Company received grants valued at $233,5000 versus $13,000 in 2022. The grant money comes from the Department of Energy SBIR Phase I grant.

Current wording

For the year ended December 31, 2024, the Company was awarded a grant valued at $1,150,000 , of which $285,000 was recognized as grant income in 2024,versus $233,500 in 2023. The grant money in 2024 comes from the Department of Energy SBIR Phase II grant, and in 2023 comes from the Department of Energy SBIR Phase I grant.

Previous wording

The Company expenses all research and development costs as incurred. For the years ended December 31, 2023, and 2022, the amounts charged to research and development expenses were $1,849,967 and $2,350,218, respectively. The decrease is largely due to the vesting of options in 2022 valued at $1,038,953, versus $467,646 in 2023.

Current wording

The Company expenses all research and development costs as incurred. For the years ended December 31, 2024, and 2023, the amounts charged to research and development expenses were $2,329,413 and $1,849,967, respectively. The increase is largely due to the vesting and expensing of options in 2024 valued at $1,114,160, versus $467,646 in 2023.

Previous wording

During the fiscal year ended December 31, 2023, the Company’s operating expenses decreased $974,861 to $2,957,415 from $3,932,276 in 2022. This decrease can primarily be attributed to equity-based compensation of $1,565,589 in 2022 due to the vesting of options.

Current wording

During the fiscal year ended December 31, 2024, the Company’s operating expenses increased $865,964 to $4,056,879 from $3,190,915 in 2023. This increase can primarily be attributed to stock-based compensation of $1,674,710 in 2024 due to the vesting and expensing of options versus $728,911 in 2023.

Previous wording

During the fiscal year ended December 31, 2023, the Company’s investing activities used $320,504 in cash. This can be attributed to $287,829 used to purchase machinery and equipment and $32,675 in patent costs. These are to be compared to $205,520 cash used in 2022 with $138,170 used to purchase machinery and equipment, and $67,350 in patent costs.

Current wording

During the fiscal year ended December 31, 2024, the Company’s investing activities used $115,791 in cash versus $320,505 in 2023. This decrease can be attributed to $287,828 used to purchase machinery and equipment and $32,677 in patent costs in 2023 versus $71,138 and $44,653 respectively in 2024.

Previous wording

During the fiscal year ended December 31, 2023, the Company generated an aggregate of $1,750,023 through its financing activities, which is an increase of $461,123 from $1,288,900 raised during fiscal year ended December 31, 2022. This increase from the prior year can be attributed to $700,000 net proceeds from issuance of convertible notes as compared to zero in 2022, and $1,002,772 raised in private placements as compared to $1,168,000 in 2022, and $97,251 received from the exercise of warrants as compared to $120,900 in 2022, and a $50,000 debt repayment in 2023 versus $0 in 2022.

Current wording

During the fiscal year ended December 31, 2024, the Company generated an aggregate of $1,127,000 through its financing activities which is a decrease of $623,024 from fiscal year 2023 where it was $1,750,024. This decrease from the prior year can be attributed to $197,000 net proceeds raised in private placements as compared to $1,002,773 in 2023, offset by the issuance of $930,000 in convertible notes in 2024 versus $700,000 in 2023. There was also $97,251 received from the exercise of options and warrants in 2023 as compared to $0 in 2024, and a $50,000 debt repayment in 2023 versus $0 in 2024.

Previous wording

At this time, the Company has limited liquidity and capital resources. To continue funding its operations, the Company will need to generate revenue or obtain additional financing for current and future operations. The Company anticipates needing around $25 million to pay for its share of the Vertiblue Fuels joint venture and start commercial production of Sustainable Aviation Fuel. The Company anticipates generating revenue from this joint venture 18-24 months from financing. There is no guarantee that we will achieve all of the additional funding that is needed.

Current wording

At this time, the Company has limited liquidity and capital resources. To continue funding its operations, the Company will need to generate revenue or obtain additional financing for current and future operations. The Company anticipates needing between $15 million and $100 million to pay for its share of the VertiBlue Fuels joint venture and start commercial production of Sustainable Aviation Fuel. The Company anticipates generating revenue from this joint venture 18-24 months from financing. There is no guarantee that we will achieve all of the additional funding that is needed.

Previous wording

As of the date of filing, the Company has raised $100,000 through the issuance of convertible notes in 2024, $1,800,023 through a private placement, the exercise of warrants and the issuance of convertible notes in 2023, $1,288,900 in 2022, through the issuance of common stock and the exercise of warrants and options, in addition to $14,826,952 raised through the end of 2021 through its private placement offerings, and in addition to capital raised through 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 filing, the Company has raised $930,000 through the issuance of convertible notes in 2024, and $197,000 from the issuance of common stock. The Company also was awarded a grant for $1,150,000 from the Department of Energy, $285,000 of which was received in 2024. The Company raised $1,800,024 through a private placement, the exercise of warrants and options and the issuance of convertible notes in 2023, in addition to $16,115,852 raised through the end of 2022 through its private placement offerings, and in addition to capital raised through 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.

Previous wording

The Company has incurred losses since inception, and it may be unable to raise further capital. At December 31, 2023, the Company had a working capital deficit of $1,426,411 and had incurred accumulated losses of $55,836,780 since its inception. The Company expects to incur significant additional losses in connection with its continued start-up activities. As disclosed in Note 2 to the financial statements, there is substantial doubt as to 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, and it may be unable to raise further capital. At December 31, 2024, the Company had a working capital deficit of $2,130,829 and had incurred accumulated losses of $57,255,761 since its inception. The Company expects to incur significant additional losses in connection with its continued start-up activities. As disclosed in Note 2 to the financial statements, there is substantial doubt as to 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

As of December 31, 2023, shareholders’ equity was negative $(3,561,082).

Current wording

As of December 31, 2024, shareholders’ equity was negative $2,845,903.

Previous wording

There were 302,750,963 shares of common stock issued and outstanding as of December 31, 2023.

Current wording

There were 307,960,508 shares of common stock issued and outstanding as of December 31, 2024.

Previous wording

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates presented and reported amounts of revenues and expenses during the reporting periods presented. Significant estimates inherent in the preparation of the accompanying Consolidated Financial Statements include estimates of impairment assessment of identifiable intangible assets and valuation allowance for deferred tax assets. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates.

Current wording

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates presented and reported amounts of revenues and expenses during the reporting periods presented. Significant estimates inherent in the preparation of the accompanying Financial Statements include estimates of impairment assessment of identifiable intangible assets, valuation allowance for deferred tax assets, and stock based compensation. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates.

Previous wording

The Company recognizes the cost of all share-based payments under the relevant authoritative accounting guidance. Share-based payments include any remuneration paid by the Company in shares of the Company’s common stock or financial instruments that grant the recipient the right to acquire shares of the Company’s common stock. For share-based payments to employees, which consist only of awards made under the stock option plan described below, the Company accounts for the payments in accordance with the provisions of ASC Topic 718, “Stock Compensation” (formerly referred to as SFAS No. 123(R)). Share-based payments to consultants, service providers and other non-employees are accounted for under in accordance with ASC Topic 718, ASC Topic 505, “Equity Payments to Non-Employees” or other applicable authoritative guidance.

Current wording

The Company recognizes the cost of all share-based payments under the relevant authoritative accounting guidance. Share-based payments include any remuneration paid by the Company in shares of the Company’s common stock or financial instruments that grant the recipient the right to acquire shares of the Company’s common stock. For share-based payments to employees, which consist only of awards made under the stock option plan described below, the Company accounts for the payments in accordance with the provisions of ASC Topic 718, “Stock Compensation”. We account for all share-based payments and awards under the fair value-based method. We account for the granting of stock options and warrants using the fair value method whereby all awards will be recorded at fair value on the date of the grant. The fair value of all stock options and warrants is expensed over their vesting period with a corresponding increase to additional paid-in capital. The fair value of stock options and warrants is determined using a Black-Scholes valuation model. Option pricing models require the input of subjective assumptions including the length of time employees will retain their vested stock options and warrants before exercising them, expected share price volatility, and interest rate. The fair value of share-based awards is based on the valuation of the common stock on the date of grant. The fair value of time-based awards that are ultimately expected to vest is recognized as an expense on a straight-line basis over the requisite service period. The fair value of performance-based awards is adjusted for the probability of achieving the performance conditions and is recognized on a straight-line basis over the term of the award agreement. Changes in the input assumptions for options and warrants can materially affect the fair value estimate and the Company’s net loss.

Previous wording

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, the Company compares the carrying amount of the asset group to future undiscounted net cash flows, excluding interest costs, expected to be generated by the asset group and their ultimate disposition. If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. The Company monitors its investment for impairment at least annually and makes appropriate reductions in the carrying value if it determines that an impairment charge is required based on qualitative and quantitative information.

Current wording

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, the Company compares the carrying amount of the asset group to future undiscounted net cash flows, excluding interest costs, expected to be generated by the asset group and their ultimate disposition. If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. The Company monitors its investment in property, equipment, and patents and trademarks for impairment at least annually and makes appropriate reductions in the carrying value if it determines that an impairment charge is required based on qualitative and quantitative information.