BLUE BIOFUELS, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 –ORGANIZATION

Blue Biofuels, Inc (the “Company”) is a technology company focused on emerging technologies in the renewable energy, biofuels, and lignin technologies sectors.

NOTE 2 –GOING CONCERN

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any significant revenue since inception and has incurred losses since inception. As of December 31, 2025, the Company has incurred accumulated losses of $60,130,362. The Company expects to incur significant additional losses and liabilities in connection with its start-up and commercialization activities. These factors, among others, raise substantial doubt as to the Company’s ability to continue as a going concern. 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. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments related to the recoverability and classifications of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty. There are no assurances that the Company will continue as a going concern.

Management believes that the Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities, and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, or sell additional shares of stock or borrow additional funds. The Company’s inability to obtain additional cash could have a material adverse effect on its financial position, results of operations, and its ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements of the Company were prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”).

Principles of Consolidation

The accompanying financial statements include the accounts of the Company and its subsidiaries, after elimination of intercompany accounts and transactions. Investments in business entities in which the Company lacks control but has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. In 2024 and 2025, the Company did not have any wholly owned subsidiaries, and so the financial statements include the results of the parent company only.

Use of Estimates

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 useful lives associated with assets, impairment assessment of long-lived assets, valuation allowance of deferred taxes, incremental borrowing rates and valuation of stock-based compensation. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates.

Cash and Cash Equivalents

All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents.

Stock Compensation

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.

Stock-based Compensation

The Company uses its common stock for various forms of share based compensation arrangements entered into with directors, officers, employees and consultants. Share based compensation arrangements are accounted for at fair value on the date of grant. For awards with graded vesting, the fair value of each tranche is measured separately and recognized over its respective vesting period. The total amount recognized as expense is adjusted to reflect the number of share options which ultimately vest. The Company recognizes forfeitures as they occur.

The fair value of common stock and share-based awards that do not contain market conditions 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.

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 before exercising them, expected share price volatility, and interest rate. The risk-free interest rate is based on the U.S. Treasury Daily Yield Curve Rate with an equivalent term in effect as of the date of grant. The expected option and warrant lives and volatility assumptions are based on historical data of the Company’s closing day market price per share. Changes in the input assumptions can materially affect the fair value estimate and the Company’s net loss.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets, generally 5 to 10 years and 15 years for buildings and improvements as indicated in Note 4. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. When an asset is sold, we recognize a gain (loss) in the Statements of Operations based upon the proceeds received on the sale less the net carrying value of the asset.

Patents

If a product is currently under research and development and is not currently approved for market, costs incurred in connection with patent applications are generally expensed in the statement of operations in the period incurred because there is uncertainty as to the future economic benefit of the asset. Conversely, if a product is approved for market (as is the case of the end product ethanol), or if future economic benefit is probable, or if an alternative future use is available to the Company, then such patent costs can be capitalized and amortized over the expected revenue life of the patent(s). Since the Company’s primary end products are expected to be ethanol, and sustainable aviation fuel (SAF), which are in wide use, the Company has determined that it is reasonable to capitalize the patent costs associated with its cellulose-to-sugar (CTS) process, the sugar being converted into ethanol, and the ethanol either sold or further converted into SAF.

Research and Development

The Company expenses all research and development costs as incurred.

Leases

Upon inception, the Company determines if a contractual arrangement is, or contains, a lease. Right-of-use (“ROU”) assets and liabilities related to operating leases are separately reported in the Balance Sheets. The Company currently has no financing leases.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, we utilize our incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. Operating lease ROU assets and liabilities also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.

Impairment of Long-Lived Assets

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.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

We evaluate uncertain tax positions in a two-step process, whereby (i) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority would be recognized. The Company has no material uncertain tax positions for any of the reporting periods presented.

Net Income (Loss) per Share:

Basic profit (loss) per share amounts have been calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share is calculated using the weighted-average number of common shares plus the potentially dilutive effect of securities such as outstanding options and warrants. The computation of potential common shares has been performed using the treasury stock method. The warrants and options are antidilutive for all periods presented. When net loss is reported, diluted and basic net loss per share amounts are the same as the impact of potential common shares is antidilutive.

Grant Income

Government grants income is recognized in earnings on a systematic basis in a manner that mirrors the manner in which the Company recognizes the underlying costs for which the grant is intended to compensate. A grant receivable is recognized for expenses or losses already incurred but for which grant funding has not yet been received. Grant funding received in excess of expenses or losses incurred is recognized as deferred revenue.

The Company has adopted the disclosure requirements of Accounting Standards Codification (“ASC”) 832 Government Assistance.

Fair Value Measurements

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

At December 31, 2025 and 2024, the Company has no assets or liabilities that are measured at fair value on a recurring basis. The estimated fair value of certain financial instruments including notes payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

Segment

The Company operates as a single operating segment. All financial information is reviewed by the Company’s Chief Operating Decision Maker (CODM). The Company’s CODM is its chief executive officer. The CODM uses net loss, as presented in the statement of operations, to assess segment performance and allocate resources. The measure of segment assets is reported on the balance sheet as total assets.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We retrospectively adopted the income tax disclosures required under amendments in the year ended December 31, 2025 financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on our consolidated financial statements and disclosures

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s consolidated financial statements upon adoption.

NOTE 4 –PROPERTY AND EQUIPMENT

Total depreciation expense was $120,691 and $118,798 for the years ended December 31, 2025, and 2024, respectively.

In the fiscal year ended December 31, 2025, the Company did not dispose of any equipment. In the fiscal year ended December 31, 2024, the Company did not dispose of any equipment.

NOTE 5 –PATENTS AND TRADEMARKS

The Company has obtained three patents and has applied for six more patents on its technology, and has also applied for international patents. The Company has obtained one trademark and has four more pending. The following is a summary of the Company’s patents and trademarks at December 31, 2025 and December 31, 2024:

Amortization expenses for patents and trademarks for the years ended December 31, 2025 and December 31, 2024 were $25,161 and $0, respectively. Estimated amortization expense for the years subsequent to December 31, 2025, is as follows:

NOTE 6 –DEBT

Activity for the years ended December 31, 2025 and 2024 associated with the Company’s debt is outlined below.

Notes Payable – Related Party

In 2023 and 2024, the Company borrowed a total of $1,140,000 from board member Chris Kneppers.The notes are now payable on the earliest of the date on which the Company (1) uplists to the Nasdaq or NYSE; (2) receives $5 million in equity financing; or (3) begins generating revenue from its first facility. In 2025, the Company borrowed an additional $185,000 from Mr. Kneppers with the same terms. The total debt due as of December 31, 2025, is $1,325,000. In lieu of interest, the Company will pay Mr. Kneppers 100% of the outstanding loan balance due him contingent upon the financing of the first plant. All interest and loan amounts automatically come due upon a change of control of the Company or if the Company files for bankruptcy under Chapter 11 or Chapter 7. During the years ended December 31, 2025 and 2024, the Company recognized $0 and $11,500, respectively, in interest expense on these notes due to Mr. Kneppers. At December 31, 2025, and 2024, accrued interest payable to Mr. Kneppers is $46,651, and $46,651, respectively.

Convertible Notes Payable – Related Party

In June and November 2023, the Company entered two long-term convertible notes with board member Edmund Burke with principal amounts of $25,000 and $15,000, respectively, to be repaid when the Company receives an equity investment of at least $3 million. The notes may convert into common stock at $0.13/share at the option of the holder for a total of 307,692 shares. Until repayment, the note agreement requires the Company to issue to Mr. Burke 80,000 warrants having a strike price of $0.15 and an expiration of 5 years every twelve months in lieu of interest. During the years ended December 31, 2025 and 2024, 50,000 and 80,000 warrants with a fair value of $6,328 and $5,932,respectively, were issued to Mr. Burke (see Note 7). The fair value of these warrants is included in interest expense – related parties on the statement of operations.

In April 2023, the Company entered a separate long-term convertible note with board member Mr. Burke, with a principal balance of $150,000, to be repaid when the Company receives an equity investment of at least $1.5 million. The notes may convert into common stock at $0.13/share at the option of the holder for a total of 1,153,846 shares. Until repayment, the note agreement requires the Company to issue to Mr. Burke 100,000 warrants having a strike price of $0.15 and an expiration of 5 years every six months in lieu of interest. During the years ended December 31, 2025 and 2024, 200,000 and 100,000 warrants with a fair value of $18,149 and $6,518, respectively, were issued to Mr. Burke (see Note 7). The fair value of these warrants is included in interest expense – related parties on the statement of operations.

Convertible Notes Payable – Non-Related Parties

In January through April 2024, the Company issued convertible notes to four different individuals totalling $250,000. These notes carried no interest and were convertible, at the option of the lender, into common shares of the Company at 8 cents per share plus a warrant with a strike price of 10 cents per share and a 5-year expiration. These notes were due 13 months after issuance and would automatically convert into shares of the Company’s common stock if not paid. In the second half of 2024, all of these notes converted into 3,125,000 shares of the Company’s common stock and 3,125,000 warrants (see Note 7).

Legacy Notes Payable

In July 2016, the Company issued six (6) short-term notes payable to related parties in conjunction with the Company’s acquisition of the remaining 49% of AMG Energy Group. These notes had a value of $2,002,126 and accrued interest at a rate of six percent (6%) per annum. As of December 31, 2018 and December 31, 2017, the total interest accrued on the notes was $278,795 and $176,460 respectively. All of the notes were due on August 4, 2017 and then were in default. However, the notes were held by related parties with the understanding that the notes were not to be paid until the Company begins generating profit. The Company renegotiated some of these notes during its Chapter 11 proceedings, whereas others failed to submit a claim and were discharged upon the Court’s Confirmation Order approving the Company’s Chapter 11 Plan on September 18, 2019. The renegotiated amounts, as per the Plan Confirmation are all to be paid from 50% of the future net profits and discharged to the extent unpaid five years after the Plan effective date of September 18, 2019. These amount are 1) Mark Koch $240,990 plus 6% interest on any portion not repaid within 12 months of the Company’s first reported quarterly net profit; 2) Animated Family Films $579,942 out of the Company’s net profits plus 6% interest; 3) Steven Dunkle, CTWC, & Wellington Asset Holdings $1.5 million plus 6% interest once there is positive quarterly EBITDA from the first plant of Company, or, at its option, may convert that into an equity investment in the first plant of the Company, measured by a percentage of the total cost to build, subject to a minimum equity interest of 1.25% in said plant. This was discharged on September 18, 2024, and the Company recognized a gain on debt extinguishment of $2,320,932.

In July 2016, the Company issued a short-term note payable to a third party in conjunction with the Company’s acquisition of the remaining 49% of AMG Energy Group. The note had a principal balance of $96,570 and accrued interest at a rate of six percent (6%) per annum. As of December 31, 2018, and December 31, 2017, the total interest accrued on the note was $14,382 and $8,588 respectively. The note was due on August 4, 2017 and was then in default. The Company renegotiated this note during its Chapter 11 proceedings, and as per the Plan Confirmation, now the $96,570 is to be paid with no interest out of the same 50% of the future net profits of the Company as the notes mentioned above, if any, or discharged to the extent unpaid five years after September 18, 2019. This Note was discharged on September 18, 2024, and the Company recognized a gain on debt extinguishment of $96,570.

Pursuant to the Company’s Chapter 11 Plan of Reorganization confirmed on September 18, 2019, the Company restructured several outstanding notes payable and convertible debentures into fixed settlement obligations. Under the terms of the confirmed Plan, the original terms, interest rates, and conversion features were terminated in exchange for a combined settlement of $320,630, payable solely out of the Company’s future gross revenues or a percentage thereof. As of December 31, 2025 and 2024, the remaining aggregate balance of these obligations is $320,630. No additional shares or warrants are issuable under these restructured agreements.

A summary of all Notes that remain of those indicated in the Notes above is as follows:

As of December 31, 2025, none of the $1,835,630 outstanding notes payable was due at a specific point in time. $1,515,000 is due on a successful capital raise ranging from $1.5 million to $5 million; and $320,630 will be paid from future revenue or profits.

NOTE 7 –STOCKHOLDERS’ EQUITY

Holders of shares of Common stock shall be entitled to cast one vote for each share held at all stockholders’ meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights. No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend. The Company has yet to designate any rights, preferences and privileges for any of its authorized Preferred Stock.

During the year ended December 31, 2025, the Company had the following transactions to its shares of common stock:

During the year ended December 31, 2024, the Company had the following transactions associated to its shares of common stock:

Warrants

Warrant activity for the years ending December 31, 2025 and 2024 is as follows:

There are also 500,000 unvested warrants that vest subject to certain conditions.

As of December 31, 2025, outstanding warrants have a weighted average remaining life of 2.83 years.

During the year ended December 31, 2025, the Company issued 266,000 warrants for services having a fair value of $25,124 and 250,000 warrants for debt-related interest and financing costs having a fair value of $24,477.

During the year ended December 31, 2024, the Company issued 303,500 warrants for services having a fair value of $23,820 and 180,000 warrants for debt-related interest and financing costs having a fair value of $12,450. The Company also cancelled 350,000 warrants and recognized a loss of $29,991 on the cancellation. In addition, a total of 1,250,000 warrants were issued in exchange for the same number of stock options that were granted in prior years.

Stock Options:

In 2021, the Company adopted the 2021 Employee, Director Stock Plan (the “2021 Plan”) to provide the Corporation with share-related mechanisms to attract and retain persons eligible to participate in the 2021 Plan, motivate Participants to achieve long-term Company goals, and further align holders’ interests with those of the Company’s other stockholders. The Plan was approved by the Corporation’s shareholders on June 2, 2021. The Plan allows for grants of restricted stock, stock options and other forms of incentive compensation to our officers, employees, directors and consultants. Under the terms of the Plan, the aggregate maximum number of shares that may be issued pursuant to awards granted under the Plan cannot 15% of the Company’s issued and outstanding common stock on a fully diluted basis. Shares delivered under the Plan will be from authorized but unissued shares of the Company.

Stock option activity for the years ending December 31, 2025, and 2024 is as follows:

During the years ended December 31, 2025, and 2024, the Company recognized share-based compensation expense from options of $956,610 (general and administrative expense of $349,773 and research and development expense of $606,837) and $1,649,555 (general and administrative expense of $535,395 and research and development expense of $1,114,160), respectively.

The weighted average remaining life of outstanding and vested options is 6.5 years and 6.1 years, respectively. At December 31, 2025, outstanding vested options had an intrinsic value of $2,997,682, and the total intrinsic value of all options is $5,757,895.

At December 31, 2025, remaining compensation to be recognized as future vesting of stock options is approximately $5.3 million of which approximately $0.3 million will vest over the next year, $0.1 million will vest in subsequent years, and approximately $4.9 million will vest upon the achievement of performance milestone criteria.

During the year ended December 31, 2025, the Company granted 12,774,470 options with a fair value of $1,130,723. All options granted in 2025 had terms ranging from five to ten years. The 2025 option grants had exercise prices ranging from $0.11 to $0.13.

During the year ended December 31, 2024, the Company granted 29,166,571 options with a fair value of $2,851,422 under the 2021 Plan. All options granted in 2024 had terms ranging from five toten years except for 1,158,334 options which had a term of 0.25 years. The 2024 option grants had exercise prices ranging from $0.11 to $0.12.

Fair Value of Warrants and Stock Options issued:

The following ranges of assumptions were used in calculations of the Black-Scholes option pricing models for option and warrant-based stock compensation issued in the years ended December 31, 2025 and December 31, 2024:

NOTE 8 –INCOME TAXES

No benefit (provision) has been recognized for the years ended December 31, 2025, and 2024. The reconciliation of income tax benefit at the U.S. statutory rate of 21% for years ending December 31, 2025, and 2024, to the Company’s effective tax rate, is as follows:

The tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of December 31, 2025, and 2024 are as follows:

As of December 31, 2025, the Company has U.S. net operating loss carryforwards (“NOLs”) of approximately $29.9 million that expire in 2032 through 2037 and approximately $25.4 million with no expiration but which are subject to an 80% limitation upon utilization. The Company has state net operating loss carryforwards of approximately $29.9 million that expire in 2032 through 2037. The deferred tax asset table above reflects the tax-effected balances of the Company’s net operating loss carryforwards using a 25.3% rate for U.S.-based carryforwards.

In 2025 and 2024, the Company evaluated its tax positions for years which remain subject to examination by major tax jurisdictions and as a result concluded no adjustment was necessary. The Company had no unrecognized tax benefits as of December 31, 2025, and 2024. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in its income tax provision. U.S. tax returns for the years 2022 to 2024 remain subject to examination but there are currently no ongoing exams in any taxing jurisdictions. Tax returns for years prior to 2022 may remain open with respect to net operating loss carryforwards that are utilized in a later year, as tax attributes from prior years can be adjusted during an audit of a later year.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.

NOTE 9 -COMMITMENTS AND CONTINGENCIES

Litigation

The Company is subject, from time to time, to litigation, claims and suits arising in the ordinary course of business. The Company is not in any litigation at this time.

Leases

During 2025 and 2024, the Company maintained a lease agreement for office and laboratory space in Palm Beach Gardens, Florida, classified as an operating lease. The original lease, signed in 2019, had a five-year term and was renewed by the Company in 2024 for an additional five years. The renewed lease includes escalating monthly payments ranging from $9,100 to $10,242. For the initial measurement of the lease liability and right-of-use asset, the Company applied a discount rate of 10.0%, reflecting its estimated incremental borrowing rate. As of December 31, 2025, the weighted average remaining lease term for the operating lease was 3.9 years.

At December 31, 2025, minimum lease payments to be paid by the Company are as follows:

Additionally, the Company leases 18.2 acres of land in Arcadia, Florida for cultivating king grass. The original lease commenced on September 1, 2020, with an annual cost of $6,370 and includes a renewal option for up to five years. It has been renewed for 2025-2026. As this lease can be terminated at will, it is not recognized as right-of-use assets or lease liabilities on the Company’s balance sheet.

During the year ended December 31, 2025, and 2024, the Company recognized rent expense, including common area maintenance fees and state sales tax, of $131,178 and $175,121, respectively. In the statement of operations, rent expense of $131,178 (2024: $166,576) is included in general and administrative expense and $0 (2024: $8,545) is included in research and development costs.

NOTE 10 – RELATED PARTIES AND TRANSACTIONS

Related Party transaction with the Company are as follows:

NOTE 11 –GRANT INCOME

In September 2024, the Company was awarded a Small Business Innovation Research (“SBIR”) Phase II grant by the U.S. Department of Energy (DOE) in the amount of $1.15 million to be received subject to meeting certain terms and conditions. The purpose of the grant was to support the further development of the Company’s patented CTS process and to bring it to the point of being commercially ready. Accounting for this DOE grant does not fall under Accounting Standard Codification 606,Revenue from Contracts with Customers, as the DOE does not meet the definition of a customer under this standard.

During the year ended December 31, 2025, $865,000 was recognized as grant income for this grant. During the year ended December 31, 2024, $285,000 was recognized as grant income for this grant. There is no additional grant money from this grant.

NOTE 12 –SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date the financial statements were available to be issued. Based on this evaluation, the Company has identified the following subsequent events:

Subsequent to December 31, 2025: