UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the Quarter ended
or
Commission
File Number:
(Exact name of small Business Issuer as specified in its charter)
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| of incorporation or organization) | Identification No.) |
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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| OTCQB |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒.
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Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
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| Large Accelerated Filer ☐ | Accelerated Filer ☐ | Emerging
Growth Company | |
| Smaller
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
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by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒
State the number of shares outstanding of the registrant’s $ par value common stock as of the close of business on the latest practicable date (April 11, 2025): .
TABLE OF CONTENTS
| Page | ||
| PART I—FINANCIAL INFORMATION | 3 | |
| ITEM 1. | Condensed Financial Statements (unaudited) | 4 |
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 |
| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 20 |
| ITEM 4. | Controls and Procedures | 20 |
| PART II—OTHER INFORMATION | 21 | |
| ITEM 1. | Legal Proceedings | 21 |
| ITEM 1A. | Risk Factors | 21 |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 21 |
| ITEM 3. | Defaults Upon Senior Securities | 22 |
| ITEM 4. | Mine Safety Disclosures | 22 |
| ITEM 5. | Other Information | 22 |
| ITEM 6. | Exhibits | 22 |
| Signatures | 23 |
| 2 |
PART I – FINANCIAL INFORMATION
TABLE OF CONTENTS
| 3 |
Blue Biofuels, Inc.
Financial Statements
UNAUDITED FINANCIAL STATEMENTS
OF
BLUE BIOFUELS, INC.
Blue Biofuels, Inc.
CONDENSED BALANCE SHEETS
(unaudited)
| March 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Prepaid Expenses | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Other Assets | ||||||||
| Property and Equipment, net of accumulated depreciation and amortization of $ | ||||||||
| Security Deposits | ||||||||
| Right of Use Assets, net of accumulated amortization | ||||||||
| Patents and Trademarks | ||||||||
| TOTAL OTHER ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts Payable | $ | $ | ||||||
| Accounts Payable - Related Party | ||||||||
| Deferred Wages and Directors’ Fees - Related party | ||||||||
| Right of Use Lease Liability - Current | ||||||||
| Convertible Notes Payable — Other | ||||||||
| Interest Payable - Related Party | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Long term liabilities | ||||||||
| Right of Use Lease Liability, Long Term | ||||||||
| Notes Payable — Related Party | ||||||||
| Convertible Notes Payable — Related Party | ||||||||
| Legacy Notes Payable — Related Party | ||||||||
| Legacy Notes Payable — Other | ||||||||
| TOTAL LONG TERM LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES (NOTES 8 AND 9) | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock; $ par value; shares authorized; shares issued and outstanding | ||||||||
| Common stock; $ par value; shares authorized; and issued and outstanding at March 31, 2025 and December 31, 2024, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | $ | ( | ) | $ | ( | ) | ||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes to the Condensed Financial Statements are an integral part of these statements.
| 4 |
Blue Biofuels, Inc
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended | ||||||||
| March 31 | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Operating expense: | ||||||||
| General and administrative | ||||||||
| Research and development | ||||||||
| Total operating expenses | ||||||||
| Loss from operations: | ( | ) | ( | ) | ||||
| Other (income) expense: | ||||||||
| Government grant income | ( | ) | ||||||
| Interest expense - related party | ||||||||
| Other (income) expense | ( | ) | ||||||
| Total other (income) expense | ( | ) | ||||||
| Income (Loss) before provisions for income taxes | $ | ( | ) | $ | ( | ) | ||
| Provisions for income taxes | ||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | ||
| Net income (loss) per share - basic and diluted | $ | ) | $ | ) | ||||
| Weighted average common shares outstanding | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes to the Condensed Financial Statements are an integral part of these statements.
| 5 |
Blue Biofuels, Inc.
CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)
| Common Stock | Additional Paid-in | Accumulated | Total Stockholder’s | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Issuance of common stock for services | $ | $ | $ | | ||||||||||||||||
| Issuance of | - | |||||||||||||||||||
| Stock based compensation recognized under the employee, director plan | - | |||||||||||||||||||
| Net Income (Loss) | ( | ) | $ | ( | ) | |||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Employee director stock options exercised on a cashless basis | ( | ) | ||||||||||||||||||
| Issuance of common stock and warrants on the conversion of notes | ||||||||||||||||||||
| Stock based compensation recognized under the employee, director plan | - | |||||||||||||||||||
| Net Income (Loss) | ( | ) | ( | ) | ||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes to the Condensed Financial Statements are an integral part of these statements.
| 6 |
Blue Biofuels, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Three Months Ended | ||||||||
| March 31 | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | ||
| Reconciliation of net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Stock based compensation | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Prepaid expenses | ||||||||
| Accounts payable | ||||||||
| Deferred wages and directors fees — related party | ||||||||
| Interest payable - related party | ||||||||
| Right of use lease | ( | ) | ||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Deposit on land | ( | ) | ||||||
| Patent and trademark costs | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of convertible note payable | ||||||||
| Proceeds from the issuance of notes payable — RP | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalent at beginning of the period | ||||||||
| Cash and cash equivalent at end of the period | $ | $ | ||||||
| Non-cash financing and investing activities | ||||||||
| Issuance of common stock and warrants on the conversion of notes payable | $ | $ | ||||||
The accompanying notes to the Condensed Financial Statements are an integral part of these statements.
| 7 |
Blue Biofuels, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – ORGANIZATION
Blue Biofuels, Inc., was incorporated in Nevada on March 28, 2012, as Alliance Media Group Holdings, Inc. Since December 2013, Blue Biofuels, Inc. (the “Company”) has been a technology company focused on emerging technologies in renewable energy, biofuels, and lignin.
NOTE 2 – GOING CONCERN
The
accompanying condensed 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 March 31, 2025, the Company has incurred accumulated losses of $
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.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed financial statements do not include all disclosures required of annual financial statements and, accordingly, should be read in conjunction with our financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
| 8 |
Operating results for the three months ended March 31, 2025, may not be indicative of full year 2025 results.
In management’s opinion, the accompanying condensed financial statements contain all adjustments necessary for a fair statement of our financial position as of March 31, 2025, and our results of operations, changes in stockholders’ deficit and cash flows for the three months ended March 31, 2025 and 2024.
Basic net earnings per share amounts have been calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted earnings per share has been calculated using the weighted-average number of common shares plus the potentially dilutive effect of securities such as common stock that potentially could be issued upon the conversion of convertible notes or upon the exercise of outstanding options and warrants. The computation of potential common shares has been performed using the treasury stock method.
For the three months ended March 31, 2025 and 2024, due to net losses, all potential dilutive securities are 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.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.
| 9 |
NOTE 4 – PROPERTY AND EQUIPMENT
| PROPERTY AND EQUIPMENT | Life | March 31, 2025 | December 31, 2024 | |||||||||
| Building and Improvements | $ | $ | ||||||||||
| Construction and Engineering | ||||||||||||
| Machinery and Equipment | ||||||||||||
| Furniture and Fixtures | ||||||||||||
| Computer Equipment | ||||||||||||
| Less Accumulated Depreciation | $ | ( | ) | $ | ( | ) | ||||||
| Property and Equipment | $ | $ | ||||||||||
Total
depreciation expense was $
NOTE 5 – PATENTS AND TRADEMARKS
The
Company has been granted one patent on its technology and one continuation patent in the United States and various international jurisdictions,
has filed for three others that are pending, and has also applied for international patents on all of its patents. The Company has capitalized
the legal and filing fees of $
NOTE 6 – DEBT
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 the first quarter of 2025, the Company borrowed an additional $100,000 from Mr. Kneppers with the same terms. 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 quarters ended March 31, 2025 and 2024, the Company recognized $0 and $11,500, respectively, in interest expense on these notes due to Mr. Kneppers. At March 31, 2025, accrued interest payable to Mr. Kneppers is $46,651.
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 quarter ended March 31, 2025, and March 31, 2024, no warrants were issued as they are issued each June and November for the prior year.
In April 2023, the Company entered a long-term convertible note with board member Edmund 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 quarter ended March 31, 2025, and March 31, 2024, no warrants were issued as they are issued each April. When issued, 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 December 2023, the Company issued a convertible note to one individual for $50,000. The note was non-interest bearing and had a term of thirteen months. In January 2025, the note was converted into 625,000 shares of the Company’s common stock and 625,000 warrants with a strike price of $0.10 per share and a five year expiration.
A summary of all Notes that remain including those indicated in the Notes above is as follows:
| Notes Payable | March 31, 2025 | December 31, 2024 | ||||||
| Current Convertible Notes — Other | $ | $ | ||||||
| Long Term Convertible Notes Payable – Related Party | ||||||||
| Long-Term Notes Payable – Related Party | ||||||||
| Long Term Notes Payable from future revenue — Related Party | ||||||||
| Long Term Notes Payable from future revenue — Other | ||||||||
| TOTAL NOTES | $ | $ | ||||||
Of the $1,750,630 payable as of March 31, 2025, none is payable in cash at a specific point in time. $1,430,000 is due only after achieving certain milestones. $320,630 is due out of future revenue with no specific due date.
At March 31, 2025, there are $190,000 in convertible notes that, if converted, would convert into 1,461,538 shares.
| 10 |
NOTE 7 – STOCKHOLDERS’ EQUITY
During
the three months ended March 31, 2025 and 2024, the Company issued an aggregate of and shares, respectively, of its common stock
for services with a fair value based on the trading price of the Company’s stock on the date of issuance of $
During
the three months ended March 31, 2025 in connection with the conversion of debt with a balance of $
During the three months ended March 31, 2025, the Company issued shares of its common stock due to the cashless exercise of options by one of its directors.
Warrants:
During
the three-month period ended March 31, 2025 and 2024, the Company issued and warrants for services with a fair value of $
| Number
of Warrants |
Weighted
Average Exercise Price |
|||||||
| Balance, December 31, 2023 | ||||||||
| Issued in connection with: | ||||||||
| Common stock units sold for cash | ||||||||
| Services | ||||||||
| Debt-related interest | ||||||||
| Debt conversion | ||||||||
| Expired or rescinded | ( |
) | ||||||
| Exchanged for stock options | ||||||||
| Balance, December 31, 2024 | $ | |||||||
| Issued in connection with: | ||||||||
| Debt conversion | ||||||||
| Expired or rescinded | ||||||||
| Balance, March 31, 2025 | ||||||||
Warrants outstanding at March 31, 2025 have a weighted average exercise price of $ and a weighted average remaining term of years.
| 11 |
Stock Options:
During the three-month period ended March 31, 2025 and 2024, the Company recognized $ and $ of stock based compensation, respectively. Of this amount, $ (2024: $) was classified as general and administrative expense and $ (2024: $) was classified as research and development expenses.
Number of Options |
Weighted Average Exercise Price |
|||||||
| Balance, December 31, 2023 | ||||||||
| Options granted | ||||||||
| Options expired | ( |
) | ||||||
| Exchanged for warrant | ( |
) | ||||||
| Balance, December 31, 2024 | $ | |||||||
| Options granted | ||||||||
| Options expired | ( |
) | ||||||
| Options exercised | ( |
) | ||||||
| Balance, March 31, 2025 | ||||||||
| Vested, March 31, 2025 | ||||||||
The weighted average exercise price of outstanding and vested options is $ and $, respectively. The weighted average remaining life of outstanding and vested options is years and years, respectively. At March 31, 2025, outstanding vested options had an intrinsic value of $, and the total intrinsic value of all options is $.
Black Scholes Model Variables:
The fair value associated with warrants and options issued or modified during the three months ended March 31, 2025 were valued on the date of issuance or modification.
| March 31, 2025 | March 31, 2024 | |||||||
| Exercise price | $ | $ | ||||||
| Risk-free interest rate | % | % - % | ||||||
| Expected term (in years) | to | |||||||
| Expected share price volatility | % | % to % | ||||||
| Expected dividend yield | % - % | % - % | ||||||
| 12 |
NOTE 8 - 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
The
Company currently leases office and laboratory space in Palm Beach Gardens, FL, that is classified as operating lease right-of-use
(“ROU”) assets and operating lease liabilities in the Company’s condensed balance sheet. During the three month
period ended March 31, 2025, the Company renewed the leases when they expired. The new lease has a term of
At March 31, 2025, minimum lease payments to be paid by the Company are as follows:
| Remainder of 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total lease payments | ||||
| Less imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Current portion | ( | ) | ||
| Long term portion | $ |
NOTE 9 – RELATED PARTY TRANSACTIONS
Related Party transactions with the Company are as follows:
| 1) | Short-term notes payable, convertible notes, and legacy liabilities issued to related parties are described in NOTE 6. | |
| 2) | A board resolution was passed on February 13, 2020 that pledged the patents and pending patents to secure the back pay claims of Ben Slager, CEO, Anthony Santelli, CFO, and Charles Sills, Director. This was done to ensure the continued involvement of management to build the Company while they receive less than full salaries. | |
| 3) | During
2024, the board of directors approved an increase in salaries to two officers of the Company retroactive to August 1, 2023, in light
of the fact that they are not receiving payments of salaries on a consistent basis. CEO Ben Slager is to receive annual salary of
$ | |
| 4) | In
June 2024, the board of directors approved a partial anti-dilution compensation for CEO Ben Slager, CFO Anthony Santelli, and Director
Chris Kneppers to be paid in restricted stock units and options of |
| 13 |
| 5) | As
of April 1, 2024, the board of directors approved ceasing accruing interest on back pay due to officers and on directors fees. In
lieu of interest, the Company will pay an additional $ | |
| 6) | As
of August 28, 2024, |
NOTE 10 – GRANT INCOME
In
September 2024, the Company was awarded a Small Business Innovation Research (“SBIR”) grant by the U.S. Department of Energy
(DOE) in the amount of $
During
the three month periods ended March 31, 2025, $
NOTE 11 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date the financial statements were issued. Based on this evaluation, the Company has identified the following subsequent events:
From April 1, 2025 to the date of this filing, the Company issued shares and warrants for $ to an unrelated party.
From
April 1, 2025 to the date of this filing, the Company received $
| 14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
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, 2024. 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.
Business Overview
Blue Biofuels, Inc., was incorporated in Nevada on March 28, 2012, as Alliance Media Group Holdings, Inc. Since December 2013, Blue Biofuels, Inc. (the “Company”) has been a technology company focused on emerging technologies in renewable energy, biofuels, and lignin.
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, Australia, Russia, and El Salvador. The Company also filed this patent in other major jurisdictions of the world including the European Patent Organization, Brazil, China, and the African Regional Intellectual Property Organization. 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.
Mr. Slager has since further developed the system with the technical staff of the Company. The patented CTS process is a continuous mechanical/chemical dry process for breaking down cellulosic material for conversion into biofuels. CTS can break down any cellulosic material – including grasses and agricultural waste. The CTS mechanical/chemical process allows for exact process control to ensure that all the material passing through it does so on the optimum reaction parameters through which optimal efficiency is achieved.
The new technology made it worthwhile to financially restructure the Company through Chapter 11. The Company voluntarily filed for Chapter 11 on October 22, 2018, in the U.S. Bankruptcy Court in the Southern District of Florida. The Company exited Chapter 11 on September 18, 2019, while keeping all classes, including shareholders, unimpaired. The bankruptcy case was closed on October 25, 2019.
CTS is environmentally friendly in that it has no toxic waste, and it has a low carbon footprint: the amount of added atmospheric carbon created by burning the biofuels produced by the CTS system was absorbed by the plant-based feedstock while growing and is merely released back into the atmosphere. No extra CO2 is released into the atmosphere when our biofuels are burned. This is to be distinguished from fossil fuels because new CO2 is released when fossil fuels are burned.
The Company believes a significant difference between CTS cellulosic ethanol and corn ethanol is the wide range of abundantly available feedstocks that CTS can process compared to just corn as the feedstock. The CTS feedstocks are nonfood and have much lower costs than corn. In addition, while in corn ethanol only the corn kernels are used, CTS uses the whole plant or its waste products, meaning it could obtain much higher yields per acre.
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 optimized the core process. The Company is now upscaling, testing 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. This process is partially funded by the $1.15 million SBIR Phase 2 Department of Energy grant, which followed up from the SBIR Phase 1 DOE grant that helped fund the finalizing of the proof of concept.
In addition, the Company has licensed the Vertimass Process which is a patented one 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.
| 15 |
Plan of Operation
The total process from cellulosic feedstock to SAF consists basically of three steps:
| 1) | Conversion from feedstock to fermentable cellulosic sugars (CTS) | |
| 2) | Ferment the cellulosic sugars into cellulosic ethanol. | |
| 3) | Covert the ethanol into SAF and related products. This third step happens with the Vertimass technology which the Company has licensed. |
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 5-10 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.
Any new biofuels plant that is built would require various government permits. In particular, renewable fuels are subject to rigorous testing and premarket approval requirements by the EPA’s Office of Transportation and Air Quality and regulatory authorities in other countries. In the U.S., various federal, and, in some cases, state statutes and regulations also govern or impact the manufacturing, safety, storage and use of renewable fuels. The process of seeking required approvals and the continuing need for compliance with applicable statutes and regulations requires the expenditure of resources. The Company anticipates raising the necessary capital for this as a part of its project-based financing.
The ethanol industry is competitive with over 200 ethanol plants in the United States alone. Currently, the vast majority use corn as feedstock. Their profitability depends highly on the fluctuations between the price of corn and the price of ethanol. Since the Company does not plan to use corn, and plans on having long-term purchase agreements with cellulosic feedstock suppliers, we anticipate that our profitability will be more consistent. Further, cellulosic biofuels yield much higher incentives than non-cellulosic biofuels.
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 called for 21.54 billion gallons of total renewable fuel, whereas for 2025 it’s 22.33 billion gallons with 7.33 billion gallons from advanced biofuels, including cellulosic biofuels, leaving 15 billion gallons for conventional biofuels (corn ethanol). 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 $2.51 per gallon of ethanol. For comparison, the D6 RIN for corn ethanol is $0.96. To profit from these incentives, the Company plans to apply for these RIN credits as it brings its first plant into commercial operation.
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Section 45Z of the Inflation Reduction Act passed on August 16, 2022, offers a Clean Fuel Production Credit (CFPC) per gallon of transportation fuel produced with a base amount of 20 cents per gallon or up to $1 per gallon for a qualified facility (depending on its carbon index) that was built while paying at least prevailing wages and which met apprenticeship requirements. For sustainable aviation fuel, those figures are 35 cents and $1.75 per gallon respectively. The Company plans to apply for CFPC credits when it begins building its commercial facilities. The CFPC currently does not apply to transportation fuel sold after December 31, 2027.
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.
At commercial scale, management expects to be able to earn substantial renewable fuel credits and produce sustainable ethanol, sustainable aviation fuel, biogasoline, and other sustainable biofuels more profitably than they could be from existing commercial corn ethanol producers. Cellulosic ethanol comes with a much more valuable D3 RIN credit as compared to the D6 RIN allocated to corn ethanol; cellulosic SAF comes with a very valuable D7 RIN, and cellulosic bio-gasoline comes with a valuable D3 RIN. The Company also expects to receive Clean Fuel Production Credits related to section 45Z of the Inflation Reduction Act, and the Company also plans to pursue Low Carbon Fuel Standard Credits.
After its first plant is profitable, the Company intends to grow with additional plants in the United States and explore international growth by either licensing the CTS technology or forming joint ventures with foreign domestic partners to build plants.
The Company believes that its management and consultants have significant experience in the development of technologies from concept to commercialization. As of this date, the Company has not generated any material revenues from its business.
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Capital Formation
From January 1, 2025, through the date of filing, the Company issued an aggregate of 44,000 shares of its common stock for the cashless exercise of 100,000 options.
From January 1, 2025, through the date of filing, the Company issued an aggregate of 1,125,000 shares and warrants for the conversion of $50,000 in debt and $50,000 in cash.
From January 1, 2025, through the date of filing, 6,915,757 options vested. During the three months ended March 31, 2025, the Company recognized additional stock-based compensation of $88,165 in connection with the expensing of unvested options.
From January 1, 2025, through the date of filing, 3,158,334 unvested options expired.
Going Concern
The Company has incurred losses since inception, has a working capital deficiency, and may be unable to raise further capital. As of March 31, 2025, the Company had a working capital deficit of $2,289,706 and had incurred accumulated losses of $57,499,594 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.
Results of Operations
Comparison of the three month period ended March 31, 2025 to March 31, 2024
For the three months ended March 31, 2025, the Company recognized $0 in revenue as opposed to $0 in 2024.
For the three months ended March 31, 2025, the Company’s general and administrative expenses increased by $42,116 to $338,098 from $295,982 in 2024. This increase is primarily the result of $56,199 in consulting expenses in 2025 versus $20,847 in 2024.
Interest expense decreased in the quarter ended March 31, 2025 by $43,255 to $0 from $43,255 in 2024.
Research and development (R&D) costs for the quarter ended March 31, 2025, were $350,707 a decrease of $256,928 from $607,635 in 2024. The decrease in R&D expenses is primarily the result of equity-based compensation of $262,308 in 2024 versus $54,456 in 2025.
Liquidity and Capital Resources
Liquidity
As of March 31, 2025, the Company had $7,583 in cash and cash equivalents, and total stockholders’ deficit on March 31, 2025, was $2,951,571. As of December 31, 2024, the Company had $48,797 in cash and cash equivalents, and total stockholders’ deficit at December 31, 2024, was $2,845,903. Total debt, including convertible notes, accounts payable and other notes payable at March 31, 2025, together with interest payable thereon and legacy liabilities, was $4,434,194 an increase of $198,704 from December 31, 2024, where it stood at $4,235,490. This increase is primarily attributable to an increase in deferred wages of $124,861 and a net increase in debt of $50,000.
During the three months ended March 31, 2025, the Company’s net cash provided by operating activities was $13,416 compared to net cash used in operating activities of $255,864 in the three months ending March 31, 2024. This is primarily attributed to lower net loss and a smaller change in deferred wages from $325,700 to $124,861 in 2025.
During the three months ended March 31, 2025, the Company generated an aggregate of $100,000 through its financing activities versus $260,000 in the three months ended March 31, 2024, which is a decrease of $160,000. This decrease from the prior year can primarily be attributed to net proceeds of $100,000 for the issuance of notes payable in 2025 versus $260,000 in 2024.
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Capital Resources
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 additional funds for G&A expenses and will seek project financing for a commercial ethanol to SAF facility in addition to funds needed to complete the commercialization of its CTS system. There is no guarantee that the Company will achieve all of the additional funding that is needed.
As of the date of this filing, in 2025 the Company has raised $175,000 through the issuance of notes and $50,000 through the issuance of shares. The Company previously raised $17,160,625 in shares and $2,245,916 through converted notes and $1,430,000 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.
The inability to obtain this funding either in the near term and/or longer term will materially affect the ability of the Company to implement its business plan of operations and jeopardize the viability of the Company. In that case, the Company may need to reevaluate and revise its operations.
Equity
As of March 31, 2025, shareholders’ deficit was $2,951,571.
There were 308,629,508 shares of common stock issued and outstanding as of March 31, 2025.
There were no preferred shares outstanding.
The Company has paid no dividends.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(e) of the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of March 31, 2025. Based upon, and as of the date of this evaluation, our chief executive officer and chief financial officer determined that our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject, from time to time, to litigation, claims and suits arising in the ordinary course of business. As of the date of filing, there are no material claims or suits whose outcomes could have a material effect on the Company’s financial statements.
ITEM 1A. RISK FACTORS.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
Below is a list of securities sold by the Company from January 1, 2025, through the date of filing which were not registered under the Securities Act.
| Entity | Date of Investment | Title of Security |
Amount of Securities Sold |
Consideration | ||||||
| Clay Taylor | 01/21/25 | Common Stock | 625,000 | Note Conversion | ||||||
| Peter Zimeri | 02/18/25 | Common Stock | 44,000 | Exercise of Options | ||||||
| Anthony Santelli, Sr. | 04/04/25 | Common Stock | 500,000 | Purchase @ $0.10 per share | ||||||
The securities issued in the above-mentioned transactions were issued in connection with private placements exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Section 4(a)(2) of that Act and Rules 504 and 506 of Regulation D.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The exhibits listed below are filed as part of or incorporated by reference in this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Blue Biofuels, Inc. | ||
| (Registrant) | ||
| By | /s/ Benjamin Slager | |
| Benjamin Slager | ||
| Chief Executive Officer, (Principal Executive Officer) | ||
| Date April 30, 2025 | ||
| By | /s/ Anthony Santelli | |
| Anthony Santelli | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
| Date April 30, 2025 | ||
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