0001493152-21-028296.txt : 20211115 0001493152-21-028296.hdr.sgml : 20211115 20211115061216 ACCESSION NUMBER: 0001493152-21-028296 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 49 CONFORMED PERIOD OF REPORT: 20210930 FILED AS OF DATE: 20211115 DATE AS OF CHANGE: 20211115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE BIOFUELS, INC. CENTRAL INDEX KEY: 0001549145 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 454944960 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54942 FILM NUMBER: 211406089 BUSINESS ADDRESS: STREET 1: 3710 BUCKEYE ST STREET 2: SUITE 120 CITY: PALM BEACH GARDENS STATE: FL ZIP: 33401 BUSINESS PHONE: (888)607-3555 MAIL ADDRESS: STREET 1: 3710 BUCKEYE ST STREET 2: SUITE 120 CITY: PALM BEACH GARDENS STATE: FL ZIP: 33401 FORMER COMPANY: FORMER CONFORMED NAME: ALLIANCE BIOENERGY PLUS, INC. DATE OF NAME CHANGE: 20141204 FORMER COMPANY: FORMER CONFORMED NAME: Alliance Media Group Holdings, Inc. DATE OF NAME CHANGE: 20120504 10-Q 1 form10-q.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarter ended September 30, 2021

 

Commission File Number: 000-54942

 

BLUE BIOFUELS, INC.

(Exact name of small Business Issuer as specified in its charter)

 

Nevada   45-4944960
(State or other jurisdiction   (IRS Employer
of incorporation or organization)   Identification No.)

 

3710 Buckeye Street, Suite 120    
Palm Beach Gardens, FL   33410
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (888) 607-3555

 

 

Former name or former address if changed since last report

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Not applicable.        

 

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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer Emerging Growth Company
    Smaller reporting company  

 

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. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

 

The number of the registrant’s shares of common stock outstanding were 272,652,183 as of November 9, 2021.

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
  PART I—FINANCIAL INFORMATION
     
ITEM 1. Consolidated Financial Statements (unaudited) 4
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 23
ITEM 4. Controls and Procedures 23
     
  PART II—OTHER INFORMATION
     
ITEM 1. Legal Proceedings 24
ITEM 1A. Risk Factors 24
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
ITEM 3. Defaults Upon Senior Securities 27
ITEM 4. Mine Safety Disclosures 27
ITEM 5. Other Information 27
ITEM 6. Exhibits 27
  Signatures 28

 

2

 

 

PART I – FINANCIAL INFORMATION

 

TABLE OF CONTENTS

 

Index to Financial Statements   Page
Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020   4
     
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)   5
     
Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2021 and 2020 (unaudited)   6
     
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)   7
     
Notes to Condensed Consolidated Financial Statements (unaudited)   8

 

3

 

 

Blue Biofuels, Inc.

Formerly known as Alliance Bioenergy Plus, Inc.

Financial Statements

Period Ended September 30, 2021

 

UNAUDITED FINANCIAL STATEMENTS

OF

BLUE BIOFUELS, INC.

 

Blue Biofuels, Inc.

Formerly known as Alliance Bioenergy Plus, Inc.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

   September 30, 2021   December 31, 2020 
ASSETS          
Current assets          
Cash and cash equivalents  $1,359,175   $286,579 
Prepaid expenses   78,015    45,324 
TOTAL CURRENT ASSETS  $1,437,190   $331,903 
Other assets          
Property and equipment, net of accumulated depreciation and amortization of $262,706 and $231,739 at September 30, 2021 and December 31,2020, respectively   362,359    247,431 
Security deposits   30,276    30,276 
Right of Use Assets, net of accumulated amortization   85,609    144,876 
Patents   154,758    138,016 
TOTAL OTHER ASSETS  $633,002   $560,599 
TOTAL ASSETS  $2,070,192   $892,502 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities          
Accounts payable  $8,812   $90,965 
Accounts payable - Related Party   72,670   $76,670 
Deferred wages and director’s fees - Related party   233,294   $676,477 
Lease Liability - Current   85,742   $80,078 
Chapter 11 Settlement   50,000   $- 
Convertible Debentures — Related Party   -    75,000 
Interest Payable - Related Party   42,579    99,268 
TOTAL CURRENT LIABILITIES  $493,097   $1,098,458 
Long term liabilities          
Right of Use Lease Liability, net of current portion   7,398    72,346 
Paycheck Protection Program SBA loan   -    66,330 
Chapter 11 Settlement   -    50,000 
Notes Payable — Related Party   2,521,562    2,521,562 
Notes Payable — Other   216,570    216,570 
Convertible debenture, payable from future profits — Related Party   -    204,000 
TOTAL LONG TERM LIABILITIES  $2,745,530   $3,130,808 
TOTAL LIABILITIES  $3,238,627   $4,229,266 
           
STOCKHOLDERS’ EQUITY (DEFICIT)          
Preferred stock; $0.001 par value; 10,000,000 shares authorized; zero shares issued and outstanding   -    - 
Common stock; $0.001 par value; 500,000,000 shares authorized; 272,649,183 issued and outstanding at September 30, 2021, and 241,721,947 shares issued and outstanding at December 31, 2020.   272,649    241,722 
Additional paid-in capital   46,794,325    43,103,607 
Accumulated deficit   (48,235,410)   (46,682,093)
Total stockholders’ equity (deficit)  $(1,168,436)  $(3,336,764)
TOTAL EQUITY (DEFICIT)  $(1,168,436)  $(3,336,764)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $2,070,192   $892,502 

 

4

 

 

Blue Biofuels, Inc

Formerly known as Alliance Bioenergy Plus, Inc.

CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

 

                     
   Three Months Ended   Nine Months Ended 
   30-Sep   30-Sep 
   2021   2020   2021   2020 
Revenues  $-   $-   $-   $- 
Operating expense:                    
General and administrative   215,965    151,394    815,614    1,029,534 
Research & Development   229,923    89,185    744,783    671,918 
Loss on disposal of assets   -    -    33,484    - 
Total operating expenses   445,888    240,579    1,593,881    1,701,452 
                     
Loss from operations:   (445,888)   (240,579)   (1,593,881)   (1,701,452)
                     
Other (income) expense:                    
Loan Forgiveness   -    -    (66,330)   - 
Interest expense - related party   6,711    17,020    20,372    156,295 
Interest expense - other   1,598    (3,966)   5,394    - 
Total other (income) expense   8,309    13,054    (40,564)   156,295 
                     
Income (Loss) before provisions for income taxes  $(454,197)  $(253,633)  $(1,553,317)  $(1,857,747)
Provisions for income taxes   -    -           
Net Income / (Loss):  $(454,197)  $(253,633)  $(1,553,317)  $(1,857,747)
                     
Net income (loss) per share  $(0.002)  $(0.001)  $(0.006)  $(0.008)
                     
Weighted average common shares outstanding                    
Basic   268,508,643    224,059,843    268,508,643    227,566,431 

 

5

 

 

Blue Biofuels, Inc.

Formerly known as Alliance Bioenergy Plus, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

 

                                    
   Common Stock   Preferred
Stock
   Additional
Paid-in
   Accumulated   Total
Stockholder’s
 
   Shares   Amount   Shares   Amt   Capital   Deficit   (Deficit) 
Balance as of December 31, 2019   219,513,233   $219,513    -    -   $40,949,645   $(44,500,966)  $(3,331,808)
Issuance of common stock for services   705,352    705    -    -    34,295    -    35,000 
Issuance of 1,166,667 warrants for services                                   
Issuance of common stock and warrants for cash through PPM   9,025,129    9,025    -    -    538,355    -    547,380 
Issuance of common stock in exchange for debt   1,000,000    1,000    -    -    24,000         25,000 
Issuance of 10,300,000 vested options under the employee, director plan        -    -    -    847,573    -    847,573 
Warrants exercised   5,000,000    5,000    -    -    245,000    -    250,000 
Employee stock options exercised                                   
Employee stock options exercised, shares                                   
Cashless exercise of stock options   277,778    278              (278)        - 
Net Income (Loss)                            (1,857,747)  $(1,857,747)
Balance as of September 30, 2020   235,521,492   $235,521    -    -   $42,638,590   $(46,358,713)  $(3,484,601)
                                    
Balance as of December 31, 2020   241,721,947   $241,722    -    -   $43,103,607   $(46,682,093)  $(3,336,764)
Issuance of common stock for services   301,000   $301    -    -   $66,129    -   $66,430 
Issuance of 1,166,667 warrants for services        -    -    -    72,090    -    72,090 
Warrants exercised   3,455,009    13,455    -    -    1,289,362    -    1,302,817 
Issuance of common stock and warrants for cash through PPM   9,403,331    9,403    -    -    1,966,347    -    1,975,750 
Issuance of common stock in exchange for debt   7,080,000    7,080    -    -    271,920    -    279,000 
Issuance of 210,000 vested options under the employee, director plan        -              12,658         12,658 
Employee stock options exercised   350,000    350    -    -    12,550    -    12,900 
Cashless exercise of stock options   337,896    338    -    -    (338)   -    (0)
Net Income (Loss)                            (1,553,317)  $(1,553,317)
Balance as of September 30, 2021   272,649,183   $272,649    -    -   $46,794,325   $(48,235,410)  $(1,168,436)

 

6

 

 

Blue Biofuels, Inc.

Formerly known as Alliance Bioenergy Plus, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

         
   For the Nine Months Ended   For the Nine Months Ended 
   30-Sep-21   30-Sep-20 
Cash flows from operating activities          
Net Income (Loss)  $(1,553,317)  $(1,857,747)
Reconciliation of net loss to net cash used in operating activities          
Depreciation and amortization   89,658    28,746 
Stock based compensation for services   66,430    35,000 
Net Issuance of options and warrants for services   84,748    847,574 
           
Loss on Disposal of assets   33,484    - 
Changes in operating assets and liabilities          
Prepaid expenses   (32,691)   80,985 
Accrued interest - related party   (56,689)   156,374 
Accounts payable and accrued liabilities   (529,335)   41,712 
Forgiveness of PPP Loan   (66,330)   - 
Right of use lease   (59,284)   2,604 
Net cash used in operating activities   (2,023,326)   (664,752)
           
Cash flows from investing activities          
Purchase of property and equipment   (178,803)   (150,036)
Security deposits   -    - 
Patent Costs   (16,742)   (58,026)
Net cash from (used in) investing activities   (195,545)   (208,062)
           
Cash flows from financing activities          
Proceeds from PPP Loan   -    66,330 
Proceeds from exercise of warrants and options   1,315,717    250,000 
Net proceeds from issuance of common stock   1,975,750    547,380 
Net cash provided by financing activities   3,291,467    863,710 
           
Net increase (decrease) in cash and cash equivalents   1,072,596    (9,104)
           
Cash and cash equivalent at beginning of the period   286,579    110,630 
Cash and cash equivalent at end of the period  $1,359,175   $101,526 
           
Supplemental disclosure of cash flow information          
Cash paid during the period for          
Interest  $-   $- 
Taxes  $-   $- 
           
Supplemental schedule of non-cash activities          
Cashless conversion of warrants/options  $28,000   $25,000 
Conversion of convertible debenture to common stock  $279,000   $25,000 

 

7

 

 

Blue Biofuels, Inc.

Formerly known as Alliance Bioenergy Plus, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – ORGANIZATION

 

Blue Biofuels, Inc (the “Company”) is a technology company focused on emerging technologies in the renewable energy, biofuels, and bioplastics technologies sectors. In early 2018, our CEO Ben Slager invented a new technology system we call Cellulose-to-Sugar or CTS 2.0, and the Company filed a patent application for this technology. The patent on the CTS 2.0 was awarded in 2021 in the United States (US10994255) and recently in El Salvador. The Company also filed an application for this patent in other major jurisdictions of the world including the European Patent Organization, Australia, Brazil, China, Japan, the African Regional Intellectual Property Organization, and the Russian Federation. The patent applications are currently pending in all of these international jurisdictions. The Company has filed five more patents in the United States, all of which are currently pending. These patents pertain to the CTS process, the “fingerprint” of our sugars coming from the process, and the lignin and nanocellulose coming from the process.

 

Mr. Slager has since further developed the system with laboratory personnel. The CTS 2.0 process is a continuous mechanical/chemical dry process for converting cellulose material into sugar and lignin, as compared to the CTS 1.0 which was a batch mechanical/chemical dry process previously used by our Company. The CTS 2.0 creates molecular contact between two reactive solid components instead of a more conventional reaction where the reaction takes place between two liquid or gas components in a batch process. The reactants are (1) the cellulose, which is broken down into its components being sugars and lignin; (2) a catalyst, which is cheap and abundantly available in the market from regular suppliers, and separated from reactor components and reused. The CTS 2.0 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.

 

CTS 2.0 differs from other commercial processes that are used to convert cellulose into sugar. Other processes use expensive enzymes, or expensive and harmful chemicals like strong acids or bases. Some use high temperature or high pressure steam. CTS 2.0 can convert any cellulosic material – including grasses, wood, paper, farm waste, yard waste, forestry products, energy crops like hemp or king grass, and the cellulosic portion of municipal solid waste – into sugars and subsequently into biofuels and bioplastics without the use of expensive enzymes or harmful liquid acids or bases. CTS 2.0 has a near zero carbon footprint in that the amount of added atmospheric carbon created by burning the biofuels produced by CTS 2.0 is reabsorbed by the plant-based seed stock used in the CTS 2.0 system, and recycles the water and catalyst.

 

At commercial scale, management expects to be able to produce ethanol at a lower cost than existing commercial corn or cellulosic ethanol producers due to the fact that the CTS 2.0 process is uncomplicated and efficient, and has high value by-products. We believe a significant difference between CTS 2.0 and corn ethanol is the wide range of feedstocks that CTS 2.0 can process compared to corn. The CTS 2.0 feedstocks are not food and have much lower costs than corn. In addition, while in corn ethanol only the corncobs are used, the CTS 2.0 uses the whole plant or its waste products.

 

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.

 

The Company has built several prototypes of the CTS 2.0 system to solidify and further develop the process. The Company completed its upgraded 4th generation CTS 2.0 prototype system in 2021, which is a representative scale to verify that the process will be scalable to industrial size. The Company is currently testing the 4th generation CTS 2.0 system to optimize various parameters towards the engineering and scale up of a commercial size reactor. The Company has decided to complete all the parameter optimizations possible with its 4th generation system before scaling up to a 5th generation system because the parameter optimizations lead to design improvements that can be done more cost effectively at this scale. The 4th generation system has already had many design improvements with better and better results. The Company does not anticipate having any issues with scaling given the mechanical nature of the process.

 

8

 

 

The CTS 2.0 system converts plant-based feedstock into two product streams, cellulose and lignin, each of which can be converted into multiple products: (1) Cellulose is broken down into sugars and nanocellulose. Nanocellulose has various uses in a wide range of industries, including the pharmaceutical industry. Sugar can be used to make specialty chemicals and/or biofuels such as ethanol and jet fuel; and (2) Lignin can be used in ion exchange resins, specialty chemicals, or to create bioplastics. It can also be burned as a renewable fuel.

 

Plan of Operation

 

The Company’s strategy is to diversify its product portfolio to include a number of product lines. These potentially include (1) biofuels – such as ethanol, or converting ethanol into higher biofuels like jet-fuel and the like; (2) selling sulfur-free lignin to ion exchange resin producers; (3) making bioplastics from lignin; and, (4) making nanocellulose. We believe these, and other markets, could potentially provide for highly profitable co-products.

 

Our goal is to develop our CTS 2.0 technology to a commercial scale and then seek to either enter into a joint venture or acquire existing corn ethanol plants to install the CTS 2.0 technology. The Company is also looking into converting ethanol to jet fuel. To minimize dilution to shareholders, we will seek project-based financing to build (or acquire and retrofit) or joint venture with existing ethanol producers to produce cellulosic ethanol and lignin/bioplastics and other specialty chemicals from our CTS 2.0 system. We believe retrofitting existing plants with the CTS 2.0 technology may achieve more rapid commercialization than building new plants. 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 technology or forming joint ventures with foreign domestic partners to build plants ourselves.

 

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 $3.30 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.

 

NOTE 2 – GOING CONCERN

 

The accompanying consolidated 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 September 30, 2021, the Company has a working capital surplus of $944,093. As of September 30, 2021, the Company has incurred accumulated losses of $48,235,410. On October 22, 2018, the Company filed for Chapter 11 bankruptcy. On September 18, 2019, the judge confirmed the Company’s Chapter 11 Plan, and on October 25, 2019, the bankruptcy case was closed. The Company expects to incur significant additional losses and liabilities in connection with its start-up and commercialization activities. 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, 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.

 

9

 

 

The Company intends to raise additional capital and continue engineering work and scaling up towards a full-scale commercial size CTS 2.0 modular unit. At that point, and to minimize dilution to shareholders, the Company will seek project-based financing to build (or acquire and retrofit) or joint venture with existing ethanol producers to produce cellulosic ethanol and lignin/bioplastics from its patented CTS 2.0 system. Once the first plant is profitable, the Company intends to grow with additional plants both in the United States and internationally. There is no assurance that the Company will be able to obtain the necessary project-based financing.

 

The Company believes that its CTS 2.0 process can potentially produce ethanol profitably at the market price, particularly if anticipated potential revenue streams from by-products are included, and in conjunction with the D3 RIN that the Company expects to potentially receive for each gallon of ethanol.

 

Our business, results of operations, and financial condition may be adversely impacted by the COVID-19 pandemic.

 

The COVID-19 pandemic has negatively affected the U.S. and global economies, disrupted global supply chains, resulted in significant travel and transport restrictions, including mandated closures and orders to “shelter-in-place,” and created significant disruption of the financial markets. We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact our customers, employees and supply chain. Given the critical nature of the products that we provide, our office and lab have remained open during the pandemic. The extent to which our operations may be impacted by the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted. We may experience additional operating costs due to increased challenges with our workforce (including as a result of illness, absenteeism or government orders), access to supplies, capital, and fundamental support services (such as shipping and transportation). Even after the COVID-19 pandemic has subsided, we may experience materially adverse impacts to our business due to any resulting economic recession or depression. Furthermore, the impacts of a potential worsening of global economic conditions and the continued disruptions to and volatility in the financial markets remain unknown.

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying consolidated financial statements of the Company were prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and include the assets, liabilities, revenues and expenses of the Company’s majority-owned subsidiaries over which the Company exercises control.

 

Principles of Consolidation

 

The accompanying consolidated 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. All material intercompany transactions and balances were eliminated in consolidation.

 

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 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.

 

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.

 

10

 

 

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. 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 in accordance with ASC Topic 718, ASC Topic 505, “Equity Payments to Non-Employees” or other applicable authoritative guidance.

 

Stock-based Compensation Valuation Methodology

 

Stock-based compensation resulting from the issuance of common stock is calculated by reference to the valuation of the stock on the date of issuance, the expense being recognized as the compensation is earned. Stock-based compensation expenses related to employee options and warrants granted to non-employees are recognized as the stock options and warrants are earned. The fair value of the stock options or warrants granted is estimated at the grant date, using the Black-Scholes option-pricing model, and the expense is recognized on a straight-line basis over the shorter of the period over which services are to be received or the life of the option or warrant. The grant date fair value of employee share options and similar instruments is estimated using the Black-Scholes option-pricing model on the basis of the fair value of the underlying common stock on the measurement date, adjusted for the unique characteristics of those equity instruments, using the assumptions noted in the table below. The fair value of the common stock is determined by the then-prevailing closing market price. Expected volatility was based on the historical volatility of the Company’s closing day market price per share. The expected term of options and warrants was based upon the life of the option, and the risk-free rate used was based on the U.S. Treasury Daily Yield Curve Rate.

 

The stock compensation issued for services during the 9 months ended September 30, 2021, was valued on the date of issuance. The following assumptions were used in calculations of the Black-Scholes option pricing models for warrant-based stock compensation issued in the nine months ended September 30, 2021:

 

   1/5/21   5/18/21   9/13/21   9/30/21 
Risk-free interest rate   0.96%   1.64%   1.33%   0.98%
Expected life   10 years    5 years    10 years    5 years 
Expected dividends   0%   0%   0%   0%
Expected volatility   209.98%   176.37%   148.35%   150.25%
ALLM common stock fair value  $0.124   $0.300   $0.160   $0.255 

 

 

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. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred.

 

Patent Capitalization

 

If a product is currently under research and development and is not currently approved for market, costs incurred in connection with patent applications should generally be expensed in the income statement 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 of the CTS process), 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 life of the patent(s). Since the Company’s primary end product is sugar converting to ethanol, which are in wide use, the Company has determined that it is reasonable to capitalize the patent costs associated with its CTS process, which were $154,758 as of September 30, 2021 and $138,016 as of December 31, 2020.

 

11

 

 

Research and Development

 

The Company expenses all research and development costs as incurred. For the nine months ended September 30, 2021, and September 30, 2020, the amounts charged to research and development expenses were $744,783, and $671,918, respectively.

 

Revenue Recognition

 

The Company follows FASB ASC 606 “Revenue Recognition” and recognizes revenue when it is realized or realizable and earned. The Company’s revenues will be derived principally from joint ventures, royalties and eventually corporate owned plants. However, no sales have occurred through those revenue streams to date. The Company considers revenue realized or realizable and earned when all of the following criteria are met:

 

  1. persuasive evidence of an arrangement exists;
  2. the product has been shipped or the services have been rendered to the customer;
  3. the sales price is fixed or determinable; and,
  4. collectability is reasonably assured.

 

Common Stock Purchase Warrants and Other Derivative Financial Instruments

 

The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide it with a choice of net-cash settlement or settlement in the Company’s own shares (physical settlement or net-share settlement) provided that such contracts are indexed to its own stock as defined in ASC 815-40 (“Contracts in Entity’s Own Equity”). The Company classifies as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the Company’s control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses the classification of its common stock purchase warrants and other free-standing derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

 

Non-controlling interest in consolidated subsidiaries

 

The accompanying consolidated financial statements include the accounts of Blue Biofuels, Inc. and those subsidiaries that the Company has the ability to control either through voting rights or means other than voting rights. For these subsidiaries, the Company records 100% of the revenues, expenses, cash flows, assets and liabilities in its consolidated financial statements. For subsidiaries that the Company controls but hold less than 100% ownership, a non-controlling interest is recorded in the consolidated income statement to reflect the non-controlling interest’s share of the net income (loss), and a non-controlling interest is recorded in the consolidated balance sheet to reflect the non-controlling interest’s share of the net assets of the subsidiary.

 

Investments in non-consolidated affiliates

 

Investments in non-consolidated affiliates are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company’s ability to exercise significant influence over the operating and financial policies of the investee. When the equity method is used, investments are recorded at original cost and adjusted periodically to recognize the Company’s proportionate share of the investees’ net income or losses after the date of investment. When net losses from an investment are accounted for under the equity method exceed its carrying amount, the investment balance is reduced to zero and additional losses are not provided for. The Company resumes accounting for the investment under the equity method if the entity subsequently reports net income and the Company’s share of that net income exceeds the share of net losses not recognized during the period the equity method was suspended. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred.

 

12

 

 

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 in accordance with ASC Topic 740, “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.

 

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented.

 

Profit (Loss) per Common 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 has been 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.

 

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.

 

The estimated fair value of certain financial instruments, payables to related parties, and accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

 

13

 

 

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)

 

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.

 

NOTE 4 – ASSETS

 

Patents

 

The Company has been granted one patent on its technology, has filed for three others that are pending, and has also applied for international patents. The Company has capitalized the legal and filing fees in the amount of $154,758 as of September 30, 2021.

 

NOTE 5 – DEBT

 

Notes Payable – Chapter 11 Settlement

 

On July 18, 2018, the Company’s former Controller Dennis Lenaburg sued the Company for $2,694,577 dollars plus stock warrants in the Circuit Court of the 15th Judicial Circuit in Palm Beach County, Florida. That lawsuit was moved to the Bankruptcy Court when the Company entered Chapter 11 on October 22, 2018. The Company filed a Complaint against Lenaburg on November 16, 2018, in the bankruptcy court in the Southern District of Florida. The bankruptcy judge ordered mediation, and a settlement was reached that paid Lenaburg $13,650 upon Plan Confirmation and a $50,000 claim payable out of post-confirmation net profits over 3 years, plus 1.5 million common stock warrants with a strike price of $0.30/share and a ten-year expiration period. The $50,000 is due on September 18, 2022.

 

Notes Payable – Related Parties

 

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 $278,794.68 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.

 

14

 

 

On February 28, 2018, the Company entered into a short-term loan with Steven Sadaka, with a principal balance of $100,000 due and payable on May 1, 2018. The note does not accrue interest, however the Company provided 2,000,000 inducement shares to secure the note. These inducement shares were valued at $84,000 and are being amortized over the life of the note. The note’s maturity date was extended to 7/1/2018. If the note is not repaid at maturity, then an additional 5,000,000 shares of common stock will be due. The note was renegotiated during the Company’s Chapter 11 proceedings, and as per the Plan Confirmation, it is agreed that $100,000 is to be paid out of future gross revenues to satisfy this note in full, with no additional shares to be issued.

 

On May 15, 2018, the Company entered into a short-term loan with Christopher Jemapete, with a principal balance of $50,000 due and payable on May 16, 2019. The note carried an interest rate of 5% plus the company issued 1,250,000 inducement shares to secure the note as well as 1,000,000 warrants with a $0.10 strike price and with a 5-year expiration. These inducement shares were valued at $36,250 and are being amortized over the life of the note; the warrants had a value of $24,449. On August 25, 2018, this note was restructured to remove the warrants. As of June 30, 2018 accrued interest on this note is $315. The note was renegotiated during the Company’s Chapter 11 proceedings, and as per the Plan Confirmation, it is agreed that $50,315.07 is to be paid out of future gross revenues.

 

On May 15, 2018, the Company entered into a short-term loan with Pamela Jemapete, with a principal balance of $50,000 due and payable on May 16, 2019. The note carried an interest rate of 5% plus the company issued 1,250,000 inducement shares to secure the note as well as 1,000,000 warrants with a $0.10 strike price and with a 5-year expiration. These inducement shares were valued at $36,250 and are being amortized over the life of the note; the warrants had a value of $24,449. On August 25, 2018, this note was restructured to remove the warrants. As of June 30, 2018 accrued interest on this note is $315. The note was renegotiated during the Company’s Chapter 11 proceedings, and as per the Plan Confirmation, it is agreed that $50,315.07 is to be paid out of future gross revenues.

 

Notes Payable – Other

 

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 $14,382.2 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.

 

In November 2017, the Company entered into a convertible debenture with Lucas Hoppel, with a principal balance of $143,000 due and payable on May 30, 2018. The note carries an 8% one-time interest charge, a $43,000 original issue discount and a 35% conversion discount to the lowest trade price in the prior twenty-five trading days, after 180 days, in whole or in part at the option of the holder. In addition, the Company provided 500,000 inducement shares to secure the note, and may have to provide additional shares on the note’s 6-month anniversary if the Company’s share price declines. These inducement shares were valued at $39,500 and were amortized over the life of the note. The note can be repaid, without prepayment penalties, within the first 90 days. Thereafter, the note will incur a 120% prepayment penalty of the then outstanding principal and interest due. In May 2018, the company made two principal payments totaling $40,000. The note went into default on June 1, 2018 and incurred a 40% penalty of the outstanding balance immediately prior to the default event. On August 30, 2018, Hoppel sued the Company in Superior Court of the State of California County of San Diego Central District. That case was staid on October 22, 2018 when the Company filed for Chapter 11 protection in the US Bankruptcy Court in the Southern District of Florida. Negotiations took place and a settlement was reached on this note and a subsequent note, and confirmed as part of the Plan Confirmation Order, that Hoppel would be paid a total of $100,000 out of 5% of the future gross revenue of the Company.

 

In February 2018, the Company entered into a convertible debenture with Lucas Hoppel, with a principal balance of $165,000 due and payable on September 21, 2018. The note carries an 8% one-time interest charge, a $15,000 original issue discount and a 40% conversion discount to the lowest trade price in the prior twenty-five trading days, after 180 days, in whole or in part at the option of the holder. In addition, the Company provided 500,000 inducement shares to secure the note. These inducement shares were valued at $14,500, and were amortized over the life of the note. The note can be repaid, without prepayment penalties, within the first 90 days. Thereafter, the note will incur a 120% prepayment penalty of the then outstanding principal and interest due. The Note went into default on June 1, 2018, through a cross default provision with another Note to Hoppel, and incurred a 40% penalty of the outstanding balance immediately prior to the default event. On August 30, 2018, Hoppel sued the Company in Superior Court of the State of California County of San Diego Central District. That case was staid on October 22, 2018 when the Company filed for Chapter 11 protection in the US Bankruptcy Court in the Southern District of Florida. Negotiations took place and a settlement was reached on this note and a prior note, and confirmed as part of the Plan Confirmation Order, that Hoppel would be paid a total of $100,000 out of 5% of the future gross revenue of the Company to settle both notes.

 

15

 

 

On March 27, 2019, the Company entered into an agreement with Partiz and Company, P.A. such that its debt will be reduced from $32,000 to $20,000 payable out of future gross revenues, upon the bankruptcy court’s acceptance of the Company’s plan of reorganization. The Plan was confirmed by the Court on September 18, 2019.

 

A summary of all debts indicated in the Notes above is as follows:

 

Notes Payable  September 30,
2021
   December 31,
2020
 
Short Term Convertible Debentures Related Party  $-   $75,000 
Short Term Chapter 11 Settlement  $50,000   $- 
Long Term Chapter 11 Settlement  $-   $50,000 
Long Term Paycheck Protection Program SBA loan  $-   $66,330 
Long Term Notes Payable from future revenue — Related Party  $1,700,630   $1,700,630 
Long Term Notes Payable from future revenue — Other  $120,000   $120,000 
Long Term Note Payable from future profits — Related Party  $820,932   $820,932 
Long Term Note Payable from future profits — Other  $96,570   $96,570 
Long Term Convertible Debentures — Related Party  $-   $204,000 
TOTAL NOTES  $2,788,132   $3,133,462 

 

Of the $2,788,132 due as of September 30, 2021, $2,738,132 is due out of future revenue or future profits. $2,417,502 of the $2,788,132 will be discharged if not paid by September 18, 2024, which is 5 years after the Company exited Chapter 11. The remaining debt that would not be discharged is $370,630, consisting of $200,630 due to related parties, $120,000 due to other, and a $50,000 Chapter 11 settlement.

 

NOTE 6 – STOCKHOLDERS’ EQUITY

 

The total number of shares of capital stock, which the Company has authority to issue, is 1,010 million, 1 billion of which are designated as common stock at $0.001 par value (the “Common Stock”) and 10 million of which are designated as preferred stock par value $0.001 (the “Preferred Stock”). As of September 30,2021, the Company had 272,649,183 shares of Common Stock issued and outstanding and no shares of Preferred Stock were issued. 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.

 

For the nine months ended September 30, 2021, the Company issued an aggregate of 301,000 shares of its common stock for services valued at $66,430.

 

For the nine months ended September 30, 2021, the Company raised $1,975,750 through its private offerings and issued 9,403,331 shares.

 

For the nine months ended September 30, 2021, 13,455,009 warrants were executed at an average price of $0.10 cents/share for total proceeds of $1,302,817.

 

For the nine months ended September 30, 2021, the Company issued an aggregate of 1,166,667 warrants for services. Using a Black-Scholes asset-pricing model, these warrants were valued at $72,090. They have a 6-month term with exercise prices of 15 cents per share.

 

For the nine months ended September 30, 2021, 400,000 employee stock options were exercised using the cashless exercise provision to obtain 337,896 shares.

 

16

 

 

For the nine months ended September 30, 2021, 350,000 employee stock options were exercised for proceeds of $12,900.

 

For the nine months ended September 30, 2021, 14,223,850 warrants expired.

 

For the nine months ended September 30, 2021, 142,873 options expired.

 

For the nine months ended September 30, 2021, the Company issued 25,830,000 unvested employee stock options, and 210,000 options vested.

 

For the nine months ended September 30, 2021, $279,000 of convertible notes issued during Chapter 11 converted into 7,080,000 shares of common stock.

 

NOTE 7 – SEGMENT INFORMATION

 

The Company operates in one segment and does not have any revenue to date.

 

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.

 

On June 21, 2018, Power Up Lending Group Ltd., sued both the Company and four of its managers, ex-managers, and directors of the Company in the United States District Court for the Eastern District of New York. The case was dropped against the Company and the claim discharged by the bankruptcy court upon Plan Confirmation on September 18, 2019. Power Up has continued a tort case against the individuals. The D&O insurance has agreed to cover the CEO Ben Slager, CFO Anthony Santelli, as well as ex-Controller Dennis Lenaburg, in this case. Management believes the Complaint is frivolous. The defendants have filed a motion to appeal the denial of their motion to dismiss, and have amended their answers and counterclaims as of the date of this filing.

 

Leases

 

The Company consolidated its premises into one location on November 1, 2019, and 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 consolidated balance sheet. ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date for leases exceeding 12 months. The lease period is for twenty-four (24) months from November 1, 2019, to October 31, 2021. This had been extended for one year until October 31, 2022. Annual rent commenced at $84,100 per annum and increases 3% per year. Tenant is also required to cover operating costs that are estimated at $3,084 per month. Operating lease expense is recognized on a straight-line basis over the lease term and is included in General & Administrative expenses.

 

ASC 842 was effective for us beginning January 1, 2019. The adoption had a material impact on our consolidated balance sheets, but did not have a material impact on our consolidated income statements. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases.

 

Rent expense for the nine months ending September 30, 2021, and 2020, were $59,284 and $57,557, respectively.

 

17

 

 

The Company recognized the following related to leases in its Consolidated Balance Sheet:

 

PERIOD ENDED  September 30, 2021   December 31, 2020 
Right of Use Lease Liabilities          
Current portion   85,742    80,078 
Long-term portion   7,398    72,346 
TOTAL   93,140    152,424 

 

As of September 30, 2021, the total future minimum lease payments in respect of leased premises are as follows:

 

YEAR ENDED  MINIMUM
DUE
 
2021   20,795 
2022   72,345 
2023   0 
      
TOTAL  $93,140 

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

Related Party Transactions

 

The Company follows FASB ASC subtopic 850-10, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. Pursuant to ASC 850-10-20, related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

  1) Short-term notes payable, convertible notes, and contingent liabilities issued to related parties are described in NOTE 5.
  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 continue to receive less than full salaries.

 

The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts.

 

NOTE 10 – 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 September 30, 2021, to the date of this filing, the Company issued 3,000 shares for services.

 

From September 30, 2021, to the date of this filing, 175,000 warrants expired.

 

18

 

 

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

 

The following discussion should be read in conjunction with the Company’s audited financial statements and the notes thereto.

 

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. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected. The accompanying information contained in this registration statement, including, without limitation, the information set forth under the heading “Management’s Discussion and Analysis and Plan of Operation — Risk Factors” identifies important additional factors that could materially adversely affect actual results and performance. You are urged to carefully consider these factors. All forward-looking statements attributable to the Company are expressly qualified in their entirety by the foregoing cautionary statement.

 

Business Overview

 

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

 

In early 2018, our CEO Ben Slager invented a new technology system we call Cellulose-to-Sugar or CTS 2.0, and the Company filed a patent application for this technology. The patent on the CTS 2.0 was awarded in 2021 in the United States (US10994255) and recently in El Salvador. The Company also filed an application for this patent in other major jurisdictions of the world including the European Patent Organization, Australia, Brazil, China, Japan, the African Regional Intellectual Property Organization, and the Russian Federation. The patent applications are currently pending in all of these international jurisdictions. The Company has filed five more patents in the United States, all of which are currently pending. These patents pertain to the CTS process, the “fingerprint” of our sugars coming from the process, and the lignin and nanocellulose coming from the process.

 

Mr. Slager has since further developed the system with laboratory personnel. The CTS 2.0 process is a continuous mechanical/chemical dry process for converting cellulose material into sugar and lignin, as compared to the CTS 1.0 which was a batch mechanical/chemical dry process previously used by our Company. The CTS 2.0 creates molecular contact between two reactive solid components instead of a more conventional reaction where the reaction takes place between two liquid or gas components in a batch process. The reactants are (1) the cellulose, which is broken down into its components being sugars and lignin; (2) a catalyst, which is cheap and abundantly available in the market from regular suppliers, and separated from reactor components and reused. The CTS 2.0 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.

 

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CTS 2.0 differs from other commercial processes that are used to convert cellulose into sugar. Other processes use expensive enzymes, or expensive and harmful chemicals like strong acids or bases. Some use high temperature or high pressure steam. CTS 2.0 can convert any cellulosic material – including grasses, wood, paper, farm waste, yard waste, forestry products, energy crops like hemp or king grass, and the cellulosic portion of municipal solid waste – into sugars and subsequently into biofuels and bioplastics without the use of expensive enzymes or harmful liquid acids or bases. CTS 2.0 has a near zero carbon footprint in that the amount of added atmospheric carbon created by burning the biofuels produced by CTS 2.0 is reabsorbed by the plant-based seed stock used in the CTS 2.0 system, and recycles the water and catalyst.

 

At commercial scale, management expects to be able to produce ethanol at a lower cost than existing commercial corn or cellulosic ethanol producers due to the fact that the CTS 2.0 process is uncomplicated and efficient, and has high value by-products. We believe a significant difference between CTS 2.0 and corn ethanol is the wide range of feedstocks that CTS 2.0 can process compared to corn. The CTS 2.0 feedstocks are not food and have much lower costs than corn. In addition, while in corn ethanol only the corncobs are used, the CTS 2.0 uses the whole plant or its waste products.

 

The Company has built several prototypes of the CTS 2.0 system to solidify and further develop the process. The Company completed its upgraded 4th generation CTS 2.0 prototype system in 2021, which is a representative scale to verify that the process will be scalable to industrial size. The Company is currently testing the 4th generation CTS 2.0 system to optimize various parameters towards the engineering and scale up of a commercial size reactor. The Company has decided to complete all the parameter optimizations possible with its 4th generation system before scaling up to a 5th generation system because the parameter optimizations lead to design improvements that can be done more cost effectively at this scale. The 4th generation system has already had many design improvements with better and better results. The Company does not anticipate having any issues with scaling given the mechanical nature of the process.

 

The CTS 2.0 system converts plant-based feedstock into two product streams, cellulose and lignin, each of which can be converted into multiple products: (1) Cellulose is broken down into sugars and nanocellulose. Nanocellulose has various uses in a wide range of industries, including the pharmaceutical industry. Sugar can be used to make specialty chemicals and/or biofuels such as ethanol and jet fuel; and (2) Lignin can be used in ion exchange resins, specialty chemicals, or to create bioplastics. It can also be burned as a renewable fuel.

 

Plan of Operation

 

The Company’s strategy is to diversify its product portfolio to include a number of product lines. These potentially include (1) biofuels – such as ethanol, or converting ethanol into higher biofuels like jet-fuel and the like; (The Company has a license agreement in place with Vertimass, LLC, on a non-exclusive basis, to use the patented Verimass Process to convert ethanol into jet-fuel, bio-diesel, bio gasoline and further green chemical components) (2) selling sulfur-free lignin to ion exchange resin producers; (3) making bioplastics from lignin; (4) making nanocellulose. We believe these, and other markets, could potentially be highly profitable co-products.

 

Our goal is to develop our CTS 2.0 technology to a commercial scale and then seek to either enter into a joint venture or acquire existing corn ethanol plants to install the CTS 2.0 technology. The Company is also looking into converting ethanol to jet fuel. To minimize dilution to shareholders, we will seek project-based financing to build (or acquire and retrofit) or joint venture with existing ethanol producers to produce cellulosic ethanol and lignin/bioplastics and other specialty chemicals from our CTS 2.0 system. We believe retrofitting existing plants with the CTS 2.0 technology may achieve more rapid commercialization than building new plants. 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 technology or forming joint ventures with foreign domestic partners to build plants ourselves.

 

20

 

 

The Energy Policy Act of 2005, which included the Renewable Fuel Standard Program enforced by the US Environmental Protection Agency, 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 $3.30 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.

 

We believe that our CTS 2.0 process can potentially produce ethanol profitably at the market price, particularly if we include anticipated potential revenue streams from by-products, and in conjunction with the D3 RIN that we expect to potentially receive for each gallon of ethanol.

 

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 generated $194,319 in revenue, however it has not generated any revenues from its core business.

 

Capital Formation

 

On January 5, 2021, the Company closed a financing at 7.5 cents per share having sold 2,143,332 shares and raised $160,750 from the beginning of the year until January 5th.

 

In January 2021, the company commenced a new offering of shares of its common stock valued at $0.25 per share. Through the date of filing, the Company has sold 7,260,000 shares for aggregate proceeds of $1,815,000.

 

From January 1, 2021, through the date of filing, the Company issued an aggregate of 301,000 shares of its common stock for services valued at $66,430.

 

From January 1, 2021, through the date of filing, the Company issued an aggregate of 1,166,667 warrants for services. Using a Black-Scholes asset-pricing model, these warrants were valued at $72,090. They had a 6-month term with exercise prices of 15 cents per share. All have been exercised.

 

From January 1, 2021, through the date of filing, the Company issued unvested options to its managers and employees to purchase 25,830,000 shares of its common stock for a period between five and ten years at the exercise price of 15 to 30 cents per share. Using a Black-Scholes asset-pricing model, these agreements were valued at $3,408,493. Only 210,000 options have vested, with a valuation of $12,658.

 

From January 1, 2021, through the date of filing, 350,000 previously issued options were exercised for proceeds of $12,900. In addition, 400,000 options were exercised on a cashless basis for 337,896 shares.

 

From January 1, 2021, through the date of filing, warrants were exercised, for the purchase of 13,455,009 shares of common stock, at prices ranging from $0.005 to $0.25 per share for total proceeds of $1,302,817.

 

From January 1, 2021, through the date of filing, $279,000 of debt issued during Chapter 11 was exchange for 7,080,000 shares of stock.

 

Going Concern

 

The Company has incurred losses since inception, has a working capital deficiency, and may be unable to raise further capital. At September 30, 2021, the Company had a working capital surplus of $944,093 and had incurred accumulated losses of $48,235,410 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.

 

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Results of Operations

 

Comparison of the three and nine month period ended September 30, 2021(unaudited) to September 30, 2020

 

For the three and nine months ended September 30, 2021, the Company recognized $0 in revenue as opposed to $0 in 2020.

 

For the three months ended September 30, 2021, the Company’s general and administrative expenses increased by $64,570 to $215,965 from $151,394 in 2020. This increase is primarily the result of a $12,272 increase in professional fees, a $14,602 increase in filing fees, and an $30,282 increase in marketing and promotion to $30,554 from $272 in 2020.

 

For the nine months ended September 30, 2021, the Company’s general and administrative expenses decreased by $213,921 to $815,614 from $1,029,534 in 2020. This decrease is primarily the result of a $421,281 decrease in equity-based compensation, partially offset by higher filing and consulting fees related to the financing.

 

Interest expense decreased in the quarter ended September 30, 2021 by $4,745 to $8,309 from $13,054 in 2020. The decrease in 2021 was primarily the result of the Company’s decision in 2021 of having paid most of its back pay due, which carries an interest rate of 10% per annum.

 

Interest expense decreased in the nine months ended September 30, 2021 by $130,528 to $25,766 from $156,295 in 2020. The decrease in 2021 was primarily the result of the Company’s decision in 2020 to pay interest on back pay due, and in 2021 of having paid most of that back pay off.

 

For the three and nine months ended September 30, 2021 the Company recorded non-cash impairments of assets of $33,484, as compared to zero in 2020. This was the result of disposing of laboratory assets no longer in use.

 

Research and development (R&D) costs for the quarter ended September 30, 2021 were $229,923, an increase of $140,739 from $89,185 in 2020. The increase in R&D expenses is primarily the result of an increase in payroll of $93,299 from the hiring of additional personnel to accelerate the process of commercializing the CTS 2.0 system.

 

Research and development (R&D) costs for the nine months ended September 30, 2021 were $744,783, an increase of $72,865 from $671,918 in 2020. The increase in R&D expenses is primarily the result of a reduction in $414,850 in equity-based compensation more than offset by an increase in bonus of $66,872, an increase in payroll of $313,440, and an increase in consulting fees of $104,907.

 

Liquidity and Capital Resources

 

Liquidity

 

As of September 30, 2021, the Company had $1,359,175 in cash, and total stockholders’ equity on September 30, 2021, was negative $1,168,436. As of December 31, 2020, the Company had $286,579 in cash, and total stockholders’ equity at December 31, 2020, was negative $3,336,764. Total debt, including advances, accounts payable and other notes payable at September 30, 2021, together with interest payable thereon and contingent liabilities, was $3,238,627 a decrease of $990,639 from December 31, 2020, where it stood at $4,229,266. This decrease is attributable to the conversion of convertible notes, the forgiveness of the Paycheck Protection Program SBA loan, and the repayment of the majority of deferred wages. $1,820,630 of the remaining debt was renegotiated to be payable out of future revenue and $917,502 out of future profits and otherwise does not come due.

 

During the nine months ended September 30, 2021, the Company’s net cash used in operating activities increased by $1,358,574 to $2,023,326 from $664,752. This increase can primarily be attributed to an increase in payroll salaries and bonuses of $370,406, an increase in professional fees of $113,962, a reduction of accounts payable and accrued liabilities and accrued interest of $784,110, and a decrease in equity-based compensation of $762,826.

 

22

 

 

During the nine months ended September 30, 2021, the Company’s investing activities used $195,545 in cash. This can be primarily attributed to capitalizing $16,742 in patent costs and $178,803 used to purchase machinery and equipment. During the nine months ended September 30, 2020, the Company’s investing activities used $208,062. This is primarily due to the purchase of equipment of $150,036 and $58,026 in patent costs.

 

During the nine months ended September 30, 2021, the Company generated an aggregate of $3,291,467 through its financing activities, which is an increase of $2,427,757 from $863,710 during the nine months ended September 30, 2020. This increase from the prior year can primarily be attributed to $1,975,750 in the sale of common stock through the Company’s private offerings in 2021, and $1,315,717 in proceeds from the exercise of warrants and options.

 

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 around $10 million to optimize and scale up its CTS 2.0 system to be commercially ready. The Company anticipates reaching this stage around 12-15 months after financing. There is no guarantee that we will achieve this additional funding.

 

As of the date of filing, the Company has raised $3,291,467 in 2021, through the issuance of common stock and the exercise of warrants and options, in addition to $10,998,234 through the end of 2020, for a total of $14,289,701, 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.

 

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 September 30, 2021, shareholders’ equity was negative $1,168,436.

 

There were 272,649,183 shares of common stock issued and outstanding as of September 30, 2021.

 

There were no preferred shares outstanding.

 

The Company has paid no dividends.

 

Critical Accounting Policies

 

Off-Balance Sheet Arrangements

 

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Seasonality

 

The Company’s operating results are not affected by seasonality.

 

Inflation

 

The Company’s business and operating results are not affected in any material way by inflation.

 

Contractual Obligations

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

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 the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2021.

 

Changes in Internal Control over Financial Reporting

 

There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of December 31, 2020, that occurred during our third fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control 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.

 

On June 21, 2018, Power Up Lending Group Ltd., sued both the Company and four of its managers, ex-managers, and directors of the Company in the United States District Court for the Eastern District of New York. The case was dropped against the Company and the claim discharged by the bankruptcy court upon Plan Confirmation on September 18, 2019. Power Up has continued a tort case against the individuals. The D&O insurance has agreed to cover the CEO Ben Slager, CFO Anthony Santelli, as well as ex-Controller Dennis Lenaburg, in this case. Management believes the Complaint is frivolous. The defendants have filed a motion to appeal the denial of their motion to dismiss, and have amended their answers and counterclaims as of the date of this filing.

 

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, 2021, 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
Mark Cox   01/05/21   Common Stock     133,333     Purchased @ $0.075 per share
Dave Vanchina   01/05/21   Common Stock     200,000     Purchased @ $0.075 per share
Pamela McKenna   01/05/21   Common Stock     133,333     Purchased @ $0.075 per share
Michael Bozek   01/05/21   Common Stock     135,000     Purchased @ $0.075 per share
Sean Edmund Burke   01/05/21   Common Stock     133,334     Purchased @ $0.075 per share
Jeffrey Howard   01/05/21   Common Stock     200,000     Purchased @ $0.075 per share
Brian Joseph Burke   01/05/21   Common Stock     275,000     Purchased @ $0.075 per share
Alexander C Shepard   01/05/21   Common Stock     400,000     Purchased @ $0.075 per share
Edmund Burke   01/05/21   Common Stock     266,666     Purchased @ $0.075 per share
Conner Thomas Burke   01/05/21   Common Stock     133,333     Purchased @ $0.075 per share
Kevin Owen Burke   01/05/21   Common Stock     133,333     Purchased @ $0.075 per share
Vestech Securities, Inc.   01/05/21   Common Stock     10,500     Professional Services
Bret Williams   01/05/21   Common Stock     59,500     Professional Services
Tom Camerlengo   01/11/21   Common Stock     200,000     Exercise of Options
Radall Brodsky   01/11/21   Common Stock     333,333     Exercise of Warrants
John Lucken   01/11/21   Common Stock     333,334     Exercise of Warrants
Mary Lucken   01/11/21   Common Stock     166,667     Exercise of Warrants

 

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The Loyalty American Companies, Inc.   01/13/21   Common Stock     333,333     Exercise of Warrants
Annie Bindler   01/13/21   Common Stock     50,000     Convertible Debenture
Zachary Bindler   01/13/21   Common Stock     50,000     Convertible Debenture
SLMJ Rocky Opportunity Trust   01/15/21   Common Stock     480,000     Convertible Debenture
Annie Bindler   01/20/21   Common Stock     100,000     Exercise of Warrants
Zachary Bindler   01/20/21   Common Stock     100,000     Exercise of Warrants
John Allen James   01/20/21   Common Stock     200,000     Purchased @ $0.25 per share
Randall Brodsky   01/20/21   Common Stock     80,000     Purchased @ $0.25 per share
John E. Lucken Revocable Trust   01/20/21   Common Stock     80,000     Purchased @ $0.25 per share
Edmund Burke   01/22/21   Common Stock     3,500,000     Convertible Debenture
Edmund Burke   01/22/21   Common Stock     1,000,000     Convertible Debenture
AES Capital Partners   01/22/21   Common Stock     2,000,000     Convertible Debenture
Frank & Joan Costabile Trust   01/25/21   Common Stock     100,000     Purchased @ $0.25 per share
Stacy Costabile   01/25/21   Common Stock     100,000     Purchased @ $0.25 per share
Randall Brodsky   01/26/21   Common Stock     80,000     Purchased @ $0.25 per share
Mary T. Lucken Revocable Trust   01/26/21   Common Stock     80,000     Purchased @ $0.25 per share
John E. Lucken Revocable Trust   01/26/21   Common Stock     80,000     Purchased @ $0.25 per share
Bohdan Rudawski Revocable Trust   01/26/21   Common Stock     100,000     Purchased @ $0.25 per share
Sam Spector   01/26/21   Common Stock     100,000     Purchased @ $0.25 per share
Animated Family Films, Inc   01/26/21   Common Stock     100,000     Purchased @ $0.25 per share
Bruce Greenburg Revocable Trust   01/26/21   Common Stock     250,000     Exercise of Warrants
Chris Kneppers   01/27/21   Common Stock     50,000     Exercise of Warrants
Bill Fitzpatrick   01/27/21   Common Stock     100,000     Professional Services
Audie Rolnick   01/27/21   Common Stock     90,000     Purchased @ $0.25 per share
Makhulu Holdings, LLC   01/29/21   Common Stock     100,000     Purchased @ $0.25 per share
Vecchitto FLP Valori, LLC   01/30/21   Common Stock     900,000     Exercise of Warrants
Annie Bindler   02/01/21   Common Stock     100,000     Exercise of Warrants
Zachary Bindler   02/01/21   Common Stock     100,000     Exercise of Warrants
Adam Langsom   02/01/21   Common Stock     15,000     Exercise of Warrants
Marjorie A Fidler & Michael Fidler   02/01/21   Common Stock     100,000     Purchased @ $0.25 per share
Gregory Nacron   02/01/21   Common Stock     80,000     Purchased @ $0.25 per share
Alexander Dimitrief   02/01/21   Common Stock     75,000     Exercise of Warrants
Arthur Lehrhoff   02/01/21   Common Stock     15,000     Exercise of Warrants
Bernard Lehrhoff   02/01/21   Common Stock     15,000     Exercise of Warrants
Bradley S Schmarak Declaration of Trust   02/01/21   Common Stock     45,000     Exercise of Warrants
Bryan I Schwartz Revocable Trust   02/01/21   Common Stock     15,000     Exercise of Warrants
Daniel J Hyman   02/01/21   Common Stock     15,000     Exercise of Warrants
Daniel Lehrhoff and Patti Lehrhoff Trust   02/01/21   Common Stock     30,000     Exercise of Warrants
David Duckler   02/01/21   Common Stock     30,000     Exercise of Warrants
Diane S Kahan   02/01/21   Common Stock     15,000     Exercise of Warrants
JCH Investments, LLC   02/01/21   Common Stock     75,000     Exercise of Warrants
Kenneth M Berman   02/01/21   Common Stock     15,000     Exercise of Warrants

 

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Mason Phelps Revocable Trust   02/01/21   Common Stock     75,000     Exercise of Warrants
Michael Hochman IRA Rollover   02/01/21   Common Stock     21,000     Exercise of Warrants
Randy Abeles   02/01/21   Common Stock     30,000     Exercise of Warrants
Monique Miron   02/03/21   Common Stock     50,000     Purchased @ $0.25 per share
Russel L. Miron   02/03/21   Common Stock     50,000     Purchased @ $0.25 per share
Chris Kneppers   02/05/21   Common Stock     320,000     Exercise of Warrants
Tyler & Brett Properties, LLC   02/05/21   Common Stock     100,000     Purchased @ $0.25 per share
Matthew & Ashley Beck   02/05/21   Common Stock     100,000     Purchased @ $0.25 per share
Capital Consulting, Inc.   02/05/21   Common Stock     100,000     Purchased @ $0.25 per share
Gary Noskin   02/05/21   Common Stock     100,000     Purchased @ $0.25 per share
Martin Schwimmer   02/05/21   Common Stock     100,000     Purchased @ $0.25 per share
Steven C Paul   02/05/21   Common Stock     200,000     Purchased @ $0.25 per share
Vecchio Financial, LLC   02/05/21   Common Stock     200,000     Purchased @ $0.25 per share
PT7, LLC   02/05/21   Common Stock     800,000     Purchased @ $0.25 per share
Julie Kaplan   02/05/21   Common Stock     100,000     Purchased @ $0.25 per share
LK Dayton Investments, LLC   02/05/21   Common Stock     200,000     Purchased @ $0.25 per share
Randall Brodsky   02/05/21   Common Stock     60,000     Purchased @ $0.25 per share
321Gold, Ltd.   02/05/21   Common Stock     200,000     Purchased @ $0.25 per share
Steven Nelson   02/05/21   Common Stock     200,000     Purchased @ $0.25 per share
Jason Walkow   02/05/21   Common Stock     40,000     Purchased @ $0.25 per share
ANIMATED FAMILY FILMS, INC.   02/08/21   Common Stock     100,000     Purchased @ $0.25 per share
Krzysztof Gozdziak   02/08/21   Common Stock     140,000     Purchased @ $0.25 per share
John Piper Jr.   02/09/21   Common Stock     50,000     Purchased @ $0.25 per share
Edward J Piper   02/09/21   Common Stock     50,000     Purchased @ $0.25 per share
M&K Bio LLC   02/09/21   Common Stock     600,000     Purchased @ $0.25 per share
Bradley S Schmarak   02/09/21   Common Stock     100,000     Purchased @ $0.25 per share
Evelyn Varvitsiotes   02/09/21   Common Stock     40,000     Purchased @ $0.25 per share
Paul M Chung Trust   02/09/21   Common Stock     100,000     Purchased @ $0.25 per share
Raymond L Leon   02/10/21   Common Stock     250,000     Purchased @ $0.25 per share
Anthony S De Leo & Paul De Leo JTWROS   02/11/21   Common Stock     200,000     Purchased @ $0.25 per share
Chris Kneppers   02/11/21   Common Stock     130,000     Exercise of Warrants
LABRYS FUND   02/12/21   Common Stock     100,000     Exercise of Warrants
John D Lane   02/12/21   Common Stock     350,000     Exercise of Warrants
John D Lane   02/12/21   Common Stock     362,000     Exercise of Warrants
SLMJ Rocky 2017 Opportunity Trust   02/12/21   Common Stock     1,000,000     Exercise of Warrants
SLMJ Rocky 2017 Opportunity Trust   02/12/21   Common Stock     1,425,000     Exercise of Warrants
SLMJ Rocky 2017 Opportunity Trust   02/12/21   Common Stock     1,815,342     Exercise of Warrants
Tom Camerlengo   02/19/21   Common Stock     150,000     Exercise of Options
Tom Camerlengo   02/19/21   Common Stock     177,778     Cashless Exercise of Options
Chris Kneppers   02/22/21   Common Stock     4,500,000     Exercise of Warrants
Mark Monahan   02/22/21   Common Stock     200,000     Purchased @ $0.25 per share
Jason Taylor   02/24/21   Common Stock     200,000     Purchased @ $0.25 per share
David Gross and Nancy Burgess   02/25/21   Common Stock     200,000     Exercise of Warrants
Vestech Securities, Inc.   03/03/21   Common Stock     6,450     Professional Services
Bret Williams   03/03/21   Common Stock     36,550     Professional Services
Max Assenheimer   03/17/21   Common Stock     10,000     Professional Services
Hazel Holdings, LP   03/22/21   Common Stock     1,000,000     Purchased @ $0.25 per share
Randall Brodsky   04/12/21   Common Stock     60,000     Purchased @ $0.25 per share
Mark Monahan   08/05/21   Common Stock     100,000     Purchased @ $0.25 per share
Thomas Camerlengo   08/30/21   Common Stock      160,118     Cashless Exercise of Options
Linda Gulla   09/20/21   Common Stock      40,000     Professional Services
NWBB, Inc   09/20/21   Common Stock      38,000     Professional Services
Johan Foster   10/05/21   Common Stock      3,000     Professional Services

 

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.

 

26

 

 

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.

 

Exhibit No.   Identification of Exhibit
     
2.1   Chapter 11 Plan of Reorganization (incorporated by reference to the Company’s Form 10-12G/A filed on February 16, 2021)
     
2.2  

Chapter 11 Disclosure Statement (incorporated by reference to the Company’s Form 10-12G/A filed on February 16, 2021)

     
3.1   Articles of Incorporation (incorporated by reference to the Company’s S-1 filed May 23, 2021)
     
3.2   Certificate of Amendment to Articles of Incorporation filed November 19, 2014 (incorporated by reference to the Company’s Form 10-12G/A filed on February 16, 2021)
     
3.3   Certificate of Amendment to Articles of Incorporation filed June 17, 2016 (incorporated by reference to the Company’s Form 10-12G/A filed on February 16, 2021)
     
3.4   Certificate of Amendment to Articles of Incorporation filed July 26, 2021 (incorporated by reference to the Company’s 8-K filed on July 30, 2021)
     
3.5  

Bylaws (incorporated by reference to the Company’s Form 10-12G/A filed on February 16, 2021)

     
10.1   Lease Agreement (incorporated by reference to the Company’s Form 10-12G/A filed on February 16, 2021)
     
10.2  

Employment Agreement, dated June 1, 2020, between the Company and Ben Slager (incorporated by reference to the Company’s Form 10-12G/A filed on February 16, 2021)

     
10.3   Employment Agreement, dated June 1, 2020, between the Company and Anthony Santelli (incorporated by reference to the Company’s Form 10-12G/A filed on February 16, 2021
     
10.4  

2021 Employee, Director Stock Plan (incorporated by reference to definitive 14C filed with the SEC on June 24, 2021)

     
31.1.   Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2   Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1   Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2   Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS   Inline XBRL Instance Document
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

27

 

 

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 November 11, 2021
     
  By /s/ Anthony Santelli
    Anthony Santelli
    Chief Financial Officer (Principal Financial and Accounting Officer)
     
  Date November 11, 2021

 

28

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATIONS

 

I, Benjamin Slager, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Blue Biofuels, Inc.;
     
  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     
  4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
       
    a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
       
    b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
       
    c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
       
    d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
       
  5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
       
    a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
       
    b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 11, 2021

 

/s/ Benjamin Slager  
Benjamin Slager  

Chief Executive Officer

(Principal Executive Officer)

 

 

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATIONS

 

I, Anthony Santelli, certify that:

 

  1. I have reviewed this quarterly report on Form 10-Q of Blue Biofuels, Inc.;
     
  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     
  4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
       
    a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
       
    b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
       
    c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
       
    d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
       
  5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
       
    a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
       
    b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 11, 2021

 

/s/ Anthony Santelli  
Anthony Santelli  

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

 

EX-32.1 4 ex32-1.htm

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

The undersigned, Benjamin Slager, the Chief Executive Officer of Blue Biofuels, Inc (the “Company”), DOES HEREBY CERTIFY that:

 

1. The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

IN WITNESS WHEREOF, the undersigned has executed this statement this 11th day of November, 2021.

 

  /s/ Benjamin Slager
  Benjamin Slager
 

Chief Executive Officer

(Principal Executive Officer)

 

A signed original of this written statement required by Section 906 has been provided to Blue Biofuels, Inc. and will be retained by Blue Biofuels, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

EX-32.2 5 ex32-2.htm

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

The undersigned, Anthony Santelli, the Chief Financial Officer of Blue Biofuels, Inc. (the “Company”), DOES HEREBY CERTIFY that:

 

1. The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

IN WITNESS WHEREOF, the undersigned has executed this statement this 11th day of November, 2021.

 

 

/s/ Anthony Santelli

  Anthony Santelli
 

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

A signed original of this written statement required by Section 906 has been provided to Blue Biofuels, Inc. and will be retained by Blue Biofuels, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

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