What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-31 compared with 2022-02-25 · 133 added, 125 removed, 42 unchanged (86% of the section changed)

1 unchanged sentence

Since December 2013, Blue Biofuels,

(the “Company”) has been a technology company focused on emerging technologies in the renewable energy, biofuels, and

bioplastics technologies sectors.

(the “Company”) has been a technology company focused on emerging technologies in renewable energy, biofuels, and lignin.

early 2018, the Company’s chief executive officer (“CEO”) Ben Slager invented a new technology system referred to as

2 unchanged sentences

the system with laboratory personnel.

The patent on the CTS 2.0 (U.S.

10,994,255) was awarded in 2021.

The same patent was

filed in all major jurisdictions of the world including the European Patent Organization, Australia, Brazil, China, Japan, the African

Regional Intellectual Property Organization, and the Russian Federation.

In addition to this patent, the Company has filed provisional

patent applications for six additional patents that are currently pending.

Slager has 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 is a batch process that the Company previously

The CTS 2.0 process creates molecular contact between two reactive solid components instead of competing systems 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;

and (2) a catalyst, 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 reaction parameters through which optimal efficiency is achieved.

100% owned CTS 2.0 system can convert virtually any cellulosic material – like 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 is environmentally friendly

in that it recycles the water and catalyst, and 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 feedstock used in the CTS 2.0 system in the next harvest.

The CTS patent was awarded in 2021 in the United States (U.S.

10,994,255) and also in

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.

patent applications are currently pending in all of these international jurisdictions.

In addition to this patent, the Company has received

one additional patent (for which it has also applied for in all the above mentioned jurisdictions), one continuation patent pending,

and provisional patent applications for two additional patents that are currently pending.

Slager has since further developed the system with the technical staff of the Company.

The patented CTS process is a continuous mechanical/chemical

dry process for converting cellulose material into sugar and lignin, as compared to the prior batch process that the Company previously

The CTS process creates molecular contact between two reactive solid components instead of other systems where the reaction

takes place between two liquid or gas components in a batch process.

The reactants are (1) the feedstock, which is broken down into its

components being sugars and lignin;

(2) a catalyst, which is cost effective and abundantly available in the market from regular suppliers;

it is separated from reactor components and reused.

The CTS mechanical/chemical process allows for exact process control to ensure that

all the material passing through it does so on the optimum reaction parameters through which optimal efficiency is achieved.

is different 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, and some processes use steam at high temperature or high pressure.

CTS 2.0 system converts plant-based feedstock into two product streams, soluble sugars and lignin, each of which can be converted into

multiple products:

(1) sugars can be further processed into cellulosic ethanol and other biofuels like jet fuel, and potentially into

bio chemicals;

and (2) Lignin can be used in ion exchange resins, specialty chemicals, or to create bioplastics.

Lignin can also be burned

as a renewable fuel.

Other processes use enzymatic batch reactors

that take up to weeks to convert cellulose to sugars.

CTS can convert any cellulosic material – including grasses and agricultural

waste – into sugars in less than a minute of conversion time.

The sugars are subsequently processed into biofuels using off-the-shelf

technologies.

CTS is environmentally friendly in that it recycles the water and catalyst, and it has a near zero carbon footprint:

amount of added atmospheric carbon created by burning the biofuels produced by the CTS system was absorbed by the plant-based feedstock

while growing and is merely released back into the atmosphere.

No extra CO2 is released into the atmosphere in our system.

be distinguished from fossil fuels because new CO2 is released when fossil fuels are burned.

CTS system converts plant-based feedstock into one primary product, soluble sugars, which can be further processed into cellulosic ethanol

and other biofuels like jet fuel, and potentially into bio chemicals.

has different co-products than other processes.

Our primary co-product is sulfur-free lignin.

Other cellulosic ethanol processes do not

yield sulfur-free high purity lignin because their processes destroy or contaminate the lignin.

Most ethanol producers use corn, not

cellulose, and the co-products of corn ethanol production are distillers grains animal feed and corn oil.

Our lignin potentially can

be converted into biodegradable bioplastics, or be used in ion exchange resins or specialty chemicals.

Revenue streams from lignin can

potentially be higher than from ethanol.

We are also looking into whether the CTS process can produce nanocellulose profitably, which

is used in pharmaceutical products and potentially could sell for over $1 per gram.

Our primary co-product is pure lignin.

Other industries like the paper industry produce

lignin that is contaminated by chemicals like sulfur.

Other cellulosic ethanol processes do not yield chemically clean high purity lignin

because their processes chemically alter or contaminate the lignin.

Most ethanol producers use corn, not cellulose, and the co-products

of corn ethanol production are distillers grains animal feed and corn oil.

Our lignin can potentially be used in ion exchange resins

or specialty chemicals.

Lignin can also be burned as a renewable fuel.

a commercial scale, our management expects to be able to produce ethanol at a lower cost per gallon than existing commercial corn or

cellulosic ethanol producers due to the fact that the CTS 2.0 process is uncomplicated and efficient, and is expected to have high value

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

corn is used, the CTS 2.0 uses the whole plant or its waste products.

promise of the CTS technology led the Company’s management and board to restructure the Company through chapter 11.

Prior management

had taken on various short-term high interest usurious “toxic” notes that converted into common stock at a fixed discount

to the market price in 2017 and early 2018, and various other debts that the Company could not pay at that time.

cellulosic ethanol producers due to the fact that the CTS process is robust, uncomplicated and efficient, and is expected to use low-cost

feedstocks and have a potentially high value by-product.

We believe a significant difference between CTS ethanol and corn ethanol is

the wide range of abundantly available feedstocks that CTS can process compared to just corn as the feedstock.

The CTS feedstocks are

nonfood and have much lower costs than corn.

In addition, while in corn ethanol only the corn kernels are used, CTS uses the whole plant

or its waste products, meaning it could obtain much higher yields per acre.

Estimated yields for corn are about 400-600 gallons of ethanol

per acre per year and for king grass in conjunction with our CTS process it could be up to 3000-3500 gallons per acre per year.

also expects to potentially receive a highly valued D3 RIN for each gallon of ethanol it produces.

promise of the then newly developed CTS technology made it worthwhile to financially restructure the Company through Chapter 11 in 2018.

Prior management had taken on various “toxic” notes other debts that the Company could not pay at that time.

The Company’s

13 unchanged sentences

to be paid, the bankruptcy case was closed on October 25, 2019.

this bankruptcy period and thereafter, the Company has proceeded with engineering and development of its technology towards commercialization.

The Company has built several prototypes of the CTS 2.0 system to further develop the process.

The Company completed its upgraded 4 th

generation CTS 2.0 prototype system in 2021, which was designed to be a representative scale with nearly all systems and parameters

anticipated in a full-scale industrial system.

The Company decided to complete all the parameter optimizations possible with its 4 th

generation system before scaling up to a 5 th generation system because the parameter optimizations lead to design improvements

that have been done more cost effectively at that scale.

The Company has recently finalized its 4 th generation testing with

great success as it was able to generate a 99%+ conversion of the cellulosic material into soluble sugars suitable for further processing

into cellulosic ethanol.

The Company is now moving into its 5 th generation system.

Company expects to have its 5 th generation CTS 2.0 prototype, along with auxiliary equipment, completed within 6 to 12 months.

The goal of the 5 th generation system is to prove larger volume production, and to be an intermediate step to the final 6 th

generation which is intended to be the commercial volume system.

The Company expects that the 5 th generation system

will be of sufficient size and handle sufficient capacity of feedstock to produce approximately one ton per day of the combination of

sugar and lignin, which the Company believes will be sufficient to prove the commercial viability of the CTS 2.0 technology.

mechanical nature and modularity, we anticipate that one plant would have multiple modular CTS systems.

The Company expects to have a

CTS 2.0 modular system ready for commercial production in 12-18 months.

commencing commercial production will require project financing.

The project financing will either be for bolting on our CTS 2.0 system

into an existing ethanol facility of a future potential joint venture partner, or for acquiring an ethanol facility and converting that

to cellulosic ethanol production using our CTS 2.0 system, or for setting up a production facility for converting ethanol into jet fuel

using the Vertimass Process that the Company has licensed.

believe retrofitting existing ethanol 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.

ethanol industry is highly competitive with over 200 ethanol plants in the United States alone.

Currently, the vast majority use corn

as the feedstock.

Company has built several prototypes of the CTS system to further develop the process.

The Company finalized its parameter optimization

when it was able to convert 99% of the cellulosic material into soluble sugars suitable for further processing into cellulosic ethanol.

In 2022, the Company partnered with K.R.

Komarek to build its CTS machines going forward.

Komarek is an industry leading manufacturing

company that builds briquetting machines and compaction/granulation systems with throughput capacities up to 50 tons per hour.

Company has begun successful testing on a Komarek-made machine at a throughput processing rate of 2.5 tons per day.

The Company has designed

a pilot plant around that machine and is in the process of completing the buildout of the plant.

The Company anticipates having the pilot

plant completed in Q1, 2023 and anticipates to continue testing it and optimizing parameters and sugar production in the first half of

This pilot plant is designed to show successful volume production and scalability.

Company expects to engage an engineering firm to design a semi-commercial scale pilot plant that integrates a larger CTS system into

the pre-processing and post-processing elements of the plant.

It is anticipated that the semi-commercial plant will have the capacity

to produce sugar at a rate sufficient to make around 500,000 – 1,000,000 gallons of ethanol per year.

The goal of the semi-commercial

plant is to provide operating cost estimates of a full commercial volume system.

Due to its mechanical nature and modularity, we anticipate

that one plant would have multiple modular CTS systems, and that the semi-commercial plant would contain one such module.

expects to have the semi-commercial system ready in 2024.

commercial production will require project financing.

The project financing will either be for bolting on our CTS system into an existing

ethanol facility of a future potential joint venture partner, or for acquiring an ethanol facility and converting that to cellulosic

ethanol production using our CTS system, or for setting up a production facility for converting ethanol into jet fuel using the Vertimass

Process that the Company has licensed.

Company has licensed the Vertimass Process to convert ethanol (from the CTS process) into sustainable aviation fuel (SAF).

up-front or annual fee until we are converting ethanol into SAF.

The license agreement with Vertimass is the subject of a confidentiality

agreement between the parties.

The Company aims to start engineering of a first pilot plant to convert up to 500,000 gallons of ethanol

into jet fuel and other fuels.

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 sustainable aviation fuel and the like;

(2) selling sulfur-free

lignin to ion exchange resin producers;

and (3) making specialty chemicals from lignin.

We believe these, and other markets, could potentially

provide for highly profitable products.

believes that retrofitting existing plants with the CTS technology or delivering cellulosic sugar to existing ethanol plants to enable

them to make cellulosic ethanol, 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.

ethanol industry is competitive with over 200 ethanol plants in the United States alone.

Currently, the vast majority use corn as the

Their profitability depends highly on the fluctuations between the price of corn and the price of ethanol.

Company does not plan to use corn, and plans on having long-term purchase agreements with cellulosic suppliers, we expect that our profitability

will potentially be more consistent.

Since the Company

does not plan to use corn, and plans on having long-term purchase agreements with cellulosic suppliers, we anticipate that our profitability

will be more consistent.

new biofuels plant that is built would require various government permits.

7 unchanged sentences

project-based financing.

The Company would also need various government permits before commercializing products for the plastics industry.

Energy Policy Act of 2005, which included the Renewable Fuel Standard (RFS) 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 motor vehicles in

This Program provides monetary incentives to companies that produce renewable transportation fuel (including jet fuel),

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 based on the source of the renewable fuel.

D3 is the code for renewable ethanol

that comes from cellulosic materials.

The EPA’s newly proposed revised mandate for cellulosic ethanol is for 510 million gallons

of cellulosic biofuels be blended into the fuel supply in 2020, 620 million gallons for 2021, and 770 million gallons for 2022 (the D3

This mandate has increased every year and is statutorily mandated to increase in the future and become a larger portion of

the full renewable fuels mandate, if and when cellulosic biofuels can be produced profitably in larger quantities than they are now.

The RFS mandate for 2022 calls for 20.77 billion gallons of total renewable fuel, 15 billion from conventional biofuels (corn ethanol)

and 5.77 billion from advanced biofuels, including cellulosic biofuels.

The “blend wall” (or upper limit to the amount of

ethanol that can be blended into U.S.

gasoline and automobile performance and comply with the Clean Air Act) of limiting ethanol content

in gasoline to 10%, limits the total amount of ethanol consumed in the United States.

The value of the D3 RIN fluctuates, but as of this

filing, it is approximately $3.40 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.

Company has a strategy that includes using its low-cost high-purity lignin co-product to produce biodegradable bioplastics.

industry is highly competitive.

The Company would need various government permits before commercializing products in this space, and

it is too preliminary to discuss more details.

Company has also licensed the Vertimass Process to convert ethanol (from the CTS 2.0 process) into bio-jet fuel.

There is no up-front

or annual fee until we are converting ethanol into bio-jet fuel.

The license agreement with Vertimass is the subject of a confidentiality

agreement between the parties.

Since we are not yet producing ethanol on a commercial scale, it is too preliminary to discuss details.

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.

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.

EPA’s current RIN volume targets for cellulosic ethanol include 720 million gallons for 2023, 1.42 billion gallons for 2024, and

2.13 billion gallons for 2025 (the D3 mandate).

This mandate has increased every year and is statutorily mandated to increase in the

future and become a larger portion of the full renewable fuels mandate, if and when cellulosic biofuels can be produced profitably in

larger quantities than they are now.

The RFS mandate for 2022 called for 20.77 billion gallons of total renewable fuel, 15 billion from

conventional biofuels (corn ethanol) and 5.77 billion from advanced biofuels, including cellulosic biofuels.

The “blend wall”

(or upper limit to the amount of ethanol that can be blended into U.S.

gasoline and automobile performance and comply with the Clean

Air Act) of limiting ethanol content in gasoline to 10%, limits the total amount of ethanol consumed in the United States.

Recent proposals

may make 15% blending available year around.

The value of the D3 RIN fluctuates, but as of this filing, it is approximately $1.95 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.

Company believes that its management and consultants have significant experience in the development of technologies from concept to commercialization.

4 unchanged sentences

Each share of Company Common Stock is entitled to one (1) vote per share.

company currently employs seven full-time employees, five part-time employee and six consultants.

The Company is in the process of hiring

additional employees to more rapidly commercialize its technology.

company currently employs seven full-time employees, three part-time employee and seventeen consultants.

The Company plans to hire additional

employees to more rapidly commercialize its technology.

required as the Company is a “smaller reporting company.”

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business