BLUE BIOFUELS, INC. 10-K

Item 8. Financial Statements and Supplementary Data. Set forth below are the audited financial statements for the Company for the years ended December 31, 2023, and December 31, 2022, and the report thereon of BF Borgers, P.A. 13 Blue Biofuels, Inc. Financial Statements Years Ended December 31, 2023, and 2022 Index to Financial Statements Page Page Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2023, and December 31, 2022. F-4 Consolidated Statements of Operations for the years ended December 31, 2023, and December 31, 2022. F-5 Consolidated Statements of Changes in Stockholder’s Equity for the years ended December 31, 2023, and December 31, 2022. F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2023, and December 31, 2022. F-7 Notes to the Consolidated Financial Statements F-8 F- 1 Report of Independent Registered Public Accounting Firm To the shareholders and the board of directors of Blue Biofuels, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Blue Biofuels, Inc. (the “Company”) as of December 31, 2023, the related statement of operations, stockholders’ equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or are required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s BF Borgers CPA PC BF Borgers CPA PC (PCAOB ID 5041 ) We have served as the Company’s auditor since 2023 Lakewood, CO March 26, 2024 F- 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Blue Biofuels, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Blue Biofuels, Inc. (the “Company”) as of December 31, 2022, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Going Concern The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of the Company as a going concern. The Company has not generated any significant revenue since inception and has incurred losses since inception. As of December 31, 2022, the Company has incurred losses of $52,781,586. The Company expects to incur significant additional losses and liabilities in connection with its start-up and commercialization activities. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. Continuation as a going concern is dependent on the ability to raise additional capital and financing, though there is no assurance of success. Management’s plans in regard to these matters are also described in Note 2 to the accompanying consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. We determined that there are no critical audit matters. /s/ Prager Metis CPAs, LLC We have served as the Company’s auditor since 2020. Our Auditor Firm ID is 273 . Hackensack, New Jersey March 31, 2023 F- 3 Blue Biofuels, Inc. CONSOLIDATED BALANCE SHEETS December 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 41,008 $ 211,901 Prepaid expenses 35,750 43,119 TOTAL CURRENT ASSETS $ 76,758 $ 255,020 Other assets Property and equipment, net of accumulated depreciation and amortization of $ 243,089 and $ 127,178 at December 31, 2023 and December 31,2022, respectively 587,308 420,115 Security deposits 30,276 30,276 Right of Use Assets, net of accumulated amortization 81,091 178,399 Patents 254,786 222,109 TOTAL OTHER ASSETS $ 953,461 $ 850,899 TOTAL ASSETS $ 1,030,219 $ 1,105,919 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities Accounts payable $ 22,798 $ 37,135 Accounts payable - Related Party 72,670 72,670 Accounts payable 72,670 $ 72,670 Deferred wages and director’s fees - Related party 828,312 307,606 Right of Use Lease Liability - Current 85,983 95,172 Chapter 11 Settlement - 50,000 Convertible Notes Payable — Related Party 350,000 - Interest Payable - Related Party 143,406 76,138 TOTAL CURRENT LIABILITIES $ 1,503,169 $ 638,721 Long term liabilities Right of Use Lease Liability, net of current portion - 85,983 Notes Payable — Related Party 2,821,562 2,521,562 Notes Payable — Other 266,570 216,570 TOTAL LONG TERM LIABILITIES $ 3,088,132 $ 2,824,115 TOTAL LIABILITIES $ 4,591,301 $ 3,462,836 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; 1,000,000,000 shares authorized; 302,750,963 issued and outstanding at December 31, 2023, and 289,941,623 issued and outstanding at December 31, 2022. 302,751 289,942 Additional paid-in capital 51,972,947 50,134,727 Accumulated deficit ( 55,836,780 ) ( 52,781,586 ) TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) $ ( 3,561,082 ) $ ( 2,356,917 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 1,030,219 $ 1,105,919 The accompanying notes are an integral part of these consolidated financial statements F- 4 Blue Biofuels, Inc CONSOLIDATED STATEMENT OF OPERATIONS 2023 2022 Year Ended 31-Dec 2023 2022 Revenue $ - $ - Operating expense: General and administrative 1,339,789 1,541,959 Research & Development 1,849,967 2,350,218 Loss on disposal of assets 1,159 40,099 Total operating expenses 3,190,915 3,932,276 Loss from operations: ( 3,190,915 ) ( 3,932,276 ) Other (income) expense: Government Grants ( 233,500 ) - Common Stock Recission - ( 1,500 ) Interest expense - related party 89,363 26,847 Interest expense - other 8,416 2,560 Total other (income) expense ( 135,721 ) 27,907 Income (Loss) before provisions for income taxes $ ( 3,055,194 ) $ ( 3,960,183 ) Provisions for income taxes - - Net Income / (Loss): $ ( 3,055,194 ) $ ( 3,960,183 ) Net income (loss) per share $ ( 0.010 ) $ ( 0.014 ) Weighted average common shares outstanding Basic 299,950,813 278,830,924 The accompanying notes are an integral part of these consolidated financial statements F- 5 Blue Biofuels, Inc. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) Shares Amount Shares Amt Capital Deficit (Deficit) Common Stock Preferred Stock Additional Paid-in Accumulated Total Stockholder’s Shares Amount Shares Amt Capital Deficit (Deficit) Balance as of December 31, 2022 289,941,623 $ 289,942 - $ - $ 50,134,727 $ ( 52,781,586 ) $ ( 2,356,917 ) Issuance of common stock for services 174,194 $ 174 $ 29,126 $ 29,300 Issuance of 794,000 warrants for services 84,677 84,677 Warrants exercised 5,950,148 5,950 91,301 97,251 Issuance of common stock and warrants for cash through PPM 6,684,998 6,685 996,087 1,002,772 Issuance of common stock in exchange for debt - Vesting of 4,385,000 options under the employee, director plan 637,028 637,028 Net Income (Loss) - ( 3,055,194 ) $ ( 3,055,194 ) Balance as of December 31, 2023 302,750,963 $ 302,751 - $ - $ 51,972,946 $ ( 55,836,780 ) $ ( 3,561,082 ) Balance as of December 31, 2021 274,003,883 $ 274,004 - $ - $ 47,151,353 $ ( 48,821,403 ) $ ( 1,396,046 ) Balance 274,003,883 $ 274,004 - - $ 47,151,353 $ ( 48,821,403 ) $ ( 1,396,046 ) Issuance of common stock for services 812,119 812 135,738 136,550 Issuance of 77,333 warrants for services 9,773 9,773 Issuance of warrants for services 9,773 9,773 Warrants exercised 7,000,000 7,000 98,000 105,000 Issuance of common stock and warrants for cash through PPM 7,786,664 7,787 1,160,213 1,168,000 Issuance of common stock in exchange for debt - Vesting of 12,560,000 options under the employee, director plan 1,565,589 1,565,589 Vesting of options under the employee, director plan 1,565,589 1,565,589 Employee stock options exercised 350,000 350 15,550 15,900 Stock Recinded ( 11,043 ) ( 11 ) ( 1,489 ) ( 1,500 ) Net Income (Loss) - ( 3,960,183 ) ( 3,960,183 ) Balance as of December 31, 2022 289,941,623 $ 289,942 - $ - $ 50,134,727 $ ( 52,781,586 ) $ ( 2,356,917 ) Balance 289,941,623 $ 289,942 - - $ 50,134,727 $ ( 52,781,586 ) $ ( 2,356,917 ) The accompanying notes are an integral part of these consolidated financial statements F- 6 Blue Biofuels, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended For the Year Ended 31-Dec-23 31-Dec-22 Cash flows from operating activities Net Income (Loss) $ ( 3,055,194 ) $ ( 3,960,183 ) Reconciliation of net loss to net cash used in operating activities Depreciation and amortization 216,785 138,464 Stock based compensation for services 29,300 136,550 Recission of stock - ( 1,500 ) Net Issuance of options and warrants for services 721,705 1,575,362 Loss on Disposal of assets 1,159 40,099 Changes in operating assets and liabilities Prepaid expenses 7,368 1,933 Accrued interest - related party 67,269 26,846 Accounts payable and accrued liabilities 506,369 92,887 Right of use lease ( 95,172 ) ( 86,601 ) Net cash used in operating activities ( 1,600,411 ) ( 2,036,143 ) Cash flows from investing activities Net purchase of property and equipment ( 287,828 ) ( 138,170 ) Patent Costs ( 32,677 ) ( 67,350 ) Net cash from (used in) investing activities ( 320,505 ) ( 205,520 ) Cash flows from financing activities Net proceeds from issuance of common stock 1,002,772 1,168,000 Net proceeds from issuance of convertible notes 700,000 - Proceeds from exercise of warrants and options 97,251 120,900 Payment of debt ( 50,000 ) - Net cash provided by financing activities 1,750,023 1,288,900 Net increase (decrease) in cash and cash equivalents ( 170,893 ) ( 952,763 ) Cash and cash equivalent at beginning of the period 211,901 1,164,664 Cash and cash equivalent at end of the period $ 41,008 $ 211,901 Supplemental disclosure of cash flow information Cash paid during the period for Interest $ - $ - Taxes $ - $ - Supplemental schedule of non-cash activities Issuance of warrants for services $ 84,677 $ 9,773 Issuance of common stock for services $ 29,300 $ 136,550 Cashless conversion of warrants/options - - Conversion of convertible debenture to common stock $ - $ - The accompanying notes are an integral part of these consolidated financial statements F- 7 Blue Biofuels, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION Blue Biofuels, Inc (the “Company”) is a technology company focused on emerging technologies in the renewable energy, biofuels, and lignin technologies sectors. In early 2018, our chief executive officer (“CEO”) Ben Slager invented a new technology system referred to as Cellulose-to-Sugar or CTS, and the Company filed, and received, two patents for this technology (U.S. Patent No. 10,994,255 and 11,484,858B2), and has subsequently been granted the firrst in Japan and El Salvador. The Company also filed for both patent in other major jurisdictions of the world including the European Patent Organization, Australia, Brazil, China, the African Regional Intellectual Property Organization, and the Russian Federation. The patent applications are currently pending in all of these international jurisdictions. Further, the company has filed for 6 other patents in the United States which are currently pending. The CTS process is a continuous mechanical/chemical dry process for converting cellulose material into sugar and lignin. The 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. In 2022, the Company partnered with K.R. Komarek to build its CTS machines going forward. Komarek is an industry leading manufacturing company that builds briquetting machines and compaction/granulation systems with throughput capacities up to 50 tons per hour. In 2023, the Company completed the build-out of a pilot plant based on a modified Komarek machine and is in the process of further testing and optimizing the plant. The Company believes that it can optimize the pre and post processing elements at this pilot scale plant to finalize design and operational parameters to provide operating cost estimates of a full-scale commercial volume system. Due to its mechanical nature and modularity, we anticipate that one plant would have multiple modular CTS systems. In addition, the Company has licensed the Vertimass Process to convert ethanol into sustainable aviation fuel (SAF) and other renewable biofuels including bio-gasoline. The license agreement with Vertimass is the subject to a confidentiality agreement between the parties. Plan of Operation The total process from cellulosic feedstock to SAF consists basically of three steps: 1) Conversion from feedstock to fermentable cellulosic sugars (CTS) 2) Ferment the cellulosic sugars into cellulosic ethanol. 3) Covert the ethanol into SAF and related products. This third step happens with the Vertimass technology which the Company has licensed. In January 2024, the Company formed a 50-50 joint venture partnership with Vertimass called VertiBlue Fuels, LLC, that has the mission to build an ethanol-to-SAF facility in Florida with the initial goal to produce around 10 million gallons of Sustainable Aviation Fuel (SAF) and related products, and then expand SAF and related product production to approximately 70 million gallon per year . VertiBlue Fuels plans to initially convert sugarcane ethanol, and then, when the Company’s CTS technology is fully commercialized, to build commercial CTS and ethanol facilities on the front-end to produce cellulosic SAF and generate the large D7 RIN and other government credits. Commencing commercial production will require project financing. F- 8 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 December 31, 2023, the Company has incurred accumulated losses of $ 55,836,780 . The Company expects to incur significant additional losses and liabilities in connection with its start-up and commercialization activities. These factors, among others, raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities when they become due and to generate sufficient revenues from its operations to pay its operating expenses. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments related to the recoverability and classifications of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty. There are no assurances that the Company will continue as a going concern. Management believes that the Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities, and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, or sell additional shares of stock or borrow additional funds. The Company’s inability to obtain additional cash could have a material adverse effect on its financial position, results of operations, and its ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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 supply chain, employees, and potential future customers. Our office and lab have remained open during the pandemic. Nevertheless, the pandemic slowed our ability to commercialize our process in two ways: by adversely affecting our ability to raise capital, and by adversely affecting the supply chain of laboratory equipment and various parts of upgrades to our CTS system, which slowed the development of our prototypes. Supply chain issues also delayed the delivery of various parts of our pilot plant. The extent to which our operations may be further 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 effects 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”). 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 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. F- 9 Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. Stock Compensation The Company recognizes the cost of all share-based payments under the relevant authoritative accounting guidance. Share-based payments include any remuneration paid by the Company in shares of the Company’s common stock or financial instruments that grant the recipient the right to acquire shares of the Company’s common stock. 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”. 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 years ended December 31, 2023, and December 31, 2022, were 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 years ended December 31, 2023, and December 31, 2022: SCHEDULE OF BLACK-SCHOLES OPTION PRICING MODELS FOR WARRANT-BASED STOCK COMPENSATION 1/5/22 4/19/22 6/21/22 9/30/22 12/30/22 Risk-free interest rate 1.71 % 2.93 % 3.38 % 4.06 % 3.99 % Expected life 10 years 10 years 5 years 5 years 5 years Expected dividends 0 % 0 % 0 % 0 % 0 % Expected volatility 133.99 % 133.42 % 134.52 % 128.59 % 124.11 % BIOF common stock fair value $ 0.259 $ 0.165 $ 0.167 $ 0.167 $ 0.145 2/10/23 2/14/23 3/1/23 3/31/23 4/5/23 4/11/23 Risk-free interest rate 3.93 % 3.77 % 4.01 % 3.60 % 3.30 % 3.54 % Expected life 5 years 10 years 10 years 5 years 10 years 5 years Expected dividends 0 % 0 % 0 % 0 % 0 % 0 % Expected volatility 123.25 % 123.26 % 123.52 % 120.71 % 119.51 % 119.39 % BIOF common stock fair value $ 0.159 $ 0.159 $ 0.177 $ 0.166 $ 0.154 $ 0.145 F- 10 4/26/23 6/5/23 7/13/23 7/26/23 10/16/23 11/1/23 12/27/23 Risk-free interest rate 3.46 % 3.77 % 3.93 % 3.86 % 4.72 % 4.67 % 3.78 % Expected life 5 years 7 years 5 years 5 years 5 years 5 years 5 years Expected dividends 0 % 0 % 0 % 0 % 0 % 0 % 0 % Expected volatility 119.28 % 103.20 % 90.70 % 87.22 % 81.19 % 81.11 % 91.10 % BIOF common stock fair value $ 0.165 $ 0.170 $ 0.160 $ 0.160 $ 0.131 $ 0.123 $ 0.106 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), 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 products are expected to be sugar, ethanol, and SAF, which are in wide use, the Company has determined that it is reasonable to capitalize the patent costs associated with its CTS process. Research and Development The Company expenses all research and development costs as incurred. For the years ended December 31, 2023, and December 31, 2022, the amounts charged to research and development expenses were $ 1,849,967 and $ 2,350,218 , respectively. Revenue Recognition Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. Under ASC 606, revenue is recognized when the following criteria are met: 1. persuasive evidence of an arrangement exists; 2. product has been delivered or the services have been rendered to the customer; 3. the sales price is fixed or determinable; and, 4. collectability of the fee or sales price is reasonably assured. The Company currently has no customers. The Company’s revenues are expected to be derived principally from products sold through joint ventures and corporate owned plants. However, no sales have occurred through those revenue streams to date. The company will recognize revenue when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and is based on the applicable shipping terms. F- 11 Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. As of December 31, 2023, the Company has convertible instruments but none that have intrinsic value to conversion options, hence no bifurcation is necessary. Accounting for Derivative Instruments The Company issues debentures where the number of shares into which a debenture can be converted is not fixed. (For example, when a debenture converts at a discount to market based on the stock price on the date of conversion.) The Company analyzes the embedded conversion option of the convertible debentures to determine if it should be bifurcated from the host contract and recorded at their fair value. In accounting for derivatives, the Company records a liability representing the estimated present value of the conversion feature considering the historic volatility of the Company’s stock, and a discount representing the imputed interest associated with the beneficial conversion feature. The discount is then amortized over the life of the debenture and the derivative liability is adjusted periodically according to stock price fluctuations. At the time of conversion, any remaining derivative liability is charged to additional paid-in capital. For purposes of determining derivative liability, the Company uses Black-Scholes modeling for computing historic volatility. As of December 31, 2023, the Company has no derivative instruments. 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. 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. The Company monitors its investment for impairment at least annually and makes appropriate reductions in the carrying value if it determines that an impairment charge is required based on qualitative and quantitative information. As of December 31, 2023, the Company had no investments in non-consolidated affiliates. F- 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. 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 F- 13 Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions) At December 31, 2022, the Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with ASC 825-10. 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 – PROPERTY AND EQUIPMENT SCHEDULE OF PROPERTY AND EQUIPMENT PROPERTY AND EQUIPMENT Life December 31, 2023 December 31, 2022 Building and Improvements 15 $ 9,370 $ 9,370 Machinery and Equipment 10 $ 795,606 $ 512,450 Furniture and Fixtures 5 $ 13,596 $ 13,649 Computer Equipment 3 $ 11,825 $ 11,824 Property and Equipment, gross $ 830,397 $ 547,293 Less Accumulated Depreciation $ ( 243,089 ) $ ( 127,178 ) Property and Equipment $ 587,308 $ 420,115 Total depreciation expense was $ 119,476 and $ 55,601 for the years ended December 31, 2023, and 2022, respectively. In the fiscal year ended December 31, 2023, the Company disposed of laboratory equipment and machinery that was no longer in use for a total of $ 3500 that was originally purchased for $ 8171 and that had accumulated depreciation of $ 3,513 , thereby taking a loss of $ 1,158 on the disposal of assets. In the fiscal year ended December 31, 2022, the Company disposed of laboratory equipment and machinery that was no longer in use for a total of $ 1,185 that originally was purchased for $ 240,898 and that had accumulated depreciation of $ 199,614 , thereby taking a loss of $ 40,099 on the disposal of assets. NOTE 5 – PATENTS The Company has obtained two patents and has applied for three more patents on its technology, and has also applied for international patents. The Company has capitalized the legal and filing fees in the amount of $ 254,786 as of December 31, 2023. F- 14 NOTE 6 – DEBT Details of each remaining debt, including those that have been paid off or renegotiated during 2023, are indicated below. Notes Payable – Related Parties On December 13, 2023, and also on August 10, 2023, and on June 30, 2023, the Company entered into a long-term convertible notes with board member Chris Kneppers, with principal balances of $ 10,000 , $ 50,000 and $ 50,000 , respectively, that are to be repaid when the Company receives $5 million in equity investment. The Notes carry a 10 % interest per annum. The Notes are convertible, at the option of the lender, into common shares of the Company at 15 cents per share, plus a warrant with a strike price of 25 cents per share and a 5 -year expiration, for a total of 733,333 shares and warrants. On November 11, 2023, and also on July 7, 2023, the Company entered into two long-term convertible notes with board member Edmund Burke, with a total principal balance of $ 15,000 and $ 25,000 , respectively, that are to be repaid when the Company receives an equity investment of at least $3 million. Otherwise, they accrued warrants, with a strike price of 15 cents and an expiration of 5 years, at the rate of 50,000 and 30,000 respectively every 12 months instead of interest, with a minimum of 80,000 warrants. The Notes may convert into common stock at $ 0.13 /share at the option of the holder for a total of 307,692 shares. In June 2023, the Company entered into a short-term convertible note with board member Chris Kneppers, with a principal balance of $ 100,000 , that if it’s not paid by December 6, 2023, it automatically extends for another 6 months. It’s convertible at the option of the lender into common stock at $ 0.13 /share for a total of 769,231 shares. In April 2023, the Company entered into a long-term convertible note with board member Edmund Burke, with a principal balance of $ 150,000 , that is to be repaid when the Company receives an equity investment of at least $1.5 million. Otherwise, it accrued warrants, with a strike price of 15 cents and an expiration of 5 years, at the rate of 100,000 every 6 months instead of interest. It may convert into common stock at $ 0.13 /share at the option of the holder for a total of 1,153,846 shares. In January 2023, the Company entered into a short-term convertible note with board member Chris Kneppers, with a principal balance of $ 250,000 , that if it’s not paid by July 4, 2023, it converts at the option of the Company into common stock at $ 0.13 /share for a total of 1,923,077 shares. This debt remains on the books because the Company hadn’t converted it into shares as of the end of 2023. In July 2016, the Company issued six (6) short-term notes payable to related parties in conjunction with the Company’s acquisition of the remaining 49% of AMG Energy Group. These notes had a value of $2,002,126 and accrued interest at a rate of six percent ( 6 %) per annum. As of December 31, 2018, and December 31, 2017, the total interest accrued on the notes was $278,795 and $176,460 respectively. All of the notes were due on August 4, 2017 and then were in default. However, the notes were held by related parties with the understanding that the notes were not to be paid until the Company begins generating profit. The Company renegotiated some of these notes during its Chapter 11 proceedings, whereas others failed to submit a claim and were discharged upon the Court’s Confirmation Order approving the Company’s Chapter 11 Plan on September 18, 2019. The renegotiated amounts, as per the Plan Confirmation are all to be paid from 50% of the future net profits and discharged to the extent unpaid five years after the Plan effective date of September 18, 2019. These amount are 1) Mark Koch $ 240,990 plus 6% interest on any portion not repaid within 12 months of the Company’s first reported quarterly net profit; 2) Animated Family Films $ 579,942 out of the Company’s net profits plus 6% interest; 3) Steven Dunkle, CTWC, & Wellington Asset Holdings $ 1.5 million plus 6% interest once there is positive quarterly EBITDA from the first plant of Company, or, at its option, may convert that into an equity investment in the first plant of the Company, measured by a percentage of the total cost to build, subject to a minimum equity interest of 1.25 % in said plant. 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 is to be paid out of future gross revenues. F- 15 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 is to be paid out of future gross revenues. 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 15 th 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 no later than three years after the Plan effective date, plus 1.5 million common stock warrants with a strike price of $ 0.30 /share and a ten -year expiration period. The $ 50,000 claim was fully paid in Q1 2023. Nothing remains due on this Settlement. 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 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. F- 16 On March 27, 2019, the Company entered into an agreement with another creditor, 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 Notes that remain of those indicated in the Notes above is as follows: SCHEDULE OF NOTES PAYABLE Notes Payable December 31, 2023 December 31, 2022 Short Term Chapter 11 Settlement $ 0 $ 50,000 Short Term Convertible Notes – Related Party $ 350,000 $ 0 Long Term Convertible Notes Payable – Related Party $ 300,000 $ 0 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 TOTAL NOTES $ 3,388,132 $ 2,788,132 Only $ 100,000 of the $ 3,388,132 due as of December 31, 2023, is due at a specific point in time. $ 300,000 automatically converts into equity and $ 300,000 is due depending on the raising of millions in capital. $ 2,738,132 of the amount due as of December 31, 2023, is due out of future revenue or future profits. $ 2,417,502 of the $ 2,738,132 will be discharged if not paid by September 18, 2024, which is 5 years after the Company exited Chapter 11. NOTE 7 – STOCKHOLDERS’ EQUITY The total number of shares of capital stock, which the Company has authority to issue, is 1,010 million, 1000 million 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 December 31, 2023, the Company had 302,750,963 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. In the year ended December 31, 2023, the company issued an aggregate of 174,194 shares of its common stock for services, valued at $ 29,300 . In the year ended December 31, 2023, the Company issued an aggregate of 794,000 warrants for services. Using a Black-Scholes asset pricing model, these were valued at $ 84,677 . In the year ended December 31, 2023, 5,950,148 warrants were exercised for proceeds of $ 97,251 . In the year ended December 31, 2023, no employee stock options were exercised. In the year ended December 31, 2023, the Company issued 6,684,998 common shares for cash through private placements of $ 1,002,772 . F- 17 In the year ended December 31, 2023, the Company issued unvested options under its Employee & Directors Stock Option Plan to purchase an aggregate of 17,150,000 shares of common stock for a period of ten years at an exercise price of $ 0.19 to $ 0.20 . Using a Black-Scholes asset-pricing model, these agreements were valued at $ 2,835,613 . The Company issued an additional 1,000,000 options that were vested with a Black-Scholes value of $ 157,939 . An additional 3,385,000 options vested. These vested options were valued at $ 479,089 . In the year ended December 31, 2022, the company issued an aggregate of 812,119 shares of its common stock for services, valued at $ 136,550 . In the year ended December 31, 2022, the Company issued an aggregate of 77,333 warrants for services. Using a Black-Scholes asset pricing model, these were valued at $ 9,773 . The Company also issued an aggregate of 2,000,000 unvested warrants for services to be performed. The services were not performed, and the warrants expired in 2023. In the year ended December 31, 2022, 7,000,000 warrants were exercised for proceeds of $ 105,000 . In the year ended December 31, 2022, 350,000 employee stock options were exercised for proceeds of $ 15,900 . In the year ended December 31, 2022, 11,043 shares of common stock were rescinded. In the year ended December 31, 2022, the Company issued 7,786,664 common shares for cash through private placements of $ 1,168,000 . In the year ended December 31, 2022, the Company issued options under its Employee & Directors Stock Option Plan to purchase an aggregate of 2,000,000 shares of common stock for a period of ten years at an exercise price of $ 0.17 . Using a Black-Scholes asset-pricing model, these agreements were valued at $ 319,327 . Only 100,000 of those options vested in 2022. A total of 12,560,000 options vested. The vested options were valued at $ 1,565,589 . Share-Based Awards Stock option activity under the 2021 ESOP for the year ending December 31, 2023, is as follows: SCHEDULE OF STOCK OPTION ACTIVITY Option Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($0’s) Outstanding as of December 31, 2022 51,080,000 $ 0.13 7.87 $ 6,791,500 Awarded 18,150,000 $ 0.19 8.99 $ - Exercised 500,000 $ 0.05 - $ 15,875 Expired or Rescinded 7,175,000 $ 0.19 - $ - Outstanding as of December 31, 2023 61,555,000 $ 0.15 7.20 $ 45,763 Vested as of December 31, 2023 28,180,000 $ 0.13 6.33 $ 42,500 Option Shares Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($0’s) Outstanding as of December 31, 2021 50,034,466 $ 0.13 8.53 $ 6,495,981 Awarded 4,000,000 $ 0.18 7.14 $ 700,000 Exercised 350,000 $ 0.05 - $ 15,900 Expired or Rescinded 2,604,466 $ 0.15 - $ 388,581 Outstanding as of December 31, 2022 51,080,000 $ 0.13 7.87 $ 6,791,500 Vested as of December 31, 2022 24,420,000 $ 0.12 6.98 $ 2,982,250 F- 18 Warrant activity for the year ending December 31, 2023, is as follows: SCHEDULE OF WARRANT ACTIVITY Warrants Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($0’s) Outstanding as of December 31, 2022 24,388,458 $ 0.16 2.83 $ 3,841,406 Awarded 7,478,998 $ 0.24 4.35 $ - Exercised 5,450,148 $ 0.01 - $ 373,299 Expired 2,401,332 $ 0.15 - $ - Outstanding as of December 31, 2023 24,015,976 $ 0.22 3.31 $ 91,690 Vested as of December 31, 2023 24,015,976 $ 0.22 3.31 $ 91,690 Warrants Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($0’s) Outstanding as of December 31, 2021 28,571,961 $ 0.12 2.17 $ 3,352,149 Awarded 7,863,997 $ 0.25 4.75 $ 1,962,133 Exercised 7,000,000 $ 0.02 - $ 105,000 Expired 5,047,500 $ 0.27 - $ 1,367,875 Outstanding as of December 31, 2022 24,388,458 $ 0.16 2.83 $ 3,841,406 Vested as of December 31, 2022 24,388,458 $ 0.16 2.83 $ 3,841,406 NOTE 8 – INCOME TAXES The reconciliation of income tax benefit at the U.S. statutory rate of 21 % for years ending December 31, 2023, and 2022, to the Company’s effective tax rate, is as follows: SCHEDULE OF RECONCILIATION BETWEEN STATUTORY TAX RATE AND EFFECTIVE TAX RATE 31-Dec-23 31-Dec-22 Statutory federal income tax rate - 21 % - 21 % State income tax, net of federal benefits - 5.5 % - 5.5 % Valuation Allowance 26.5 % 26.5 % Income tax provision (benefit) 0 % 0 % F- 19 The provisional (benefit) for income tax is summarized as follows: SCHEDULE OF INCOME TAX PROVISION 31-Dec-23 31-Dec-22 Federal Current $ - $ - Deferred ( 642,785 ) ( 831,638 ) State Current - - Deferred ( 168,349 ) ( 217,810 ) Change in valuation allowance 811,134 1,049,448 Income tax provision (benefit) $ - $ - The tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of December 31, 2023 and 2022 are as follows: SCHEDULE OF TAX EFFECTS OF PRINCIPAL TEMPORARY DIFFERENCES THAT GIVE RISE TO DEFERRED TAX ASSETS 31-Dec-23 31-Dec-22 Years Ended 31-Dec-23 31-Dec-22 Deferred tax asset Net operating loss carryovers (federal) $ 13,561,765 $ 12,752,139 Total deferred tax assets 13,561,765 12,752,139 Valuation Allowance ( 13,561,765 ) ( 12,752,139 ) Deferred tax asset, net of allowance $ - $ - As of December 31, 2023, and 2022, the Company had approximately $ 51,176,471 and $ 48,121,278 of Federal net operating loss carryovers (“NOLs”) to offset taxable income, if any, in future years which begin to expire in 2033 . Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under regulations. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35 % to 21 % for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. The Company has estimated its provision for income taxes in accordance with the Tax Act and guidance available. The Company files U.S. Federal and Florida tax returns that are subject to audit by tax authorities. The Company’s policy is to classify assessments, if any, for tax and related interest and penalties as tax expense. NOTE 9 - COMMITMENTS AND CONTINGENCIES Litigation The Company is subject, from time to time, to litigation, claims and suits arising in the ordinary course of business. The Company is not in any litigation at this time. F- 20 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 was for twenty-four (24) months from November 1, 2019, to October 31, 2021. This had been extended for one year until October 31, 2022, and was further extended for two more years until October 31, 2024. Annual rent commenced at $ 84,100 per annum and increased 3 % per year. The latest amendment adjusted to lease to $ 102,950 per annum and increases at 3 % per year. Tenant is also required to cover operating costs that are estimated at $ 3,600 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. In addition, the Company leases land in Arcadia, FL where it grows king grass. The original lease began on September 1, 2020, and was for 18.2 acres at an annual cost of $ 6,370 that the Company has the right to renew for a total of 5 years. A second lease began on March 31, 2023, for an additional 167.6 acres at a cost of $ 24,721 every 6 months that the Company also can continue for up to 5 years. Since those leases can be terminated at will, they are not included in the ROU or lease liability on the Company’s balance sheet. Total rent expense for the years ending December 31, 2023, and 2022, were $ 214,902 and $ 139,083 , respectively. The following table provides the components of the lease expense for the periods indicated: SCHEDULE OF COMPONENTS OF THE LEASE EXPENSE December 31, 2023 December 31, 2022 YEAR ENDED December 31, 2023 December 31, 2022 Finance Lease Cost: Amortization of ROU assets $ - $ - Interest on lease liabilities 0 0 Operating lease cost 95,172 86,601 Short-term lease cost 0 0 Total lease expense 95,172 86,601 The following table provides supplemental cash flow and other information related to leases for the periods indicated: SCHEDULE OF SUPPLEMENTAL CASH FLOW AND OTHER INFORMATION RELATED TO LEASES December 31, 2023 December 31, 2022 YEAR ENDED December 31, 2023 December 31, 2022 Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases ( 1 ) $ - $ - Operating cash flows from finance leases 0 0 Financing cash flows from finance leases 0 0 ROU assets obtained in exchange for new lease liabilities: Finance leases 0 0 Operating leases 0 0 (1) Amounts are included in Other operating activities on the consolidated cash flow statements. F- 21 The following table provides the lease terms and discount rates for the periods indicated: SCHEDULE OF LEASE TERMS AND DISCOUNT RATES December 31, 2023 December 31, 2022 YEAR ENDED December 31, 2023 December 31, 2022 Weighted-average remaining lease term (years): Finance leases 0 0 Operating leases 0.83 1.83 Weighted-average discount rate: Finance leases N/A N/A Operating leases N/A N/A The following table provides supplemental balance sheet information related to leases at the dates indicated: SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES December 31, 2023 December 31, 2022 YEAR ENDED December 31, 2023 December 31, 2022 Assets Finance lease ROU assets (1) $ - $ - Operating lease ROU assets 81,091 178,399 Liabilities Current Finance lease liabilities 0 0 Operating lease liabilities 85,983 95,172 Noncurrent Finance lease liabilities 0 0 Operating lease liabilities 0 85,983 (1) Amounts are included in Property and equipment, net on the consolidated balance sheets. The following table provides maturities of undiscounted lease liabilities at December 31, 2023 SCHEDULE OF MATURITIES OF UNDISCOUNTED LEASE LIABILITIES Finance Lease Operating Lease 2024 $ - $ 88,365 2025 0 0 Thereafter 0 0 Total lease payments $ - $ 88,365 Less: Interest 0 ( 2,382 ) Present value of lease liabilities 0 85,983 Less: Current portion of lease obligation 0 ( 85,983 ) Total long-term lease obligation $ - $ 0 F- 22 The following table provides maturities of undiscounted lease liabilities at December 31, 2022: Finance Lease Operating Lease 2023 $ - $ 103,465 2024 0 88,365 Thereafter 0 0 Total lease payments - 191,830 Less: Interest - ( 10,675 ) Present value of lease liabilities - 181,155 Less: Current portion of lease obligation - ( 95,172 ) Total long-term lease obligation - 85,983 NOTE 10 – RELATED PARTY TRANSACTIONS Related 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 6. 2) A board resolution was passed on February 13, 2020, that pledged the 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 be owed back pay. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. However, they may not engage in competing business interests. 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 11 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date the financial statements were available to be issued. Based on this evaluation, the Company has identified the following subsequent events: Subsequent to December 31, 2023, the Company issued 52,500 shares for services valued at $ 4,200 and 62,500 warrants valued at $ 3,592 . Subsequent to December 31, 2023, 133,333 warrants expired. Subsequent to December 31, 2023, 1,775,000 employee stock options vested. These have a Black-Scholes valuation of $ 234,350 . Subsequent to December 31, 2023, the company issued convertible notes for $ 230,000 . These notes may be converted into equity at the discretion of the holder and all automatically convert into equity if not repaid in 13 months from their date of issue. F- 23 ITEM 9. – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There was a change in the Company’s independent registered accounting firm after the first quarter of 2023. There were no disagreements between the Company and either of its independent registered accounting firms on accounting or financial disclosure.