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, 2024, and December 31, 2023, and the report thereon of Assure, CPA. 14 Blue Biofuels, Inc. Financial Statements Years Ended December 31, 2024, and 2023 Index to Financial Statements Page Page Report of Independent Registered Public Accounting Firm PCAOB ID 444 F-2 Balance Sheets as of December 31, 2024, and December 31, 2023. F-3 Statements of Operations for the years ended December 31, 2024, and December 31, 2023. F-4 Statements of Stockholder’s Deficit for the years ended December 31, 2024, and December 31, 2023. F-5 Statements of Cash Flows for the years ended December 31, 2024, and December 31, 2023. F-6 Notes to the Financial Statements F-7 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 balance sheets of Blue Biofuels, Inc (the “Company”) as of December 31, 2024 and 2023, the related statements of operations, of stockholders’ deficit and of cash flows for the years 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, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. 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 has accumulated losses since inception and has negative working capital. These factors raised substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter is also described in Note 2. 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 audits. 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 audits 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 audits 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 audits 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 audits provide a reasonable basis for our opinion. Critical Audit Matter Critical audit matters 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. We determined that there are no critical audit matters. /s/ Assure CPA, LLC Spokane, Washington March 19, 2025 We have served as the Company’s auditor since 2023. F- 2 Blue Biofuels, Inc. BALANCE SHEETS December 31, 2024 December 31, 2023 ASSETS Current Assets Cash and Cash Equivalents $ 48,797 $ 41,008 Prepaid Expenses 32,489 35,750 TOTAL CURRENT ASSETS 81,286 76,758 Other Assets Property and Equipment, net of accumulated depreciation and amortization of $ 361,887 and $ 243,089 at December 31, 2024 and December 31, 2023, respectively 539,648 587,308 Security Deposits 30,276 30,276 Right of Use Assets, net of accumulated amortization 440,298 81,091 Patents and Trademarks 298,079 254,786 TOTAL OTHER ASSETS 1,308,301 953,461 TOTAL ASSETS $ 1,389,587 $ 1,030,219 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities Accounts Payable $ 227,195 $ 22,798 Accounts Payable - Related Party 72,670 72,670 Accounts Payable 72,670 72,670 Deferred Wages and Directors’ Fees - Related party 1,607,870 828,312 Right of Use Lease Liability - Current 68,677 85,983 Convertible Notes Payable — Related Party - 350,000 Convertible Notes Payable — Other 50,000 - Convertible Notes Payable 50,000 - Interest Payable - Related Party 185,703 143,406 TOTAL CURRENT LIABILITIES 2,212,115 1,503,169 Long term liabilities Right of Use Lease Liability, Long Term 372,745 - Notes Payable — Related Party 1,140,000 - Convertible Notes Payable — Related Party 190,000 300,000 Convertible Notes Payable — Other - 50,000 Convertible Notes Payable - 50,000 Legacy Notes Payable — Related Party 200,630 2,521,562 Legacy Notes Payable — Other 120,000 216,570 TOTAL LONG TERM LIABILITIES 2,023,375 3,088,132 TOTAL LIABILITIES 4,235,490 4,591,301 COMMITMENTS AND CONTINGENCIES (NOTES 9 AND 10) - - STOCKHOLDERS’ 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; 307,960,508 issued and outstanding at December 31, 2024, and 302,750,963 issued and outstanding at December 31, 2023. 307,961 302,751 Additional paid-in capital 54,101,897 51,972,947 Accumulated deficit ( 57,255,761 ) ( 55,836,780 ) TOTAL STOCKHOLDERS’ DEFICIT $ ( 2,845,903 ) $ ( 3,561,082 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 1,389,587 $ 1,030,219 The accompanying notes are an integral part of these consolidated financial statements F- 3 Blue Biofuels, Inc STATEMENTS OF OPERATIONS 2024 2023 Year Ended December 31 2024 2023 Revenue $ - $ - Operating expense: General and administrative 1,726,106 1,339,789 Research and development 2,329,413 1,849,967 Loss on disposal of assets 1,360 1,159 Total operating expenses 4,056,879 3,190,915 Loss from operations: ( 4,056,879 ) ( 3,190,915 ) Other (income) expense: Government Grants ( 285,000 ) ( 233,500 ) Gain on extinguishment of debt ( 2,417,502 ) - Interest expense - related party 54,747 89,363 Interest expense - other 9,857 8,416 Total other (income) expense ( 2,637,898 ) ( 135,721 ) Income (Loss) before provisions for income taxes $ ( 1,418,981 ) $ ( 3,055,194 ) Provisions for income taxes - - Net Income (Loss): $ ( 1,418,981 ) $ ( 3,055,194 ) Net income (loss) per share - basic and diluted $ ( 0.005 ) $ ( 0.010 ) Weighted average common shares outstanding Basic 303,851,512 299,950,813 Diluted 303,851,512 299,950,813 The accompanying notes are an integral part of these financial statements F- 4 Blue Biofuels, Inc. STATEMENTS OF STOCKHOLDERS’ 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, 2023 302,750,963 $ 302,751 - - $ 51,972,947 $ ( 55,836,780 ) $ ( 3,561,082 ) Issuance of common stock for services 114,545 $ 115 $ 9,980 $ 10,095 Issuance of 303,500 warrants for services 23,820 23,820 Issuance of warrants for services 23,820 23,820 Issuance of 180,000 warrants for interest 12,450 12,450 Issuance of warrants for interest 12,450 12,450 Repricing of warrants for services 21,231 21,231 Cancelling 350,000 warrants for services ( 29,991 ) ( 29,991 ) Cancelling warrants for services ( 29,991 ) ( 29,991 ) Issuance of common stock and warrants for cash through PPM 1,970,000 1,970 195,030 197,000 Issuance of common stock and warrants on the conversion of notes 3,125,000 3,125 246,875 250,000 Stock based compensation recognized under the employee, director plan 1,649,555 1,649,555 Net Income (Loss) - - - - - ( 1,418,981 ) $ ( 1,418,981 ) Balance as of December 31, 2024 307,960,508 $ 307,961 - - $ 54,101,897 $ ( 57,255,761 ) $ ( 2,845,903 ) 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 ) Issuance of common stock for services 174,194 $ 174 $ 29,126 $ 29,300 Issuance of 614,000 warrants for services 62,583 62,583 Issuance of warrants for services 62,583 62,583 Issuance of 180,000 warrants for interest 22,094 22,094 Issuance of warrants for interest 22,094 22,094 Warrants exercised 5,450,148 5,450 66,801 72,251 Issuance of common stock and warrants for cash through PPM 6,684,998 6,685 996,088 1,002,773 Stock based compensation recognized under the employee, director plan 637,028 637,028 Employee stock options exercised 500,000 500 24,500 25,000 Net Income (Loss) - - - - - ( 3,055,194 ) ( 3,055,194 ) Balance as of December 31, 2023 302,750,963 $ 302,751 - - $ 51,972,947 $ ( 55,836,780 ) $ ( 3,561,082 ) Balance 302,750,963 $ 302,751 - - $ 51,972,947 $ ( 55,836,780 ) $ ( 3,561,082 ) The accompanying notes are an integral part of these financial statements F- 5 Blue Biofuels, Inc. STATEMENTS OF CASH FLOWS 2024 2023 Year Ended December 31 2024 2023 Cash flows from operating activities Net Income (Loss) $ ( 1,418,981 ) $ ( 3,055,194 ) Reconciliation of net loss to net cash used in operating activities Depreciation and amortization 118,798 119,476 Stock based compensation 1,674,710 751,005 Extinguishment of debt ( 2,417,502 ) - Issuance of warrants for interest expense 12,450 - Loss on Disposal of assets 1,360 1,159 Changes in operating assets and liabilities Prepaid expenses 3,261 7,369 Accounts payable 200,629 ( 12,201 ) Deferred wages and directors’ fees -related party 779,558 520,706 Interest payable - related party 42,297 67,268 Net cash used in operating activities ( 1,003,420 ) ( 1,600,412 ) Cash flows from investing activities Net purchase of property and equipment ( 71,138 ) ( 287,828 ) Patent and trademark costs ( 44,653 ) ( 32,677 ) Net cash from (used in) investing activities ( 115,791 ) ( 320,505 ) Cash flows from financing activities Net proceeds from issuance of common stock 197,000 1,002,773 Net proceeds from the issuance of convertible notes — RP 680,000 700,000 Net proceeds from the issuance of convertible notes — Other 250,000 - Proceeds from exercise of warrants and options - 97,251 Repayment of debt - ( 50,000 ) Net cash provided by financing activities 1,127,000 1,750,024 Net increase (decrease) in cash and cash equivalents 7,789 ( 170,893 ) Cash and cash equivalent at beginning of the year 41,008 211,901 Cash and cash equivalent at end of the year $ 48,797 $ 41,008 Supplemental disclosure of cash flow information Cash paid during the year for Interest $ - $ - Taxes $ - $ - Supplemental schedule of non-cash financing and investing activities Recognition of operating lease liability and right-of-use asset $ 452,132 $ - Issuance of common stock and warrants on the conversion of notes payable $ 250,000 $ - The accompanying notes are an integral part of these financial statements F- 6 Blue Biofuels, Inc. NOTES TO FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION Blue Biofuels, Inc (the “Company”) is a technology company focused on emerging technologies in the renewable energy, biofuels, and lignin technologies sectors. NOTE 2 – GOING CONCERN The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any significant revenue since inception and has incurred losses since inception. As of December 31, 2024, the Company has incurred accumulated losses of $ 57,255,761 . The Company expects to incur significant additional losses and liabilities in connection with its start-up and commercialization activities. These factors, among others, raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities when they become due and to generate sufficient revenues from its operations to pay its operating expenses. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments related to the recoverability and classifications of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty. There are no assurances that the Company will continue as a going concern. Management believes that the Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities, and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, or sell additional shares of stock or borrow additional funds. The Company’s inability to obtain additional cash could have a material adverse effect on its financial position, results of operations, and its ability to continue in existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements of the Company were prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”). Principles of Consolidation The accompanying financial statements include the accounts of the Company and its subsidiaries, after elimination of intercompany accounts and transactions. Investments in business entities in which the Company lacks control but has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method. In 2023 and 2024, the Company did not have any wholly owned subsidiaries, and so the financial statements include the results of the parent company only. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates presented and reported amounts of revenues and expenses during the reporting periods presented. Significant estimates inherent in the preparation of the accompanying Financial Statements include estimates of depreciable lives of assets, impairment assessment of long-lived assets, valuation allowance of deferred taxes, and valuation of stock-based compensation. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results may differ from these estimates. Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the date of purchase are considered to be cash equivalents. Stock Compensation The Company recognizes the cost of all share-based payments under the relevant authoritative accounting guidance. Share-based payments include any remuneration paid by the Company in shares of the Company’s common stock or financial instruments that grant the recipient the right to acquire shares of the Company’s common stock. F- 7 Stock-based Compensation The Company uses its common stock for various forms of share based compensation arrangements entered into with directors, officers, employees and consultants. Share based compensation arrangements are accounted for at fair value on the date of grant. For awards with graded vesting, the fair value of each tranche is measured separately and recognized over its respective vesting period. The total amount recognized as expense is adjusted to reflect the number of share options which ultimately vest. The Company recognizes forfeitures as they occur. The fair value of common stock and share-based awards that do not contain market conditions is based on the valuation of the common stock on the date of grant. The fair value of time-based awards that are ultimately expected to vest is recognized as an expense on a straight-line basis over the requisite service period. The fair value of performance-based awards is adjusted for the probability of achieving the performance conditions and is recognized on a straight line basis over the term of the award agreement. The fair value of stock options and warrants is determined using a Black-Scholes valuation model. Option pricing models require the input of subjective assumptions including the length of time employees will retain their vested stock options before exercising them, expected share price volatility, and interest rate. The risk-free interest rate is based on the U.S. Treasury Daily Yield Curve Rate with an equivalent term in effect as of the date of grant. The expected option and warrant lives and volatility assumptions are based on historical data of the Company’s closing day market price per share. Changes in the input assumptions can materially affect the fair value estimate and the Company’s net loss. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets, generally 5 to 10 years. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. When an asset is sold, we recognize a gain (loss) in the Statements of Operations based upon the proceeds received on the sale less the net carrying value of the asset. Patents If a product is currently under research and development and is not currently approved for market, costs incurred in connection with patent applications are generally expensed in the statement of operations in the period incurred because there is uncertainty as to the future economic benefit of the asset. Conversely, if a product is approved for market (as is the case of the end product ethanol), or if future economic benefit is probable, or if an alternative future use is available to the Company, then such patent costs can be capitalized and amortized over the expected revenue life of the patent(s). Since the Company’s primary end products are expected to be 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. Leases Upon inception, the Company determines if a contractual arrangement is, or contains, a lease. Right-of-use (“ROU”) assets and liabilities related to operating leases are separately reported in the Balance Sheets. The Company currently has no financing leases. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, we utilize our incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. Operating lease ROU assets and liabilities also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. F- 8 Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. 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. 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. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. If events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable, the Company compares the carrying amount of the asset group to future undiscounted net cash flows, excluding interest costs, expected to be generated by the asset group and their ultimate disposition. If the sum of the undiscounted cash flows is less than the carrying value, the impairment to be recognized is measured by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. We evaluate uncertain tax positions in a two-step process, whereby (i) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority would be recognized. The Company has no material uncertain tax positions for any of the reporting periods presented. Net Income (Loss) per Share : Basic profit (loss) per share amounts have been calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share 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. F- 9 Grant Income Government grants income is recognized in earnings on a systematic basis in a manner that mirrors the manner in which the Company recognizes the underlying costs for which the grant is intended to compensate. A grant receivable is recognized for expenses or losses already incurred but for which grant funding has not yet been received. Grant funding received in excess of expenses or losses incurred is recognized as deferred revenue. The Company has adopted the disclosure requirements of Accounting Standards Codification (“ASC”) 832 Government Assistance. Fair Value Measurements The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions) At December 31, 2024 and 2023, the Company has no assets or liabilities that are measured at fair value on a recurring basis. The estimated fair value of certain financial instruments including notes payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. Segment The Company operates as a single operating segment. All financial information is reviewed by the Company’s Chief Operating Decision Maker (CODM). The Company’s CODM is its chief executive officer. The CODM uses net loss, as presented in the statement of operations, to assess segment performance and allocate resources. The measure of segment assets is reported on the balance sheet as total assets. Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are applied retrospectively. The adoption of this update as of December 31, 2024 had minimal impact on our consolidated financial statements and disclosure. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We are currently evaluating the impact of this update on our consolidated financial statements and disclosures. F- 10 In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on our consolidated financial statements and disclosures From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s consolidated financial statements upon adoption. NOTE 4 – PROPERTY AND EQUIPMENT SCHEDULE OF PROPERTY AND EQUIPMENT PROPERTY AND EQUIPMENT Life December 31, 2024 December 31, 2023 Building and Improvements 15 $ 9,370 $ 9,370 Construction and Engineering 10 45,342 - Machinery and Equipment 5 - 10 821,402 795,606 Furniture and Fixtures 5 13,596 13,596 Computer Equipment 3 11,825 11,825 Property and Equipment, gross 901,535 830,397 Less Accumulated Depreciation ( 361,887 ) ( 243,089 ) Property and Equipment $ 539,648 $ 587,308 Total depreciation expense was $ 118,798 and $ 119,476 for the years ended December 31, 2024, and 2023, 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 $ 3,500 that was originally purchased for $ 8,172 and that had accumulated depreciation of $ 3,513 , thereby taking a loss of $ 1,159 on the disposal of assets. In the fiscal year ended December 31, 2024, the Company did no t dispose of any equipment. NOTE 5 – PATENTS AND TRADEMARKS 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 obtained one trademark and has four more pending. The Company has capitalized the legal and filing fees of its patents and trademarks in the amount of $ 298,079 as of December 31, 2024. The Company disposed of one trademark in 2024, and recognized an expense of $ 1,360 . NOTE 6 – DEBT Activity for the years ended December 31, 2024 and 2023 associated with the Company’s debt is outlined below. Notes Payable – Related Party During 2023, the Company entered into long term convertible note agreements of $460,000 with board member Chris Kneppers. These notes bore interest at 10% and were convertible into shares of the Company’s comment stock at rates that ranged from $0.13 to $0.25 per share. A portion of the notes were due to be paid or automatically converted in 2024. The remaining were to be paid when the Company completes a capital raise of at least $5.0 million. F- 11 In 2024, prior to June 22, 2024, the Company borrowed an additional $240,000 from Mr. Kneppers. These notes were non-interest bearing and were initially due 13 months after issuance. The outstanding principal balance due to Mr. Kneppers on June 22, 2024 was $940,000. On June 22, 2024, the terms of all of the convertible notes due to Mr. Kneppers were modified. Under the modification, the notes are now payable on the earliest of the date on which the Company (1) uplists to the Nasdaq or NYSE; (2) receives $5 million in equity financing; or (3) begins generating revenue from its first facility. Subsequent to the amendment, the Company borrowed an additional $440,000 with same terms. Total outstanding principal balance due Mr. Kneppers at December 31, 2024 is $1,140,000. In January and February 2025, the Company borrowed an additional $100,000 from Mr. Kneppers with the same terms. In connection with modification of the terms of all of Mr. Kneppers notes, interest stopped accruing on March 31, 2024. In lieu of interest, the Company will pay Mr. Kneppers 100% of the outstanding loan balance due him contingent upon the financing of the first plant. All interest and loan amounts automatically come due upon a change of control of the Company or if the Company files for bankruptcy under Chapter 11 or Chapter 7. During the years ended December 31, 2024 and 2023, the Company recognized $11,500 and $35,151, respectively, in interest expense on these notes due to Mr. Kneppers. At December 31, 2024 and 2023, accrued interest payable to Mr. Kneppers is $46,651 and $35,151, respectively. Convertible Notes Payable – Related Party In June and November 2023, the Company entered two long-term convertible notes with board member Edmund Burke with principal amounts of $25,000 and $15,000, respectively, to be repaid when the Company receives an equity investment of at least $3 million. The notes may convert into common stock at $0.13/share at the option of the holder for a total of 307,692 shares. Until repayment, the note agreement requires the Company to issue to Mr. Burke 80,000 warrants having a strike price of $0.15 and an expiration of 5 years every twelve months in lieu of interest. During the years ended December 31, 2024 and 2023, 80,000 warrants with a fair value of $5,932 and $8,180, respectively, were issued to Mr. Burke (see Note 7). The fair value of these warrants is included in interest expense – related parties on the statement of operations. In April 2023, the Company entered a long-term convertible note with board member Edmund Burke, with a principal balance of $150,000, to be repaid when the Company receives an equity investment of at least $1.5 million. The notes may convert into common stock at $0.13/share at the option of the holder for a total of 1,153,846 shares. Until repayment, the note agreement requires the Company to issue to Mr. Burke 100,000 warrants having a strike price of $0.15 and an expiration of 5 years every six months in lieu of interest. During the years ended December 31, 2024 and 2023, 100,000 warrants with a fair value of $6,518 and $13,914, respectively, were issued to Mr. Burke (see Note 7). The fair value of these warrants is included in interest expense – related parties on the statement of operations. Convertible Notes Payable – Non-Related Parties In January through April 2024, the Company issued convertible notes to four different individuals totaling $250,000. These notes carried no interest and were convertible, at the option of the lender, into common shares of the Company at 8 cents per share plus a warrant with a strike price of 10 cents per share and a 5-year expiration. These notes were due 13 months after issuance and would automatically convert into shares of the Company’s common stock if not paid. In the second half of 2024, all of these notes converted into 3,125,000 shares of the Company’s common stock and 3,125,000 warrants (see Note 7). In December 2023, the Company issued a convertible note to one individual for $50,000. The note was non-interest bearing and had a term of thirteen months. In January 2025, the note was converted into 625,000 shares of the Company’s common stock and 625,000 warrants with a strike price of $0.10 per share and a five year expiration. F- 12 Legacy Notes Payable In July 2016, the Company issued six (6) short-term notes payable to related parties in conjunction with the Company’s acquisition of the remaining 49% of AMG Energy Group. These notes had a value of $2,002,126 and accrued interest at a rate of six percent (6%) per annum. As of December 31, 2018 and December 31, 2017, the total interest accrued on the notes was $278,795 and $176,460 respectively. All of the notes were due on August 4, 2017 and then were in default. However, the notes were held by related parties with the understanding that the notes were not to be paid until the Company begins generating profit. The Company renegotiated some of these notes during its Chapter 11 proceedings, whereas others failed to submit a claim and were discharged upon the Court’s Confirmation Order approving the Company’s Chapter 11 Plan on September 18, 2019. The renegotiated amounts, as per the Plan Confirmation are all to be paid from 50% of the future net profits and discharged to the extent unpaid five years after the Plan effective date of September 18, 2019. These amount are 1) Mark Koch $240,990 plus 6% interest on any portion not repaid within 12 months of the Company’s first reported quarterly net profit; 2) Animated Family Films $579,942 out of the Company’s net profits plus 6% interest; 3) Steven Dunkle, CTWC, & Wellington Asset Holdings $1.5 million plus 6% interest once there is positive quarterly EBITDA from the first plant of Company, or, at its option, may convert that into an equity investment in the first plant of the Company, measured by a percentage of the total cost to build, subject to a minimum equity interest of 1.25% in said plant. This was discharged on September 18, 2024, and the Company recognized a gain on debt extinguishment of $2,320,932. Legacy Notes Payable — Other 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. 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. In July 2016, the Company issued a short-term note payable to a third party in conjunction with the Company’s acquisition of the remaining 49% of AMG Energy Group. The note had a principal balance of $96,570 and accrued interest at a rate of six percent (6%) per annum. As of December 31, 2018, and December 31, 2017, the total interest accrued on the note was $14,382 and $8,588 respectively. The note was due on August 4, 2017 and was then in default. The Company renegotiated this note during its Chapter 11 proceedings, and as per the Plan Confirmation, now the $96,570 is to be paid with no interest out of the same 50% of the future net profits of the Company as the notes mentioned above, if any, or discharged to the extent unpaid five years after September 18, 2019. This Note was discharged on September 18, 2024, and the Company recognized a gain on debt extinguishment of $96,570. F- 13 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. 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, 2024 December 31, 2023 Current Convertible Notes — Other $ 50,000 $ - Current Convertible Notes – Related Party - 350,000 Long Term Convertible Notes Payable – Related Party 190,000 300,000 Long Term Convertible Notes – non-Related Party - 50,000 Long Term Notes Payable – Related Party 1,140,000 - Long Term Notes Payable from future revenue — Related Party - 1,700,630 Long Term Notes Payable from future revenue — Other 120,000 120,000 Long Term Note Payable from future profits — Related Party 200,630 820,932 Long Term Note Payable from future profits — Other - 96,570 TOTAL NOTES PAYABLE $ 1,700,630 $ 3,438,132 As of December 31, 2024, only $50,000 of the $1,700,630 outstanding notes payable was due at a specific point in time. That $50,000 was converted in January 2025. Of the remaining amount outstanding: $1,330,000 is due on a successful capital raise ranging from $1.5 million to $5 million; and $320,630 will be paid from future revenue or profits. F- 14 NOTE 7 – STOCKHOLDERS’ EQUITY Holders of shares of Common stock shall be entitled to cast one vote for each share held at all stockholders’ meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights. No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend. The Company has yet to designate any rights, preferences and privileges for any of its authorized Preferred Stock. During the year ended December 31, 2024, the Company had the following transactions associated to its shares of common stock: ● Sold 1,970,000 units consisting of one shares of its common stock consisting of one share of common stock and one warrant through private placements for $ 197,000 . The warrants have a strike price of $ 0.15 and a five -year expiration. ● Issued 114,545 shares of its common stock with a fair value of $ 10,095 for services. ● Issued 3,125,000 shares of its common stock upon conversion of notes payable with a principal balance of $ 250,000 . During the year ended December 31, 2023, the Company had the following transactions associated to its shares of common stock: ● Sold 6,684,998 units consisting of one share of common stock and one warrant through private placements for $ 1,002,773 . The warrants have a strike price of $ 0.25 and a five -year expiration. ● Issued 174,194 shares of its common stock for services with a fair value of $ 29,300 . ● Issued 5,450,148 shares of common stock upon exercise of warrants for proceeds of $ 72,251 . ● Issued 500,000 shares of common stock upon exercise of employee stock options for proceeds of $ 25,000 . Warrants Warrant activity for the years ending December 31, 2024 and 2023 is as follows: SCHEDULE OF WARRANT ACTIVITY Number of Warrants Weighted Average Exercise Price Balance, December 31, 2022 24,388,458 $ 0.16 Issued in connection with: Common stock units sold for cash 6,684,998 0.25 Services 614,000 0.16 Debt-related interest 180,000 0.15 Expired ( 2,401,332 ) 0.15 Exercised ( 5,450,148 ) 0.03 Balance, December 31, 2023 24,015,976 0.22 Issued in connection with: Common stock units sold for cash 1,970,000 0.15 Services 303,500 0.11 Debt-related interest 180,000 0.15 Debt conversion 3,125,000 0.10 Expired or rescinded ( 3,397,981 ) 0.09 Exchanged for stock options 1,250,000 0.20 Balance, December 31, 2024 27,446,495 $ 0.21 As of December 31, 2024, outstanding warrants have a weighted average remaining life of 3.32 years. During the year ended December 31, 2024, the Company issued 303,500 warrants for services having a fair value of $ 23,820 and 180,000 warrants for debt-related interest and financing costs having a fair value of $ 12,450 . The Company also cancelled 350,000 warrants and recognized a loss of $ 29,991 on the cancellation. In addition, a total of 1,250,000 warrants were issued in exchange for the same number of stock options that were granted in prior years. F- 15 During the year ended December 31, 2023, the Company issued 614,000 warrants for services having a fair value of $ 62,583 and 180,000 warrants for debt-related interest and financing costs having a fair value of $ 22,094 . Stock Options: In 2021, the Company adopted the 2021 Employee, Director Stock Plan (the “2021 Plan”) to provide the Corporation with share-related mechanisms to attract and retain persons eligible to participate in the 2021 Plan, motivate Participants to achieve long-term Company goals, and further align holders’ interests with those of the Company’s other stockholders.The Plan was approved by the Corporation’s shareholders on June 2, 2021. The Plan allows for grants of restricted stock, stock options and other forms of incentive compensation to our officers, employees, directors and consultants. Under the terms of the Plan, the aggregate maximum number of shares that may be issued pursuant to awards granted under the Plan cannot 15% of the Company’s issued and outstanding common stock on a fully-diluted basis. Shares delivered under the Plan will be from authorized but unissued shares of the Company. Stock option activity for the years ending December 31, 2024 and 2023 is as follows: SCHEDULE OF OPTION ACTIVITY Number of Options Weighted Average Exercise Price Balance, December 31, 2022 51,080,000 $ 0.13 Options granted 18,150,000 0.19 Options expired ( 7,175,000 ) 0.19 Options exercised ( 500,000 ) 0.05 Balance, December 31, 2023 61,555,000 0.15 Options granted 29,166,571 0.11 Options expired ( 500,000 ) 0.05 Exchanged for warrant ( 1,250,000 ) 0.20 Balance, December 31, 2024 88,971,571 $ 0.13 Vested, December 31, 2024 37,443,567 $ 0.13 During the years ended December 31, 2024 and 2023, the Company recognized share based compensation expense from options of $ 1,649,555 (general and administrative expense of $ 535,395 and research and development expense of $ 1,114,160 ) and $ 637,028 (general and administrative expense of $ 169,382 and research and development expense of $ 467,646 ), respectively. The weighted average remaining life of outstanding and vested options is 6.9 years and 6.2 years, respectively. At December 31, 2024, outstanding vested options had an intrinsic value of $ 196,174 , and the total intrinsic value of all options is $ 328,762 At December 31, 2024, remaining compensation to be recognized as future vesting of stock options is approximately $4.2 million of which approximately $0.1 million will vest over the next year and approximately $4.1 million will vest upon the probability of achieving performance milestone criteria. During the year ended December 31, 2024, the Company granted 29,166,571 options with a fair value of $ 2,851,422 under the 2021 Plan. All options granted in 2024 had terms ranging from five to ten years except for 1,158,334 options which had a term of 0.25 years. The 2024 option grants had exercise prices ranging from $ 0.11 to $ 0.12 . During the year ended December 31, 2023, the Company granted 18,150,000 options with a fair value of $ 2,993,552 under the 2021 Plan. Each options had a term of ten years with exercise prices ranging from $ 0.16 to $ 0.20 . F- 16 Fair Value of Warrants and Stock Options issued: The following ranges of assumptions were used in calculations of the Black-Scholes option pricing models for option and warrant-based stock compensation issued in the years ended December 31, 2024 and December 31, 2023: SCHEDULE OF BLACK-SCHOLES OPTION PRICING MODELS FOR WARRANT-BASED STOCK COMPENSATION 2024 2023 Stock price $ 0.061 - $ 0.125 $ 0.106 - $ 0.177 Risk-free interest rate 3.74 % - 4.70 % 3.30 % - 4.72 % Expected term (in years) 2.0 to 10.0 5.0 to 10.0 Expected share price volatility 89.73 % - 113.72 % 81.11 % to 123.52 % Expected dividend yield 0.0 % - 0.0 % 0.0 % - 0.0 % NOTE 8 – INCOME TAXES No benefit (provision) has been recognized for the years ended December 31, 2024 and 2023. The reconciliation of income tax benefit at the U.S. statutory rate of 21 % for years ending December 31, 2024, and 2023, to the Company’s effective tax rate, is as follows: SCHEDULE OF RECONCILIATION BETWEEN STATUTORY TAX RATE AND EFFECTIVE TAX RATE 2024 2023 December 31 2024 2023 Statutory federal income tax rate 21.0 % 21.0 % State income tax, net of federal benefits 4.3 % 4.3 % Change in Valuation Allowance ( 25.3 )% ( 25.3 )% Income tax provision (benefit) 0 % 0 % The tax effects of temporary differences that give rise to the Company’s net deferred tax liability as of December 31, 2024 and 2023 are as follows: SCHEDULE OF TAX EFFECTS OF PRINCIPAL TEMPORARY DIFFERENCES THAT GIVE RISE TO DEFERRED TAX ASSETS 2024 2023 Years Ended, December 31 2024 2023 Deferred tax asset Net operating loss carryovers $ 13,329,866 $ 12,964,426 Total deferred tax assets 13,329,866 12,964,426 Valuation Allowance ( 13,329,866 ) ( 12,964,426 ) Deferred tax asset, net of allowance $ - $ - As of December 31, 2024, the Company has U.S. net operating loss carryforwards (“NOLs”) of approximately $ 29.9 million that expire in 2032 through 2037 and approximately $ 23.2 million with no expiration but which are subject to an 80% limitation upon utilization. The Company has state net operating loss carryforwards of approximately $ 29.9 million that expire in 2032 through 2037. The deferred tax asset table above reflects the tax-effected balances of the Company’s net operating loss carryforwards using a 25.3 % rate for U.S.-based carryforwards. F- 17 In 2024 and 2023, the Company evaluated its tax positions for years which remain subject to examination by major tax jurisdictions and as a result concluded no adjustment was necessary. The Company had no unrecognized tax benefits as of December 31, 2024 and 2023. The Company recognizes interest accrued related to unrecognized tax benefits and penalties in its income tax provision. U.S. tax returns for the years 2021 to 2023 remain subject to examination but there are currently no ongoing exams in any taxing jurisdictions. Tax returns for years prior to 2021 may remain open with respect to net operating loss carryforwards that are utilized in a later year, as tax attributes from prior years can be adjusted during an audit of a later year. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized. NOTE 9 - COMMITMENTS AND CONTINGENCIES Litigation The Company is subject, from time to time, to litigation, claims and suits arising in the ordinary course of business. The Company is not in any litigation at this time. Leases During 2024 and 2023, the Company maintained a lease agreement for office and laboratory space in Palm Beach Gardens, Florida, classified as an operating lease. The original lease, signed in 2019, had a five -year term and was renewed by the Company in 2024 for an additional five years. The renewed lease includes escalating monthly payments ranging from $ 9,100 to $ 10,242 . For the initial measurement of the lease liability and right-of-use asset, the Company applied a discount rate of 10.0 %, reflecting its estimated incremental borrowing rate. As of December 31, 2024, the weighted average remaining lease term for the operating lease was 4.9 years. At December 31, 2024, minimum lease payments to be paid by the Company are as follows: SCHEDULE OF MINIMUM LEASE PAYMENTS 2025 109,751 2026 113,043 2027 116,434 2028 119,928 2029 102,426 Total lease payments 561,582 Less imputed interest ( 120,160 ) Present value of lease liabilities 441,422 Current portion ( 68,677 ) Long term portion $ 372,745 Additionally, the Company leases 18.2 acres of land in Arcadia, Florida for cultivating king grass. The original lease commenced on September 1, 2020, with an annual cost of $ 6,370 and includes a renewal option for up to five years . A second lease, covering an additional 167.6 acres, began on March 31, 2023, at a semi-annual cost of $ 24,721 , also with a renewal option for up to five years . As these leases can be terminated at will, they are not recognized as right-of-use assets or lease liabilities on the Company’s balance sheet. The lease for the 167.6 acres was not renewed in 2024. During the year ended December 31, 2024 and 2023, the Company recognized rent expense, including common area maintenance fees and state sales tax, of $ 175,121 and $ 214,902 , respectively. In the statement of operations, rent expense of $ 166,576 (2023: $ 159,090 ) is included in general and administrative expense and $ 8,545 (2023: $ 55,812 ) is included in research and development costs. F- 18 NOTE 10 – RELATED PARTIES AND TRANSACTIONS Related Party transaction with the Company are as follows : 1) Short-term notes payable, convertible notes, and legacy liabilities issued to related parties are described in NOTE 6. 2) A board resolution was passed on February 13, 2020 that pledged the patents and pending patents to secure the back pay claims of Ben Slager, CEO, Anthony Santelli, CFO, and Charles Sills, Director. This was done to ensure the continued involvement of management to build the Company while they receive less than full salaries. 3) During 2024, the board of directors approved an increase in salaries to two officers of the Company retroactive to August 1, 2023, in light of the fact that they are not receiving payments of salaries on a consistent basis. CEO Ben Slager is to receive annual salary of $ 525,000 and CFO Anthony Santelli $ 325,000 . 4) In June 2024, the board of directors approved a partial anti-dilution compensation for CEO Ben Slager, CFO Anthony Santelli, and Director Chris Kneppers to be paid in restricted stock units and stock options of 4 %, 3 %, and 3 %, respectively, of the equity and warrants sold to investors on the next $ 50 million in equity raised into the Company or its subsidiaries. This is compensation for their deferring salary or lending funds to the Company until such raise(s) is affected. These restricted share units will be issued as the Company raises capital through sale of its common stock. As of the end of 2024, Ben Slager is to be issued 88,800 RSUs and options with a 15 cent exercise price and expiring on November 14, 2029, and both Anthony Santelli and Chris Kneppers are each to be issued 66,600 RSUs and 66,600 options. These remain payable as of December 31, 2024. 5) As of April 1, 2024, the board of directors approved ceasing accruing interest on back pay due to officers and on directors’ fees. In lieu of interest, the Company will pay an additional $ 25,000 to each director contingent upon the financing of the first plant or the successful uplisting to the NYSE or Nasdaq. Similarly, a performance bonus equal to 100 % of the outstanding back pay balance due to Officers Ben Slager and Anthony Santelli shall be paid contingent upon the financing of the first plant. These amounts automatically come due upon a Change of Control or if the Company files for bankruptcy under Chapter 11 or Chapter 7. 6) As of August 28, 2024, each Director that is not an Officer shall receive 3.5% in cash and 3.5% in warrants for any investor first introduced to the Company by the Director. The warrants shall either be at the same price as any warrants being offered in the raise, or, if there are no warrants in the raise, then at the closing market price on the date in which the funds are received. All warrants will have a 5-year expiration from the date of the investment. No such cash/warrants were earned in 2024. NOTE 11 – GRANT INCOME In September 2024, the Company was awarded a Small Business Innovation Research (“SBIR”) Phase II grant by the U.S. Department of Energy (DOE) in the amount of $ 1.15 million to be received subject to meeting certain terms and conditions. The purpose of the grant is to support the further development of the Company’s patented CTS process and to bring it to the point of being commercially ready. Accounting for this DOE grant does not fall under Accounting Standard Codification 606, Revenue from Contracts with Customers , as the DOE does not meet the definition of a customer under this standard. During the year ended December 31, 2024, $ 285,000 was recognized as grant income for this grant. The Company anticipates recognizing an additional $ 870,000 on this grant over the next 12 months. In July, 2023, the Company was awarded an SBIR Phase I grant by the U.S. DOE in the amount of $ 206,500 . The purpose of the grant was to support the development of the Company’s patented CTS process and its scaling. Accounting for this DOE grant does not fall under Accounting Standard Codification 606, Revenue from Contracts with Customers , as the DOE does not meet the definition of a customer under this standard. The entire amount was recognized in 2023. NOTE 12 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date the financial statements were available to be issued. Based on this evaluation, the Company has identified the following subsequent events: Subsequent to December 31, 2024, the Company issued 44,000 shares of its common stock upon the cashless exercise of 100,000 stock options. The Company converted a convertible note for $ 50,000 into 625,000 shares of the Company’s common stock and 625,000 warrants with an exercise price of 10 cents and a 5 -year expiration. The Company borrowed an additional $ 100,000 from board member Chris Kneppers (see Note 6). The board of directors granted 1,659,090 options with exercise price of $ 0.11 to the Company’s employees. F- 19 ITEM 9. – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.