10-K: Blue Biofuels Reports Net Loss Improvement for Fiscal Year 2024, Focuses on SAF Production and Technology Upscaling

Blue Biofuels, Inc. reports a reduced net loss for 2024, highlighting progress in its CTS technology and joint venture for sustainable aviation fuel (SAF) production.

Summary

• Blue Biofuels, Inc. reported a net loss of $1,418,981 for the year ended December 31, 2024, compared to a net loss of $3,055,194 in 2023, primarily due to a gain on extinguishment of debt.
• The company recognized $0 in revenue for both 2024 and 2023.
• General and administrative expenses increased by $386,317 to $1,726,106 in 2024, mainly due to higher stock-based compensation.
• Research and development expenses increased to $2,329,413 in 2024, driven by the vesting and expensing of options.
• The company received a $1.15 million SBIR Phase 2 Department of Energy grant, recognizing $285,000 as grant income in 2024.
• Blue Biofuels is focused on upscaling its Cellulose-to-Sugar (CTS) technology and plans to build an ethanol-to-SAF facility through a joint venture, VertiBlue Fuels, LLC.
• The company anticipates needing between $15 million and $100 million to fund its share of the VertiBlue Fuels joint venture and start commercial SAF production.
• The company plans to apply for Renewable Identification Numbers (RINs), Clean Fuel Production Credits (CFPC), and Low Carbon Fuel Standard Credits (LCFS) to enhance profitability.
• As of December 31, 2024, the company had $48,797 in cash and a stockholders deficit of $2,845,903.
• 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.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company is still operating at a loss, there is a significant reduction in net loss, progress in technology development, and a strategic move into the SAF market. However, the need for significant capital and going concern uncertainty temper the positive aspects.

Positives

• The company significantly reduced its net loss in 2024 compared to 2023.
• The company is actively developing and upscaling its patented CTS technology.
• The company has formed a joint venture to enter the sustainable aviation fuel (SAF) market.
• The company is pursuing government grants and incentives to support its operations and enhance profitability.
• The company has secured a $1.15 million grant from the Department of Energy.

Negatives

• The company has not generated any material revenues from its core business.
• The company has a working capital deficit of $2,130,829 as of December 31, 2024.
• The company has accumulated losses of $57,255,761 since its inception.
• The company needs to raise significant capital ($15 million to $100 million) to fund its SAF project.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern.

Risks

• The company's ability to continue as a going concern is dependent on obtaining additional financing and generating sufficient revenues.
• The company faces competition in the ethanol industry.
• The company's success depends on the commercialization of its CTS technology and the successful operation of its SAF facility.
• The company is subject to regulatory approvals and compliance requirements.
• The company's profitability is dependent on the availability and cost of cellulosic feedstocks.

Future Outlook

The company anticipates needing between $15 million and $100 million to pay for its share of the VertiBlue Fuels joint venture and start commercial production of Sustainable Aviation Fuel. The Company anticipates generating revenue from this joint venture 18-24 months from financing.

Management Comments

• Management expects to be able to earn substantial renewable fuel credits and produce sustainable ethanol, sustainable aviation fuel, biogasoline, and other sustainable biofuels more profitably than they could be from existing commercial corn ethanol producers.
• The Company believes that its management and consultants have significant experience in the development of technologies from concept to commercialization.

Industry Context

The company operates in the competitive ethanol industry, where profitability depends on feedstock prices. Blue Biofuels aims to differentiate itself by using non-food cellulosic feedstocks and leveraging government incentives for cellulosic biofuels.

Comparison to Industry Standards

• The ethanol industry is competitive with over 200 ethanol plants in the United States alone.
• Currently, the vast majority use corn as feedstock.
• Their profitability depends highly on the fluctuations between the price of corn and the price of ethanol.
• Cellulosic biofuels yield much higher incentives than non-cellulosic biofuels.

Legal Proceedings

• The Company is subject, from time to time, to litigation, claims and suits arising in the ordinary course of business.
• As of the date of filing, there are no material claims or suits whose outcomes could have a material effect on the Companys financial statements.

Related Party Transactions

• Short-term notes payable, convertible notes, and legacy liabilities issued to related parties are described in NOTE 6.
• 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.
• During 2024, the board of directors approved an increase in salaries to two officers of the Company retroactive to August 1, 2023.
• 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.
• As of April 1, 2024, the board of directors approved ceasing accruing interest on back pay due to officers and on directors fees.
• 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.

Stakeholder Impact

• Shareholders: The company's financial performance and strategic initiatives impact shareholder value.
• Employees: The company's ability to secure funding and achieve profitability affects employee job security and compensation.
• Customers: The company's development of sustainable biofuels could provide customers with environmentally friendly fuel options.
• Suppliers: The company's demand for cellulosic feedstocks could create opportunities for suppliers.
• Creditors: The company's ability to repay its debts depends on its financial performance and access to capital.

Next Steps

• The company plans to upscale its CTS technology and optimize pre and post-processing elements.
• The company intends to build a commercial CTS and ethanol facilities on the front-end to produce cellulosic SAF and generate the large D7 RIN and other government credits.
• The company plans to apply for Renewable Identification Numbers (RINs), Clean Fuel Production Credits (CFPC), and Low Carbon Fuel Standard Credits (LCFS).
• After its first plant is profitable, the Company intends to grow with additional plants in the United States and explore international growth by either licensing the CTS technology or forming joint ventures with foreign domestic partners to build plants.

Key Dates