Blue Biofuels Qualifies as a Qualified Small Business Stock

Blue Biofuels, Inc. Qualified Small Business Status

This letter is being provided to Blue Biofuels, Inc. (“Company”), which has engaged Eqvista Inc. (“Eqvista”) to provide certain information to help the Company determine whether its shares qualify as “qualified small business stock” (“QSBS”) under Section 1202 of the Internal Revenue Code (“IRC”). The information below has been provided to the best of Eqvista and Company’s knowledge and belief.

Based on our review, we believe that the Company is a qualified small business (“QSB”) and that primary shares issued by the Company between January 1, 2015, and December 31, 2025 (the “Qualification Period”) meet the company-level qualifications for Qualified Small Business Stock (“QSBS”) within the meaning of Internal Revenue Code (“IRC”) Section 1202(c)(1).

Thus, Company shareholders who acquired original issuance shares during this period may hold QSBS, and such may be able to exclude gain on the sale of their shares from federal gross income (capital gains taxes). The specific amount of the exclusion and the required holding period are dependent on the date the shares were acquired, pursuant to recent legislative amendments enacted on July 4, 2025. For shares acquired on or before this date, the gain exclusion is generally limited to the greater of $10 million or ten times the applicable shareholder’s cost basis, subject to a holding period of more than 5 years.

This analysis is based on Company’s audited public financial statements and corporate documents filed with the SEC. Where public filings do not explicitly detail statutory QSBS micro-requirements (such as but not limited to, the specific absence of disqualifying stock redemptions under § 1202(c)), Eqvista has relied upon specific representations provided by Management. While Eqvista has analyzed this combined information for the purpose of this QSBS assessment, we have not audited or independently verified the underlying data provided by Management and, accordingly, express no opinion or other form of assurance on its accuracy.

BACKGROUND

2.1) The Company was incorporated in Nevada on March 28, 2012, under the name Alliance Media Group Holdings, Inc. Following a pivot in business operations, the Company amended its Articles of Incorporation to change its name to Alliance Bioenergy +, Inc. (November 2014), Alliance Bioenergy Plus, Inc. (December 2014), and ultimately Blue Biofuels, Inc. (July 2021).

2.2) From approximately late 2014 onward, the Company has operated as a technology company focused on emerging technologies in renewable energy, biofuels, and lignin technologies. Its primary business involves developing Cellulose-to-Sugar (CTS) technology to convert plant material into ethanol and licensing the “Vertimass Process” to convert ethanol into sustainable aviation fuel and other biofuels.

2.3) More information on the Company’s business can be found at https://bluebiofuels.com/

ENCLOSURES

3.1) With this attestation letter, we also enclose the following documents:

a) Articles of Incorporation and subsequent Amendments (March 28, 2012 – July 26, 2021)

b) Form 10-K Balance Sheet Data (December 31, 2025)

DETAILS OF THE COMPANY’S SHARE CAPITAL

4.1) As of December 31, 2025, the Company reported 317,872,112 issued and outstanding common shares, alongside outstanding options and warrants, as per the Form 10-K filing.

ANALYSIS OF ELIGILIBTY CRITERA UNDER SECTION 1202

For the company to be considered a qualified small business, and later exclusion of capital gains tax on the gain of its shares, it must fulfill certain criteria as laid out by Section 1202 of the US Code, which include:

5.1) § 1202 (a) The Company stock is eligible for exclusion from gross income based on its acquisition date and holding period. For stock acquired after July 4, 2025, a tiered exclusion applies: 50% for a 3-year hold, 75% for a 4-year hold, and 100% for a hold of 5 years or more. For stock acquired on or before that date, a holding period of more than 5 years is required. Because the Qualification Period for this letter begins on January 1, 2015, all shares issued within this window prior to the July 4, 2025, legislative amendment fall under the 100% exclusion provision (which applies to stock acquired after September 2010).

5.2) § 1202 (b) The maximum amount of capital gains is limited based on the acquisition date. For stock acquired after July 4, 2025, the limit is the greater of $15 million or 10x aggregate adjusted bases. For the Company’s shares issued to date (acquired on or before July 4, 2025), the gain is limited to the greater of $10 million or 10x aggregate adjusted basis.

5.3) § 1202 (c) The stock of the company evaluated herein represents primary/original issuances. Furthermore, the Company must meet the active business requirement during “substantially all” of the taxpayer’s holding period. Because the Company operated in a disqualified industry (motion pictures/performing arts) prior to its pivot in late 2014, only shares issued on or after January 1, 2015, are considered to cleanly meet the active business holding period requirement for the purposes of this attestation. According to Management representations, there have been no significant redemptions that would disqualify the stock to date.

5.4) § 1202 (d) The company qualifies as a small business with aggregate gross assets below the applicable threshold ($50 million for stock issued on or before July 4, 2025, and $75 million for stock issued after July 4, 2025). The Gross Asset Test applies at the time of stock issuance. Based on the company’s financial history and public SEC filings demonstrating gross assets of approximately $1,407,379 (as of December 31, 2025), Eqvista has determined that the Company’s aggregate gross assets did not exceed the statutory limits at the time the evaluated shares were issued.

5.5) § 1202 (e) From January 1, 2015, onward, at least 80 percent of the assets are used in the active conduct of a qualified trade or business (biofuels technology and manufacturing). The company is not in any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees.

5.6) § 1202 (f) According to the information provided, for any preferred stock acquired and subsequently converted into common stock, the holding period generally tacks to the original issuance date of the qualifying preferred stock.

5.7) § 1202 (g) The company is incorporated as a C Corporation. Where stock was acquired by a pass-through entity (e.g., an LP), the QSBS benefits may pass through to the partners who held an interest in the entity at the time the stock was acquired, subject to Section 1202(g) limitations.

5.8) § 1202 (h) Secondary market purchases of public stock do not qualify as original issuance. This analysis applies only to primary shares issued directly by the Company.

5.9) § 1202 (i) Management has represented that certain shares were issued in 2025 in exchange for a capitalized

5.10) § 1202 (j) There are no offsetting short positions within the Company reported to Eqvista.  Based on these findings, Eqvista has determined that shares issued directly by the Company from January 1, 2015, until December 31, 2025, meet the company-level qualifications for QSBS within the meaning of IRC Section 1202(c)(1). However, note that this analysis does not take into account any changes to QSB status after the Qualification Period, nor does it certify the individual tax treatment, holding periods, or acquisition methods of specific shareholders.

Blue Biofuels, Inc. shareholders should consult their own CPAs and tax advisors to calculate specific holding periods, track basis, and consider the particular facts of their respective filing positions, especially regarding stock acquired via debt conversion, option exercise, or warrant exercise.

Looking forward, provided the Company continuously maintains its active business focus in the biofuels sector (pursuant to § 1202(e)), its aggregate gross assets remain below the applicable statutory threshold immediately after any future stock issuance (pursuant to §1202(d)), and no disqualifying redemptions occur, primary shares issued by the Company in the future would generally continue to meet the company-level qualifications for QSBS. However, Eqvista expresses no opinion on future issuances until formally assessed.

If you or a shareholder has any questions contact us at info@eqvista.com

Yours Faithfully,

For Eqvista Inc.

This analysis was prepared in accordance with professional standards under the supervision of Eqvista’s licensed professional,

Colin McCrea, IRS Enrolled Agent #135828