CitroTech Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations FORWARD-LOOKING STATEMENTS This report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results. We caution that the factors described herein, and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Our unaudited financial statements are stated in United States Dollars (USD) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock. As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean General Enterprise Ventures, Inc. General Overview General Enterprise Ventures, Inc. (the “Company”) was originally incorporated under the laws of the State of Nevada on March 14, 1990. On April 13, 2022, General Enterprise Ventures, Inc. acquired Mighty Fire Breaker LLC and all associated IP, in exchange for 1,000,000 Preferred C Shares. On April 13, 2022, The Company designated 5,000,000 shares of Series C convertible Preferred Stock (“Series C Preferred Stock”). The Series C Preferred Stock is convertible into twenty (20) shares of Common Stock for each share of Series C Preferred Stock at the option of the stockholder. The Series C Preferred Stock does not have voting rights and is not eligible to receive dividends On April 28, 2022, Jan Ralston transferred ownership of 10,000,000 Preferred A shares to CEO, Joshua Ralston, making Mr. Ralston the new Majority Shareholder. 13 Table of Contents Current Operations Fully Integrated Services We are a fully integrated technology company structured to provide mergers and acquisitions of new and available technology. Through our services, we incubate first-to-market products and help existing companies accelerate their product development within all regulatory requirements. Corporate changes On April 13, 2022 General Enterprise Ventures, Inc. acquired Mighty Fire Breaker, LLC , an Ohio Limited Liability company (“ MFB”) and all associated IP, in exchange for 1,000,000 Preferred C Shares and a 10% royalty on the gross sales before taxes of products sold under the MFB family of products. MFB has 19 patents centered around its CitroTech MFB 31 Technology for the prevention and spread of wildfires. Its core products can be used for lumber treatments for fire prevention. It has been widely tested and is currently in testing at 3 major us government agencies. When CitroTech Science is sprayed and applied it takes flammable fuels like dry native vegetation and wood and makes them noncombustible. During the third quarter of 2022 the company received EPA Safer Choice status and UL Green-Guard Gold approval on its CitroTech fire inhibitor. It continues to pursue additional accreditations such Missoula Testing approval for selling products to the government. Currently the Company’s subsidiary Mighty Fire Breaker LLC Ohio is involved in installing large home and facility Proactive Wildfire Prevention Systems. Effective April 1, 2022, the Company implemented a plan to divest its Crypto Mining operations and focus resources on the operations of Mighty Fire Breaker LLC (“MFB”). We expanded our services by building upon its foundation of emerging technology development, by creating a Crypto-Currency mining operation (farm). Previously, the Company had 20 Bitmain Antminer SJ19 PRO 104t/h and 99 Mini-Doge 185 m/h miners deployed, which are mining, Bitcoin, Doge, and Litecoin through the F2Pool and utilized its 8,000 Sq Ft Commercial space to house these ASIC Miners. Effective November 20, 2022 General Enterprise Ventures Inc. formed a UK branch of its US subsidiary Mighty Fire Breaker LLC, named Mighty Fire Breaker UK Limited. The new Subsidiary headquartered in the United Kingdom, will be used to direct the sales of the Mighty Fire Breaker line of products and technologies in Europe, the Middle East and Africa. Results of Operations Results of Operations for the three months ended March 31, 2023 and the three months ended March 31, 2022 Our results of operations for the three months ended March 31, 2023 and 2022 are summarized below: Three Months Ended March 31, 2023 2022 Change Revenue $ 55,595 $ - $ 55,595 Operating expenses 395,177 42,766 352,411 Interest expense 175 - 175 Net loss from continuing operations $ (353,611 ) $ (42,766 ) $ 408,006 Income from discontinued operations - 13,016 (13,016 ) Net loss $ (353,611 ) $ (29,750 ) $ (323,861 ) 14 Table of Contents Revenue Our Company generated $55,595 and $0 revenue for the three months ended March 31, 2023 and 2022, respectively. The Company’s revenue is associated with revenue from MFB which was acquired in April 2022. Operating Expenses Operating expenses consisted of professional fees of $295,129, depreciation of $264 and general and administrative expenses of $99,784 in the three months ended March 31, 2023, compared to professional fees of $40,171 and general and administrative of $2,595 in the three months ended March 31, 2022. Discontinuing Operating Expenses During the three months ended March 31, 2022, income from discontinued operations of $13,016 was the result of the net income from the operations of crypto mining and the disposition of crypto mining which the Company implemented a plan to divest its crypto mining operations to focus its resources on the MFB acquisition. Net Loss As a result of the foregoing, we incurred a net loss of $353,611, for the three months ended March 31, 2023, compared to a net loss of $29,750 for the corresponding three months ended March 31, 2022. Liquidity and Capital Resources March 31, December 31, 2023 2022 Change Cash $ 63,529 $ 55,434 $ 8,095 Current Assets $ 172,337 $ 170,319 $ 2,018 Current Liabilities $ 1,314,839 $ 1,060,918 $ 253,921 Working Capital (Deficiency) $ (1,142,502 ) $ (890,599 ) $ (251,903 ) The increase in working capital deficiency in 2023 was primarily the result of increases in accounts payable and accrued liabilities of $34,463 and due to related party of $234,052. As of March 31, 2023 and December 31, 2022, the current assets consisted primarily of cash of $63,529 and $55,434, and inventory of $102,268 and $114,645, respectively. As of March 31, 2023, and December 31, 2022, the current liabilities consisted of accounts payable and accrued liabilities of $121,861 and $87,398, due to related party of $1,133,205 and $899,153, convertible note of $35,000 and $35,000, and current portion of operating lease liability of $24,773 and $39,367, respectively. Cash Flows Three Months Ended March 31, 2023 2022 Cash provided by (used in) operating activities $ (176,905 ) $ 33,524 Cash provided by financing activities $ 185,000 $ 7,677 Net Change in Cash $ 8,095 $ 41,201 15 Table of Contents Cash Flows from Operating Activities For the three months ended March 31, 2023, net cash flows used in operating activities consisted of a net loss of $353,611, reduced by stock-based compensation of $86,850, non-cash lease expenses of $15,000, depreciation $264 and reduced by an increase in changes in operating assets and liabilities of $74,592. For the three months ended March 31, 2022, net cash flows provided by operating activities consisted of a net loss of $29,750, reduced by impairment loss on digital assets of $6,125, depreciation of $15,059, reduced by an increase in changes in operating assets and liabilities of $33,524. Cash Flows from Financing Activities For the three months ended March 31, 2023, net cash provided by financing activities consisted of $185,000 received from a related party. For the three months ended March 31, 2022 net cash provided by financing activities consisted of $55,000 received from a related party and $47,323 repaid to a related party. Going Concern The accompanying consolidated financial statements have been prepared (i) in accordance with accounting principles generally accepted in the United States, and (ii) assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated significant income to date. The Company is subject to the risks and uncertainties associated with a business with no substantive revenue, as well as limitations on its operating capital resources. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. In light of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise capital and generate revenue and profits in the future. Critical Accounting Policies The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements. Off-balance sheet arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. Item 3. Quantitative and Qualitative Disclosures About Market Risk As a “smaller reporting company”, we are not required to provide the information required by this Item. 16 Table of Contents