CitroTech Inc. 10-Q

Item 1. Financial Statements General Enterprise Ventures, Inc. Consolidated Balance Sheets (Unaudited) June 30, December 31, 2023 2022 Assets Current Assets Cash $ 86,144 $ 55,434 Prepaid expenses 20,339 240 Inventory 103,736 114,645 Total Current Assets 210,219 170,319 Intangible assets 4,195,353 4,195,353 Operating lease right-of-use asset 9,977 39,367 Equipment, net 4,016 4,547 Total Assets $ 4,419,565 $ 4,409,586 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 34,150 $ 87,398 Convertible note payable 54,000 35,000 Due to related party 1,355,989 899,153 Operating lease liability - current portion 9,977 39,367 Total Current Liabilities 1,454,116 1,060,918 Total Liabilities 1,454,116 1,060,918 Stockholders' Equity Convertible Series A Preferred Stock, par value $ 0.0001 , authorized 10,000,000 shares, 10,000,000 shares issued and outstanding 1,000 1,000 Convertible Series C Preferred Stock, par value $ 0.0001 , authorized 5,000,000 shares, 800,000 and 950,000 issued and outstanding, respectively 80 95 Common Stock par value $ 0.0001 , authorized 1,000,000,000 shares, 97,545,388 and 93,945,388 shares issued and outstanding, respectively 9,755 9,395 Additional paid-in capital 62,866,083 62,719,578 Shares to be issued, subscription received 179,600 - Accumulated deficit ( 60,091,069 ) ( 59,381,400 ) Total Stockholders' Equity 2,965,449 3,348,668 Total Liabilities and Stockholders' Equity $ 4,419,565 $ 4,409,586 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 3 Table of Contents General Enterprise Ventures, Inc. Consolidated Statements of Operations (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenue $ 28,355 $ 41,468 $ 83,950 $ 41,468 Cost of revenue 4,893 - 18,747 - Gross Profit 23,462 41,468 65,203 41,468 Operating Expenses General and administration 114,151 78,111 213,935 80,706 Depreciation 267 135 531 135 Management compensation - 2,100,000 - 2,100,000 Professional fees 264,518 182,295 559,647 222,466 Total operating expenses 378,936 2,360,541 774,113 2,403,307 Loss from Operations ( 355,474 ) ( 2,319,073 ) ( 708,910 ) ( 2,361,839 ) Other Income (Expense) Interest expense ( 584 ) - ( 759 ) Total other expense ( 584 ) - ( 759 ) - Loss from continuing operations before taxes ( 356,058 ) ( 2,319,073 ) ( 709,669 ) ( 2,361,839 ) Provision for income taxes - - - - Loss from continuing operations $ ( 356,058 ) $ ( 2,319,073 ) $ ( 709,669 ) $ ( 2,361,839 ) Discontinued operations: Income from discontinued operations $ - $ - $ - $ 13,016 Loss on disposition of digital currency and digital currency assets - ( 2,030 ) - ( 2,030 ) Income (Loss) from discontinued operations, net of tax $ - $ ( 2,030 ) $ - $ 10,986 Net Loss $ ( 356,058 ) $ ( 2,321,103 ) $ ( 709,669 ) $ ( 2,350,853 ) Loss from continuing operations Per Common Share – Basic $ ( 0.00 ) $ ( 0.06 ) $ ( 0.01 ) $ ( 0.08 ) Income (Loss) from discontinuing operations Per Common Share– Basic $ - $ ( 0.00 ) $ - $ 0.00 Net loss per common share - Basic $ ( 0.00 ) $ ( 0.06 ) $ ( 0.01 ) $ ( 0.08 ) Loss from continuing operations Per Common Share – Diluted $ ( 0.00 ) $ ( 0.06 ) $ ( 0.01 ) $ ( 0.08 ) Income (Loss) from discontinuing operations Per Common Share– Diluted $ - $ ( 0.00 ) $ - $ 0.00 Net loss per common share - Diluted $ ( 0.00 ) $ ( 0.06 ) $ ( 0.01 ) $ ( 0.08 ) Basic Weighted Average Number of Common Shares Outstanding 97,350,883 37,055,278 95,766,935 30,039,311 Diluted Weighted Average Number of Common Shares Outstanding 113,482,751 37,745,388 113,324,946 30,386,272 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 4 Table of Contents General Enterprise Ventures, Inc. Consolidated Statements of Change in Stockholders’ Equity (Deficit) (Unaudited) For the three and six months ended June 30, 2023 Convertible Series A Convertible Series C Additional Total Stockholders' Preferred stock Preferred stock Common Stock Stock Paid-In Accumulated Equity Shares Amount Shares Amount Shares Amount to be issued Capital Deficit (Deficit) Balance - December 31, 2022 10,000,000 $ 1,000 950,000 $ 95 93,945,388 $ 9,395 $ - $ 62,719,578 $ ( 59,381,400 ) $ 3,348,668 Common stock issued for services - - - - 300,000 30 - 86,820 - 86,850 Net loss - - - - - - - - ( 353,611 ) ( 353,611 ) Balance - March 31, 2023 10,000,000 $ 1,000 950,000 $ 95 94,245,388 $ 9,425 - $ 62,806,398 $ ( 59,735,011 ) $ 3,081,907 Shares to be issued, subscription received - - - - - - 179,600 - - 179,600 Common stock issued for services - - - - 300,000 30 - 59,970 - 60,000 Conversion of Convertible Series C Preferred stock in Common stock - - ( 150,000 ) ( 15 ) 3,000,000 300 - ( 285 ) - - Net loss - - - - - - - - ( 356,058 ) ( 356,058 ) Balance - June 30, 2023 10,000,000 $ 1,000 800,000 $ 80 97,545,388 $ 9,755 $ 179,600 $ 62,866,083 $ ( 60,091,069 ) $ 2,965,449 For the three and six months ended June 30, 2022 Convertible Series A Convertible Series C Additional Total Stockholders' Preferred stock Preferred stock Common Stock Paid-In Accumulated Equity Shares Amount Shares Amount Shares Amount Capital Deficit (Deficit) Balance - December 31, 2021 10,000,000 $ 1,000 - $ - 22,945,388 $ 2,295 $ 56,417,418 $ ( 56,473,572 ) $ ( 52,859 ) Debt forgiveness - former related party - - - - - - 9,355 - 9,355 Net loss - - - - - - - ( 29,750 ) ( 29,750 ) Balance - March 31, 2022 10,000,000 1,000 - - 22,945,388 2,295 56,426,773 ( 56,503,322 ) ( 73,254 ) Shares issued for acquisition of Mighty Fire Breakers - - 1,000,000 100 - - 4,199,900 - 4,200,000 Conversion of Convertible Series C Preferred stock of Common stock - - ( 50,000 ) ( 5 ) 1,000,000 100 ( 95 ) - - Stock based compensation - - - - 70,000,000 7,000 2,093,000 - 2,100,000 Net loss - - - - - - - ( 2,321,103 ) ( 2,321,103 ) Balance - June 30, 2022 10,000,000 $ 1,000 950,000 $ 95 93,945,388 $ 9,395 $ 62,719,578 $ ( 58,824,425 ) $ 3,905,643 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 5 Table of Contents General Enterprise Ventures, Inc. Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2023 2022 Cash Flows from Operating Activities: Net loss $ ( 709,669 ) $ ( 2,350,853 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 146,850 2,100,000 Loss on disposition of digital currency and digital currency assets - 2,029 Impairment loss on digital assets - 6,125 Non-cash lease expense 30,000 14,647 Depreciation and amortization 531 15,194 Changes in operating assets and liabilities: Inventory 10,909 ( 114,413 ) Digital currency - 374 Prepaid expense ( 20,099 ) - Related party advances funding operating expense 200,836 58,231 Accounts payable and accrued liabilities ( 53,248 ) 4,392 Change in operating lease liability ( 30,000 ) ( 10,000 ) Net cash used in Operating Activities ( 423,890 ) ( 274,274 ) Cash Flows from Investing Activities: Purchase of equipment - ( 2,707 ) Net cash used in Investing Activities - ( 2,707 ) Cash Flows from Financing Activities: Proceeds from loan - related party 275,000 429,484 Repayment of loan- related party - ( 55,720 ) Proceeds from stock subscription 179,600 - Net cash provided by Financing Activities 454,600 373,764 Change in cash 30,710 96,783 Cash, beginning of period 55,434 5,469 Cash, end of period $ 86,144 $ 102,252 Supplemental Disclosure Information: Cash paid for interest $ - $ - Cash paid for taxes $ - $ - Non-Cash Financing Disclosure: Issuance of common stock for services $ 146,850 $ 70,000 Issuance of Preferred C Stock for acquisition of Mighty Fire Breakers $ - $ 4,200,000 Common stock issued upon conversion of Preferred C stock $ 300 $ 100 Debt forgiveness - related party $ - $ 9,355 Reclassification of due to related party to convertible note $ 19,000 $ - See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 6 Table of Contents General Enterprise Ventures, Inc. Notes to Unaudited Consolidated Financial Statements June 30, 2023 Note 1 – Nature of Operations and Going Concern General Enterprise Ventures, Inc., (the “Company” or “GEVI”), was originally incorporated under the laws of the State of Nevada on March 14, 1990. Business 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. Going Concern The accompanying unaudited interim 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. Note 2 – Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the unaudited interim financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2022, as filed with the SEC on March 31, 2023. Principles of Consolidation The consolidated financial statements include the accounts of General Enterprise Ventures, Inc., and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments. 7 Table of Contents Cash and Cash Equivalents For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company did not have any cash equivalents. The Company had $ 86,144 and $ 55,434 cash equivalents at June 30, 2023 and December 31, 2022, respectively. Inventory Inventories consist of raw materials which are stated at lower cost or net realizable value, with cost being determined on the weighted average method. As of June 30, 2023, and December 31, 2022, the Company held inventories of $ 103,736 and $ 114,645 , respectively. During the six months ended June 30, 2023, and 2022, the Company recorded cost of goods sold of $ 18,747 and $ 0 associated with the cost of inventories sold, respectively. The Company did not write-off any inventories as unsalable during the six months ended June 30, 2023, and 2022. Property and Equipment Property and equipment are stated at cost. Depreciation is computed on the straight-line method. Currently our assets consist solely of furniture and equipment which we amortize over a useful life of 5 years. Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income. Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. Fair Value of Financial Instruments The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The Company’s financial instruments, including cash, prepaid expenses, inventory, accounts payable and accrued liabilities, and due to related party, are carried at amortized cost. At June 30, 2023 and December 31, 2022, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. 8 Table of Contents Related Parties The Company follows ASC 850, “Related Party Disclosures,” 10). Basic and Diluted Net Loss Per Common Share Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. For the six months ended June 30, 2023, and 2022, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive. June 30, June 30, 2023 2022 Convertible notes 300,000 105,556 Revenue We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers . The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. Our revenues currently consist of products used for lumber products for fire prevention. Revenue is recognized at a point in time that is which the risks and rewards of ownership of the products transfer from the Company to the customer. Note 2 – Discontinued Operations Crypto mining On April 1, 2022, the Company implemented a plan to divest its crypto mining operations to focus its resources on the MFB acquisition (see Note 4). The Company recognized a loss of $ 2,030 from the disposition of its crypto mining operations, which consisted of the relinquishment of the digital currency assets in exchange for settlement of the related party note payable associated with the acquisition of the equipment. The following is a summary of discontinued operations for the period ended April 1, 2022: April 1, 2022 Revenue $ 46,976 Cost of revenue 27,835 Gross Profit 19,141 Operating expenses: Impairment loss 6,125 Total operating expenses 6,125 Income from discontinued operations $ 13,016 9 Table of Contents Note 3 – Equipment, net At June 30, 2023 and December 31, 2022, equipment consisted of the following: June 30, December 31, 2023 2022 Cost: Furniture and equipment $ 5,350 $ 5,350 Less: accumulated depreciation ( 1,334 ) ( 803 ) Property and equipment, net $ 4,016 $ 4,547 During the six months ended June 30, 2023, the Company recorded a depreciation of $ 531 . During the six months ended June 30, 2022, the Company recorded a depreciation of $ 15,059 for digital currency equipment, which is included within the Company’s income from discontinued operations. Note 4 – Acquisition On April 13, 2022, the Company acquired 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. The following table summarizes the consideration paid for MFB and the amounts of the assets acquired, and liabilities assumed at the acquisition date of April 13, 2022: Consideration: Convertible Preferred C stock $ 4,200,000 Assets acquired and liabilities assumed: Intangible assets $ 4,195,353 Operating lease right-of-use assets 81,967 Operating lease liabilities ( 77,320 ) Note 5 – Intangible Assets The Company has capitalized the costs associated with acquiring the intellectual property of MFB at a value of $ 4,195,353 as of June 30, 2023, and December 31, 2022, respectively (see Note 4). The amount capitalized consisted of a portion of the fair value of 1,000,000 shares of Convertible Preferred C stock of $ 4,200,000 . During the six months ended June 30, 2023, no additional costs met the criteria for capitalization as an intangible asset. 10 Table of Contents Note 6 – Lease The following summarizes right-of-use asset and lease information about the Company’s operating lease as of June 30, 2023: Six Months Ended June 30, 2023 Lease cost: Operating lease cost $ 30,000 Other information: Cash paid for operating cash flows from operating leases $ 30,000 Right -of-use assets obtained upon acquisition $ 81,967 Weighted-average remaining lease term - operating leases (year) 0.17 Weighted-average discount rate — operating leases 5.50 % Future minimum lease payments under the operating lease liability have the following non-cancellable lease payments as of June 30, 2023: 2023 (excluding the six months ended June 30, 2023) $ 10,000 Thereafter - 10,000 Less: Imputed interest ( 23 ) Operating lease liabilities -current $ 9,977 Note 7 – Convertible Note On September 30, 2022, the Company entered into a convertible note agreement for the amount of $ 54,000 , with term of six (6) months from the date of receipt of the funds, at interest rate of 2 % per annum, currently the note is in default. At the sole option of the Lender, all or part of unpaid principal then outstanding may be converted into shares of common stock at any time starting from 24 hours after payment at a fixed conversion price of $ 0.18 per share. As of June 30, 2023, following is the summary of funds received from the lender: Principal Interest Payment date Amount Maturity date Rate Balance August 11, 2022 $ 18,000 February 11, 2023 2 % 18,000 September 2, 2022 $ 17,000 March 2, 2023 2 % 17,000 April 1, 2023 $ 19,000 Due on demand 2 % 19,000 Total Convertible notes $ 54,000 Current portion ( 54,000 ) Long -term portion $ - On June 9, 2022, the lender paid $ 19,000 to the Company and it was recorded as an advance from a related party. On April 1, 2023, an amount owing to related party was reclassed to convertible note for $ 19,000 . During the six months ended June 30, 2023, the Company recognized $ 759 interest. As of June 30, 2023, and December 31, 2022, the Company owed principal of $ 54,000 and $ 35,000 and accrued interest of $ 1,015 and $ 255 , respectively. Note 8 – Stockholders’ Equity On June 29,2023, the Board of Directors and stockholders of the Company approved an amended and restated certificate of incorporation effective a change in par value from $0.001 to $0.0001 per share of Common and Preferred Stock . All issued and outstanding Common and Preferred Stock contained in the consolidated financial statements have been retroactively corrected to reflect this change in par value for all periods presented. 11 Table of Contents Preferred Shares The Company’s preferred shares consist of the following: · 10,000,000 authorized shares of Convertible Series A Preferred Stock, par value $ 0.0001 . The Series A Preferred Stock are convertible into common stock of the Corporation at a conversion rate of one thousand ( 1,000 ) shares of common stock and entitled to one thousand (1,000) votes of common stock for each share of Series A Preferred Stock. The holders of the Convertible Series A Preferred Stock shall not be entitled to receive dividends. Issued and outstanding Convertible Series A Preferred stock as of June 30, 2023, and December 31, 2022, was 10,000,000 , respectively. · 5,000,000 authorized shares of non-voting Convertible Series C Preferred Stock, par value $ 0.0001 . The Series C Preferred Stock shares are convertible into common stock of the Corporation at a conversion rate of one ( 1 ) Preferred C share for twenty (20) shares of common stock. Issued and outstanding Convertible Series A Preferred stock as of June 30, 2023 and December 31, 2022, were 800,000 and 950,000 , respectively. On April 13, 2022, the Company’s board of directors approved the issuance of 1,000,000 Convertible Series C Preferred Stock, with a value of $ 4,200,000 to be issued to the vendor of MFB as consideration for the acquisition of the entity (see note 4). The holder may exercise shares after an initial lock up period of six (6) months following the date of the agreement and may only exchange a maximum of four (4) million shares in a twelve (12) month period and may not hold or beneficially hold more than 10% of outstanding at any time. On June 7, 2022, the holder of the Convertible Series C Preferred Stock converted 50,000 shares of the Company’s Series C Preferred Stock into 1,000,000 shares of the Company’s common shares. On April 5, 2023, the holder of the Convertible Series C Preferred Stock converted 150,000 shares of the Company’s Series C Preferred Stock into 3,000,000 shares of the Company’s common shares. Common Shares The Company has authorized 1,000,000,000 shares of common stock with a par value of $ 0.0001 . Each common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. As of June 30, 2023, 70,000,000 shares issued to a member of the board of directors and President of the Company are restricted (the “Restricted Stock Award”) and shall be released only upon the Company achieving gross revenue in each of the calendar years ended December 31, 2023, 2024, 2025 and 2026, of not less than $100,000,000. The holder of the Restricted stock shall be entitled to vote but is not entitled to dividends or disposal. The Company valued the voting rights associated with the awards at $ 2,100,000 which is recorded as stock-based compensation during the year ended December 31, 2022. During the six months ended June 30, 2023 and 2022, the holder of the Convertible Series C Preferred Stock converted 150,000 and 50,000 shares of the Company’s Series C Preferred Stock into 3,000,000 and 1,000,000 shares of the Company’s common shares, respectively. During the six months ended June 30, 2023, the company issued 600,000 shares of common stock for services valued at $ 146,850 . As of June 30, 2023, and December 31, 2022, issued and outstanding Common shares were 97,545,388 and 93,945,388 respectively. 12 Table of Contents Restricted Stock Award On June 13, 2022, the Company issued a 70,000,000 Restricted Stock Award (“RSA”) to a member of the board of directors and President of the Company. Set out below is a summary of the changes in the Restricted Shares during the six months ended June 30, 2023: Six Months Ended June 30, 2023 RSA Weighted -Average Grant Price Balance, December 31, 2022 70,000,000 $ 0.03 Granted - - Vested - - Forfeited - - Balance, June 30, 2023 70,000,000 $ 0.03 Note 9 – Subscription Received – Shares to be issued During the six months ended June 30,2023, the Company received subscriptions of $ 179,600 for 74,833 shares of Convertible Series C Preferred Stock. As of June 30, 2023, 74,833 shares of Convertible Series C Preferred stock for a value of $ 179,600 were yet to be issued. Note 10 – Related Party Transactions During the six months ended June 30, 2022, our former officer forgave $ 9,355 in accrued salary and the Company recognized it as additional paid-in-capital. During the six months ended June 30, 2022, as part of the Company’s divestiture of its digital asset operations, a related party forgave loans payable of $ 301,175 in exchange for digital asset equipment with a net book value of $ 276,379 and digital currency intangible assets of $ 26,825 , of which the Company recorded a loss on disposition of $ 2,030 . On April 1, 2023, the holder of convertible note paid $ 19,000 to the Company and it was recorded as an advance from a related party. During the six-month ended June 30,2023, the Company recognized the error, and the related party account was adjusted accordingly. During the six months ended June 30,2023 and 2022, a related party advanced to the Company an amount of $ 275,000 and $ 429,484 for working capital propose, respectively. During the six months ended June 30, 2023, and 2022, a related party advanced to the Company an amount of $ 200,836 and $ 58,231 for operating expenses on behalf of the Company, respectively. During the six months ended June 30,2023 and 2022, the Company repaid $ 0 and $ 55,720 owing to the loan, respectively. During the six months ended June 30, 2023 and 2022 the Company paid $ 104,000 and $ 0 as consulting fee to an entity under common control of a related party and $ 80,000 and $ 0 as commission to a related party. As of June 30, 2023, and December 31, 2022, the Company was obliged to related parties, for unsecured, non-interest-bearing demand loans with a balance of $ 1,355,989 and $ 899,153 , respectively. 13 Table of Contents Note 11 – Commitments and Contingencies On November 9, 2022, the Company entered into a consulting agreement with Duchess Group LLC. for propose of obtaining corporate consulting services so as to better serve its shareholders and investment community. The agreement shall be for period of nine months and corporate consulting services to be settled by issuing 300,000 shares of common stock upon execution agreement, 150,000 shares of common stock due three months after execution of agreement and 150,000 shares of common stock due six months after execution of agreement. On January 25, 2023, the Company issued 300,000 shares of common stock for first commitment and it was valued based on valuation of common stock price on issuance date for amount of $ 86,850 . On April 20,2023, the Company issued 300,000 shares of common stock for second and third commitment and it was valued based on valuation of common stock price on issuance date for amount of $ 60,000 . As of June 30, 2023, the Company settled its commitment for consulting services through the end of the agreement (August 9,2023). As part of the consideration for the Company’s acquisition of MFB (see Note 4), the vendor will be entitled to a ten (10%) percent royalty on the gross sales before taxes of products sold under the MFB family of products, to be paid on or before the fifteenth (15 th ) day of the following month. On July 13, 2023, The Company entered into an amendment to lease agreement by extension the period from August 1, 2023, for two years and increased the monthly lease to $5,200 for first year and $5,400 for second year . On October 23, 2021, The Company entered into a consulting agreement with a related party. The consultant shall render to the Company, upon the request of any members of Board of Directors or the President of the Company, consulting services on matters relating to the business affairs of the Company. The agreement shall take effect of the date of agreement and shall terminate upon mutual agreement of the parties. The compensation of consultant is a number of Series C Preferred Shares which the Board of Directors of the Company may determine at its discretion. Note 12 – Subsequent Events Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure, except as follows. On June 7, 2023, the Company entered into a promissory note agreement with a borrower for the amount of $120,000, in terms of twelve months and interest rate of 5% per annum. The Company paid $120,000 to the borrower on July 3, 2023. On July 13, 2023, The Company entered into an amendment to lease agreement by extension the period from August 1, 2023, for two years and increased the monthly lease to $5,200 for first year and $5,400 for second year . 14 Table of Contents