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, the Company acquired Mighty Fire Breaker LLC and all associated intellectual property, in exchange for 1,000,000 shares of Series C Convertible Preferred Stock. 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 shares of Series A Convertible Preferred Stock to CEO, Joshua Ralston, making Mr. Ralston the new Majority Shareholder. 15 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, the Company acquired Mighty Fire Breaker, LLC, an Ohio limited liability company (“MFB”) and all associated intellectual property, in exchange for 1,000,000 shares of Series C Convertible Preferred Stock and a 10% royalty on the gross sales before taxes of products sold under the MFB family of products. MFB has 18 granted patents as well as 17 worldwide patents pending centered around it’s CitroTech MFB 31 Technology for the prevention and spread of wildfires, mapping and tracking and other associated technologies. Its core products can be used as vegetation and lumber treatments for fire prevention and is in development of uses for it’s green technologies. It has been widely tested and approved by three major US government agencies. When CitroTech is sprayed and applied it takes flammable fuels like dry native vegetation and wood and makes them non-combustible. During the third quarter of 2022, MFB received EPA Safer Choice status and UL Green-Guard Gold approval on its CitroTech fire inhibitor as well as California Aquatic approval as non-toxic and non-hazardous. MFB continues to pursue additional accreditations, such as Missoula Testing approval, for selling products to governmental entities. Currently, MFB is involved in installing large home and facility Proactive Wildfire Prevention Systems as well as providing it’s products to various entities for proactive wildfire defense spraying. MFB continues to pursue and do business with retail chains selling both DIY home systems and its CitroTech non-toxic non-hazardous chemistry. Effective April 1, 2022, the Company implemented a plan to divest its Crypto Mining operations and focus resources on the operations of 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, the Company formed a UK branch of its US subsidiary MFB, named Mighty Fire Breaker UK Limited. The 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 June 30, 2023 and the three months ended June 30,2022 Our results of operations for the three months ended June 30, 2023 and 2022 are summarized below: Three Months Ended June 30, 2023 2022 Change Revenue $ 28,355 $ 41,468 $ (13,113 ) Operating expenses 378,936 2,360,541 (1,981,605 ) Other expense 584 - 584 Net loss from continuing operations $ (356,058 ) $ (2,319,073 ) $ (1,994,718 ) Loss on disposition of digital currency and digital currency assets - (2,030 ) 2,030 Net loss from discontinued operations $ - $ (2,030 ) $ 2,030 Net loss $ (356,058 ) $ (2,321,103 ) $ 1,965,045 16 Table of Contents Revenue Our Company generated $28,355 and $41,468 revenue for the three months ended June 30, 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 $264,518, depreciation of $267 and general and administrative expenses of $114,151 in the three months ended June 30,2023, compared to professional fees of $182,295, depreciation expenses of $135, general and administrative of $78,111 and management compensation of $2,100,000 associated with the issuance of 70,000,000 restricted stock units as compensation in the three months ended June 30, 2022. Other Expenses For the three months ended June 30, 2023, the other expenses consisted of $584 interest related to convertible note payable to lender. Discontinuing Operating Expenses During the three months ended June 30, 2022, loss on discontinued operations of $2,030 was the result of a loss on disposition of the Company’s digital currency assets, including equipment and digital currency, against a note payable issued as consideration for the equipment when it was previously acquired. Net Loss As a result of the foregoing, we incurred a net loss of $356,058, for the three months ended June 30, 2023, compared to a net loss of $2,321,103 for the corresponding three months ended June 30, 2022. Results of Operations for the six months ended June 30, 2023 and the six months ended June 30, 2022 Our results of operations for the six months ended June 30, 2023 and 2022 are summarized below: Six Months Ended June 30, 2023 2022 Change Revenue $ 83,950 $ 41,468 $ 42,482 Operating expenses 774,113 2,403,307 (1,629,194 ) Other expenses 759 - 759 Net loss from continuing operations $ (709,669 ) $ (2,361,839 ) $ (1,567,965 ) Income from discontinued operations - 13,016 (13,016 ) Loss on disposition of digital currency and digital currency assets - (2,030 ) 2,030 Net income from discontinued operations $ - $ 10,986 $ (10,986 ) Net loss $ (709,669 ) $ (2,350,853 ) $ 1,641,184 17 Table of Contents Revenue Our Company generated $83,950 and $41,468 revenue for the six months ended June 30, 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 $559,647, depreciation of $531 and general and administrative expenses of $213,935 in the six months ended June 30,2023, compared to professional fees of $222,466, depreciation expenses of $135, general and administrative of $80,706 and management compensation of $2,100,000 associated with the issuance of 70,000,000 restricted stock units as compensation in the six months ended June 30, 2022. Other Expenses For the six months ended June 30, 2023, the other expenses consisted of $759 interest related to convertible note payable. Discontinuing Operating Expenses During the six months ended June 30, 2022, loss on discontinued operations of $2,030 was the result of a loss on disposition of the Company’s digital currency assets, including equipment and digital currency, against a note payable issued as consideration for the equipment when it was previously acquired. During the six months ended June 30, 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 $709,669, for the six months ended June 30, 2023, compared to a net loss of $2,350,853 for the corresponding six months ended June 30, 2022. Liquidity and Capital Resources June 30, December 31, 2023 2022 Change Cash $ 86,144 $ 55,434 $ 30,710 Current Assets $ 210,219 $ 170,319 $ 39,900 Current Liabilities $ 1,454,116 $ 1,060,918 $ 393,198 Working Capital (Deficiency) $ (1,243,897 ) $ (890,599 ) $ (353,298 ) The increase in working capital deficiency in 2023 was primarily the result of an increase in due to related party of $456,836, a decrease in accounts payable and accrued liabilities of $53,248 offset by an increase in cash of $30,710. As of June 30, 2023 and December 31, 2022, the current assets consisted primarily of cash of $86,144 and $55,434, inventory of $103,736 and $114,645 and prepaid expenses of $20,339 and 240, respectively. 18 Table of Contents As of June 30, 2023, and December 31, 2022, the current liabilities consisted of accounts payable and accrued liabilities of $34,150 and $87,398, due to related party of $1,355,989 and $899,153, convertible note of $54,000 and $35,000, and current portion of operating lease liability of $9,977 and $39,367, respectively. Cash Flows Six Months Ended June 30, 2023 2022 Cash used in operating activities $ (423,890 ) $ (274,274 ) Cash used in investing activities $ - $ (2,707 ) Cash provided by financing activities $ 454,600 $ 373,764 Net change in cash $ 30,710 $ 96,783 Cash Flows from Operating Activities We have not generated positive cash flows from operating activities. For the six months ended June 30, 2023, net cash flows used in operating activities was $423,890, consisting of a net loss of $709,669, reduced by stock-based compensation of $146,850, non-cash lease expenses of $30,000, depreciation $531 and reduced by changes in operating assets and liabilities of $108,395. For the six months ended June 30, 2022, net cash flows used in operating activities was $274,274, consisting of a net loss of $2,350,853, reduced by management compensation of $2,100,000 associated with the issuance of 70,000,000 shares of common stock as compensation, loss on disposition of digital currency and digital currency assets of $2,029, impairment loss on digital assets of $6,125, depreciation of $15,194, non-cash lease expenses of $14,647 and increased by changes in operating assets and liabilities of $61,416. Cash Flows from Investing Activities Cash flows used in investing activities of $2,707 during the six months ended June 30, 2022, was $2,707 which related to the purchase of equipment. Cash Flows from Financing Activities For the six months ended June 30, 2023, net cash provided by financing activities consisted of $275,000 received from a related party and $179,000 from stock subscription. For the six months ended June 30, 2022 net cash provided by financing activities consisted of $429,484 received from a related party and $55,720 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. 19 Table of Contents 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.