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Item 2. Management’s Discussion and Analysis

2024-08-12 compared with 2022-03-22 · 92 added, 61 removed, 35 unchanged (81% of the section changed)

Management’s Discussion and Analysis of Financial Condition or Plan of Operation

Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

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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 consolidated 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 consolidated financial statements and the related notes that appear elsewhere in this quarterly report.

Our audited 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.

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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 Entertainment Ventures, Inc.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean General Enterprise Ventures, Inc.

General Overview

General Environmental Management Inc., now General Entertainment Ventures, Inc.

(the “Company”) was originally incorporated under the laws of the State of Nevada on March 14, 1990.

The Company’s revenues and expenses, operations, assets and liabilities were discontinued from February 2010 until January 2021.

In January 2021, Board of Directors of the Company approved redomiciling the Company in Delaware.

On March 31, 2021, the Company formed General Entertainment Ventures, Inc.

(“GEVI”) in Delaware as a wholly owned subsidiary of the Company.

The purpose of the formation of GEVI was to merge the Company into GEVI pursuant to Section 251(g) of the General Corporation Law of the State of Delaware.

On April 10, 2021, after approval by the board of directors and shareholders of the Company, the Company was merged into GEVI pursuant to an Agreement and Plan of Merger dated as of the same date.

GEVI is the accounting and legal acquiror of the Company.

On May 10, 2021, GEVI acquired all the issued and outstanding equity of Strategic Asset Holdings, LLC (“SAH”), a Wyoming limited liability company, for $50,000, pursuant to a promissory note dated as of the same date.

SAH is a development stage company in the home essentials technology space, and owns a provisional patent for a safe and secure night light.

On June 3, 2021, after approval by the board of directors and shareholders of the Company, the Company was redomiciled to the State of Wyoming.

On October 11, 2021, after approval by the board of directors and shareholders of the Company, the Company changed its name to General Enterprise Ventures, Inc.

The Company’s U.S.

subsidiary, Mighty Fire Breaker LLC (“MFB”) is engaged in developing solutions to support the resolution of the insurance crisis in the western United States by use of its EPA approved CitroTech products.

MFB has developed and patented additional intellectual property in this regard, such as a system for commercial properties and homes that puts a fire inhibiting buffer zone around a property, blocking blown-in embers from igniting.

The technology continues to work dry, which unlike other products allows for early deployment and evacuation of people.

MFB also has developed a job site trailer allowing for the fire protection of property during the construction phase and fire hardening of the inner construction and installation of our patented system during that phase.

The intent is for the home owner to be able to bind insurance to start a construction project.

The Company has achieved USDA approval.

It has sold products to various fire departments and continues to demonstrate a market for its products.

Results of Operations

For three months ended September 30, 2021, compared to three months ended September 30, 2020.

The following summary of our operations should be read in conjunction with our unaudited financial statements for the three months ended September 30, 2021 and 2020.

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the period ended March 31, 2024, which are included herein.

Our operating results for the three months ended March 31, 2024, and 2023 and the changes between those periods for the respective items are summarized as follows:

Results of Operations for the three months ended March 31, 2024, and the three months ended March 31, 2023

Three Months Ended

September 30,

Operating expenses

Other expenses

The Company has not generated revenues for the three months ended September 30, 2021 and 2020.

Our net loss for the three months ended September 30, 2021, was $20,566 compared to a net loss of $0 for three months ended September 30, 2020.

Our operating expenses for the three months ended September 30, 2021 were $19,621 compared to $0 for the three months ended September 30, 2020.

For the three months ended September 30, 2021, operating expenses consisted of professional fees of $13,250, management compensation of $6,358 and general and administrative expenses of $13.

Our other expenses for the three months ended September 30, 2021 was $945 compared to $0 for the three months ended September 30, 2020.

For the three months ended September 30, 2021, other expenses consist of interest expense of $945.

For nine months ended September 30, 2021, compared to nine months ended September 30, 2020.

The following summary of our operations should be read in conjunction with our unaudited financial statements for the nine months ended September 30, 2021 and 2020.

Nine Months Ended

September 30,

Other expense

$ (3,519,710 )

$ (3,104,287 )

The Company’s revenue is associated with revenue from Mighty Fire Breaker, LLC, an Ohio limited liability company (“MFB Ohio’) which acquired intellectual property to fire suppression in April 2022.

During the three months ended March 31,2024, the revenue increased $377,423 over the three months ended March 31, 2023, due to MFBs EPA approval and the filing of additional patents.

With the EPA approval, MFB started the marketing phase of the company’s evolution.

MFB started selling directly to fire departments and launched its proactive wild-fire defense systems and is gaining momentum with commercial customers, along with attempting to influence the insurance industry to the benefit of consumers.

The net loss for the three months ended March 31, 2024 increased by $3.1 million as compared to the three months ended March 31,2023 primarily due to the increase in operating expenses, largely from stock-based compensation awards and loss on settlement of debt.

Operating Expenses

Three Months Ended

Cost of revenue

Amortization and depreciation

General and administration

Professional fees- related party

Professional fees

Total operating expenses

Cost of revenue

Three Months Ended

Cost of inventory

Freight and shipping

Consulting and advisory

Royalty and sales commission

Total cost of revenue

The increase in operating expenses was primarily attributed to stock -base management compensation of $1,422,750, stock-based services companion of $975,250, marketing expenses of $98,614, cost of revenue of $86,298 and general and administrative expenses of $65,666.

During the three months ended March 31, 2024, the cost of revenue increase 86,298 over the three months ended March 31, 2023, primarily due to increase in cost of inventory and royalty and sales commissions.

Cost of inventory consists of the sales of product, related supplies and direct testing our CitroTech™ product and various components required to for installation of Mighty Firese Breaker proactive fire systems.

Cost of inventory increased during the three months ended March 31, 2024 primarily due to an increase in product sales and supplies and royalty and commission, from increased sales.

Royality and sales commissions increased in the three months ended March 31,2024 from more revenue.

The Company recognizes an allocated portion of consulting and direct labor costs associated with our revenue.

Professional fees

The increase in professional fees during the three months ended March 31, 2024 of $2.3 million over March 31, 2023, is primarily due to stock-based compensation of $1.7 million.

Other Expenses

The Company has not generated revenues for the nine months ended September 30, 2021 and 2020.

Our net loss for the nine months ended September 30, 2021, was $84,293 compared to a net loss of $0 for nine months ended September 30, 2020.

Our operating expenses for the nine months ended September 30, 2021 were $82,824 compared to $0 for the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, operating expenses consists of professional fees of $13,250, management compensation of $16,498, general and administrative expenses of $100 and impairment loss of $52,976 in relation to impairment of goodwill on acquisition of Strategic Asset Holdings, LLC.

Our other expenses for the nine months ended September 30, 2021 was $1,469 compared to $0 for the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, other expenses consist of interest expense of $1,469.

For the three months ended March 31, 2024, and 2023, the other expenses consisted of $885 and $175 interest related to convertible note payable and loss on settlement of debt of $882,000 and $0, respectively.

Liquidity and Capital Resources

The following table provides selected financial data about our company as of September 30, 2021 and December 31, 2020.

Working Capital

September 30,

Current Assets

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Working Capital (Deficiency)

As of September 30, 2021 and December 31, 2020, our total assets were $686 and $0, respectively.

As of September 30, 2021 and December 31, 2020, our total liabilities were $94,334 and $9,355, respectively.

As of September 30, 2021, the total liabilities consist of note payable - related party of $50,000, loan payable of $20,260, due to related parties of $22,605 and accrued interest of $1,469.

As of December 31, 2020, the total liabilities consist of due to related party for salary to our former Chief Executive Officer of $9,355.

Nine Months Ended

September 30,

The increase in working capital in 2024 was primarily the result of an increase in accounts receivable of $254,000, prepaid expenses of $800 and a decrease in cash of $179,000 and inventory of 41,000 offset by an increase in accounts payable and accrued liabilities of $16,000 operating lease liability -current portion of $2,000, a decrease in promissory note of $120,000 and convertible note of $54,000.

As of March 31, 2024, and December 31, 2023, the current assets consisted primarily of cash, inventory of $189,000 and $230,000, accounts receivable of $681,000 and $427,000, and prepaid expenses of $11,000 and $11,000, respectively.

As of March 31, 2024, and December 31, 2023, the current liabilities consisted of accounts payable and accrued liabilities of $70,000 and $55,000, due to related party of $1.3 million and $1.3 million, convertible note of $0 and $54,000, promissory note of $0 and $120,000 and current portion of operating lease liability of $82,000 and $80,000, respectively.

Three months ended

Cash used in operating activities

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Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities for the nine months ended September 30, 2021, net cash flows used in operating activities was $18,889.

Cash flows used in operating activities for the nine months ended September 30, 2020, was $0.

For the nine months ended September 30,2021, net cash flows used in operating activities was $18,889 consisting of a net loss of $84,293, reduced by impairment loss of $52,976, accrued interest of $1,469 and due to related party of $10,959.

We have not generated positive cash flows from operating activities.

For the three months ended March 31, 2024, net cash flows used in operating activities consisted of a net loss of $3.5 million, reduced by stock-based compensation of $1.702,000, non-cash lease expenses of $20,000, amortization and depreciation of $64,000, loss on settlement of debt of $882,000 and increased by net changes in operating assets and liabilities of $188,000.

For the three months ended March 31, 2023, net cash flows used in operating activities consisted of a net loss of $415,000, reduced by stock-based compensation of $87,000, amortization and depreciation of $62,000, non-cash lease expenses of $15,000 and reduced by net changes in operating assets and liabilities of $74,000.

Cash Flows from Investing Activities

For the nine months ended September 30, 2021, cash flows from investing activities were $14,075 from acquisition of Strategic Asset Holdings, LLC.

We have not generated cash flows from investing activities for the nine months ended September 30, 2020.

The Company did not use any funds for investing activities during the three months ended March 31, 2024, and 2023.

Cash Flows from Financing Activities

For the nine months ended September 30, 2021 and 2020, net cash provided by financing activities was $5,500 from proceeds from loan and $0, respectively.

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.

Critical Accounting Policies and Estimates

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 GAAP.

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses.

For the three months ended March 31, 2024, net cash provided by financing activities consisted of $165,000 proceed from issuance Series C Preferred Stock.

For the three months ended March 31, 2023, net cash provided by financing activities consisted of $185,000 received from a related party.

Contractual Obligations

Lease Agreements

The Company has one lease classified as an operating lease for an office and warehouse purpose.

The following table outlines maturities of our lease liabilities as of March 31, 2023:

Year ending December 31,

2024 (excluding the three months ended March 31, 2024)

Imputed interest

Operating lease liabilities

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.

Use of Estimates

The preparation of financial statements in conformity with 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 revenues and expenses during the reporting period.

Actual results could differ from these good faith estimates and judgments.

Our most critical accounting policies and estimates relate to the following:

Revenue Recognition

Incremental borrowing rate for Right of Use Assets

Share based compensation

Revenue Recognition

Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied.

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.

All of our performance obligations under the terms of contracts with our customers have an original duration of one year or less.

Incremental borrowing rate for Right of Use Assets

As the Company’s operating leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate.

The assessment of the Company’s incremental borrowing rate involves judgment regarding the cost of borrowing funds on a collateralized basis over a similar term and in a similar economic environment.

Share-Based Compensation

The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to nonemployees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.

Equity grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period.

If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service.

Off-balance sheet arrangements

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q/A

Item 2. Management’s Discussion and Analysis