CitroTech Inc. 10-Q

Item 1. Financial Statements General Enterprise Ventures, Inc. Consolidated Balance Sheets (Unaudited) June 30, December 31, 2024 2023 Assets Current Assets Cash $ 546,555 $ 549,755 Accounts receivable 650,871 427,433 Inventory 192,081 230,197 Prepaid expenses 11,462 10,671 Deferred offering costs 34,675 - Total Current Assets 1,435,644 1,218,056 Non-Current Assets Equipment, net 6,365 7,299 Intangible assets 3,822,440 3,948,106 Operating lease right-of-use asset 90,164 129,683 Total Assets $ 5,354,613 $ 5,303,144 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 100,746 $ 54,572 Promissory note - 120,000 Convertible note payable - 54,000 Due to related parties 1,251,257 1,309,077 Advances for convertible notes to be issued 695,000 - Operating lease liability - current portion 83,998 80,136 Total Current Liabilities 2,131,001 1,617,785 Non-current Liability Operating lease liability 7,266 50,047 Total Liabilities 2,138,267 1,667,832 Stockholders' Equity Series A Preferred Stock, par value $ 0.0001 , designated 10,000,000 shares, 10,000,000 shares issued and outstanding 1,000 1,000 Series C Convertible Preferred Stock, par value $ 0.0001 , designated 5,000,000 shares, 2,546,831 and 2,273,499 issued and outstanding, respectively 254 227 Common Stock par value $ 0.0001 , authorized 1,000,000,000 shares, 36,552,150 and 97,545,388 shares issued and outstanding, respectively 3,655 9,755 Additional paid-in capital 76,832,217 72,427,996 Common Stock to be issued - 500,000 and 500,000 shares, respectively 290,000 180,000 Subscription received - 0 and 183,333 shares of Series C Preferred stock to be issued, respectively - 500,000 Accumulated deficit ( 73,910,780 ) ( 69,483,666 ) Total Stockholders' Equity 3,216,346 3,635,312 Total Liabilities and Stockholders' Equity $ 5,354,613 $ 5,303,144 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 3 Table of Contents General Enterprise Ventures, Inc. Consolidated Statement of Operations and Comprehensive Loss (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Revenue $ 198,669 $ 28,355 $ 631,687 $ 83,950 Operating Expenses Cost of revenue (including payments to related parties of $73,136 and $27,165, respectively and exclusive of amortization and depreciation shown separately below) 89,939 28,576 216,011 68,351 Amortization and depreciation 62,765 62,079 126,600 124,155 General and administration 199,459 76,886 339,927 151,678 Advertising and marketing 247,170 28,217 357,376 39,818 Professional fees- related party 65,210 84,365 1,533,614 156,835 Professional fees 441,530 165,518 1,602,109 375,647 Total operating expenses 1,106,073 445,641 4,175,637 916,484 Loss from Operations ( 907,404 ) ( 417,286 ) ( 3,543,950 ) ( 832,534 ) Other Expense Interest expense - ( 584 ) ( 885 ) ( 759 ) Loss on settlement of debt by issuing common stock - - ( 882,279 ) - Total other expense - ( 584 ) ( 883,164 ) ( 759 ) Loss from operations before taxes ( 907,404 ) ( 417,870 ) ( 4,427,114 ) ( 833,293 ) Provision for income taxes - - - - Net Loss $ ( 907,404 ) $ ( 417,870 ) $ ( 4,427,114 ) $ ( 833,293 ) Comprehensive Loss ( 907,404 ) ( 417,870 ) $ ( 4,427,114 ) $ ( 833,293 ) Net loss per common share - basic and diluted $ ( 0.02 ) $ ( 0.00 ) $ ( 0.07 ) $ ( 0.01 ) Basic and diluted weighted average number of common shares outstanding 36,387,315 97,350,883 64,310,131 95,766,935 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’ Deficit (Unaudited) For the Three and Six Months ended June 30, 2024 Convertible Series A Convertible Series C Preferred Common Additional Total Preferred stock Preferred stock Common Stock Stock to be Stock to be Paid-In Accumulated Stockholders' Shares Amount Shares Amount Shares Amount issued issued Capital Deficit Equity Balance - December 31, 2023 10,000,000 $ 1,000 2,273,499 $ 227 97,545,388 $ 9,755 $ 500,000 $ 180,000 $ 72,427,996 $ ( 69,483,666 ) $ 3,635,312 Series C Preferred Stock issued for preferred stock to be issued - - 108,333 11 - - ( 320,000 ) - 319,989 - - Series C Preferred Stock issued for cash - - 50,000 5 - - - - 164,995 - 165,000 Series C Preferred Stock issued for services - - 40,000 4 - - - - 695,996 - 696,000 Common stock issued for stock to be issued - management - - - - 250,000 25 - ( 90,000 ) 89,975 - - Common stock issued for conversion and settlement of debt - - - - 1,506,762 150 - - 1,084,998 - 1,085,148 Cancellation of comment stock -related party - - - - ( 65,000,000 ) ( 6,500 ) - - 6,500 - - Common stock issued for services - - - - 2,000,000 200 - - 1,701,800 - 1,702,000 Net loss - - - - - - - - - ( 3,519,710 ) ( 3,519,710 ) Balance - March 31, 2024 10,000,000 1,000 2,471,832 247 36,302,150 3,630 180,000 90,000 76,492,249 ( 73,003,376 ) 3,763,750 Series C Preferred Stock issued for preferred stock to be issued - - 74,999 7 - - ( 180,000 ) - 179,993 - - Common stock issued for services - - - - 250,000 25 - - 159,975 - 160,000 Common stock to be issued for services - - - - - - - 200,000 - - 200,000 Net loss - - - - - - - - - ( 907,404 ) ( 907,404 ) Balance - June 30, 2024 10,000,000 $ 1,000 2,546,831 $ 254 36,552,150 $ 3,655 $ - $ 290,000 $ 76,832,217 $ ( 73,910,780 ) $ 3,216,346 For the Three and Six Months ended June 30, 2023 Convertible Series A Convertible Series C Common 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 - - - - - - - - ( 415,423 ) ( 415,423 ) Balance - March 31, 2023 10,000,000 1,000 950,000 95 94,245,388 9,425 - 62,806,398 ( 59,796,823 ) 3,020,095 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 - - - - - - - - ( 417,870 ) ( 417,870 ) Balance - June 30, 2023 10,000,000 $ 1,000 800,000 $ 80 97,545,388 $ 9,755 $ 179,600 $ 62,866,083 $ ( 60,214,693 ) $ 2,841,825 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 5 Table of Contents General Enterprise Ventures, Inc. Consolidated Statement of Cash Flows (Unaudited) Six Months Ended June 30, 2024 2023 Cash Flows from Operating Activities: Net loss $ ( 4,427,114 ) $ ( 833,293 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 2,062,000 146,850 Series C Preferred stock-based compensation 696,000 - Non-cash lease expenses 39,519 30,000 Depreciation and amortization 126,600 124,155 Loss on settlement of debt 882,279 - Changes in operating assets and liabilities: Accounts receivable ( 223,438 ) - Inventory 38,116 10,909 Prepaid expense ( 791 ) ( 20,099 ) Related party advances funding operating expense 2,180 200,836 Accounts payable and accrued liabilities 75,043 ( 53,248 ) Operating lease liabilities ( 38,919 ) ( 30,000 ) Net Cash used in Operating Activities ( 768,525 ) ( 423,890 ) Cash Flows from Financing Activities: Advances received for convertible notes to be issued 695,000 - Deferred offering cost ( 34,675 ) - Proceeds from loan - related party - 275,000 Repayment of loan- related party ( 60,000 ) - Proceed from issuance Series C Preferred Stock 165,000 - Proceed from stock subscription - 179,600 Net Cash provided by Financing Activities 765,325 454,600 Change in cash ( 3,200 ) 30,710 Cash, beginning of period 549,755 55,434 Cash, end of period $ 546,555 $ 86,144 Supplemental Disclosure Information: Cash paid for interest $ - $ - Cash paid for taxes $ - $ - Non-Cash Financing Disclosure: Common stock issued for services $ 1,862,000 $ 146,850 Common stock to be issued for services $ 200,000 $ - Series C Preferred stock issued for services $ 696,000 $ - Common stock issued upon conversion of Series C Preferred stock $ - $ 300 Common stock issued for conversion and settlement of debt $ 1,085,148 $ - Common stock issued for stock to be issued - management $ 90,000 $ - Series C Preferred stock issued for subscription received $ 500,000 $ - Cancellation comment stock - related party $ 6,500 $ - 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, 2024 Note 1 – Organization, Business and Going Concern General Enterprise Ventures, Inc., was originally incorporated under the laws of the State of Nevada on March 14, 1990. When used in these notes, the terms “GEVI,” “Company,” “we,” “us” and “our” mean General Enterprise Ventures, Inc. and all entities included in our consolidated financial statements. 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. 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 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 was renamed General Enterprise Ventures, Inc., in the State of Wyoming. Corporate Changes On January 3, 2022, the Company formed Mighty Fire Breaker, LLC, an Ohio limited liability company (“MFB Ohio”), to acquire all the intellectual property of Mighty Fire Breaker, LLC, a California limited liability company (“MFB California”) in connection with the flame retardant and flame suppression segments of the environmental industry, including patents and patents pending. On April 13, 2022, the transaction between the Company, MFB Ohio and MFB California closed. The transaction consideration to the equity holders of MFB California was 1,000,000 shares of the Series C Convertible Preferred Stock of the Company with a value at closing of $ 4,200,000 , and a 10 % royalty on gross sales before taxes of the MFB Ohio family of products. In addition, on November 14, 2022, the Company formed Mighty Fire Breaker UK Limited (“MFB UK” and together with MFB Ohio, collectively, “MFB”). MFB has 56 patents pertaining to its CitroTech MFB 31 Technology™ (“CitroTech” or the “MFB Technology”) for the prevention and spread of wildfires. When CitroTech is applied it converts flammable fuels like dry native vegetation and wood into non-combustible materials. During the third quarter of 2022 the Company received EPA Safer Choice status and UL Green-Guard Gold approval on its CitroTech fire inhibitor. The Company continues to pursue accreditations such as the Missoula Testing approval for selling products to the government. Currently, MFB Ohio is involved in installing commercial and large residential Proactive Wildfire Prevention Systems. Effective June 25, 2024, the Company formed and organized a wholly owned subsidiary, GEVI Insurance Holdings Inc., an Ohio corporation, while the Company contemplates the opportunity to enter the wildfire insurance markets relating to the Company’s flame retardant and flame suppression products. Business We are an environmentally sustainable flame retardant and flame suppression company for the residential home industry throughout the United States and international markets. Management is experienced in business integration and branding potential. The Company is bringing to the marketplace unique, disruptive products with significant environmental impact potential. The Company holds various intellectual property in the form of patents and trademarks in the fields of fire suppression, mapping and tracking of fire-retardant dispersion and fire inhibition chemistry and technology. The Company has obtained multiple certification and accreditations in this industry, such as being the only EPA Safer Choice approved, long-term fire retardant, UL GreenGaurd Gold, California Bioassay water approval, LENS, and in the process of USDA approval. Going Concern Our consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred losses since inception and has a net loss of $ 4,427,114 on $ 631,687 of revenues for the six months ended June 30, 2024 and has a working capital deficiency of $ 695,357 as of June 30, 2024. In addition, the Company has been dependent on related parties to fund operations and has an amount owing to related parties of $ 1,251,257 outstanding at June 30, 2024. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. 7 Table of Contents Management recognizes that the Company must obtain additional resources to successfully implement its business plans. During the six months ended June 30, 2024, the Company completed financings from the issuance of Series C preferred stock, common stock, advances and relate party loans, generating net proceeds of $ 802,180 . However, the Company’s existing cash resources and income from operations, are not expected to provide sufficient funds to carry out the Company’s operations and business development through the next twelve (12) months. Management plans to continue to raise funds and complete an Initial Public Offering (IPO) to support our operations in 2024 and beyond. However, no assurances can be given that we will be successful. If management is not able to timely and successfully raise additional capital and/or complete an IPO, the implementation of the Company’s business plan, financial condition and results of operations will be materially affected. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 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/A, for the year ended December 31, 2023, as filed with the SEC on July 30, 2024. Principles of Consolidation The consolidated financial statements include the accounts of General Enterprise Ventures, Inc., and its wholly owned subsidiaries, Mighty Fire Breaker, LLC, an Ohio Limited Liability company and GEVI Insurance Holdings Inc., an Ohio corporation. Intercompany transactions and balances have been eliminated. Restatement For the three and six months ended June 30, 2023, the company restated the Consolidated Financial Statements for the calculation of amortization on intangible assets. The impact on the Consolidated Statement of Operations and Comprehensive Loss of the restatement is as follows: Three Months Ended Six Months Ended June 30, 2023 June 30, 2023 As Filed Adjustment As Restated As Filed Adjustment As Restated Amortization and depreciation $ 267 $ 61,812 $ 62,079 531 123,624 124,155 Total operating expense $ 378,936 $ 61,812 $ 440,748 774,113 123,624 897,737 Loss from operations $ ( 355,474 ) $ ( 61,812 ) $ ( 417,286 ) ( 708,910 ) ( 123,624 ) ( 832,534 ) Net loss $ ( 356,058 ) $ ( 61,812 ) $ ( 417,870 ) ( 709,669 ) ( 123,624 ) ( 833,293 ) 8 Table of Contents The impact on the Consolidated Statement of Cash Flows of the restatement is as follows: Six Months Ended June 30,2023 As Filed Adjustment As Restated Cash Flows from Operating Activities: Net loss $ ( 709,669 ) $ ( 123,624 ) $ ( 833,293 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 531 123,624 124,155 Net Cash used in Operating Activities $ ( 423,890 ) $ - $ ( 423,890 ) The impact on the Consolidated Statement of Stockholders’ Equity of the restatement is as follows: June 30, 2023 As Filed Adjustment As Restated Stockholders' equity: Accumulated deficit $ ( 60,091,069 ) $ ( 123,624 ) $ ( 60,214,693 ) Total stockholders' equity $ 2,965,449 $ ( 123,624 ) $ 2,841,825 Reclassification For the three and six months ended June 30, 2023, certain amounts have been reclassified to improve the clarity and comparability of the Consolidated Financial Statements. An adjustment has been made to the Consolidated Statements of Operations and Comprehensive Loss and for the three and six months ended June 30,2023, to reclassify partial operating expenses to cost of revenue, and to separately disclose professional service provided by related party from line-item professional service to professional fees- related party. The impact on the Consolidated Statement of Operations and Comprehensive Loss, with no change to the restated loss from operations or net loss, respectively, as follows: Three Months Ended Six Months Ended June 30, 2023 June 30, 2023 As Filed and Restated (*) Adjustment As Reclassified As Filed and Restated (*) Adjustment As Reclassified Cost of revenue $ 4,893 $ ( 4,893 ) $ - $ 18,747 $ ( 18,747 ) $ - Operating Expenses Cost of revenue (exclusive of amortization and depreciation shown separately below) - 28,576 28,576 - 68,351 68,351 Amortization and depreciation 62,079 - 62,079 124,155 - 124,155 General and administration 114,151 ( 37,265 ) 76,886 213,935 ( 62,257 ) 151,678 Marketing - 28,217 28,217 - 39,818 39,818 Professional fees- related party - 84,365 84,365 - 156,835 156,835 Professional fees 264,518 ( 99,000 ) 165,518 559,647 ( 184,000 ) 375,647 Total operating expenses $ 440,748 $ 4,893 $ 445,641 $ 897,737 $ 18,747 $ 916,484 Loss from Operations $ ( 417,286 ) $ - $ ( 417,286 ) $ ( 832,534 ) $ - $ ( 832,534 ) (*) Originally as filed for June 30, 2023, and restated for the change for amortization of intangible assets. 9 Table of Contents 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 expenses during the reporting period. Actual results could differ from these good faith estimates and judgments. 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 at June 30, 2024 and December 31, 2023. The Company had cash of $ 546,555 and $ 549,755 at June 30, 2024 and December 31, 2023, respectively. Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $ 250,000 per institution. The amount in excess of the FDIC insurance as of June 30, 2024, was $ 296,555 . The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant. Accounts Receivable Trade accounts receivable is recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make the required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered. As of June 30, 2024, and December 31, 2023, the Company had no allowance for doubtful accounts. 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, 2024, and December 31, 2023, the Company held inventories of $ 192,081 and $ 230,197 , respectively. The Company did not write-off any inventories as unsalable during the six months ended June 30, 2024, and 2023. Deferred Offering Costs Pursuant to ASC 340-10-S99-1, costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the proposed public offering. Should the proposed public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be expensed. As of June 30, 2024 and December 31, 2023, deferred offering costs consisted of the following: June 30 December 31 2024 2023 Legal fees $ 34,675 $ - 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. 10 Table of Contents The Company’s financial instruments, including cash, accounts receivable, prepaid expenses, accounts payable and accrued liabilities, due to related parties and loans payable, are carried at historical cost. At June 30, 2024 and December 31, 2023, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. Revenue The Company recognizes revenue from its contracts with customers in accordance with ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract. Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company 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. Cost of Revenue For the three and six months ended June 30, 2024 and 2023, cost of revenue consists of: Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Cost of inventory $ 58,529 $ 4,607 $ 134,725 $ 30,761 Freight and shipping 5,620 9,334 8,150 10,425 Consulting and advisory-related party 6,200 11,800 10,400 20,800 Royalty and sales commission-related party 19,590 2,835 62,736 6,365 Total cost of revenue $ 89,939 $ 28,576 $ 216,011 $ 68,351 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, 2024 and 2023, 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, 2024 2023 Shares Shares Convertible notes - 300,000 Convertible Series C Preferred Stock 49,059,894 18,930,320 Convertible Series A Preferred Stock (1) - 10,000,000,000 49,059,894 10,019,230,320 (1) Series A Preferred Stock was amended in March 2024 to remove the conversion feature (Note 10). 11 Table of Contents For the three and six months ended June 30, 2024 and 2023, the reconciliation to net loss per common share basic and the anti-dilutive impact on net loss per share, are as follows: Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Numerator: Net loss $ ( 907,404 ) $ ( 417,870 ) $ ( 4,427,114 ) $ ( 833,293 ) Net loss - diluted $ ( 907,404 ) $ ( 417,870 ) $ ( 4,427,114 ) $ ( 833,293 ) Denominator: Weighted average common shares outstanding 36,387,315 97,350,883 64,310,131 95,766,935 Effect of dilutive shares - - - - Convertible notes - 300,000 - 300,000 Preferred stock 50,559,528 10,018,858,616 49,059,894 10,018,930,320 Diluted 86,946,843 10,116,509,499 113,370,025 10,114,997,255 Net loss per common share: Basic $ ( 0.02 ) $ ( 0.00 ) $ ( 0.07 ) $ ( 0.01 ) Diluted $ ( 0.01 ) $ ( 0.00 ) $ ( 0.04 ) $ ( 0.00 ) Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures ("ASU 2023-09"), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures. We have evaluated all other recently issued, but not yet effective, accounting pronouncements and do not believe that these accounting pronouncements will have any material impact on our consolidated financial statements or disclosures upon adoption. Note 3 – Equipment At June 30, 2024 and December 31, 2023, equipment consisted of the following: June 30, December 31, 2024 2023 Cost: Furniture and equipment $ 9,366 $ 9,365 Less: accumulated depreciation ( 3,001 ) ( 2,066 ) Property and equipment, net $ 6,365 $ 7,299 12 Table of Contents For the three and six months ended June 30, 2024, and 2023, depreciation consists of: Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Depreciation $ 274 $ 267 $ 934 $ 531 Note 4 – Intangible Assets In 2022, the Company acquired the intellectual property of MFB California, 19 patents centered around its MFB Technology for the prevention and spread of wildfires. As of June 30, 2024 and December 31, 2023, finite lived intangible assets consisted of the following: June 30, December 31 2024 2023 Patents $ 4,195,353 $ 4,195,353 Accumulated amortization ( 372,913 ) ( 247,247 ) Intangible assets, net $ 3,822,440 $ 3,948,106 Estimated future amortization expense for finite lived intangibles are as follows: December 31, 2024 (excluding the six months ended June 30, 2024) $ 122,949 2025 247,931 2026 247,931 2027 247,931 2028 247,931 Thereafter 2,707,767 $ 3,822,440 As of June 30, 2024, the weighted-average useful life is 16.00 years. For the three and six months ended June 30, 2024 and 2023, amortization expense is as follows: Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Amortization $ 62,491 $ 61,812 $ 125,666 $ 123,624 Note 5 – Lease We had one operating lease for our corporate office and warehouse and three short term leases for executive office and storage facilities. In March 2022, the Company entered into an operating lease for the office, with the term of 18 months. In July 2023, the Company amended the contract and extended the lease term to July 2025. For the three and six months ended June 30, 2024 and 2023, right-of-use asset and lease information about the Company’s operating lease consist of: Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 The components of lease expense were as follows: Operating lease cost $ 21,498 $ 15,000 $ 42,996 $ 30,000 Short-term lease cost 17,348 717 20,041 3,468 Variable lease cost 11,582 3,900 11,282 7,800 Total lease cost $ 50,428 $ 19,617 $ 74,319 $ 41,268 13 Table of Contents Supplemental cash flow information related to leases was as follows: Six Months Ended June 30, 2024 2023 Cash paid for operating cash flows from operating leases $ 54,278 $ 37,800 Weighted-average remaining lease term - operating leases (year) 1.08 0.17 Weighted-average discount rate — operating leases 6.50 % 5.50 % Supplemental balance sheet information related to leases consists of: June 30, December 31, 2024 2023 Operating lease right-of-use asset $ 90,164 $ 129,683 Operating lease liabilities: Current portion $ 83,998 $ 80,136 Non-current portion 7,266 50,047 $ 91,264 $ 130,183 The following table outlines maturities of our lease liabilities as of June 30, 2024: Year ending December 31, 2024 (excluding the six months ended June 30, 2024) $ 43,396 2025 50,862 Thereafter - 94,258 Less: Imputed interest ( 2,994 ) Operating lease liabilities $ 91,264 Note 6 – 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. 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 24 hours after payment at a fixed conversion price of $ 0.18 per share. As of June 30, 2024, and December 31, 2023, following is the summary of funds received from the lender: Principal Interest June 30, December 31, Payment date Amount Maturity date Rate 2024 2023 August 11, 2022 $ 18,000 2/11/2023 2 % $ - $ 18,000 September 2, 2022 $ 17,000 3/2/2023 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 $ - $ - During the six months ended June 30, 2024, the Company settled liabilities of $ 23,400 and converted notes with principal amounts of $ 54,000 and accrued interest of $ 1,702 into 456,762 shares of common stock. The fair market value of the common shares converted was $ 126,655 at the issuance date, as a result, the Company recognized a loss on debt settled by common stock of $ 103,255 . During the six months ended June 30, 2024 and 2023, the Company recognized interest expenses of $ 135 and $ 759 , respectively. As of June 30, 2024 and December 31, 2023, the Company owned principal of $ 0 and $ 54,000 and accrued interest of $ 0 and $ 1,567 , respectively. 14 Table of Contents Note 7 – Promissory Note On June 7, 2023, the Company entered into a promissory note agreement for the amount of $ 120,000 , in terms of twelve (12) months and interest rate of 5 % per annum. The Company received $ 120,000 from the lender on July 3, 2023. During the six months ended June 30, 2024 and 2023, the Company recognized $ 750 and $ 0 interest. During the six months ended June 30, 2024, the Company settled the promissory note with principal amount of $ 120,000 and accrued interest of $ 3,767 into 1,050,000 shares of common stock. The fair market value of the common shares converted was $902,790 at the issuance date, as a result, the Company recognized a loss on debt settled by common stock of $ 779,024 . Note 8 – Related Party Transactions The related parties that had material transactions for the three and six months ended June 30, 2024 and 2023, consist of the following: Related Party Nature of Relationship to the Company A An Ohio Corporation – a significant shareholder B Owner of related party A C Chief Executive Officer (CEO) of the Company D A California Corporation owned by related party E E Significant shareholder F MFB Ohio board advisor G MFB Ohio board advisor H MFB Ohio board advisor I MFB Ohio board advisor J MFB Ohio board advisor K MFB Ohio board advisor As of June 30, 2024 and December 31, 2023, amounts owing to related parties consists as follows: June 30, December 31, Related Party 2024 2023 A $ 839,377 $ 897,197 B 411,880 411,880 $ 1,251,257 $ 1,309,077 During the six months ended June 30, 2024 and 2023, related party A advanced to the Company an amount of $ 0 and $ 275,000 for working capital proposes and $ 2,180 and $ 200,836 for operating expenses paid directly to vendors, on behalf of the Company, respectively. During the six months ended June 30, 2024 and 2023, the Company repaid $ 60,000 and $ 0 owing to the related party A, respectively. For the three months ended June 30, 2024 and 2023, expenses to related parties and their nature consists of: Three months ended June 30, Related Party 2024 2023 Nature of Transaction Financial Statement Line Item D $ 24,800 $ 47,200 Cash paid for consulting fees Professional fees - related party D $ 6,200 $ 11,800 Cash paid for consulting and advisory fees Cost of revenue E $ 40,410 $ 37,165 Cash paid for management fee Professional fees - related party E $ 19,590 $ 2,835 Cash paid for royalty and sales commissions Cost of revenue 15 Table of Contents For the three months ended June 30, 2024 and 2023, expenses to related parties and their nature consists of: Six Months Ended June 30, Related Party 2024 2023 Nature of transaction Financial Statement Line Item C $ 25,000 $ - Cash paid for management fee General and administration D $ 41,600 $ 83,200 Cash paid for consulting fees Professional fees - related party D $ 10,400 $ 20,800 Cash paid for consulting and advisory fees Cost of revenue E $ 69,264 $ 73,635 Cash paid for management fee Professional fees - related party E $ 62,736 $ 6,365 Cash paid for royalty and sales commissions Cost of revenue F $ 214,950 $ - 250,000 shares of common stock issued for advisory fee Professional fees - related party G $ 429,900 $ - 500,000 shares of common stock issued for advisory fee Professional fees - related party H $ 128,970 $ - 150,000 shares of common stock issued for advisory fee Professional fees - related party I $ 214,950 $ - 250,000 shares of common stock issued for advisory fee Professional fees - related party J $ 348,000 $ - 20,000 shares of Series C preferred stock for advisory fee Professional fees - related party K $ 85,980 $ - 100,000 shares of common stock issued for advisory fee Professional fees - related party Note 9 – Advances for Convertible Notes to be Issued During the six months ended June 30, 2024, the Company obtained $ 695,000 from eleven (11) lenders in cash for issuance of convertible promissory notes and warrants. As of June 30, 2024, the Company has not issued convertible promissory notes and warrants agreements, and all of the funds would have been returned if a certain threshold of investment had not been achieved. Note 10 – Stockholders’ Equity Preferred Shares Shares Outstanding The Company is authorized to issue up to 15,000,000 shares of Preferred Stock, par value $ 0.0001 per share. Series A Preferred Stock The Company originally designated 10,000,000 shares of its Preferred Stock as Series A Convertible Preferred Stock. On March 29, 2024, the Company amended and restated its Series A Convertible Preferred Stock to designate 10,000,000 shares of its Preferred Stock as Series A Preferred Stock, par value $0.0001, with the following rights and privileges . Dividends . Holders of shares of Series A Preferred Stock are not entitled to receive dividends. Voting Rights . Each share of Series A Preferred Stock is entitled to 1,000 votes on all matters submitted to a vote of stockholders. Holders of shares of Series A Preferred Stock do not have cumulative voting rights. This means a holder of a single share of Series A Preferred Stock cannot cast more than one vote for each position to be filled on the Board. Other Rights . Shares of Series A Preferred Stock are not entitled to a liquidation preference. The holders of the Series A Preferred Stock may not be redeemed without the consent of the holders of the Series A Preferred Stock. The holder of the Series A Preferred Stock are not entitled to pre-emptive rights or subscription rights. The Company will not, by amendment of its Charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of its Charter and in the taking of all such action as may be necessary or appropriate to protect the rights of the holders of the Series A Preferred Stock against impairment. 16 Table of Contents So long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent as provided by the Wyoming Business Corporations Act) of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock: (a) alter or change the rights, preferences or privileges of the Series A Preferred Stock; (b) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series A Preferred Stock; (c) increase the authorized number of shares of Series A Preferred Stock; or (d) authorize or issue any shares of senior securities. Fully Paid . The issued and outstanding shares of Series A Preferred Stock are fully paid and non-assessable. This means the full purchase price for the outstanding shares of Series A Preferred Stock has been paid and the holders of such shares will not be assessed any additional amounts for such shares. As of June 30, 2024, and December 31, 2023, there were 10,000,000 shares of Series A Preferred Stock issued and outstanding. Series C Convertible Preferred Stock The Company has designated 5,000,000 shares of its Preferred Stock as Series C Convertible Preferred Stock with the following rights and privileges. Dividends . Holders of shares of Series C Convertible Preferred Stock are not entitled to receive dividends. Voting Rights . The holders of the Series C Convertible Preferred Stock are not entitled to vote. Conversion Rights . Each share of Series C Convertible Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into 20 shares of the Common Stock of the Company (the “Conversion Ratio”). Such Conversion Ratio, and the rate at which shares of Series C Convertible Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment. If at any time or from time to time there shall be (i) a merger or consolidation of the Company with or into another corporation, (ii) the sale of all or substantially all of the Company’s capital stock or assets to any other person, (iii) any other form of business combination or reorganization in which the Company shall not be the continuing or surviving entity of such business combination or reorganization, or (iv) any transaction or series of transactions by the Company in which more than 50 percent (50%) of the Company’s voting power is transferred (each a “Reorganization”) then as a part of such Reorganization, the provision shall be made so that the holders of the Series C Convertible Preferred Stock shall thereafter be entitled to receive the same kind and amount of stock or other securities or property (including cash) of the Company, or the successor corporation resulting from such Reorganization. Other Rights . The holders of the Series C Convertible Preferred Stock are not entitled to a liquidation preference. The holders of the Series C Convertible Preferred Stock may not be redeemed without the consent of the holders of the Series C Convertible Preferred Stock. The holder of the Series C Convertible Preferred Stock are not entitled to pre-emptive rights or subscription rights. The Company will not, by amendment of its Charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of its Charter and in the taking of all such action as may be necessary or appropriate to protect the rights of the holders of the Series C Convertible Preferred Stock against impairment. So long as any shares of Series C Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent as provided by the Wyoming Business Corporations Act) of the holders of at least a majority of the then outstanding shares of Series C Convertible Preferred Stock: (a) alter or change the rights, preferences or privileges of the Series C Convertible Preferred Stock; (b) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series C Convertible Preferred Stock; (c) increase the authorized number of shares of Series C Convertible Preferred Stock; or (d) authorize or issue any shares of senior securities. Fully Paid . The issued and outstanding shares of Series C Convertible Preferred Stock are fully paid and non-assessable. This means the full purchase price for the outstanding shares of Series C Convertible Preferred Stock has been paid and the holders of such shares will not be assessed any additional amounts for such shares. During the six months ended June 30, 2024, the Company issued 273,332 shares of Series C Preferred Stock as follow; · 183,332 shares issued for stock payable of $ 500,000 . · 50,000 shares for $ 165,000 cash subscription. · 40,000 issued for services, valued at $ 696,000 at market price on issuance date. 17 Table of Contents Subscription received During the year ended December 31, 2023, the Company received $ 500,000 for subscription of 183,332 shares of Series C Preferred Stock. As of December 31, 2023, 183,332 shares were not issued and are recorded as preferred stock to be issued with value of $ 500,000 in equity. During the six months ended June 30, 2024, the Company issued 183,332 shares of Series C Preferred Stock. As of June 30, 2024 and December 31, 2023, there were 2,546,831 and 2,273,499 shares of the Company’s Convertible Series C Preferred Stock issued and outstanding, respectively. Common Stock The Company has authorized 1,000,000,000 shares of common stock with a par value of $ 0.0001 . Each share of 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. During the six months ended June 30, 2024, the Company issued 4,006,762 shares of Common Stock and cancelled 65,000,000 shares as follow: · 2,250,000 shares issued for services, valued at $ 1,862,000 at market price on issuance date. · 1,506,762 shares for conversion and settlement of debt of $ 1,085,148 at market price on issuance date. · 250,000 shares issued for common stock to be issued from fiscal year ended 2023 – to a director of the Company. · 65,000,000 shares were cancelled by the Company's President, valued $6,500 at par value. As of June 30, 2024 and December 31, 2023, there were 36,552,150 and 97,545,388 shares of the Company’s common stock issued and outstanding, respectively. Stock-Based Compensation On June 13, 2022, the Company issued 70,000,000 Restricted Stock Awards (“RSAs”) 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, 2024: Restricted Stock Award Weighted-Average Grant Price Balance, December 31, 2023 70,000,000 $ 0.03 Granted - - Vested - - Cancelled ( 65,000,000 ) 0.03 Balance, June 30, 2024 5,000,000 $ 0.03 As of December 31, 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, 2024, 65,000,000 shares were cancelled. Common Stock to be Issued On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each of the two independent directors for their board services in support of the Company. The Company valued the 500,000 shares of common stock at the market value of the Company’s common stock at approval date for the amount of $180,000. During the six months ended June 30, 2024, the Company issued 250,000 shares of common stock and settled common stock to be issued of $ 90,000 . On April 22, 2024, the Company entered into an advisory and consulting agreement for a period of twelve (12) months with share compensation of 250,000 shares of common stock upon signing the agreement. The Company valued the 250,000 shares based on market value at signing of the agreement, in the amount of $ 200,000 . As of June 30, 2024, the Company did not issue the shares, and recorded this as common stock to be issued as a component of stockholders’ equity. 18 Table of Contents As of June 30, 2024 and December 31, 2023, 500,000 and 500,000 shares were not yet issued and are recorded as common stock to be issued of $ 290,000 and $ 180,000 in equity, respectively. Note 11– Commitments and Contingencies As part of the intellectual asset purchase agreement with MFB California, the Company is subject to royalties of 10.0 % derived from gross invoiced sales of MFB products excluding funds received for sales and use tax (see Notes 1 and 4). On April 22, 2024, the Company entered into an advisory and consulting agreement for a period of 12 months with monthly fees of $14,500, success fees of 4.5% of the total value of any non-financing contract, finder fees of 4.5% of total value of the financing transactions (payable to the Company’s broker-dealer) and share compensation of 250,000 shares of common stock upon signing the agreement, recorded as common stock to be issued. Note 12 – Concentration As of June 30, 2024, and December 31, 2023, and for six months ended June 30, 2024, and 2023, customer and supplier concentrations (more than 10%) were as follows: Revenue and accounts receivable Percentage of Revenue Percentage of For the Six Months Ended Accounts Receivable June 30 June 30 December 31 2024 2023 2024 2023 Customer A 19.36 % - - Customer B 17.56 % - 17.00 % - Customer C 13.97 % - 13.52 % - Customer D 25.08 % - 24.28 % 39.77 % Customer E - - 15.08 % 53.82 % Customer F - 53.01 % - - Customer G - 41.35 % - - Total (as a group) 75.97 % 94.35 % 69.87 % 93.60 % Purchase and accounts payable Percentage of Purchase Percentage of For the Six Months Ended Accounts Payable June 30 June 30 December 31 2024 2023 2024 2023 Supplier A 15.77 % 80.44 % - - Supplier B - 19.56 % - - Supplier C 59.35 % - - - Total (as a group) 75.11 % 100.00 % - - To reduce risk, the Company closely monitors the amounts due from its customers and assesses the financial strength of its customers through a variety of methods that include, but are not limited to, engaging directly with customer operations and leadership personnel, visiting customer locations to observe operating activities, and assessing customer longevity and reputation in the marketplace. As a result, the Company believes that its accounts receivable credit risk exposure is limited. Note 13 – Subsequent Events Management evaluated all additional events through the date the consolidated financial statements were available to be issued. Based upon this review, unless noted below, the Company did not identify any material subsequent events that would have required adjustment or disclosure in the consolidated financial statements. During July and August 2024, the Company issued senior convertible notes (together, the “Convertible Notes”). The Convertible Notes bear interest at an annualized rate of 10 %. The Convertible Notes mature twelve ( 12 ) months after the original issue date of the Convertible Notes, whereupon all outstanding principal and accrued interest is due to the holders of the Convertible Notes. 19 Table of Contents The Convertible Notes include a conversion feature. The Conversion price is the lesser of (i) $0.40 or (ii) a 30% discount to the price of shares issued in connection with a Qualified Financing . Qualified Financing means the Company’s sale of its common stock pursuant to a registration statement filed with and declared effective by the commission and the listing of the common stock in connection with an uplist to a national securities exchange. In the event that, prior to the maturity date, the VWAP per share of Company common stock does not trade below $1.50 for thirty (30) consecutive trading days, then, subject to the limitations on conversion, this Convertible Notes shall automatically convert on the next trading day immediately following the trading period into the number of shares of Company common stock determined by dividing the conversion amount by the conversion price. In connection with the issuance of the Convertible Notes, the Company issued common stock purchase warrants to the holders of the Convertible Notes (the “Warrants”). The Warrants give the holders the right, but not the obligation, to purchase shares of the Company. The exercise price of the Warrants is $ 0.50 per share. The Warrants expire five ( 5 ) years from the issue date. · The Company issued convertible notes and warrant, in July and August 2024 for $ 1,171,000 , of which $ 695,000 was advanced on or before June 30, 2024 (Note 9) 20 Table of Contents