What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-18 compared with 2024-08-19 · 113 added, 54 removed, 110 unchanged (60% of the section changed)

18 unchanged sentences

General Overview

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.

General Enterprise Ventures, Inc., (“GEVI,” “we,” “us,” or the “Company”) was originally incorporated in Nevada on March 14, 1990.

Our principal executive offices are located at 1740H Del Range Blvd, Suite 166, Cheyenne, Wyoming 82009.

We are an environmentally sustainable flame retardant and flame suppression company for the residential home industry throughout the United States.

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.

Steve Conboy, who founded MFB California, has been in the lumber business for over 30 years.

Approximately 10 years ago, he realized that residential and commercial fires, as well as wildfires, would not cease for the foreseeable future.

Conboy understood that, even if lumber was treated, it was toxic by nature and this toxicity is harmful to humans and the environment.

He realized that there was a market, and most importantly a need, for a product that was capable of fire suppression and being a fire retardant while also being the safest for the environment and for human beings.

Conboy set out to develop a formula for a product that would meet these requirements.

During the course of research and development, Mr.

Conboy formed MFB California and contributed numerous patents toward development of a green product line that was envisioned many years ago.

That product is its CitroTech MFB 31 Technology™.

Since MFB Ohio acquired the MFB California portfolio of intellectual property, Company management has continued to develop many formulations to achieve the vision.

In addition, the Company has been recognized and certified for their achievement.

These recognitions and achievements, including twice receiving the EPA Safer Choice award and being the first and only EPA certified fire retardant, UL Certification, GreenGaurd Gold for no VOCs, other accreditations, and adoption by departments throughout the State of California.

Our management is comprised of one individual, Joshua Ralston, who is our President, Chief Executive officer, Chief Financial Officer and Chairman of the Board of Directors..

Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the period ended June 30, 2024, which are included herein.

Our operating results for the three and six months ended June 30, 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 June 30, 2024 and the three months ended June 30, 2023

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the three and nine months ended September 30, 2024 and 2023, which are included herein.

Our results of operations for the three months ended September 30, 2024 and 2023 are summarized below:

Three Months Ended

September 30,

Operating expenses

Other expense

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 June 30, 2024, the revenue increased $170,314 over the three months ended June 30, 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.

$ (9,084,815 )

The Company’s revenue is associated with revenue from MFB Ohio which acquired intellectual property to fire suppression in April 2022.

Although overall, the Company’s revenue has increased year to date, during the three months ended September 30, 2024, revenue decreased $68,000 over the three months ended September 30, 2023, due to decreased wildfire activity associated with cooler temperatures during the summer months of July 2024 and August 2024.

Operating Expenses

Three Months Ended

September 30,

Cost of revenue

2 unchanged sentences

Advertising and marketing

Management compensation

Professional fees

Total operating expenses

The increase in operating expenses was primarily attributed to cost of revenue of $61,000, professional fees of $257,000, advertising and marketing of $219,000 and general and administrative expenses of $123,000.

$ (8,589,360 )

The decrease in operating expenses was primarily due to decreases in professional fee of $8.7 million and management compensation offset by increases in general and administration expense and management compensation.

Cost of revenue

Three Months Ended

September 30,

Cost of inventory

3 unchanged sentences

Total cost of revenue

During the three months ended June 30, 2024, the cost of revenue increased $61,000 over the three months ended June 30, 2023, primarily due to an 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 Firebreaker proactive wildfire defense systems.

Cost of inventory increased during the three months ended June 30, 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 June 30, 2024 from more revenue.

During the three months ended September 30, 2024, the cost of revenue slightly increased over the three months ended September 30, 2023, primarily due to an increase in cost of inventory.

Cost of inventory consists of the sales of product, related supplies and direct testing our CitroTechproduct and various components required to for installation of Mighty Fire Breaker proactive wildfire defense systems.

Cost of inventory increased during the three months ended September 30, 2024, primarily due to an increase in product sales and supplies and royalty and commission, from increased sales.

Consulting and advisory services are to a related party company for services related to product installations.

Freight and shipping relate to product shipped to customers.

Royality and sales commissions decreased during the three months ended September 30, 2024 due to a decrease in 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 June 30, 2024, of $257,000 over June 30, 2023, is primarily due to stock-based services compensation of $200,000 and professional fees of $57,000 for maintaining reporting status with the Securities and Exchange Commission (“SEC”).

General and administrative

General and administrative expenses are office, rent, travel, insurance, website, IT and other office related expenses.

For the three months ended September 30, 2024, the Company incurred increased expenditures on their website and IT development and travel as well as general office and insurance expenses from expansion of operations.

Advertising and marketing

The increase in advertising and marketing during the three months ended June 30, 2024, of $219,000 over June 30, 2023, is primarily due to stock-based service compensation of $160,000 and increased expenses to support revenue growth.

The increase in advertising and marketing during the three months ended September 30, 2024, over September 30, 2023, is primarily due to increased marketing expenses to support revenue growth.

Professional fees

The increase in professional fees during the three months ended September 30, 2024, over September 30, 2023, is primarily due to stock-base management compensation of $8.6 million.

The Company issued 1,200,000 shares of Preferred C stock, for professional fees to a related party consultant, which is valued as if they are fully converted to 24 million shares of common stock on issuance, and based on closing stock prices resulted in an accounting valuation of $8,640,000.

Other Expenses

For the three months ended June 30, 2023, the other expense consisted of interest related to convertible note payable.

The net loss for the three months ended June 30, 2024, increased by $490,000 as compared to the three months ended June 30,2023 primarily due to the increase in operating expenses, primarily from stock-based compensation and professional fees for maintaining reporting status with the Securities and Exchange Commission (“SEC”).

Results of Operations for the six months ended June 30, 2024 and the six months ended June 30, 2023

Six Months Ended

For the three months ended September 30, 2024 and 2023, the other expenses consisted of $93,875 and $1,760 interest related to convertible notes payable, respectively.

The net loss for the three months ended September 30, 2024, decreased by $8.6 million as compared to the three months ended September 30, 2023 primarily due to the decrease in operating expenses, primarily stock based professional fees.

Our results of operations for the nine months ended September 30, 2024 and 2023 are summarized below:

Nine Months Ended

September 30,

Operating expenses

Other expenses

Other (income) expenses

$ (5,082,352 )

During the six months ended June 30, 2024, the revenue increased $548,000 over the six months ended June 30, 2023, due to MFB Ohio’s EPA approval and the filing of additional patents.

$ (9,918,107 )

The Company’s revenue is associated with revenue from MFB Ohio which acquired intellectual property to fire suppression in April 2022.

During the nine months ended September 30, 2024, the revenue increased $480,000 over the nine months ended September 30, 2023, due to MFB Ohio’s EPA approval and the filing of additional patents.

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

1 unchanged sentence

Operating Expenses

Six Months Ended

Nine Months Ended

September 30,

Cost of revenue

2 unchanged sentences

Advertising and marketing

Management compensation

Professional fees

Total operating expenses

The increase in operating expenses was primarily attributed to increases in cost of revenue of $148,000, professional fees of $2.6 million, advertising and marketing of $318,000 and general and administrative expenses of $188,000.

$ (5,330,206 )

The decrease in operating expenses was primarily attributed to decreases in profession fees of $6.1 million, management compensation of $180,000 offset by increases in cost of revenue of $170,000, advertising and marketing of $472,000 and general and administrative expenses of $295,000.

Cost of revenue

Six Months Ended

Nine Months Ended

September 30,

Cost of inventory

3 unchanged sentences

Total cost of revenue

During the six months ended June 30, 2024, the cost of revenue increased $148,000 over the six months ended June 30, 2023, primarily due to an increase in cost of inventory and royalty and sales commissions.

During the nine months ended September 30, 2024, the cost of revenue increased over the nine months ended September 30, 2023, primarily due to an 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 Firebreaker proactive wildfire defense systems.

Cost of inventory increased during the six months ended June 30, 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 six months ended June 30, 2024 from more revenue.

Cost of inventory increased during the nine months ended September 30, 2024, primarily due to an increase in product sales and supplies and royalty and commission, from increased sales.

Consulting and advisory services are to a related party company for services related to product installations.

Freight and shipping relate to product shipped to customers.

Royality and sales commissions increased in the nine months ended September 30, 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 six months ended June 30, 2024, of $2.6 million over June 30, 2023, is primarily due to stock-base management compensation of $1.4 million and stock-based services compensation of $1.2 million.

General and administrative

General and administrative expenses are office, rent, travel, insurance, website, IT and other office related expenses.

For the nine months ended September 30, 2024, the Company incurred increased expenditures on their website and IT development and travel as well as general office and insurance expenses from expansion of operations.

Advertising and marketing

The increase in advertising and marketing during the six months ended June 30, 2024, of $318,000 over June 30, 2023, is primarily due to stock-based compensation for services of $160,000 and increased expenses to support revenue growth.

The increase in advertising and marketing during the nine months ended September 30, 2024, over September 30, 2023, is primarily due to stock-based compensation for services of $160,000 and increased expenses to support revenue growth.

Professional fees

The decrease in professional fees during the nine months ended September 30, 2024, over September 30, 2023, is primarily due to stock-base management compensation of $1.4 million and stock-based services compensation of $1.2 million in 2024 over stock-base management compensation of $8.6 million in 2023.

Other Expenses

For the six months ended June 30, 2024 and 2023, the other expenses consisted of $885 and $759 interest related to convertible note payable and loss on settlement of debt of $882,279 and $0, respectively.

The net loss for the six months ended June 30, 2024, increased by $3.6 million as compared to the six months ended June 30, 2023 primarily due to the increase in operating expenses, primarily from stock-based compensation and professional fees for maintaining reporting status with the Securities and Exchange Commission (“SEC”).

For the nine months ended September 30, 2024 and 2023, the other expenses consisted of $94,760 and $2,519 interest related to convertible notes payable and loss on settlement of debt of $882,279 and $0, respectively.

The net loss for the nine months ended September 30, 2024, decreased by $4.8 million as compared to the nine months ended September 30, 2023 primarily due to the decrease in operating expenses, primarily from stock-based professional fees.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have incurred significant operating losses and negative cash flows from our operations.

Our net loss was $0.9 million and $10.1 million for the nine months ended September 30, 2024 and the year ended December 31, 2023, respectively.

During July and August 2024, we completed a debt offering which generated net proceeds of $1.1 million, of which $0.75 million was advanced on or before June 30, 2024.

Working capital

September 30,

Current Assets

1 unchanged sentence

Working Capital (Deficiency)

The increase in working capital deficiency in 2024 was primarily the result of an increase in accounts receivable of $223,000, prepaid expenses of $791, deferred offering cost of $35,000 and a decrease in cash of $3,200, inventory of 38,000 offset by an increase in accounts payable and accrued liabilities of $46,000, operating lease liability-current portion of $3,900, advances payable of $695,000 and a decrease in promissory note of $120,000, convertible note of $54,000 and due to related party of $58,000.

As of June 30, 2024, and December 31, 2023, the current assets consisted of cash of $547,000 and $550,000, inventory of $192,000 and $230,000, accounts receivable of $651,000 and $427,000, prepaid expenses of $11,000 and $11,000, and deferred offering costs of $35,000 and $0 respectively.

As of June 30, 2024, and December 31, 2023, the current liabilities consisted of accounts payable and accrued liabilities of $101,000 and $55,000, due to related parties of $1.3 million and $1.3 million, convertible note of $0 and $54,000, promissory note of $0 and $120,000, advances of $695,000 and $0, and operating lease liability-current portion of $84,000 and $80,000, respectively.

Six Months Ended

$ (1,002,764 )

As of September 30, 2024 and December 31, 2023, the current assets consisted of cash of $309,000 and $550,000, inventory of $271,000 and $230,000, accounts receivable of $430,000 and $427,000, prepaid expenses of $43,000 and $11,000, and deferred offering costs of $57,000 and $0, respectively.

As of September 30, 2024 and December 31, 2023, the current liabilities consisted of accounts payable and accrued liabilities of $154,000 and $55,000, due to related parties of $1.3 million and $1.3 million, convertible notes of $633,000 and $54,000, and current portion of operating lease liability of $71,000 and $80,000, respectively.

2024 versus 2023

The increase in working capital deficiency in 2024 was primarily the result of advances for convertible notes.

The Company had net loss and negative cash flows from our operations.

In 2024, the Company generated funds from more debt financing than equity financing, therefore, current liabilities increased more than current assets.

Nine Months Ended

September 30,

Cash used in operating activities

$ (1,319,815 )

Cash used in investing activities

3 unchanged sentences

We have not generated positive cash flows from operating activities.

For the six months ended June 30, 2024, net cash flows used in operating activities consisted of a net loss of $4.4 million, reduced by stock-based compensation of $2.8 million , non-cash lease expenses of $40,000, amortization and depreciation of $127,000, loss on settlement of debt of $882,000 and increased by net changes in operating assets and liabilities of $148,000.

For the six months ended June 30, 2023, net cash flows used in operating activities consisted of a net loss of $833,000, reduced by stock-based compensation of $147,000, amortization and depreciation of $124,000, non-cash lease expenses of $30,000 and reduced by net changes in operating assets and liabilities of $108,000.

For the nine months ended September 30, 2024, net cash flows used in operating activities consisted of a net loss of $5.1 million, reduced by stock-based compensation of $2.6 million , non-cash lease expenses of $60,000, amortization and depreciation of $190,000, loss on settlement of debt of $882,000 and increased by net changes in operating assets and liabilities of $1.

For the nine months ended September 30, 2023, net cash flows used in operating activities consisted of a net loss of $9.9 million, reduced by stock-based compensation of $9.0 million, amortization and depreciation of $186,000, non-cash lease expenses of $52,000 and reduced by net changes in operating assets and liabilities of $107,000.

Cash Flows from Investing Activities

The Company did not use any funds for investing activities during the six months ended June 30, 2024 and 2023.

The Company did not use any funds for investing activities during the nine months ended September 30, 2024.

For the nine months ended September 30, 2023, the cash flows used in investing activities were $2,231, which was related to the purchase of equipment.

Cash Flows from Financing Activities

For the six months ended June 30, 2024, net cash provided by financing activities consisted of $165,000 proceed from issuance Series C Preferred Stock, $695,000 advances received from eleven (11) lenders in cash for issuance of convertible promissory notes and warrants, $35,000 deferred offering cost payment and $65,000 repayment of loan -related party.

For the six months ended June 30, 2023, net cash provided by financing activities consisted of $275,000 received from a related party and $179,600 received from Series C Preferred Stock subscription.

For the nine months ended September 30, 2024, net cash provided by financing activities consisted of $165,000 proceed from issuance Series C Preferred Stock, $1.0 million from convertible promissory notes and warrants, $57,000 deferred offering cost payment and $60,000 repayment of loan - related party.

For the nine months ended September 30, 2023, net cash provided by financing activities consisted of $305,000 received from a related party, $907,600 from preferred stock subscriptions and $120,000 from promissory note.

Contractual Obligations

1 unchanged sentence

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 June 30, 2024:

The following table outlines maturities of our lease liabilities as of September 30, 2024:

Year ending December 31,

2024 (excluding the six months ended June 30, 2024)

2024 (excluding the nine months ended September 30, 2024)

Imputed interest

7 unchanged sentences

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.

Future Capital Requirements

Our current available cash and cash equivalents are insufficient to satisfy our liquidity requirements.

Our capital requirements for the fiscal year ending December 31, 2024, will depend on numerous factors, including management’s evaluation of the timing of projects to pursue.

Subject to our ability to generate revenues and cash flow from operations and our ability to raise additional capital (including through possible joint ventures or partnerships), we expect to incur substantial expenditures to carry out our business plan, as well as costs associated with our capital raising efforts and being a public company.

Our plans to finance our operations include seeking equity and debt financing, alliances or other partnership agreements, or other business transactions that would generate sufficient resources to ensure the continuation of our operations.

The sale of additional equity or debt securities may result in further dilution to our stockholders.

If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our Common Stock and could contain covenants that would restrict our operations.

Any such required additional capital may not be available on reasonable terms, if at all.

If we were unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned activities and limit our operations, which could have a material adverse effect on our business, financial condition, and operations results.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur.

In consultation with its legal counsel as appropriate, our management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements.

If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is likely, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Critical Accounting Policies

9 unchanged sentences

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.

Our performance obligation generally of product used for lumber product for fire prevention.

Revenue is recognized at a point in time, that is which the risks and rewards of ownership of the product 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.

11 unchanged sentences

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

Item 2. Management’s Discussion and Analysis