CitroTech Inc. 10-Q

Item 1. Financial Statements General Enterprise Ventures, Inc. Consolidated Balance Sheets (Unaudited) September 30, December 31, 2024 2023 Assets Current assets Cash $ 309,129 $ 549,755 Accounts receivable 429,906 427,433 Inventory 271,143 230,197 Prepaid expenses 43,059 10,671 Deferred offering costs 57,131 - Total Current Assets 1,110,368 1,218,056 Non-current assets Equipment, net 5,893 7,299 Intangible assets, net 3,759,265 3,948,106 Operating lease right-of-use asset 69,923 129,683 Total Assets $ 4,945,449 $ 5,303,144 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 153,530 $ 54,572 Promissory note - 120,000 Convertible notes, net of discount 633,107 54,000 Due to related parties 1,255,572 1,309,077 Operating lease liability - current portion 70,923 80,136 Total Current Liabilities 2,113,132 1,617,785 Non-current liability Operating lease liability - 50,047 Total Liabilities 2,113,132 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, 36,802,150 and 97,545,388 shares issued and outstanding, respectively 3,680 9,755 Additional paid-in capital 77,393,401 72,427,996 Common Stock to be issued - 0 and 500,000 shares, respectively - 180,000 Subscription received - 0 and 183,333 shares of Series C Preferred stock to be issued, respectively - 500,000 Accumulated deficit ( 74,566,018 ) ( 69,483,666 ) Total Stockholders' Equity 2,832,317 3,635,312 Total Liabilities and Stockholders' Equity $ 4,945,449 $ 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 Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Revenue $ 107,042 $ 174,710 $ 738,729 $ 258,660 Operating expenses Cost of revenue, exclusive of amortization and depreciation shown separately below) 99,808 79,919 242,683 121,105 Cost of revenue - related parties 26,256 23,371 99,392 50,536 Amortization and depreciation 63,647 62,152 190,247 186,306 General and administration 194,381 87,530 534,308 239,208 Advertising and marketing 172,667 18,656 530,043 58,474 Management compensation - 180,000 - 180,000 Professional fees - related parties 62,744 8,688,629 1,596,358 8,845,464 Professional fees 48,902 117,508 1,651,011 493,155 Total operating expenses 668,405 9,257,765 4,844,042 10,174,248 Loss from operations ( 561,363 ) ( 9,083,055 ) ( 4,105,313 ) ( 9,915,588 ) Other income (expense) Interest expense ( 93,875 ) ( 1,760 ) ( 94,760 ) ( 2,519 ) Loss on settlement of debt - - ( 882,279 ) - Total other expense ( 93,875 ) ( 1,760 ) ( 977,039 ) ( 2,519 ) Loss from operations before taxes ( 655,238 ) ( 9,084,815 ) ( 5,082,352 ) ( 9,918,107 ) Provision for income taxes - - - - Net loss $ ( 655,238 ) $ ( 9,084,815 ) $ ( 5,082,352 ) $ ( 9,918,107 ) Comprehensive loss ( 655,238 ) ( 9,084,815 ) $ ( 5,082,352 ) $ ( 9,918,107 ) Net loss per common share - basic and diluted $ ( 0.02 ) $ ( 0.09 ) $ ( 0.09 ) $ ( 0.10 ) Basic and diluted weighted average number of common shares outstanding 36,563,020 97,545,388 54,993,582 96,366,267 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 For the Three and Nine Months ended September 30, 2024 (Unaudited) Convertible Series A Convertible Series C Preferred Stock Common Stock Additional Total Preferred stock Preferred stock Common Stock to be 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 Warrants issued in conjunction with convertible debts - - - - - - - - 471,209 - 471,209 Common Stock issued for common stock to be issued - - - - 250,000 25 - ( 90,000 ) 89,975 - - Cancellation of stock to be issued for services - - - - - - - ( 200,000 ) - - ( 200,000 ) Net loss - - - - - - - - - ( 655,238 ) ( 655,238 ) Balance - September 30, 2024 10,000,000 $ 1,000 2,546,831 $ 254 36,802,150 $ 3,680 $ - $ - $ 77,393,401 $ ( 74,566,018 ) $ 2,832,317 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 5 Table of Contents General Enterprise Ventures, Inc. Consolidated Statements of Change in Stockholders’ Deficit For the Three and Nine Months ended September 30, 2023 (Unaudited) Convertible Series A Convertible Series C Preferred Stock Common Stock Additional Total Stockholders' Preferred stock Preferred stock Common Stock to be to be Paid-In Accumulated Equity Shares Amount Shares Amount Shares Amount issued 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 - - - - - - - - - ( 415,422 ) ( 415,422 ) Balance - March 31, 2023 10,000,000 $ 1,000 950,000 $ 95 94,245,388 $ 9,425 - - $ 62,806,398 $ ( 59,796,822 ) $ 3,020,096 Subscription received - shares to be issued - - - - - - 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 ( 60,214,692 ) 2,841,826 Common stock to be issued - management - - - - - - - 180,000 - - 180,000 Issuance Series C Preferred stock related to subscription - - 74,833 7 - - ( 179,600 ) - 179,593 - - Issuance Series C Preferred stock in cash - - 198,666 20 - - - - 727,980 - 728,000 Issuance Series C Preferred stock for services -related party - - 1,200,000 120 - - - - 8,639,880 - 8,640,000 Contribution inventory - related party - - - - - - - - 14,460 - 14,460 Net loss - - - - - - - - - ( 9,084,815 ) ( 9,084,815 ) Balance - September 30, 2023 10,000,000 $ 1,000 2,273,499 $ 227 97,545,388 $ 9,755 $ - $ 180,000 $ 72,427,996 $ ( 69,299,507 ) $ 3,319,471 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 6 Table of Contents General Enterprise Ventures, Inc. Consolidated Statement of Cash Flows (Unaudited) Nine Months Ended September 30, 2024 2023 Cash Flows from Operating Activities: Net loss $ ( 5,082,352 ) $ ( 9,918,107 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 1,862,000 8,966,850 Series C Preferred stock-based compensation 696,000 - Non-cash lease expenses 59,760 52,058 Depreciation and amortization 190,247 186,306 Amortization of debt discount 72,996 - Loss on settlement of debt 882,279 - Changes in operating assets and liabilities: Accounts receivable ( 2,473 ) ( 182,308 ) Inventory ( 40,946 ) ( 70,033 ) Contribution inventory - related party - 14,460 Prepaid expense ( 32,388 ) ( 14,590 ) Related party advances funding operating expense 6,495 222,529 Accounts payable and accrued liabilities 127,827 ( 25,243 ) Operating lease liabilities ( 59,260 ) ( 51,858 ) Net Cash used in Operating Activities ( 1,319,815 ) ( 819,936 ) Cash Flows from Investing Activities: Purchase of equipment - ( 2,231 ) Net Cash used in Investing Activities - ( 2,231 ) Cash Flows from Financing Activities: Proceeds from convertible notes 1,031,320 - Deferred offering cost ( 57,131 ) - Proceeds from loan - related party - 305,000 Repayment of loan- related party ( 60,000 ) - Proceed from issuance Series C Preferred Stock 165,000 907,600 Proceeds from promissory note - 120,000 Net Cash provided by Financing Activities 1,079,189 1,332,600 Change in cash ( 240,626 ) 510,433 Cash, beginning of period 549,755 55,434 Cash, end of period $ 309,129 $ 565,867 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 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 $ 180,000 $ - Series C Preferred stock issued for subscription received $ 500,000 $ - Cancellation comment stock - related party $ 6,500 $ - Warrants issued in conjunction with convertible debts $ 471,209 $ - Reclassification of due to related party to convertible note $ - $ 19,000 Contribution inventory - related party $ - $ 14,460 Issuance Series C Preferred stock for services - related party $ - $ 8,640,000 Right -of-use assets obtain in exchange for new operating lease liabilities $ - $ 161,665 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 7 Table of Contents General Enterprise Ventures, Inc. Notes to Unaudited Consolidated Financial Statements September 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 (“GEVI”). 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 30 patents and 26 patents pending 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. On April 30, 2024, MFB UK was dissolved under the Companies House in the United Kingdom. The board of directors of the Company determined that it was in the best interest of the Company to focus its business development on its existing markets. Accordingly, the Company has no current plan to revive the existence of MFB UK. 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 two-time, EPA Safer Choice approved long-term fire retardant, UL Greengard Gold, California Bioassay water approval, LENS, and in the process of USDA approval. 8 Table of Contents 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 $ 5,082,352 on $ 738,729 of revenues for the nine months ended September 30, 2024, and has a working capital deficiency of $ 1,002,764 as of September 30, 2024. In addition, the Company has been dependent on related parties to fund operations and has an amount owing to related parties of $ 1,255,572 outstanding at September 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. Management recognizes that the Company must obtain additional resources to successfully implement its business plans. During the nine months ended September 30, 2024, the Company completed financing from the issuance of Series C preferred stock, convertible notes and relate party loans, generating net proceeds of $ 1,079,189 . 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 nine months ended September 30, 2023, the company restated the Consolidated Financial Statements for the calculation of amortization on intangible assets. 9 Table of Contents The impact on the Consolidated Statement of Operations and Comprehensive Loss of the restatement is as follows: Three Months Ended Nine Months Ended September 30, 2023 September 30, 2023 As Filed Adjustment As Restated As Filed Adjustment As Restated Amortization and depreciation $ 340 $ 61,812 $ 62,152 $ 871 $ 185,435 $ 186,306 Total operating expense $ 9,156,070 $ 61,812 $ 9,217,882 $ 9,930,183 $ 185,435 $ 10,115,618 Loss from operations $ ( 9,021,243 ) $ ( 61,812 ) $ ( 9,083,055 ) $ ( 9,730,153 ) $ ( 185,435 ) $ ( 9,915,588 ) Net loss $ ( 9,023,003 ) $ ( 61,812 ) $ ( 9,084,815 ) $ ( 9,732,672 ) $ ( 185,435 ) $ ( 9,918,107 ) The impact on the Consolidated Statement of Cash Flows of the restatement is as follows: Nine Months September 30, 2023 As Filed Adjustment As Restated Cash Flows from Operating Activities: Net loss $ ( 9,732,672 ) $ ( 185,435 ) $ ( 9,918,107 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 871 185,435 186,306 Net Cash used in Operating Activities $ ( 819,936 ) $ - $ ( 819,936 ) The impact on the Consolidated Statement of Stockholders’ Equity of the restatement is as follows: September 30, 2023 As Filed Adjustment As Restated Stockholders' equity: Accumulated deficit $ ( 69,114,072 ) $ ( 185,435 ) $ ( 69,299,507 ) Total stockholders' equity $ 3,504,906 $ ( 185,435 ) $ 3,319,471 Reclassification For the three and nine months ended September 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 nine months ended September 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. 10 Table of Contents 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 Nine Months Ended September 30, 2023 September 30, 2023 As Filed and Restated (*) Adjustment As Reclassified As Filed and Restated (*) Adjustment As Reclassified Revenue $ 174,710 $ - $ 174,710 $ 258,660 $ - $ 258,660 Cost of revenue 39,883 ( 39,883 ) - 58,630 ( 58,630 ) - 134,827 39,883 174,710 200,030 58,630 258,660 Operating expenses Cost of revenue (exclusive of amortization and depreciation shown separately below) - 103,290 103,290 - 171,641 171,641 Amortization and depreciation 62,152 - 62,152 186,306 - 186,306 General and administration 146,222 ( 58,692 ) 87,530 360,157 ( 120,949 ) 239,208 Marketing - 18,656 18,656 - 58,474 58,474 Management compensation 180,000 - 180,000 180,000 - 180,000 Stock-based professional fees - related party 8,640,000 ( 8,640,000 ) - 8,640,000 ( 8,640,000 ) - Professional fees- related party - 8,688,629 8,688,629 - 8,845,464 8,845,464 Professional fees 189,508 ( 72,000 ) 117,508 749,155 ( 256,000 ) 493,155 Total operating expenses 9,217,882 39,883 9,257,765 10,115,618 58,630 10,174,248 Loss from operations $ ( 9,083,055 ) $ - $ ( 9,083,055 ) $ ( 9,915,588 ) $ - $ ( 9,915,588 ) (*) Originally as filed for September 30, 2023, and restated for the change for amortization of intangible assets. 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 September 30, 2024 and December 31, 2023. The Company had cash of $ 309,129 and $ 549,755 at September 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 September 30, 2024, was $ 0 . 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. 11 Table of Contents 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 September 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 September 30, 2024, and December 31, 2023, the Company held inventories of $ 271,143 and $ 230,197 , respectively. The Company did not write-off any inventories as unsalable during the nine months ended September 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 September 30, 2024 and December 31, 2023, deferred offering costs consisted of the following: September 30 December 31 2024 2023 Legal fees $ 52,131 $ - Accounting fees 5,000 - Total $ 57,131 $ - Fair Value of Financial Instruments The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The Company’s financial instruments, including cash, accounts receivable, prepaid expenses, accounts payable and accrued liabilities, due to related parties and loans payable, are carried at historical cost. At September 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. 12 Table of Contents 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 nine months ended September 30, 2024 and 2023, cost of revenue consists of: Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Cost of inventory $ 98,637 $ 79,919 $ 233,362 $ 110,680 Freight and shipping 1,171 - 9,321 10,425 Consulting and advisory - related party 5,800 5,900 16,200 26,700 Royalty and sales commission - related party 20,456 17,471 83,192 23,836 Total cost of revenue $ 126,064 $ 103,290 $ 342,075 $ 171,641 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 nine months ended September 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. September 30, September 30, 2024 2023 Shares Shares Convertible notes 2,802,500 300,000 Convertible Series C Preferred Stock 49,690,036 19,021,061 Common stock warrants 1,401,250 - Convertible Series A Preferred Stock (1) - 10,000,000,000 53,893,786 10,019,321,061 (1) Series A Preferred Stock was amended in March 2024 to remove the conversion feature (Note 9). 13 Table of Contents For the three and nine months ended September 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 Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Numerator: Net loss $ ( 655,238 ) $ ( 9,084,815 ) $ ( 5,082,352 ) $ ( 9,918,107 ) Interest on convertible debts 20,879 276 21,014 1,035 Net loss - diluted $ ( 634,359 ) $ ( 9,084,539 ) $ ( 5,061,338 ) $ ( 9,917,072 ) Denominator: Weighted average common shares outstanding 36,563,020 97,545,388 54,993,582 96,366,267 Effect of dilutive shares Convertible notes 2,101,413 300,000 705,584 300,000 Preferred stock 50,936,620 10,019,198,547 49,690,036 10,019,019,038 Common stock warrants 295,290 - 114,116 - Diluted 89,896,343 10,117,043,935 105,503,318 10,115,685,305 Net income per common share: Basic $ ( 0.02 ) $ ( 0.09 ) $ ( 0.09 ) $ ( 0.10 ) Diluted $ ( 0.01 ) $ ( 0.00 ) $ ( 0.05 ) $ ( 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. 14 Table of Contents 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 September 30, 2024 and December 31, 2023, equipment consisted of the following: September 30, December 31, 2024 2023 Cost: Equipment $ 9,366 $ 9,365 Less: accumulated depreciation ( 3,473 ) ( 2,066 ) Equipment, net $ 5,893 $ 7,299 For the three and nine months ended September 30, 2024 and 2023, depreciation consists of: Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Depreciation $ 472 $ 340 $ 1,406 $ 871 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 September 30, 2024 and December 31, 2023, finite lived intangible assets consisted of the following: September 30 December 31 2024 2023 Patents $ 4,195,353 $ 4,195,353 Accumulated amortization ( 436,088 ) ( 247,247 ) Intangible assets, net $ 3,759,265 $ 3,948,106 Estimated future amortization expense for finite lived intangibles are as follows: 2024 (excluding the nine months ended September 30, 2024) $ 59,774 2025 247,931 2026 247,931 2027 247,931 2028 247,931 Thereafter 2,707,767 $ 3,759,265 As of September 30, 2024, the weighted-average useful life is 15 .00 years. 15 Table of Contents For the three and nine months ended September 30, 2024 and 2023, amortization expense is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 Amortization $ 63,175 $ 123,623 $ 188,841 $ 185,435 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 nine months ended September 30, 2024 and 2023, right-of-use asset and lease information about the Company’s operating lease consist of: Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 The components of lease expense were as follows: Operating lease cost $ 21,498 $ 10,000 $ 64,494 $ 40,000 Short-term lease cost 27,603 1,829 47,644 5,297 Variable lease cost 3,996 10,432 15,278 18,232 Total lease cost $ 53,097 $ 22,261 $ 127,416 $ 63,529 Supplemental cash flow information related to leases was as follows: Nine Months Ended September30, 2024 2023 Cash paid for operating cash flows from operating leases $ 71,954 $ 58,232 Weighted-average remaining lease term - operating leases (year) 0.83 1.84 Weighted-average discount rate — operating leases 6.50 % 6.50 % Supplemental balance sheet information related to leases consists of: September 30, December 31, 2024 2023 Operating lease right-of-use asset $ 69,923 $ 129,683 Operating lease liabilities: Current portion $ 70,923 $ 80,136 Non-current portion - 50,047 $ 70,923 $ 130,183 The following table outlines maturities of our lease liabilities as of September 30, 2024: Year ending December 31, 2024 (excluding the nine months ended September 30, 2024) $ 21,798 2025 50,862 Thereafter - 72,660 Less: Imputed interest ( 1,737 ) Operating lease liabilities $ 70,923 16 Table of Contents Note 6 – Convertible Notes The components of convertible notes as of September 30, 2024 and December 31, 2023, were as follows: Principal Interest September 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 July 15, 2024 $ 795,000 7/15/2025 10 % 795,000 - August 15, 2024 $ 326,000 8/15/2025 10 % 326,000 - Total Convertible notes $ 1,121,000 $ 54,000 Less: Unamortized debt discount ( 487,893 ) - 633,107 54,000 Less: Current portion ( 633,107 ) (54,000 ) Long-term portion $ - $ - 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. During the nine months ended September 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 . On July 15, 2024 and August 15, 2024, the Company entered into seventeen (17) subscription agreements for convertible notes ($ 1,121,000 ) and warrants ( 1,401,250 shares of common stock). The convertible notes have a term of twelve (12) months, at an interest rate of 10% per annum and warrants are with a term of five (5) years, at exercise price of $ 0.50 per share. The outstanding principal amount of convertible notes and unpaid interest is convertible at conversion price of the lesser of (i) $0.40 or (ii) a 30% discount to the price of shares issued in connection with a qualified financing. The Company believes the qualified financing is an initial offering price therefore, 30% discount to the price of shares issued in connection with qualified financing shall not be below $0.40. Therefore, the conversion price is a fixed price of $0.40 and the Company determined that conversion feature is not bifurcated. The Company has accounting for the convertible debt at amortized cost under ASC 470-20. During the nine months ended September 30, 2024, the Company recognized the debt discount of $ 560,889 (Original Issued Discounts of $ 89,680 and warrants discount of $ 471,209 ) and amortized debt discount of $ 72,996 . During the nine months ended September 30, 2024 and 2023, the Company recognized interest expenses of $ 21,014 and $ 1,035 , respectively. As of September 30, 2024 and December 31, 2023, the Company recorded accrued interest of $ 20,879 and $ 1,567 , respectively. 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 nine months ended September 30, 2024, and 2023, the Company recognized $ 750 and $ 0 interest. During the nine months ended September 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 . 17 Table of Contents Note 8 – Related Party Transactions The related parties that had material transactions for the three and nine months ended September 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 September 30, 2024 and December 31, 2023, amounts owing to related parties consists as follows: September 30, December 31, Related Party 2024 2023 A $ 843,692 $ 897,197 B 411,880 411,880 $ 1,255,572 $ 1,309,077 During the nine months ended September 30, 2024 and 2023, related party A advanced to the Company an amount of $ 0 and $ 305,000 for working capital proposes and $ 6,495 and $ 222,529 for operating expenses paid directly to vendors, on behalf of the Company, respectively. During the nine months ended September 30, 2024 and 2023, the Company repaid $ 60,000 and $ 0 owing to the related party A, respectively. For the three months ended September 30, 2024 and 2023, expenses to related parties and their nature consists of: Three Months Ended September 30, Related Party 2024 2023 Nature of transaction Financial Statement Line Item D $ 23,200 $ 23,600 Cash paid for consulting fees Professional fees - related party D $ 5,800 $ 5,900 Cash paid for consulting and advisory fees Cost of revenue E $ 39,544 $ 25,029 Cash paid for management fee Professional fees - related party E $ 20,456 $ 17,471 Cash paid for royalty and sales commissions Cost of revenue 18 Table of Contents For the nine months ended September 30, 2024 and 2023, expenses to related parties and their nature consists of: Nine Months Ended September 30, Related Party 2024 2023 Nature of transaction Financial Statement Line Item C $ 25,000 $ - Cash paid for management fee General and administration D $ 64,800 $ 106,800 Cash paid for consulting fees Professional fees - related party D $ 16,200 $ 26,700 Cash paid for consulting and advisory fees Cost of revenue E $ 108,808 $ 98,664 Cash paid for management fee Professional fees - related party E $ 83,192 $ 23,836 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 – 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. 19 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 September 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. 20 Table of Contents 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 nine months ended September 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. 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 nine months ended September 30, 2024, the Company issued 183,332 shares of Series C Preferred Stock. As of September 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 nine months ended September 30, 2024, the Company issued 4,256,762 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. ● 500,000 shares issued for common stock to be issued from fiscal year ended 2023 – to two directors of the Company. ● 65,000,000 shares were cancelled by the Company's President, valued $ 6,500 at par value. As of September 30, 2024 and December 31, 2023, there were 36,802,150 and 97,545,388 shares of the Company’s common stock issued and outstanding, respectively. 21 Table of Contents 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 nine months ended September 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, September 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 nine months ended September 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 nine months ended September 30, 2024, the Company issued 500,000 shares of common stock and settled common stock to be issued of $ 180,000 . 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 and recorded as common stock to be issued as a component of stockholders’ equity. On July 1, 2024, the Company terminated the agreement due to a lack of service performance by a contractor and 250,000 shares to be issued were cancelled. As of September 30, 2024 and December 31, 2023, 0 and 500,000 shares were not yet issued and are recorded as common stock to be issued of $ 0 and $ 180,000 in equity, respectively. Warrants During the nine months ended September 30, 2024, the Company issued a total of 1,401,250 common stock warrants exercisable for a period of five years at an exercise price per share of $ 0.50 in connection with convertible notes issued in July 15, 2024 and August 15, 2024. The Company utilizes the Black-Scholes model to value its warrants and recognized debt discount of $ 471,209 . The Company utilized the following assumptions: September 30 2024 Expected term 5 years Expected average volatility 245 % - 251 % Expected dividend yield - Risk-free interest rate 3.79 % - 4.13 % 22 Table of Contents A summary of activity of the warrants during the nine months ended September 30, 2024, as follows: Warrants Outstanding Weighted Average Weighted Average Remaining Shares Exercise Price Contractual life (in years) Outstanding, December 31, 2023 - $ - - Granted 1,401,250 0.50 5 .00 Exercised - - - Forfeited/canceled - - - Outstanding, September 30, 2024 1,401,250 $ 0.50 4.82 The intrinsic value of the warrants as of September 30, 2024 is $262,734. Note 10– 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). Note 11 – Concentration As of September 30, 2024 and December 31, 2023, and for nine months ended September 30, 2024 and 2023, customer and supplier concentrations (more than 10%) were as follows: Revenue and accounts receivable Percentage of Revenue Percentage of For Nine Months Ended Accounts Receivable September 30, September 30 December 31 2024 2023 2024 2023 Customer A 28.16 % - - - Customer B 14.97 % - 15.56 % - Customer C 11.91 % - - - Customer D 21.39 % - 36.75 % 39.77 % Customer E - - - 53.82 % Customer F - 65.72 % - - Customer G - 17.2 % - - Customer H - 13.42 % - - Total (as a group) 76.43 % 96.35 % 52.32 % 93.60 % Purchase and supplier accounts payable Percentage of Purchase Percentage of For Nine Months Ended Accounts Payable for purchase September 30, September 30, December 31, 2024 2023 2024 2023 Supplier A 27.79 % - - - Supplier B 33.85 % 91.03 % 100 % - Total (as a group) 61.64 % 91.03 % 100 % - 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 12 – Subsequent Events Management evaluated all additional events through the date the consolidated financial statements were available to be issued. Based upon this review, the Company did not identify any material subsequent events that would have required adjustment or disclosure in the consolidated financial statements. The Company filed with the Securities and Exchange Commission (“SEC”) a prospectus on Form S-1 with the objective, when effective, of raising up to $ 15,000,000 to fund the Company’s working capital and operating capital needs for, at a minimum, calendar year 2025, and at maximum, through calendar year 2029. The Company has received comments from the SEC and is preparing responses to the same. During the month of October 2024, the Company raised $ 1,200,000 in working capital in connection with sales of its Series C Preferred Stock at a price of $ 0.30 per share. 23 Table of Contents