CitroTech Inc. 10-Q

Item 1. Financial Statements. GENERAL ENTERPRISE VENTURES, INC. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Page Consolidated Balance Sheets (unaudited) 4 Consolidated statements of Operations and Comprehensive Loss (unaudited) 5 Consolidated Statements of Changes in Stockholders' Equity (unaudited) 6 Consolidated Statements of Cash Flows (unaudited) 7 Consolidated Notes to Financial Statements (unaudited) 8 3 Table of contents General Enterprise Ventures, Inc. Consolidated Balance Sheets (Unaudited) June 30, December 31, 2025 2024 Assets Current Assets Cash $ 2,327,087 $ 775,133 Accounts receivable, net 653,995 317,455 Inventory 409,923 324,657 Prepaid expenses and other current assets 206,370 74,129 Deferred offering costs 185,327 126,104 Total Current Assets 3,782,702 1,617,478 Non-Current Assets Intangible assets, net 3,575,525 3,699,491 Operating lease right-of-use asset 828,513 49,347 Property and equipment, net 465,511 111,374 Security deposit 36,991 - Total Non-Current Assets 4,906,540 3,860,212 Total Assets $ 8,689,242 $ 5,477,690 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 532,985 $ 186,984 Deferred revenue 94,860 - Convertibles notes, net of discount 277,593 196,077 Convertibles notes, net of discount - related parties 932,002 576,693 Due to related parties 95,747 - Financing loan - 96,849 Derivative liability 3,733,000 1,055,233 Operating lease liability - current portion 138,810 50,047 Total Current Liabilities 5,804,997 2,161,883 Non-current Liability Operating lease liability 693,652 - Total Liabilities 6,498,649 2,161,883 Stockholders' Equity Preferred Stock, par value $ 0.0001 , authorized 30,000,000 shares: 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 10,000,000 shares, 2,036,507 and 3,001,969 issued and outstanding, respectively 204 300 Common Stock, par value $ 0.0001 , authorized 1,000,000,000 shares, 66,086,853 and 36,841,581 shares issued and outstanding, respectively 6,609 3,684 Additional paid-in capital 101,355,591 79,676,211 Accumulated deficit ( 99,172,811 ) ( 76,365,388 ) Total Stockholders' Equity 2,190,593 3,315,807 Total Liabilities and Stockholders' Equity $ 8,689,242 $ 5,477,690 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 Operations and Comprehensive Loss (Unaudited) Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 Revenue $ 687,638 $ 198,669 $ 1,657,020 $ 631,687 Operating expenses Cost of revenue, exclusive of amortization and depreciation shown separately below 371,392 102,195 928,362 199,064 Cost of revenue - related parties - 25,790 95,290 73,136 Amortization and depreciation 77,107 62,765 151,646 126,600 General and administration 311,503 161,413 522,705 258,738 Advertising and marketing 152,608 217,574 257,104 307,980 Payroll and management compensation 2,334,698 - 2,973,121 25,000 Professional fees 445,668 471,126 1,072,986 1,651,505 Professional fees - related parties 12,300 65,210 2,131,900 1,533,614 Total operating expenses 3,705,277 1,106,073 8,133,115 4,175,637 Loss from operations ( 3,017,639 ) ( 907,404 ) ( 6,476,095 ) ( 3,543,950 ) Other income (expense) Interest expense ( 552,085 ) - ( 962,876 ) ( 885 ) Interest expense - related party ( 212,787 ) - ( 274,843 ) - Interest income 3,958 - 3,958 - Financing expense ( 2,511,855 ) - ( 8,679,189 ) - Change in fair value of derivative liability ( 2,973,000 ) - ( 3,777,767 ) - Loss on settlement of debt ( 2,640,611 ) - ( 2,640,611 ) ( 882,279 ) Total other expense ( 8,886,380 ) - ( 16,331,328 ) ( 883,164 ) Loss from operations before taxes ( 11,904,019 ) ( 907,404 ) ( 22,807,423 ) ( 4,427,114 ) Provision for income taxes - - - - Net loss $ ( 11,904,019 ) $ ( 907,404 ) $ ( 22,807,423 ) $ ( 4,427,114 ) Comprehensive loss $ ( 11,904,019 ) $ ( 907,404 ) $ ( 22,807,423 ) $ ( 4,427,114 ) Net loss per common share - basic and diluted $ ( 0.19 ) $ ( 0.02 ) $ ( 0.41 ) $ ( 0.07 ) Basic and diluted weighted average number of common shares outstanding 62,734,319 36,387,315 55,353,088 64,310,131 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’ Equity (Unaudited) For the three and six months ended June 30, 2025 Convertible Series A Convertible Series C Additional Total Preferred stock Preferred stock Common Stock Paid-In Accumulated Stockholders' Shares Amount Shares Amount Shares Amount Capital Deficit Equity Balance - December 31, 2024 10,000,000 $ 1,000 3,001,969 $ 300 36,841,581 $ 3,684 $ 79,676,211 $ ( 76,365,388 ) $ 3,315,807 Series C Preferred Stock issued for cash - - 27,500 3 - - 259,997 - 260,000 Series C Preferred Stock issued for services - - 167,500 17 - - 2,349,003 - 2,349,020 Series C Preferred Stock issued for compensation - - 30,000 3 - - 420,717 - 420,720 Common stock issued for conversion of Series C Preferred Stock - - ( 776,831 ) ( 78 ) 15,536,620 1,554 ( 1,476 ) - - Common stock warrants issued - - - - - - 8,649,503 - 8,649,503 Net loss - - - - - - - ( 10,903,404 ) ( 10,903,404 ) Balance - March 31, 2025 10,000,000 1,000 2,450,138 245 52,378,201 5,238 91,353,955 ( 87,268,792 ) 4,091,646 Series C Preferred Stock issued for services - - 69,007 7 - - 2,511,848 - 2,511,855 Series C Preferred Stock issued for compensation - - 50,000 5 - - 1,099,995 - 1,100,000 Common stock issued for conversion of Series C Preferred Stock - - ( 532,638 ) ( 53 ) 10,652,760 1,065 ( 1,012 ) - - Common stock issued for services - - - - 10,000 1 18,999 - 19,000 Common stock issued for conversion of debts - - - - 3,045,892 305 5,604,137 - 5,604,442 Management stock compensation - - - - - - 767,669 - 767,669 Net loss - - - - - - - ( 11,904,019 ) ( 11,904,019 ) Balance - June 30, 2025 10,000,000 $ 1,000 2,036,507 $ 204 66,086,853 $ 6,609 $ 101,355,591 $ ( 99,172,811 ) $ 2,190,593 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 See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements. 6 Table of contents General Enterprise Ventures, Inc. Consolidated Statements of Cash Flows (Unaudited) Six months ended June 30, 2025 2024 Cash Flows from Operating Activities: Net loss $ ( 22,807,423 ) $ ( 4,427,114 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 4,656,409 2,758,000 Financing expense 8,679,189 - Non-cash lease expenses 86,052 39,519 Depreciation and amortization 151,646 126,600 Amortization debt discount 1,000,390 - Loss on settlement of debt 2,640,611 882,279 Change in fair value of derivative 3,777,767 - Changes in operating assets and liabilities: Accounts receivable ( 336,540 ) ( 223,438 ) Inventory ( 180,563 ) 38,116 Prepaid expenses and other current assets ( 132,241 ) ( 791 ) Security deposit ( 36,991 ) - Accounts payable and accrued liabilities 443,354 75,043 Related party advances funding operating expense 25,300 2,180 Accrued interest - related parties 95,447 - Deferred revenue 94,860 - Operating lease liabilities ( 82,803 ) ( 38,919 ) Net Cash used in Operating Activities ( 1,925,536 ) ( 768,525 ) Cash Flows from Investing Activities: Purchase of property and equipment ( 167,744 ) - Net Cash used in Investing Activities ( 167,744 ) - Cash Flows from Financing Activities: Advances received for convertible notes to be issued - 695,000 Proceeds from convertible notes 1,909,000 - Proceeds from convertible note - related party 1,776,082 - Deferred offering cost ( 59,223 ) ( 34,675 ) Repayment of loan- related party ( 25,000 ) ( 60,000 ) Proceed from issuance of Series C Preferred Stock 260,000 165,000 Repayment of financing loan ( 215,625 ) - Net Cash provided by Financing Activities 3,645,234 765,325 Change in cash 1,551,954 ( 3,200 ) Cash, beginning of period 775,133 549,755 Cash, end of period $ 2,327,087 $ 546,555 Supplemental Disclosure Information: Cash paid for interest $ 5,870 $ - Cash paid for taxes $ - $ - Non-Cash Financing Disclosure: Common stock issued for services $ - $ 1,862,000 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 $ 2,618 $ - Common stock issued for conversion and settlement of debt $ 5,604,442 $ 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 of common stock - related party $ - $ 6,500 Warrants issued in conjunction with convertible debts $ 882,000 $ - Right -of-use assets obtained in exchange for new operating lease liabilities $ 865,218 $ - Recognition of derivative liability as debt discount $ 1,027,000 $ - Transfer from inventory to property and equipment $ 95,297 $ - Acquisition of property and equipment as financing loan $ 118,776 $ - 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 June 30, 2025 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. 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. When used in these notes, the terms “General Enterprise Ventures, Inc.,” “Company,” “we,” “us” and “our” mean General Enterprise Ventures, Inc. and all entities included in our unaudited interim consolidated financial statements. Corporate Changes Effective June 25, 2024, the Company formed and organized a wholly owned subsidiary, GEVI Insurance Holdings Inc., an Ohio corporation (“GEVI Insurance”), to enter the wildfire insurance markets utilizing the Company’s flame retardant and flame suppression product. Effective February 21, 2025, the Company formed MFB Insurance Company, Inc., a Hawaii corporation (“MFBI”) and organized it as a wholly owned subsidiary of GEVI Insurance to act as a captive insurance company to enter the wildfire insurance market. MFBI was formed to act as a captive insurance company to reinsure real property protected with the Company’s CitroTech product. MFBI is not currently able to reinsure real property. Business Our product is CitroTech™, which is utilized in wildfire defense and to treat lumber to inhibit fire. In addition, we are developing a coating to treat lumber during manufacture prior to distribution. Our product is sustainable, because it is made of food-grade ingredients derived from corn, fruits and other renewable sources. Our current customer base is mainly comprised of homeowners, developers and fire departments. Homeowners and developers use our product to proactively spray wood framing during construction to treat the property prior to the occurrence of fires. We install systems to deploy our product remotely to provide a buffer zone around properties to prevent combustion. Fire Departments use our product to proactively spray around controlled burns and areas that traditionally have active wildfire risk to prevent expansion of the burn area. Going Concern Our unaudited interim 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 approximately $ 22.8 million and revenue of $ 1.7 million for the six months ended June 30, 2025. The Company also has a working capital deficiency of approximately $ 2.0 million, as of June 30, 2025. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited consolidated financial statements are issued. Management recognizes that the Company must obtain additional resources to successfully implement its business plans. During the six months ended June 30, 2025, the Company completed financings from the issuance of Series C preferred stock, and convertible notes, generating net proceeds of approximately $ 3.9 million. 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 a public offering to support our operations in 2025. 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 a public offering, the implementation of the Company’s business plan, financial condition and results of operations will be materially affected. These unaudited interim 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. 8 Table of contents Note 2 – Summary of Significant Accounting Policies Basis of Presentation Our unaudited interim consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited interim consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K of General Enterprise Ventures, Inc. for the year ended December 31, 2024. In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2025, and its results of operations for the three months and six months ended June 30, 2025, and 2024, and cash flows for the six months ended June 30, 2025, and 2024. The balance sheet at December 31, 2024, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the unaudited interim consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2024, as filed with the SEC on March 31, 2025. Principles of Consolidation The consolidated financial statements include the accounts of General Enterprise Ventures, Inc., and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated. Reclassification Certain amounts have been reclassified to improve the clarity and comparability of the financial statements. These reclassifications had no impact on previously reported total assets, liabilities, equity, net income (loss), or cash flows for any periods presented. 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. Segment Information Our Chief Executive Officer (“CEO”) is the chief operating decision maker who reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, we determined we operate in a single reporting segment - environmentally sustainable flame retardant and flame suppression company for the residential home industry. Our CEO assesses performance and decides how to allocate resources primarily based on consolidated net income, which is reported on our Consolidated Statements of Operations. Total assets on the Consolidated Balance Sheets represent our segment assets. 9 Table of contents 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 as of June 30, 2025 and December 31, 2024. The Company had cash of $ 2,327,087 and $ 775,133 , as of June 30, 2025 and December 31, 2024, respectively. Periodically, the Company may carry cash balances at financial institutions more than the federally insured limit of $ 250,000 per institution. The amount in excess of the FDIC insurance as of June 30, 2025, was approximately $ 1.7 million. The Company has not experienced losses on account balances 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 are recorded at the invoiced amount and do not bear interest. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any expected loss on the trade accounts receivable balances and charged to the provision for doubtful accounts. 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. During the six months ended June 30, 2025 and 2024, the Company recorded no bad debt expense, and no allowance for credit losses as of June 30, 2025 and December 31, 2024. 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. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange. 10 Table of contents Recurring Fair Value Measurements The following table summarizes the liabilities measured at fair value on a recurring basis: June 30, 2025 Level 3 Liabilities Derivative Liability – conversion feature $ 3,733,000 December 31, 2024 Level 3 Liabilities Derivative Liability – conversion feature $ 1,055,233 Nonrecurring Fair Value Measurements The valuation of warrants and market based compensation were derived using Level 3 inputs. Other Fair Value Disclosures The Company’s financial instruments, including cash, accounts receivable, prepaid expenses, deferred offering costs, accounts payable and accrued liabilities, deferred revenue and loans payable, are carried at historical cost. As of June 30, 2025 and December 31, 2024, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. Convertible Notes The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For our derivative financial instruments, the Company used a Binomial Lattice model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date. Warrants For warrants that are determined to be equity-classified, we estimate the fair value at issuance and record the amounts to additional paid in capital (potentially on a relative fair value basis if issued in a basket transaction with other financial instruments). Warrants that are equity-classified are not subsequently remeasured unless modified or required to be reclassified as liabilities. 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. 11 Table of contents 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. For the six months ended June 30, 2025, our revenues currently consist of a sale of product used for lumber products for fire prevention and an installation of self-contained sprinkler systems. 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. Deferred revenue Deferred revenue consists of advanced payments for our service that have not been rendered. Revenue is recognized when service is rendered. As of June 30, 2025 and December 31, 2024, total deferred revenue was $ 94,860 and $ 0 , respectively. Deferred revenue is expected to be recognized as revenue within the third quarter of 2025. Cost of Revenue For the three and six months ended June 30, 2025 and 2024, cost of revenue consisted of: Three Months Ended Six months ended June 30, June 30, 2025 2024 2025 2024 Cost of inventory $ 304,791 $ 58,529 $ 821,234 $ 134,725 Freight and shipping 5,899 5,620 6,059 8,150 Consulting and advisory-related party - 6,200 4,000 10,400 Royalty and sales commission-related party - 19,590 91,290 62,736 Rent expense 60,702 38,046 101,069 56,189 Total cost of revenue $ 371,392 $ 127,985 $ 1,023,652 $ 272,200 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, 2025 and 2024, 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, 2025 2024 Shares Shares Convertible notes 12,226,924 - Common stock warrants 11,385,125 - Convertible Series C Preferred Stock 40,730,140 49,059,894 64,342,189 49,059,894 12 Table of contents 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, 2025 and December 31, 2024, deferred offering costs consisted of the following: June 30, December 31 2025 2024 Legal fees $ 94,537 $ 52,131 General and administrative expenses 90,790 73,973 Total $ 185,327 $ 126,104 Stock-Based Compensation The Company accounts for employee and non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to nonemployees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Equity grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. During the three and six months ended June 30, 2025 and 2024, stock-based compensation was recognized as follows: Three Months Ended Six months ended June 30, June 30, 2025 2024 2025 2024 Management compensation $ 1,867,669 $ - $ 2,288,389 $ - Professional fees - 200,000 2,368,020 1,175,250 Professional fees - related party - - - 1,422,750 Advertising and marketing - 160,000 - 160,000 Financing expense 2,511,855 - 8,679,189 - $ 4,379,524 $ 360,000 $ 13,335,598 $ 2,758,000 Compensation cost for stock awards, which include common shares, Series C Preferred Stock, warrants and performance stock units (“PSUs”), is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service or performance period. The fair value of stock awards is based on the quoted price of our common stock on the grant date and Series C Preferred stock as if converted to common stock. We measure the fair value of PSUs using a Monte Carlo valuation model and warrants using a Black Scholes valuation model. Compensation cost for PSUs are recognized using the derived service period and accelerated if the condition is satisfied at an earlier date. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures” (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. 13 Table of contents In December 2023, the FASB issued ASU 2023-09, “Income Taxes” (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, additional disclosures primarily related to the income tax rate reconciliation and income taxes paid. The expanded annual disclosures are effective for our year ending December 31, 2025. The Company is currently evaluating the impact that ASU 2023-09 will have its financial statements and whether we will apply the standard prospectively or retrospectively. The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements. Note 3 – Inventory As of June 30, 2025 and December 31, 2024, inventory consisted of the following: June 30, December 31, 2025 2024 Finished goods $ 171,449 $ 50,469 Raw materials 238,474 274,188 $ 409,923 $ 324,657 The Company did not impair any inventories as unsalable for the six months ended June 30, 2025 and 2024. Note 4 – Equipment, net As of June 30, 2025 and December 31, 2024, equipment consisted of the following: June 30, December 31, 2025 2024 Cost: Equipment $ 17,186 $ 9,366 Vehicles 494,152 120,155 511,338 129,521 Less: accumulated depreciation ( 45,827 ) ( 18,147 ) Equipment, net $ 465,511 $ 111,374 During the six months ended June 30, 2025, the Company purchased vehicles for $ 381,817 , of which $ 118,776 was purchased with a financing loan and transferred vehicles from inventory of $ 95,297 due to a change of use. For the three and six months ended June 30, 2025 and 2024, depreciation consists of: Three Months Ended Six months ended June 30, June 30, 2025 2024 2025 2024 Depreciation $ 15,124 $ 274 $ 27,680 $ 934 Financing loan The Company had a financing loan for the purchase of vehicle for the year ended December 31, 2024. The loan repayment is $1,898 per month for the first 36 months and then $2,590 per month for 30 months with an interest rate of $11.54% . For the six months ended June 30, 2025, the Company repaid $ 101,478 , of which $ 4,629 is for interest. In March 2025, the Company fully paid this financing loan. The Company had a financing loan for the purchase of vehicle in January 2025. A repayment of loan schedule was $1,977 per month for the 72 months with an interest rate of $10.84% . For the six months ended June 30, 2025, the Company repaid $ 104,732 , of which $ 955 is for interest. In March 2025, the Company fully paid this financing loan. 14 Table of contents Note 5 – Intangible Assets, net 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. MFB California currently holds 31 granted patents and 56 pending patent applications. The granted patents include MFB California’s main chemistry and applications. MFB California has 21 trademarks and various copyrights. Internally generated patents, trademarks and copyrights, are expensed as incurred. As of June 30, 2025 and December 31, 2024, finite lived intangible assets consisted of the following: June 30, December 31, 2025 2024 Acquired patents (19) $ 4,195,353 $ 4,195,353 Accumulated amortization ( 619,828 ) ( 495,862 ) Intangible assets, net $ 3,575,525 $ 3,699,491 Estimated future amortization expense for finite lived intangibles are as follows: 2025 remaining $ 123,966 2026 247,931 2027 247,931 2028 247,931 2029 247,931 Thereafter 2,459,835 $ 3,575,525 As of June 30, 2025, the weighted-average useful life is 14.63 years. During the three and six months ended June 30, 2025 and 2024, amortization expense is as follows: Three Months Ended Six months ended June 30, June 30, 2025 2024 2025 2024 Amortization $ 61,983 $ 62,491 $ 123,966 $ 125,666 Note 6 – Lease In March 2022, the Company entered into an operating lease for a warehouse, with a term of eighteen (18) months. In July 2023, the Company amended the contract and extended the lease term to July 2025. In May 2025, the Company terminated this lease and wrote off of right-of use asset and lease liability. In January 2025, the Company entered into an operating lease for our office and warehouse. The commencement date is April 1, 2025, and the termination date is March 31, 2030. The Company records a security deposit of $ 36,991 . 15 Table of contents Short-term lease The Company has some rental equipment with a month-to-month contract and leases commercial space for office, retail and warehousing, which is under one year lease agreement and expires June 30, 2025. For the three and six months ended June 30, 2025 and 2024, 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, 2025 2024 2025 2024 The components of lease expense were as follows: Operating lease cost $ 65,811 $ 21,498 $ 87,309 $ 42,996 Short-term lease cost 4,553 17,348 34,146 20,041 Variable lease cost 10,472 11,582 13,204 11,282 Total lease cost $ 80,836 $ 50,428 $ 134,659 $ 74,319 Supplemental cash flow information related to leases was as follows: Six months ended June 30, 2025 2024 Cash paid for operating cash flows from operating leases $ 106,164 $ 54,278 Right-of-use asset obtained in exchange for new operating lease liabilities $ 865,218 $ - Weighted-average remaining lease term - operating leases (year) 4.75 1.08 Weighted-average discount rate — operating leases 7.00 % 6.50 % The following table outlines maturities of our lease liabilities as of June 30, 2025: 2025 - remaining of six months $ 94,860 2026 195,412 2027 203,228 2028 211,357 2029 219,812 Thereafter 55,486 980,155 Less: Imputed interest ( 147,693 ) Operating lease liabilities $ 832,462 16 Table of contents Note 7 – Convertible Notes The components of convertible notes as of June 30, 2025 and December 31, 2024, were as follows: Effective Stated Principal Interest Interest June 30, December 31, Payment date Amount Maturity date Rate Rate 2025 2024 July 15, 2024 $ 795,000 July 15, 2025 390 % 10 % $ - $ 795,000 August 15, 2024 $ 326,000 August 15, 2025 398 % 10 % - 326,000 November 15, 2024 $ 100,000 November 15, 2025 511 % 10 % 100,000 100,000 December 15, 2024 $ 75,000 December 15, 2025 815 % 10 % 75,000 75,000 February 7, 2025 $ 1,500,000 February 7, 2026 416 % 10 % 1,500,000 - February 15, 2025 $ 575,000 February 15, 2026 511 % 10 % 575,000 - Total Convertible notes $ 2,250,000 $ 1,296,000 Less: Unamortized debt discount ( 1,972,407 ) ( 1,099,923 ) 277,593 196,077 Less: Current portion ( 277,593 ) ( 196,077 ) Long-term portion $ - $ - On July 15, 2024 and August 15, 2024, the Company entered into seventeen (17) 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) $0.40 or (ii) a 30% discount to the price of shares issued in connection with a qualified financing. In November and December, the Company entered into three (3) convertible notes ($ 175,000 ) and warrants ( 218,750 shares of common stock). The Company paid 8% financing fee of $ 89,680 , accrued fee of $ 14,000 and recorded financing fee as debt discount. In February 2025, the Company entered into eleven (11) convertible notes ($ 2,075,000 ) and warrants ( 2,593,750 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 paid 8% financing fee of $ 166,000 recorded financing fee as debt discount. During the six months ended June 30, 2025, the Company recognized the debt discount of $ 2,075,000 (Original Issued Discounts of discount of $ 166,000 , warrants of $882,000 and derivative liability of $ 1,027,000 ). In June 2025, 17 note holders converted convertible notes issued in July and August 2024 of $ 1,121,000 and accrued interest of $ 97,353 into 3,045,892 shares of common stock. As a result, the Company settled convertible notes, accrued interest, debt discount of $ 381,522 , and derivative liability of $ 2,127,000 , and recorded loss on settlement of debt of $ 2,640,611 . During the six months ended June 30, 2025 and 2024, the Company recognized interest expense of $ 136,931 and $ 135 and amortization of debt discount of $ 820,994 and $ 0 , respectively. During the three months ended June 30, 2025 and 2024, the Company recognized interest expense of $ 76,673 and $ 0 and amortization of debt discount of $ 475,166 and $ 0 , respectively. As of June 30, 2025 and December 31, 2024, the Company recorded accrued interest of $ 90,301 and $ 50,723 , respectively. The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815-40, Derivatives and Hedging - Contracts in Entity's Own Stock and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and “day 1” derivative loss for the excess amount of debt discount and amortized to interest expense over the term of the note. Note 8 – Derivative Liability Fair Value Assumptions Used in Accounting for Derivative Liabilities ASC 815 requires us to assess the fair market value of derivative liabilities at the end of each reporting period and recognize any change in the fair market value as other income or expense. The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Binomial Lattice model to calculate the fair value as of June 30, 2025 and December 31, 2024. 17 Table of contents For the six months ended June 30, 2025 and the year ended December 31, 2024, the estimated fair values of the liabilities measured on a recurring basis, used the following significant assumptions: June 30, December 31 2025 2024 Expected term 0.13 - 1 year 0.29 years Risk-free interest rate 4.02 - 4.30 % 4.15 % Stock price at valuation date $ 0.89 - 1.95 % 0.73 Expected average volatility 60.5 - 146.5 % 95.41 % Expected dividend yield - - The following table summarizes the changes in the derivative liabilities during the six months ended June 30, 2025: Fair Value Measurements Using Significant Observable Inputs (Level 3) Balance - December 31, 2024 $ 1,055,233 Addition of new derivatives recognized as debt discounts 1,027,000 Settled on issuance of common stock ( 2,127,000 ) Loss on change in fair value of the derivative 3,777,767 Balance - June 30, 2025 $ 3,733,000 Note 9 – Accounts payable and accrued liabilities As of June 30, 2025 and December 31, 2024, accounts payable and accrued liabilities consisted of the following: June 30, December 31, 2025 2024 Accounts payable $ 343,329 $ 48,195 Accrued interest 90,321 51,663 Credit card 939 4,540 Sales tax payable 61,987 11,737 Other liabilities 36,409 70,849 $ 532,985 $ 186,984 Note 10 – Related Party Transactions The related parties that had material transactions for the six months ended June 30, 2025 and 2024, consist of the following: Related Party Nature of Relationship to the Company A An Ohio limited liability company - a significant shareholder B Owner of A and our Chief Executive Officer of the Company from April 1, 2025 C Chief Executive Officer of the Company until March 31, 2025 and Vice President of Operations from April 1, 2025. D A California limited liability company owned by a related party E E Significant shareholder and our Chief Technology Officer F Director and Chief Executive Officer of GEVI Insurance Holdings Inc. G A Delaware limited liability company – Series A Preferred shareholder H Subsidiary - MFB Ohio board advisor, resigned during 2024 I Subsidiary - MFB Ohio board advisor, resigned during 2024 J Subsidiary - MFB Ohio board advisor K Subsidiary - MFB Ohio board advisor L Subsidiary - MFB Ohio board advisor 18 Table of contents For the six months ended June 30, 2025 and 2024, expenses to related parties and their nature consists of: Six Months Ended June 30, Related Party 2025 2024 Nature of transaction Financial Statement Line Item A $ 2,103,600 $ - 150,000 Series C preferred stock for consulting fee Professional fees - related party A $ 25,300 $ 2,180 Payment operating expenses on behalf of the Company Operating expenses A $ 25,000 $ 60,000 Repayment loan Due to related party D $ 21,600 $ 41,600 Cash paid for consulting fees Professional fees - related party D $ 4,000 $ 10,400 Cash paid for consulting and advisory fees Cost of revenue - related party E $ - $ 69,264 Cash paid for management fee Professional fees - related party E $ 91,290 $ 62,736 Cash paid for royalty and sales commissions Cost of revenue - related party F $ 420,720 $ - 30,000 Series C preferred stock for management compensation Management compensation F $ - $ 348,000 20,000 shares of Series C preferred stock for advisory fee Professional fees - related party G $ 2,511,855 $ - 69,007 Series C preferred stock for services Financing expense H $ - $ 85,980 100,000 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 $ - $ 429,900 500,000 shares of common stock issued for advisory fee Professional fees - related party K $ - $ 128,970 150,000 shares of common stock issued for advisory fee Professional fees - related party L $ - $ 214,950 250,000 shares of common stock issued for advisory fee Professional fees - related party For the three months ended June 30, 2025 and 2024, expenses to related parties and their nature consists of: Three Months Ended June 30, Related Party 2025 2024 Nature of transaction Financial Statement Line Item B $ 25,300 $ - Payment operating expenses on behalf of the Company Due to related party B $ 25,000 $ - Repayment loan Due to related party D $ 5,600 $ 24,800 Cash paid for consulting fees Professional fees - related party D $ - $ 6,200 Cash paid for consulting and advisory fees Cost of revenue - related party E $ - $ 40,410 Cash paid for management fee Professional fees - related party E $ - $ 19,590 Cash paid for royalty and sales commissions Cost of revenue - related party G $ 2,511,855 $ - 69,007 Series C preferred stock for services Financing expense 19 Table of contents Convertible notes – related parties The components of convertible notes as of June 30, 2025 and December 31, 2024, were as follows: Effective Stated Principal Interest Interest June 30, December 31, Payment date Amount Maturity date Rate Rate 2025 2024 December 1, 2024 $ 576,693 December 31, 2025 - 10 % $ 576,693 $ 576,693 February 2025 $ 2,000,000 February 28, 2026 320 % 10 % 2,000,000 - Total Convertible notes $ 2,576,693 $ 576,693 Less: Unamortized debt discount ( 1,644,691 ) - 932,002 576,693 Less: Current portion ( 932,002 ) ( 576,693 ) Long-term portion $ - $ - On December 31, 2024, the Company issued a convertible note of $ 576,693 , to related party A, in exchange for the amount due to related party. The convertible note has a term of twelve ( 12 ) months, at an interest rate of 10 % per annum. The outstanding principal amount of convertible note and unpaid interest is convertible at a fixed conversion price of $ 0.36 . The conversion price is a fixed price and the Company determined that conversion feature did not need to be bifurcated. The Company has accounting for the convertible debt at amortized cost under ASC 470-20. In February 2025, the Company entered into one (1) subscription agreement for convertible notes ($ 2,000,000 ) and warrants ( 2,500,000 shares of common stock) with a related party G. 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 a fixed conversion price of $ 0.40 . The obligations of the Company under the convertible note are secured by a pledge of the Company’s membership interests in MFB Ohio. In the event of a default, related party G could proceed against the equity of MFB Ohio pledged to collateralize the convertible note. MFB Ohio owns the Company’s intellectual property portfolio. The Company paid 8% original discount of $ 160,000 and financing fee of $ 63,918 and recorded these financing cost as debt discount. The Company has accounted for the convertible debt at amortized cost under ASC 470-20. During the six months ended June 30, 2025, the Company recognized the debt discount of $ 1,824,087 (Original Issued Discounts of discount and financing fee of $ 223,918 and warrants of $ 1,600,169 ). During the three and six months ended June 30, 2025, the Company recognized interest expenses of $ 64,241 and $ 95,447 and amortization of debt discount of $ 148,546 and $ 179,396 , respectively. As of June 30, 2025, the Company recorded accrued interest of $ 95,447 . 20 Table of contents Note 11 – Stockholders’ Equity Amended Articles of Incorporation Effective on March 17, 2025, the Company amended its Articles of Incorporation to increase the authorized shares to 1,030,000,000 shares, of which 1,000,000,000 shares are common stock and 30,000,0000 shares are preferred stock . Preferred Shares Shares Outstanding The Company is authorized to issue up to 30,000,000 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 17, 2025, 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 the holders of Common Stock, voting together with the holders of Common Stock as a single class. 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 of Directors. 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. As of June 30, 2025 and December 31, 2024, there were 10,000,000 shares of Series A Preferred stock issued and outstanding. Series C Convertible Preferred Stock The Company has designated 10,000,000 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. 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. 21 Table of contents During the six months ended June 30, 2025, the Company issued 344,007 shares of Series C Preferred Stock as follows: · 27,500 shares for purchase subscriptions of $ 260,000 , at prices of $ 4.00 or $ 6.00 per share · 236,507 shares for services, valued at $ 4,860,875 at market price on issuance dates. · 80,000 shares for compensation, valued at $ 1,520,720 at market price on issuance dates. In January and April 2025, the holders of the Convertible Series C Preferred Stock converted 776,831 and 532,638 shares of the Company’s Convertible Series C Preferred Stock into 15,536,620 and 10,652,760 shares of the Company’s common stock respectively. As of June 30, 2025 and December 31, 2024, there were 2,036,507 and 3,001,969 shares of the Company’s Series C Convertible Preferred Stock issued and outstanding, respectively. Common Stock The holders of shares of our Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. The holders of Common Stock are entitled to equal dividends and distributions, with respect to the Common Stock when, as, and if declared by the Board of Directors from funds legally available for such dividends. No holder of Common Stock has any preemptive right to subscribe for any of our stock nor are any shares subject to redemption. Upon our liquidation, dissolution, or winding up, and after payment of creditors and any amounts payable to senior securities, the assets will be divided pro rata on a share-for-share basis among the holders of the shares of Common Stock. No holder of shares of Common Stock of the Company shall be entitled as of right to purchase or subscribe for any part of any unissued stock of the Company or of any new or additional authorized stock of the Company of any class whatsoever, or any issue of securities of the Company convertible into stock, whether such stock or securities be issued for money or consideration other than money or by way of dividend, but any such unissued stock or such new or additional authorized stock or such securities convertible into stock may be issued and disposed of to such persons, firms, corporations and associations, and upon such terms as may be deemed advisable by the Board of Directors without offering to stockholders then of record or any class of stockholders any thereof upon the same terms or upon any terms. During the six months ended June 30, 2025, the Company issued 29,245,272 shares of common stock as follows: · 26,189,380 shares for conversion of Series C Preferred Stock. · 3,045,892 shares for conversion of debt of $ 5,604,442 . · 10,000 shares for services, valued at $ 19,000 . As of June 30, 2025 and December 31, 2024, there were 66,086,853 and 36,841,581 shares of the Company’s common stock issued and outstanding, respectively. Management stock compensation (PSU) On April 1, 2025, the Company entered into the consulting agreement with our CEO. The consulting fee is as s follows; · 70,000 shares of the Company’s Series C Convertible Preferred Stock when the Company's market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 120,000,000 ; · 70,000 shares of the Company’s Series C Convertible Preferred Stock when the Company's market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 150,000,000 ; · 70,000 shares of the Company’s Series C Convertible Preferred Stock when the Company's market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 200,000,000 ; and · 70,000 shares of the Company’s Series C Convertible Preferred Stock when the Company's market capitalization reaches and sustains a market capitalization for 30 consecutive days above $ 250,000,000 The Company used the Monte Carlo model to calculate the fair value of compensation and estimated the grant date fair value of $ 1,932,000 . The Company records compensation expense over the term of a derived service period unless the condition is satisfied at an earlier date. During the three and six months ended June 30, 2025, the Company recorded compensation expense of $ 767,669 . As of June 30, 2025, unrecognized compensation cost for unvested equity awards was $ 1,164,331 , which is expected to be recognized over a remaining weighted-average period of 0.40 years. 22 Table of contents For the six months ended June 30, 2025, the estimated fair values of the compensation measured used the following significant assumptions: April 1 2025 Derived service period 0.56 – 0.76 year Risk-free interest rate 3.97 % Stock price at valuation date $ 1.10 Expected average volatility 108.5 % First Capitalization Thresholder per share price $ 2.29 Second Capitalization Thresholder per share price $ 2.86 Third Capitalization Thresholder per share price $ 3.82 Fourth Capitalization Thresholder per share price $ 4.77 Warrants The Company issued a total of 5,093,750 warrants for a period of five years at an exercise price per share of $ 0.50 in connection with convertible notes for the six months ended June 30, 2025. The Company recorded the warrants of $ 710,845 to additional paid in capital. The Company issued 4,000,000 warrants for a period of five years at an exercise price per share of $ 0.01 for consulting services, for the six months ended June 30, 2025. Each 1,000,000 warrants are exercisable on September 7, 2025, March 7, 2026, September 7, 2026 and March 7, 2027. The Company recorded a financing expense of $ 6,167,334 to additional paid in capital. The Company issued a total of 671,375 warrants at an exercise price per share of $ 0.44 for financing expense of convertible notes issued in 2025 and 2024. Warrants are exercisable on September 7, 2025, and are for a period of five years following the initial exercise date. The Company recorded the warrants of $ 827,991 to additional paid in capital. The Company issued a total of 1,620,000 warrants for a period of five years at an exercise price per share of $ 0.50 in connection with convertible notes for the year ended December 31, 2024. The Company recorded the warrants of $ 1,654,178 to additional paid in capital. We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC 815. In addition to determining classification, we evaluate these instruments to determine if such instruments meet the definition of a derivative. The classification of all outstanding warrants, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period. The warrants, were deemed to be equity instruments, and were valued using a Black Scholes valuation model. The use of this valuation model requires the input of highly subjective assumptions. Any change to these inputs could produce significantly higher or lower fair value measurements. The Company utilized the following assumptions: June 30, 2025 Expected term 5.00 years Expected average volatility 49.0 % - 57.5 % Risk-free interest rate 3.99 % - 4.29 % Expected dividend yield - 23 Table of contents A summary of activity of the warrants during the six months ended June 30, 2025 as follows: Warrants Outstanding Weighted Average Weighted Average Remaining Shares Exercise Price Contractual life (in years) Outstanding, December 31, 2024 1,620,000 $ 0.50 4.61 Granted 9,765,125 0.30 5.04 Exercised - - - Forfeited/canceled - - - Outstanding, June 30, 2025 11,385,125 $ 0.32 4.62 Exercisable, June 30, 2025 6,713,750 $ 0.50 4.52 The intrinsic value of the warrants as of June 30, 2025 is $ 18,508,714 . Note 12 – Disaggregated revenue and Concentration During the three and six months ended June 30, 2025 and 2024, disaggregated revenue was as follows: Three Months Ended Six months ended June 30, June 30, 2025 2024 2025 2024 Products sale $ 446,785 $ 171,269 $ 1,051,267 $ 604,287 Product installation service 240,853 27,400 605,753 27,400 $ 687,638 $ 198,669 $ 1,657,020 $ 631,687 During the three and six months ended June 30, 2025 and 2024, customer and supplier concentration (more than 10%) were as follows: Revenue and accounts receivable Recurring customers do not represent a material percentage of our revenue and accounts receivable for the three and six months ended June 30, 2025 and 2024. Three months ended Six months ended June 30, June 30, 2025 2024 2025 2024 Number of customers (more than 10% revenue) 3 5 1 4 Total revenue of top 5 customers 78.4 % 94.9 % 40.7 % 82 % June 30, December 31, 2025 2024 Number of customers (more than 10% of accounts receivable) 3 3 Total % of accounts receivable balance (more than 10%) 62.3 % 86.3 % 24 Table of contents Purchases and accounts payable Percentage of Purchases Percentage of Purchases Percentage of For three months ended For six months ended Accounts payable for purchase June 30, June 30, June 30, December 31 2025 2024 2025 2024 2025 2024 Supplier A 25.1 % - 36.5 % - - - Supplier B 6.2 % - 5.0 % 7.0 % 89.5 % 74.5 % Supplier C - 72.6 % - 59.3 % - - Supplier D 2.9 % 4.6 % 2.8 % 15.8 % 10.5 % 25.5 % Supplier E - - 15.2 % - - - Supplier G 43.1 % - 19.8 % - - - Total (as a group) 77.3 % 77.2 % 79.3 % 82.1 % 100.0 % 100.0 % 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 has evaluated subsequent events through August 14, 2025, which is the date these interim unaudited consolidated financial statements were available to be issued. The Company issued 464,128 shares of common stock issued for conversion of debt and accrued interest of $ 185,651 . The Company and Univest Securities, LLC have agreed that, concurrently with the closing of the Company’s offering on Form S-1, warrants (the “Univest Warrants”) to purchase up to 4,671,375 shares of common stock, would be terminated in full and rendered null and void, and all past, current, or future obligations under the Univest Warrants shall be extinguished, and there shall be no surviving right, title or interest in or to the Univest Warrants or any shares purchasable thereunder. The Univest Warrants were originally issued on March 7, 2025, in connection with financial advisory services and private placement transactions conducted by Univest Securities, LLC. 25 Table of Contents