What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-12 · 343 added, 244 removed, 55 unchanged (91% of the section changed)

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

Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements.

The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions.

This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance.

We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.

In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results.

We caution that the factors described herein, and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements.

Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

New factors emerge from time to time, and it is not possible for us to predict all of such factors.

Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Our unaudited financial statements are stated in United States Dollars (USD) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

This Quarterly Report

on Form 10-Q (the “Quarterly Report”) contains forward-looking statements.

The Securities and Exchange Commission encourages

companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make

informed investment decisions.

This Quarterly Report and other written and oral statements that we make from time to time contain such

forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events

or performance.

We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,”

“expect,” “project,” “intend,” “plan,” “believe,” “will” and similar

expressions in connection with any discussion of future operating or financial performance.

In particular, these include statements relating

to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such

as legal proceedings, and financial results.

We caution that the factors

described herein, and other factors could cause our actual results of operations and financial condition to differ materially from those

expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements.

Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update

any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence

of anticipated or unanticipated events or circumstances.

New factors emerge from time to time, and it is not possible for us to predict

all of such factors.

Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any

factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Our unaudited financial

statements are stated in United States Dollars (USD) and are prepared in accordance with accounting principles generally accepted in the

United States of America (“GAAP”).

The following discussion should be read in conjunction with our financial statements and

the related notes that appear elsewhere in this Quarterly Report.

The following discussion contains forward-looking statements that reflect

our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to “common shares” refer to the common shares in our capital stock.

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

General Overview

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 unaudited 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

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.

On July 8, 2025, the Company filed Articles of Amendment of the Company’s Articles of Incorporation (the “Amendment”) with the Secretary of State of the State of Wyoming for a 1-for-6 reverse stock split (the “Reverse Stock Split”) of the issued and outstanding shares of the Company’s Series A Preferred Stock (the “Series A Preferred”) and the Company’s Common Stock (the “Common Stock” ).

The Board of Directors of the Company believes that the Reverse Stock Split is an effective means by which to increase the minimum bid price of the Company’s Common Stock proportionately by reducing the number of outstanding shares of Common Stock and put the Company in a position to uplist to the New York Stock Exchange American.

In connection with filing the Amendment, the Company filed an Issuer Company-Related Action Notification with the Financial Industry Regulatory Authority (“FINRA”).

FINRA approved the Reverse Stock Split on August 27, 2025, to be effective on August 28, 2025 (the “Effective Date”).

On the Effective Date, each six (6) shares of the Company’s Series A Preferred and each six (6) shares of the Company’s Common Stock issued immediately prior to the Effective Date was reclassified and combined into one (1) share of Series A Preferred and one (1) share of Common Stock, respectively.

No fractional shares were issued and, in lieu thereof, any holder of less than one (1) share of Series a Preferred or one (1) share of Common Stock was entitled to receive one whole share of the Series A Preferred or the Common Stock of the Company, respectively.

The Reverse Stock Split will affect all shares of the Company’s Series A Preferred and Common Stock outstanding immediately prior to the Effective Date of the Reverse Stock Split.

In addition, the Reverse Stock Split caused a reduction in the number of shares of Common Stock issuable upon the conversion of the Company’s Series C Convertible Preferred Stock outstanding immediately prior to the effectiveness of the Reverse Stock Split.

that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this Quarterly

In this Quarterly Report,

unless otherwise specified, all dollar amounts are expressed in United States Dollars.

As used in this Quarterly

Report, the terms “we”, “us”, “our” and “our company” mean CitroTech Inc.

We are a specialty, non-toxic chemical company

that formed a 50/50 global joint venture with Hexion on April 17, 2026 for the production and sale of CitroTech into the fire retardant

treated wood market.

In addition, the Company manufactures environmentally sustainable fire inhibitors and fire retardants to help prevent

wildland fires and protect assets, as well as putting the fire inhibitors into home systems for their deployment.

Management is highly

experienced at building and running companies, as well as commercializing and executing on strategic partnerships for the sale of products

and services.

Since MFB Ohio acquired the MFB portfolio of intellectual

property on April 13, 2022, our management team has continued to develop and refine our product formulations.

The Company has received

significant third-party recognition for these efforts, including twice receiving the EPA Safer Choice designation, being the first and

only fire inhibitor recognized by the EPA as safe for the environment, and receiving UL GREENGUARD Gold certification, which reflects

minimal impact on indoor air quality from toxic smoke over extended exposure.

Our products have been adopted by fire departments throughout

the State of California.

We are expanding our patent portfolio and

technology platform into additional markets that can benefit from environmentally safe alternatives to legacy fire retardant and fire

retardant-treated wood products.

CitroTech has developed wood coating products utilizing this technology and is in the initial phases

of commercialization.

The Company is also deploying proactive wildfire

defense systems on residential and commercial properties under the CitroSafe Systems brand.

CitroSafe Systems are self-contained sprinkler

installations that utilize our patented CitroTech product and are deployed in advance of wildfires to reduce structural risk.

This offering

addresses a significant and growing insurance market disruption across eleven western states, where carriers have curtailed or declined

to write wildfire coverage on new construction and existing policies in the Wildland Urban Interface, the transitional zone between undeveloped

land and built environments that is at elevated risk of catastrophic wildfire loss.

The Company is working with a large insurance broker

to offer insurance coverage to customers who install a CitroSafe proactive wildfire system, with policies underwritten by established

insurance carriers.

This program is currently in the proof-of-concept phase.

Our management team consists

of four individuals:

Bolsen, Chief Executive Officer;

Andrew Hotsko, Chief Operating Officer;

Nanuk Warman, Secretary and Chief

Financial Officer;

and Anthony Newton, General Counsel.

Known Trends and Uncertainties

Growth in Fire Safety

We believe that fire safety benefits from several

growth drivers, including increasing fire severity, as measured by higher acres burned, longer fire seasons and a growing urban component

moving into the Wildland Urban Interface, resulting in a need for higher quantity of specialty chemical fire inhibitors, thereby increasing

We believe these trends are prevalent in North America, as well as globally, and we expect these trends to continue driving

growth in demand for fire retardants and fire retardant treated lumber products.

We are working to grow our fire prevention and

protection business, which is primarily focused on expanding use of ground-applications for long-term fire retardants.

This growth includes

use of ground assets in response to active fires (protection), as well as proactive treatments around critical infrastructure and known

high-risk areas (prevention).

Fire prevention products can be used to help prevent fire ignitions and protect property from potential

fire danger by providing proactive retardant treatment in high-risk areas such as along roadsides, under power lines, along railroad rights-of-way,

and around residential neighborhoods and commercial infrastructure.

Treating these areas ahead of the fire season can help to prevent

ignitions from equipment failures or sparks until a significant rainfall occurs.

Although there is no certainty in wildfire defense, when

our CitroSafe system is installed, we fill it with our CitroTech product.

Thereafter, we will conduct an annual inspection of the system

to help ensure it is ready to help defend against a wildfire.

While there is no specific useful life for our product, if the system has

not been deployed since the third anniversary of the initial installation, or three years following an annual inspection, in an abundance

of caution we will remove and replace the CitroTech.

In addition, we suggest spraying CitroTech in areas surrounding the property that

pose the greatest risk to help reduce the risk posed by dry vegetation, decks, garden bark, and fences.

We have invested and intend to continue investing

in the expansion of our fire retardant and lumber treatment business through product development and business development to grow our

customer base.

Weather Conditions and Climate Trends

Our business is highly dependent on the needs

of commercial entities, residential homeowners and fire departments to prevent fires and protect assets, as well as the use and expansion

of Class A Fire Retardant Treated lumber and wood products.

As such, our financial condition and results of operations are significantly

impacted by weather as well as environmental and other factors affecting climate change, which impact the number and severity of fires

in any given year.

Typically, sales of our product are higher during the summer months in the United States due to weather patterns that

are generally correlated to a higher prevalence of wildfires.

We believe orders will generally peak during the summer months, but with

expanded fire seasons in the United States, ignitions may start in the late Spring and continue through late Fall of calendar year 2026.

Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the three and nine months ended September 30, 2025 and 2024, which are included herein.

The Company is in the early stages of developing and commercializing its product lines.

Historically, the Company has focused on securing patents and obtaining various accreditations.

To date, the Company’s commercialization efforts have relied on a limited number of customers primarily for testing and initial adoption of its CitroTech products and delivery systems.

The Company currently does not have an established retail product line or a significant recurring customer base.

As a result, period-over-period comparisons of operating results may not be indicative of future performance.

The following summary of our results of operations should be read in conjunction with our audited financial statements for the three and nine months ended September 30, 2025 and 2024, which are included herein.

Our results of operations for the three months ended September 30, 2025 and 2024 are summarized below:

We are developing and commercializing our product

We have been focused historically on obtaining patents and various accreditations.

To date, we do not have a large customer

base, having relied heavily on a few customers, for the commercialization and testing of our CitroTech product and delivery system.

currently do not have an established retail product line nor recurring significant customer base.

The following summary of our results of operations

should be read in conjunction with our unaudited financial statements for the three months ended March 31, 2026 and 2025, which are included

Our results of operations for the three

months ended March 31, 2026 and 2025 are summarized below:

Three months ended

September 30,

Operating expenses

Other expense

$ (7,929,208 )

$ (7,273,970 )

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

During the three months ended September 30, 2025, the revenue increased $181,170 from the three months ended September 30, 2024, largely due to the adoption of our technology by the marketplace, including the sale of homebased wildfire defense systems, commercial and fire department chemical sales, and directly spraying residential properties due to the wildfire concerns.

Other (income) expenses

Our revenue is generated through our subsidiary

Mighty Fire Breaker LLC ("MFB Ohio"), which acquired our fire suppression intellectual property portfolio in April 2022.

revenue is highly seasonal and event-driven, with demand concentrated in the Western United States during the traditional May to October

fire season, and is materially influenced by wildfire activity in any given period.

During the three months ended March 31, 2026, revenue

decreased $624,000, or 64%, compared to the three months ended March 31, 2025.

The rare situation of a devastating fire in both the Pacific

Palisades and Eaton Canyon fires in the first quarter of 2025 added to system revenue in the first quarter of 2025 that was not seen in

the first quarter of 2026.

Our revenues consisted of the following:

Three months ended

September 30,

Products sale

Product installation service

Product installation services commenced in the second quarter of 2024.

Our revenues from significant customers for the three months ended September 30, 2025 and 2024, are as follows:

Our revenues from significant customers for the

three months ended March 31, 2026 and 2025, are as follows:

Three months ended

September 30,

Number of customers (more than 10% revenue)

Total revenue of top 5 customers

We do not have major sales from recurring customers for the three months ended September 30, 2025 and 2024.

Our revenue is project- and event-driven rather

than subscription- or contract-based, and we do not currently have a meaningful base of recurring customers.

The increase in our top-five

customer concentration to 67.8% in the three months ended March 31, 2026, from 48.1% in the comparable 2025 period, reflects both the

absence of the Pacific Palisades and Eaton Canyon fire deployments that drove revenue in the prior period and the early-stage nature of

our commercial customer base.

We expect customer concentration to remain elevated until our channel partner program and recurring utility

and structural-protection customer relationships further mature.

Operating Expenses

Three months ended

September 30,

Cost of revenue

Amortization and depreciation

General and administration

Advertising and marketing

Payroll and management compensation

Professional fees

Total operating expenses

The increase in operating expenses was primarily attributed to increases in cost of revenue, professional fees and payroll and management compensation.

Cost of revenue

Three Months Ended

September 30,

Cost of inventory

Freight and shipping

Consulting and advisory-related party

Royalty and sales commission-related party

Total cost of revenue

During the three months ended September 30, 2025, the cost of revenue increased over the three months ended September 30, 2024, primarily due to an increase in cost of inventory and rent expense.

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

Cost of inventory increased during the three months ended September 30, 2025, primarily due to an increase in labor, product sales and supplies from increased sales.

Freight and shipping relate to costs for shipping products to customers.

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

The Company recognized an allocated portion of consulting and direct labor costs associated with our revenue as royalty and sales cost of revenue during 2024.

In March 2025, the Company entered into a new management contract and is no longer paying for consulting, advisory and royalty fees.

Rent expenses are warehouse rent expenses.

The increase in rent expense is primarily because the Company leased a larger commercial space for office, retail and warehousing from April 2025.

Amortization and depreciation

Amortization and depreciation expenses are an amortization of patents and a depreciation of vehicle, and furniture and equipment.

General and administrative

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

For the three months ended September 30, 2025, the Company incurred increased expenditures on our website and IT development and travel as well as general office and insurance expenses from expansion of operations.

Advertising and marketing

The increase in advertising and marketing during the three months ended September 30, 2025, over the three months ended September 30, 2024, is primarily due to support revenue growth.

Professional fees

The professional fees during the three months ended September 30, 2025, primarily included various professional fee for accounting and audit related to SEC filing, legal on patents and other consulting services in 2025.

The professional fees during the three months ended September 30, 2024, primarily included accounting and audit related to SEC filing, legal on patents and other consulting services in 2024.

The increase in professional fees during the three months ended September 30, 2025, over the three months ended September 30, 2024, is primarily due to an increase in consulting fees.

In addition, on August 19, 2025, the Company withdrew the registration statement, as a result, the Company expensed deferred offering costs.

Payroll and management compensation

During the three months ended September 30, 2025, management compensation primality included stock-based management compensation of $1.8 million to our management and cash payments of $379,000 to our management, and payroll to our employees of $240,000.

During the three months ended September 30, 2024, there was management compensation of $25,000.

Other Expenses

For the three months ended September 30, 2025 and 2024, the other income and expenses consisted of $1.3 million and $94,000 interest expenses related to convertible notes payable issued in 2025 and 2024, respectively, change in fair value of derivative liability related to convertible notes payable issued in 2025 and 2024 of $1.7 million gain and $0, respectively, and loss on settlement of debt from conversion of debt of $4.1 million and $0, respectively.

Settlement of debt in 2025 is conversion of convertible notes issued in 2025.

The net loss for the three months ended September 30, 2025, increased by approximately $7.3 million as compared to the three months ended September 30, 2024 primarily due to the increase in operating expenses and other expense offset by the increase in revenue.

Our results of operations for the nine months ended September 30, 2025 and 2024 are summarized below:

Nine months ended

September 30,

Operating expenses

Other expenses

$ (30,736,631 )

$ (5,082,352 )

$ (25,654,279 )

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

During the nine months ended September 30, 2025, the revenue increased $1.2 million from the nine months ended September 30, 2024, largely due to the adoption of our technology by the marketplace, including the sale of homebased wildfire defense systems, commercial and fire department chemical sales, and directly spraying residential properties due to the wildfire concerns.

Our revenues consisted of the following:

Nine months ended

September 30,

Products sale

Product installation service

Product installation services commenced in the second quarter of 2024.

Our revenues from significant customers for the nine months ended September 30, 2025 and 2024, are as follows:

Nine months ended

September 30,

Number of customers (more than 10% revenue)

Total revenue of top 5 customers

We do not have major sales from recurring customers for the nine months ended September 30, 2025 and 2024.

Operating Expenses

Nine months ended

September 30,

Cost of revenue

Amortization and depreciation

General and administration

Advertising and marketing

Payroll and management compensation

Professional fees

Research and development expense

Total operating expenses

The increase in operating expenses was primarily attributed to increases in cost of revenue and payroll and management compensation.

The increase in operating expenses was primarily

attributed to increases in management compensation offset by a decrease in cost of revenue and professional fees.

Cost of revenue

Nine months ended

September 30,

Three months ended

Cost of inventory

3 unchanged sentences

Total cost of revenue

During the nine months ended September 30, 2025, the cost of revenue increased over the nine months ended September 30, 2024, primarily due to an increase in cost of inventory, rent and royalty and sales commissions.

Cost of inventory increased during the nine months ended September 30, 2025, primarily due to an increase in product sales and supplies from increased sales.

Freight and shipping relate to costs for shipping products to customers.

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

Royalty and sales commissions increased in the nine months ended September 30, 2025, from more revenue.

The Company recognized an allocated portion of consulting and direct labor costs associated with our revenue as royalty and sales cost of revenue in 2024 and during the first quarter of 2025.

In March 2025, the Company entered into a new contract and there is no longer consulting and advisory and royalty.

Rent expenses are warehouse rent expenses.

The increase in rent expense is primarily because the Company leased a larger commercial space for office, retail and warehousing from April 2025 and the cancelation of one of our warehouse leases in May 2025.

During the three months ended March 31, 2026,

the cost of revenue decreased over the three months ended March 31, 2025, primarily due to a decrease in cost of inventory.

Cost of inventory consists of product costs, direct

labor, related supplies, and direct testing of our CitroTech product and the various components required for installation of CitroSafe™

Cost of inventory decreased during the three months ended March 31, 2026, compared to the comparable 2025 period, primarily due

to lower product sales volume.

Freight and shipping relate to costs for shipping

products to customers.

Consulting and advisory services are to a related

party company for services related to product installations.

Royalty and sales commissions to a related party

decreased to zero in the three months ended March 31, 2026, from $56,290 in the comparable 2025 period.

During the first quarter of 2025,

we recognized an allocated portion of consulting and direct labor costs associated with our revenue as royalty and sales cost of revenue.

In March 2025, we entered into a new contract under which the consulting and advisory royalty arrangement was terminated.

Rent expenses are warehouse and facility rent

The increase in rent expense is primarily attributable to our relocation to a larger commercial facility for operations, warehousing,

and customer-facing activities beginning in April 2025, along with the cancellation of a prior warehouse lease in May 2025.

Amortization and depreciation

Amortization and depreciation expenses are an amortization of patents and a depreciation of vehicle, and furniture and equipment.

Amortization and depreciation expenses are from

the amortization of patents and technology and the depreciation of vehicle, and furniture and equipment.

General and administrative

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

For the nine months ended September 30, 2025, the Company incurred increased expenditures on our website and IT development and travel as well as general office and insurance expenses from expansion of operations.

General and administrative expenses are office,

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

For the three months ended March 31, 2026, we incurred increased

expenditures on consulting and payroll fees, our website and IT development and travel as well as general office and insurance expenses

from expansion of operations.

Advertising and marketing

The increase in advertising and marketing during the nine months ended September 30, 2025, over the nine months ended September 30, 2024, is primarily due to support revenue growth.

The increase in advertising and marketing during

the three months ended March 31, 2026, over the three months ended March 31, 2025, is primarily due to supporting revenue growth in addition

to investor relations activities after being uplisted to the NYSE American.

This includes rebranding efforts around the official company

name change to CitroTech Inc.

from General Enterprise Ventures Inc as well as the product labels moving from Mighty Fire Breaker to CitroTech

and the conversion of relevant website and marketing materials.

Professional fees

The professional fees during the nine months ended September 30, 2025, primarily included stock-based compensation of $2.4 million to a related party consultant (TC Special Investments, LLC (“TCSI”)) and various professional fees for accounting and audit related to SEC filings, legal on patents and other consulting services in 2025.

The professional fees during the nine months ended September 30, 2024, primarily included stock-based management compensation of $1.4 million to advisors to our subsidiary MFB and stock-based compensation of $1 million to various consultants for IT service for software development, legal on patents and other consulting services in 2024.

TCSI’s consulting services to the Company include sales and business development, customer relationship management, strategy optimization, investor relations, underwriter interface, coordinating outside counsel and other business aspects at the request of the Board of Directors.

In addition to TCSI, stock-based compensation was remitted to certain individuals with fire retardant and flame suppression industry experience, who provided guidance and insight to the Company’s management and Board of Directors with respect to the fire retardant and flame suppression industry, business development connections, and oversight during the testing and recognition processes.

The professional fees during the three months

ended March 31, 2026, primarily included stock-based compensation of $160,000 to advisors to our subsidiary MFB, and various professional

fees for accounting and audit related to SEC filings, legal on patents and other consulting services in 2026.

The professional fees during

the three months ended March 31, 2025, primarily included stock-based management compensation of $2.3 million, of which $2.1 million was

to a related party consultant (TC Special Investments, LLC (“TCSI”)) and various professional fees for accounting and audit

related to SEC filings, legal on patents and other consulting services in 2025.

TCSI’s consulting services to us include

sales and business development, customer relationship management, strategy optimization, investor relations, underwriter interface, coordinating

outside counsel and other business aspects at the request of the Board of Directors.

In addition to TCSI, stock-based compensation was

remitted to certain individuals with fire retardant and industry experience, who provided guidance and insight to our management and Board

of Directors with respect to the fire retardant and fire inhibitor industry, business development connections, and oversight during the

testing and recognition processes.

Payroll and management compensation

During the nine months ended September 30, 2025, management compensation primality included stock-based management compensation of $4.1 million to our management and cash payments of $845,000 to our management, and payroll to our employees of $466,000.

During the nine months ended September 30, 2024, management compensation primality included cash payment of $50,000 to our former CEO.

During the three months ended March 31, 2026,

management compensation increased to $3.1 million from $673,000 in the prior period.

This increase was primarily attributable to the buildout

of a full executive management team during 2025, including the appointment of a Chief Operating Officer, Chief Financial Officer, Chief

Technology Officer, and General Counsel.

Compensation during 2026, primarily included stock-based management compensation of $2.1 million,

and payroll to management and employees of approximately $1 million.

The significant increase in stock-based compensation reflects the

transition from a single-executive structure in the first quarter of 2025, when management compensation consisted of a stock-based management

compensation of $420,000 and a $142,000 cash payment to our former CEO, to a fully staffed leadership team necessary to support our growth

and commercialization objectives.

Research and development costs

We continue to invest heavily in the testing and certifications of CitroTech treated products as well as in advance of submitting formulas

for approval to apply product onto federal lands.

We expect to continue growing R&D spend over historical spend as we add additional

product lines and invest in the future of the company.

This includes funded research programs with Texas A&M on new products that

were not underway in 2025.

Other Expenses

For the nine months ended September 30, 2025 and 2024, the other expenses consisted of interest expense related to convertible notes payable issued in 2025 and 2024 of $2.6 million and interest expense related to convertible notes issued in 2022 and 2023 and promissory notes issued in 2024 of $94,000, respectively, change in fair value of derivative liability related to convertible notes payable issued in 2025 and 2024 of $2.0 million and $0, respectively, financing expense of $8.7 million and $0, respectively, and loss on settlement of debt of $6.8 million and $882,000, respectively.

Settlement of debt in 2025 is conversion of convertible notes issued in 2024 and 2025 and settlement of debt in 2024 is settlement of notes payable and convertible note issued in 2022.

Financing expense is 4 million warrants granted to a financial advisor and 69,007 shares of Series C Convertible Preferred stock issued to a Series A Preferred Shareholder in 2025.

The 4 million warrants were subsequently cancelled by the financial advisor in August, 2025.

The net loss for the nine months ended September 30, 2025, increased by approximately $25.7 million as compared to the nine months ended September 30, 2024 primarily due to the increase in operating expenses and other expense offset by the increase in revenue.

For the three months ended March 31, 2026

and 2025, the other expenses consisted of interest expense related to convertible notes payable issued in 2025 of $942,000 and convertible

notes payable issued in 2025 and 2024 of $473,000, respectively, change in fair value of derivative liability related to convertible notes

payable issued in 2025 and 2024 of $0 and $805,000, respectively, financing expense of $0 and $6.2 million, respectively, and loss on

settlement of debt of $847,000 and $0, respectively.

Settlement of debt in 2026 is the conversion of convertible notes issued in

Financing expense is from 4 million warrants granted to a financial advisor.

The net loss for the three months ended March

31, 2026 was approximately $6.2 million, a decrease of approximately $4.7 million as compared to the three months ended March 31, 2025,

primarily due to a significant reduction in other expenses, partially offset by lower revenue and higher operating expenses.

Liquidity and Capital Resources

Sources of Liquidity

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

Our net loss was $30.7 million and $5.1 million for the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2025, we completed a debt offering and an equity offering which generated net proceeds of approximately $3.7 million and $5.7 million respectively.

Since our inception, we have incurred significant

operating losses and negative cash flows from our operations.

Our net loss was $6.2 million and $10.9 million for the three months

ended March 31, 2026 and 2025, respectively.

During fiscal year 2025, we completed a debt offering in February and an equity offering

in September and October which generated net proceeds of approximately $3.7 million and $8.1 million, respectively.

Working capital

September 30,

Current assets

$ (1,789,764 )

Current liabilities

Working capital (deficiency)

As of September 30, 2025 and December 31, 2024, the current assets consisted of cash of $6.2 million and $775,000, respectively, inventory of $467,000 and $325,000, respectively accounts receivable of $508,000 and $317,000, respectively, prepaid expenses and other current assets of $87,000 and $74,000, respectively, and deferred offering costs of $0 and $126,000, respectively.

As of September 30, 2025 and December 31, 2024, the current liabilities consisted of accounts payable and accrued liabilities of $705,000 and $187,000, respectively, deferred revenue of $6,000 and $0, respectively, convertible notes net of discount of $63,0000 and $196,000, respectively, convertible note – related parties of $1.8 million and $577,000, respectively, due to related parties of $161,000 and $0, respectively, financing loan of $48,000 and $97,000, respectively, derivative liability of $0 and $1.1 million, respectively, and current portion of operating lease liability of $143,000 and $50,000, respectively.

The increase in working capital in 2025 was primarily due to an increase in cash from equity and debt offering offset by an increase in convertible notes.

For the nine months ended September 30, 2025 and 2024

Nine months ended

September 30,

Cash used in operating activities

$ (2,472,214 )

As of March 31, 2026 and December 31, 2025, the

current assets consisted of cash of $4.3 million and $6.3 million, respectively, inventory of $696,000 and $621,000, respectively, accounts

receivable of $130,000 and $209,000, respectively, and prepaid expenses and other current assets of $512,000 and $317,000, respectively.

As of March 31, 2026 and December 31, 2025, the

current liabilities consisted of accounts payable and accrued liabilities of $414,000 and $316,000, respectively, due to related parties

of $19,000 and $168,000, respectively, convertible notes net of discount of $0 and $219,000, respectively, convertible note – related

party of $2.2 million and $1.3 million, respectively, current portion of financing loan of $31,000 and $30,000, respectively, and current

portion of operating lease liability of $152,000 and $148,000, respectively.

The decrease in working capital in 2026 was primarily

due to an increase in convertible note- related party and a decrease in cash for operating activities.

For the three months ended March 31, 2026 and

Three months ended

Cash used in operating activities

$ (2,059,341 )

2 unchanged sentences

Cash provided by financing activities

$ (3,617,735 )

Net Change in cash

$ (1,981,694 )

$ (4,946,897 )

Operating Activities

We have not generated positive cash flows from operating activities.

For the nine months ended September 30, 2025, net cash flows used in operating activities consisted of a net loss of $30.7 million, reduced by stock-based compensation of $6.8 million, financing expense of $8.7 million, non-cash lease expenses of $123,000, amortization and depreciation of $242,000, amortization of debt discount of $2.2 million, loss on settlement of debt of $6.8 million and changes in derivative liability of $2.0 million, and increased by net changes in operating assets and liabilities of $328,000.

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

We have not generated positive cash flows from

operating activities.

For the three months ended March 31, 2026, net

cash flows used in operating activities consisted of a net loss of $6.2 million, reduced by stock-based compensation of $2.3 million,

non-cash lease expenses of $38,000, amortization and depreciation of $126,000, amortization of debt discount of $882,000 and loss on settlement

of debt of $847,000, and increased by net changes in operating assets and liabilities of $19,000.

For the three months ended March 31, 2025, net

cash flows used in operating activities consisted of a net loss of $10.9 million, reduced by stock-based compensation of $2.8 million,

financing expense of $6.2 million, non-cash lease expenses of $21,000, amortization and depreciation of $75,000, amortization of debt

discount of $377,000, and changes in derivative liability of $805,000, and increased by net changes in operating assets and liabilities

Investing Activities

For the nine months ended September 30, 2025, the cash flows used in investing activities were $222,000, which was related to the purchase of property and equipment.

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

For the three months ended March 31, 2026 and

2025, the cash flows used in investing activities consisted of the purchase of equipment of $11,000 and $27,000, respectively.

Financing Activities

For the nine months ended September 30, 2025, net cash provided by financing activities consisted of $5.7 million from the issuance of Series C Convertible Preferred Stock, $3.7 million from the issuance of convertible promissory notes and associated warrants, $71,000 deferred offering cost payment, repayment of a financing loan of $216,000 and repayments to related party of $25,000.

The basic terms of the convertible promissory notes issued in 2025 are:

(i) a 12-month term;

(ii) interest of 10% per annum, compounded annually;

and (iii) voluntary conversion during the term at a conversion price of $2.40 for each dollar of principal amount.

The associated warrants are exercisable for a period of 5 years from the issuance date, for an aggregate of up to 848,963 shares at an exercise price of $3.00.

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

For the three months ended March 31, 2026, net

cash provided by financing activities consisted of $96,000 capital contribution from a related party and repayments of financing loans of

For the three months ended March 31, 2025, net

cash provided by financing activities consisted of $260,000 proceeds from the issuance of Series C Convertible Preferred Stock, $3.7 million

from the issuance of convertible promissory notes and associated warrants, $23,000 deferred offering cost payment, and repayment of a

financing loan of $216,000.

Our revenue is generated through our subsidiary

Mighty Fire Breaker LLC ("MFB Ohio"), which acquired our fire suppression intellectual property portfolio in April 2022.

revenue is highly seasonal and event-driven, with demand concentrated in the Western United States during the traditional May to October

fire season, and is materially influenced by wildfire activity in any given period.

During the three months ended March 31, 2026, revenue

decreased $624,000, or 64%, compared to the three months ended March 31, 2025.

The rare situation of a devastating fire in both the Pacific

Palisades and Eaton Canyon fires in the first quarter of 2025 added to system revenue in the first quarter of 2025 that was not seen in

the first quarter of 2026.

Contractual Obligations

Convertible notes

In first quarter 2025, the Company entered into eleven (11) subscription agreements for convertible notes ($2,075,000) and warrants (432,296 shares of common stock).

The material terms of this convertible note indebtedness are, (i) a 12-month maturity;

(ii) 10% interest per annum, capitalized on the maturity date;

(iii) conversion rights in the amount of the principal, either (x) divided by 2.40 or (y) a 30% discount to the price sale of its Common Stock pursuant to a registration statement filed with the SEC and listing of the Common Stock on national securities exchange;

and (iv) warrant coverage for five years at the rate of 1.25 shares of Common Stock for each dollar of principal, at an exercise price of $3.00 per share.

Convertible notes – related party

On December 31, 2024, the Company issued convertible note of $577,000 to a related party, 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 $2.16.

In February 2025, the Company entered into one (1) subscription agreement for convertible notes ($2,000,000) and warrants (416,667 shares of common stock) with a related party.

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 $3.00 per share.

The outstanding principal amount of convertible notes and unpaid interest is convertible at a fixed conversion price of $2.40.

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, the related party could proceed against the equity of MFB Ohio pledged to collateralize the convertible note.

MFB Ohio owns the Company’s intellectual property portfolio.

In February 2025, we entered into one (1) subscription

agreement for convertible notes ($2,000,000) and warrants (416,667 shares of common stock) with a related party.

The convertible

notes have a term of twelve (12) months, at an interest rate of 10% per annum and warrants with a term of five (5) years, at exercise

price of $3.00 per share.

The outstanding principal amount of convertible notes and unpaid interest is convertible at a fixed conversion

price of $2.40.

Our obligations under the convertible note are secured by a pledge of the Company’s membership interests in MFB

In the event of a default, the related party could proceed against the equity of MFB Ohio pledged to collateralize the convertible

MFB Ohio owns our intellectual property portfolio.

On February 27, 2026, related party F extended their convertible promissory note

until April 28, 2026.

Pursuant to the extension, they charged a 1% amendment fee and agreed to release their security pledge against certain

intangible assets of the Company.

In April 2026, the note and accrued interest were fully converted into the Company’s Common Stock.

Financing loans

We had a financing loan for the purchase of a

vehicle in September 2025.

The loan repayment is $2,021 per month for 60 months, beginning October 2025, with an interest rate of

We had a financing loan for the purchase of a

second vehicle in September 2025.

The loan repayment is $2,083 per month for 48 months, beginning October 2025, with an interest

rate of 11.90%.

Lease Agreements

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

The following table outlines maturities of our lease liabilities as of September 30, 2025:

We have one lease classified as an operating lease

for office and warehouse purposes.

The following table outlines maturities of our lease liabilities as of March 31, 2026:

Year ending December 31,

2025 - remaining three months

2026 (remaining nine months)

Imputed interest

Operating lease liabilities

Financing loans

The Company had a financing loan for the purchase of vehicle in September 2025.

A repayment of loan schedule is $2,021 per month for 60 months, beginning October 2025, with an interest rate of 11.33%.

The Company had a financing loan for the purchase of vehicle in September 2025.

A repayment of loan schedule is $2,083 per month for 48 months, beginning October 2025, with an interest rate of 11.90%.

The Company has incurred losses since inception and incurred a net loss of $30.7 million during the nine months ended September 30, 2025.

However, in September 2025, the Company completed an equity offering which generated net proceeds of $5.4 million.

Additionally, in October 2025, the Company completed an equity offering which generated net proceeds of $2.7 million.

The Company’s existing cash resources are expected to provide sufficient funds to carry out the Company’s planned operations through fiscal year 2026.

To continue operations beyond such time frame, the Company may be required to raise additional funds by completing additional equity or debt offerings or increasing revenue.

There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.

We have incurred losses since inception and incurred

a net loss of $6.2 million during the three months ended March 31, 2026.

However, in September 2025, we completed an equity

offering which generated net proceeds of $5.4 million.

Additionally, in October 2025, we completed an equity offering which generated

net proceeds of $2.7 million.

Our existing cash resources are expected to provide

sufficient funds to carry out our planned operations through fiscal year 2026.

To more rapidly grow our revenue and continue operations

beyond such time frame, we may be required to raise additional funds by completing additional equity or debt offerings or increasing revenue.

We may also raise capital through public or private offerings of equity or debt securities or by entering into a credit facility.

can be no assurance that we will be successful in acquiring additional funding, that our projections of its future working capital needs

will prove accurate, or that any additional funding would be sufficient to continue operations in future years.

Contingencies

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

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

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

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

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

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

Critical Accounting Estimates

Our unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require management to make estimates, judgments and assumptions that affect the amounts reported in our unaudited consolidated financial statements and accompanying notes.

We believe our most critical accounting estimates relate to the following:

Fair value of convertible notes

Fair value of warrant to purchase common stock

While our estimates and assumptions are based on our knowledge of current events and on actions we may undertake in the future, actual results may ultimately differ from these estimates and assumptions.

For a discussion of the Company’s significant accounting policies, refer to Note 2 of Notes to Unaudited Consolidated Financial Statements.

Fair Value of Convertible Notes

The Company determined that the conversion feature, embedded in convertible notes, 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 become 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.

For the conversion feature classified as a liability, the Company uses a Binomial Lattice valuation model to value the derivative instrument at inception and on subsequent valuation dates.

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.

Fair Value of Warrant to Purchase Common Stock

The Company has issued warrants to investors in our debt offerings.

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.

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.

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 are 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.

Off-balance sheet arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Certain conditions may exist as of the date the

financial statements are issued, which may result in a loss to us, but which will only be resolved when one or more future events occur

or fail to occur.

In consultation with its legal counsel as appropriate, our management assesses such contingent liabilities, and such

assessment inherently involves an exercise of judgment.

In assessing loss contingencies related to legal proceedings that are pending

against us or unasserted claims that may result in such proceedings, we, in consultation with legal counsel, evaluate the perceived merits

of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability

can be estimated, then the estimated liability would be accrued in our financial statements.

If the assessment indicates a potentially

material loss contingency is not probable, but is reasonably possible, or is likely, but cannot be estimated, then the nature of the contingent

liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.

Loss contingencies

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

Critical Accounting

Our consolidated financial statements are prepared

in accordance with accounting principles generally accepted in the United States (“U.S.

GAAP”), which require management to

make estimates, judgments and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.

For a discussion of our critical accounting estimates,

refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the

year ended December 31, 2025, filed with the SEC on March 30, 2026 (the “Annual Report”).

There have been no material changes

to our critical accounting estimates as described in that Annual Report.

and Qualitative Disclosures About Market Risk.

We are a smaller reporting

company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required

to provide the information specified under this item.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis