What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-04-18 compared with 2025-01-21 · 129 added, 73 removed, 438 unchanged (32% of the section changed)

Financial Statements

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Karbon-X Corp.

15 unchanged sentences

Deferred Revenue

Lease liabilities

Lease liabilities - Current

Short-term loan payable

3 unchanged sentences

Convertible notes - interest payable

Embedded Derivative

Other current liabilities

Total current liabilities

Long-term liabilities:

Long-term debt

Lease liabilities

3 unchanged sentences

Stockholders' equity:

Common stock Common stock $ 0.001 par value, 200,000,000 shares authorized, 83,569,408 and 82,174,750 shares issued and outstanding as of November 30, 2024 and May 31, 2024, respectively.

Common stock Common stock $ 0.001 par value, 200,000,000 shares authorized, 84,061,489 and 82,174,750 shares issued and outstanding as of February 28, 2025 and May 31, 2024, respectively.

Additional paid-in capital

1 unchanged sentence

( 8,590,179 )

( 4,937,342 )

Accumulated other comprehensive gain (loss)

1 unchanged sentence

Total liabilities and stockholders' equity

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Karbon-X Corp.

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of sales

11 unchanged sentences

( 1,188,775 )

( 1,064,203 )

Income before income taxes

2 unchanged sentences

( 2,163,366 )

( 1,692,094 )

Income tax expense

3 unchanged sentences

( 2,163,366 )

( 1,692,094 )

Other comprehensive income (loss)

6 unchanged sentences

Earnings per share

Weighted average shares outstanding

Basic loss per share

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

For the Three Months and Six Months Ended November 30, 2024 and November 30, 2023

Weighted average shares outstanding, basic and diluted.

Basic and diluted loss per share.

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CHAGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

For the Three Months and Nine Months Ended February 28, 2025 and February 29, 2024

Karbon-X Corp.

5 unchanged sentences

Issuance of shares for cash, net of issuance cost

Issuance of shares as compensation

Fees related to shares issuance

Net income (loss)

3 unchanged sentences

Issuance of shares for cash, net of issuance cost

Issuance of options as compensation

Issuance of shares as compensation

Net income (loss)

4 unchanged sentences

( 6,903,663 )

Issuance of shares for cash, net of issuance cost

Issuance of shares as compensation

Net income (loss)

( 1,686,516 )

Foreign currency translation

Balance at February 28, 2025

$ ( 8,590,179 )

$ ( 158,129 )

Additional paid-in

Retained earnings

Accumulated other comprehensive profit

Accumulated other comprehensive

Total Stockholders'

9 unchanged sentences

Issuance of shares for cash

Issuance of shares as compensation

Investment write-off in silviculture

7 unchanged sentences

( 3,884,201 )

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Issuance of shares for cash

Issuance of shares as compensation

Offering expense

Net income (loss)

Foreign currency translation

Balance at February 29, 2024

$ ( 4,356,124 )

See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Karbon-X Corp.

Six Months Ended

Nine Months Ended

Operating activities

10 unchanged sentences

Prepaid expenses

( 1,319,562 )

Marketable securities

3 unchanged sentences

Accounts payable

Deferred Revenue

Lease Liability

Convertible Note

Other current liabilities

1 unchanged sentence

( 4,496,214 )

( 1,038,148 )

Investing activities

Purchases of property, plant and equipment

Other investing activities

Net cash used in investing activities

1 unchanged sentence

Proceeds from convertible notes payable

Debt discount on convertible notes payable

Proceeds from sales of common stock, net of issuance costs

5 unchanged sentences

Cash -- end of period

See notes to consolidated financial statements.

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for income taxes

See notes to condensed consolidated financial statements.

NOTE 1 – BACKGROUND, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 unchanged sentences

Under generally accepted accounting principles in the United States ("US GAAP") because the combined entity will be dependent on Karbon-X's senior management, the Reverse Acquisition was accounted for as a recapitalization effected by a share exchange, wherein Karbon-X is considered the acquirer for accounting and financial reporting purposes.

On the date of the reorganization, the assets and liabilities of Karbon-X have been brought forward at their book value and consolidated with Cocoluv, Inc.’s assets, which comprised of cash and cash equivalents of $ 134 and liabilities which comprises due to related party of $ 99,902 .

No goodwill has been recognized.

45 unchanged sentences

The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

As of November 30, 2024, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per share.

As of February 28, 2025, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per share.

Reclassifications

4 unchanged sentences

Update 2025-01:

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date Effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

Update 2024-04 :

Debt—Debt with Conversion and Other Options (Subtopic 470-20):

18 unchanged sentences

Early adoption is permitted.

Update 2023-07 :Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

As public entity to disclose information about operating segments, to help our investors and other stakeholders understand the financial performance of different parts of a business

The Company is currently evaluating the impact of these provisions on its consolidated financial statements

36 unchanged sentences

The Company measures progress toward completion using an input method based on hours incurred.

Revenue from the sale of NFTs (non-fungible tokens) representing tokenized carbon credits is recognized at a point in time when control of the NFTs transfers to the customer, which typically occurs upon delivery.

Accounts Receivable and Deferred Revenue

2 unchanged sentences

Accounts receivable are recorded at the invoiced amount.

As of November 30, 2024, accounts receivable were $ 0 .

As of February 28, 2025, accounts receivable were $ 4,658 .

Deferred Revenue:

Deferred revenue consists of advance payments received from customers for services to be provided in future periods.

As of November 30, 2024, deferred revenue was $ 2,882,096 .

As of February 28, 2025, deferred revenue was $ 3,684,616 .

The deferred revenue related to the delivery of carbon credits is expected to be recognized in revenue over the contract period as the credits are delivered according to the schedule.

5 unchanged sentences

The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are written down or written off.

As of November 30, 2024, inventories consisted of the following:

As of February 28, 2025, inventories consisted of the following:

Carbon Credit Inventory

12 unchanged sentences

These expenses are recognized as assets until the related goods or services are consumed or the benefits are realized.

As of November 30, 2024, the majority of the Company's prepaid expenses are related to the advertising and promotional agreement with Oilers Entertainment Group Canada Corp.

On September 1, 2024, the Company received invoices from OEG for the advertising and promotional agreement signed on July 1, 2024.

As of February 28, 2025, the majority of the Company's prepaid expenses are related to the advertising and promotional agreement with Oilers Entertainment Group Canada Corp.

On December 1, 2024, the Company received invoices from OEG for the advertising and promotional agreement signed on July 1, 2024.

The agreement includes various promotional rights and advertising services to be provided over the term of the contract, which ends on June 30, 2027.

The total amount invoiced for the period ending November 30, 2024, has been recorded as a prepaid expense.

The table below summarizes the prepaid expenses related to the OEG agreement as of November 30, 2024:

The total amount invoiced for the period ending February 28, 2025, has been recorded as a prepaid expense.

The table below summarizes the prepaid expenses related to the OEG agreement as of February 28, 2025:

Advertising & Promotional Agreement

Other Prepayments

Total Prepaid Expenses

2 unchanged sentences

The agreement specifies that the Company will receive these promotional rights in exchange for a fee.

The first installment of CAD 750,000 was invoiced on September 1, 2024, and has been recorded as a prepaid expense.

The second installment of CAD 750,000 was invoiced on December 1, 2024, and has been recorded as a prepaid expense.

This amount will be amortized over the period in which the related promotional rights and advertising services are received.

1 unchanged sentence

The prepaid expenses related to the OEG agreement will be amortized on a straight-line basis over the term of the contract.

The amortization expense for the period ending November 30, 2024, will be recognized in the Company's statement of operations.

The amortization expense for the period ending February 28, 2025, will be recognized in the Company's statement of operations.

NOTE 5 – CONVERTIBLE PROMISSORY NOTES

On October 15, 2024, Karbon-X Corp.

issued convertible promissory notes totaling USD $ 1,009,803 to three investors as part of its capital-raising efforts.

The notes bear simple interest at a rate of 10 % per annum, and mature on October 15, 2026 , for two investors, and October 16, 2026 , for one investor.

As of February 28, 2025, Karbon-X Corp.

issued convertible promissory notes totaling USD $ 1,207,635 to four investors as part of its capital-raising efforts.

The notes bear simple interest at a rate of 10 % per annum, and mature on October 15, 2026 , for two investors, October 16, 2026 , for one investor and January 31, 2027 for one investor.

One investors note was issued for CAD $ 500,000 , which was equivalent to USD $ 359,803 on the date of issuance.

6 unchanged sentences

The conversion price is the lesser of:

80% of the twenty-day weighted average closing price of the Company’s common stock preceding the conversion (but not less than $ 0.50 per share), or

$ 0.50 per share.

80% of the twenty-day weighted average closing price of the Company’s common stock preceding the conversion (but not less than the average of the four notes $0.56 per share), and of the trading day immediately preceding such conversion (but not less than $0.75 per share) or (ii) $0.90 per share .

Average of the four notes $ 0.78 per share.

Conversion is further restricted to ensure that no lender converts an amount of the note that would result in owning more than 9.9 % of the outstanding common stock at any time.

1 unchanged sentence

The issuance of these convertible promissory notes provided the Company with necessary capital to support its operations and strategic initiatives while offering investors the potential for equity participation in the Company's future growth.

As of November 30, 2024, the principal amount of the convertible promissory notes totaled USD $ 1,009,803 , For the quarter ended November 30, 2024, the Company recognized interest expense of USD $ 13,118 , calculated based on the stated 10 % simple interest rate.

As of February 28, 2025, the principal amount of the convertible promissory notes totaled USD $ 1,207,635 , For the quarter ended February 28, 2025, the Company recognized interest expense of USD $ 46,315 , calculated based on the stated 10 % simple interest rate.

Prepayment Option

14 unchanged sentences

GAAP guidance.

The futures contract is considered under ASC 606 because it represents a performance obligation to deliver carbon credits, a distinct good, to the buyer in exchange for consideration.

The contract specifies the quantity, timing, and price of the credits to be delivered, aligning with ASC 606's criteria for a contract with a customer.

Additionally, the primary intent of the agreement is the physical delivery of carbon credits, which are expected to be used for the buyer's operational needs rather than for speculative trading.

As such, the transaction falls within the scope of ASC 606, as it involves the recognition of revenue upon the fulfillment of the delivery obligations.

Initial Recognition and Measurement

11 unchanged sentences

The CTA is included in other comprehensive income (OCI) in accordance with ASC 830, "Foreign Currency Matters".

As of November 30, 2024, the fair market value (FMV) of New Pubco shares was USD $0.96 per share.

As of February 28, 2025, the fair market value (FMV) of New Pubco shares was USD $ 0.39 per share.

In compliance with ASC 321, the Company marked the investment to fair value, resulting in the following adjustments:

2 unchanged sentences

The true-up provision ensures that the Company will be made whole if the market value of the shares remains below the contracted value during the adjustment period.

As of November 30, 2024, no additional shares have been issued under these provisions.

As of November 30, 2024, the balances were as follows:

As of February 28, 2025, no additional shares have been issued under these provisions.

As of February 28, 2025, the balances were as follows:

Balance (USD)

16 unchanged sentences

This deferred revenue represents the obligation to deliver the carbon credits in the future.

Additionally, as of February 28, 2025, the Company has recorded deferred revenue of $ 884,940 related to a sales contract with Heidelberg for the sale of carbon credits.

Under the terms of the agreement, the Company received cash in advance of the sale, with delivery of the carbon credits scheduled for July 2025.

Recognition of Marketable Securities

6 unchanged sentences

Revenue is recognized when control of the promised goods or services is transferred to the customer, in accordance with ASC 606.

Purchase Price Adjustment

Purchase Price Adjustment for Devvstream Holdings Inc.

The agreement includes a provision for a purchase price adjustment 18 months after the closing date .

1 unchanged sentence

to cover the shortfall.

As of November 30, 2024, no additional shares have been issued under this provision.

Further, the company will incur a liability if it is unable to deliver the agreed-upon carbon credits under the futures contract to its customer.

As of February 28, 2025, no additional shares have been issued under this provision.

NOTE 8 - CAPITAL WORK IN PROGRESS (INTERNALLY DEVELOPED SOFTWARE)

2 unchanged sentences

Once the software is ready for implementation, the Company will begin amortizing the software over its estimated useful life.

As of November 30, 2024, and May 31, 2024, the Company has capitalized internally developed software with a value of USD $ 507,478 and USD $ 521,372 , respectively.

As of February 28, 2025, and May 31, 2024, the Company has capitalized internally developed software with a value of USD $ 492,966 and USD $ 521,372 , respectively.

The decrease in value is primarily attributed to the impact of cumulative translation adjustments (CTA) resulting from the remeasurement of foreign currency values to USD.

18 unchanged sentences

Payment for Shares

Upon exercise of an option, the optionee may pay the exercise price in cash or, with the consent of the Compensation Committee, by tendering shares of common stock.

Upon exercise of an option, the optionee may pay the exercise price in cash or cashless exercise, with the consent of the Compensation Committee, by tendering shares of common stock.

In the event of a stock split, merger, or other corporate event, the number of shares subject to the Plan and the exercise price of outstanding options will be adjusted as determined by the Compensation Committee.

8 unchanged sentences

Activity Under the Plan

As of November 30, 2024, the following activity has occurred under the Plan:

As of February 28, 2025, the following activity has occurred under the Plan started in second quarter of this fiscal year :

Number of Shares

8 unchanged sentences

Options Unvested

On November 30, 2024, the intrinsic value of the 2,979,875 outstanding options was $0.

As of February 28, 2028, the intrinsic value of the 4,159,875 outstanding options was $ 0 .

Fair Value of Options

15 unchanged sentences

Stock-Based Compensation Expense

For the quarter ended November 30, 2024, the Company recognized stock-based compensation expense of USD $ 290,263 , reflecting the expense allocation based on the vesting schedule outlined below:

Vested Shares

Period Compensation Expense

For the nine months ended February 28, 2025, the Company recognized stock-based compensation expense of USD $ 381,241 .

NOTE 10 – WARRANTS

A detail of warrant activity for the six months ended November 30, 2024 is as follows:

A detail of warrant activity for the nine months ended February 28, 2025 is as follows:

Weighted average exercise price

1 unchanged sentence

Outstanding May 31, 2024

Outstanding November 30, 2024

Outstanding February 28, 2025

NOTE 11 – LEASES

The Company has entered into a operating lease for office space commencing on July 1, 2025, with an early occupancy period beginning on February 1, 2025.

The lease has a term of 5 years, expiring on June 30, 2030.

During the early occupancy period (February 1, 2025 – June 30, 2025), no rent payments are required.

Lease Liability and Right-of-Use (ROU) Asset

The Company recognized a lease liability and ROU asset at the lease commencement date, calculated as the present value of future lease payments discounted at the Company’s incremental borrowing rate (IBR) of 5 %.

The following table summarizes the lease liability and ROU asset balances as of February 28, 2025:

Lease Liability

Lease Expense

Lease expense is recognized on a straight-line basis over the lease term and is included in operating expenses in the consolidated statements of operations.

For the quarter ended February 28, 2025, the Company recognized total lease expense of $ 8,850 , consisting of:

Amortization of ROU Asset:

Interest on Lease Liability:

Maturity of Lease Liabilities

The following table summarizes the undiscounted cash flows for the lease liability as of February 28, 2025:

Lease Payments

NOTE 12 – DEPOSIT

As of February 28, 2025, the Company has made advance payments for inventory totaling $ 606,998 , which is included in Deposit on the condensed consolidated balance sheet.

These payments relate to inventory purchases that have not yet been received as of the reporting date.

The Company expects to take delivery of the inventory by July of 2025, at which point the amounts will be reclassified to inventory.

Management evaluates these prepayments regularly to ensure recoverability and alignment with the Company’s operational needs.

NOTE 13 – EMBEDDED DERIVATIVE

On February 7, 2025, the Company issued a $ 250,000 unsecured promissory note (the “Note”) to a Lender with a maturity date of February 7, 2026 .

The Note bears interest at a rate of 40 % per annum, payable monthly, and is convertible at the election of the Lender into common shares of the Company at a conversion price of lesser of (i) 80% of the twenty day weighted average closing price of Lender’s common stock as of the trading day immediately preceding such conversion (but not less than $0.75 per share) or (ii) $0.90 per share.

The Note includes a minimum interest clause and contains no prepayment restrictions .

In accordance with ASC 815, the Company assessed the terms of the Note and identified an embedded conversion feature that qualifies for separate accounting as a derivative liability.

The fair value of the embedded derivative at issuance was determined to be $ 56,500 , which was recorded as a derivative liability with a corresponding debt discount.

As of the reporting period ended February 28, 2025, the unamortized discount on the Note was $ 52,168 .

The Company recognized interest expense of $ 10,087 for the three months ended February 28, 2025, of which $ 5,753 related to contractual interest and $ 4,334 related to amortization of the debt discount.

The fair value of the embedded derivative is remeasured at each reporting date, with changes in fair value recognized in the consolidated statement of operations.

As of February 28, 2025, the fair value of the embedded derivative liability is $ 93,814 .

NOTE 14 – SUBSEQUENT EVENTS

Lease Agreement

On October 18, 2024, Karbon-X Corp.

entered into a lease agreement with First Real Properties Limited for new office space located at Suite 1720, 540 – 4th Avenue SW, Calgary, Alberta.

The leased premises consist of approximately 6,655 square feet.

The lease term is five years, commencing on July 1, 2025, and ending on June 30, 2030 .

The agreement includes an early occupancy period starting February 1, 2025, during which Karbon-X will not be responsible for paying Basic Rent or Additional Rent.

Employee stock options

In the third quarter of fiscal year 2025, the Company has initiated plans to award stock options to employees as part of its equity compensation program.

The terms and conditions of these stock options, including the number of options to be granted, the exercise price, and the vesting schedule, are currently under review and have not yet been finalized or executed as of the issuance date of these financial statements.

Management anticipates that these awards will be granted to incentivize and retain employees, aligning their interests with those of the Company’s shareholders.

The financial impact of these stock option awards will be recognized in accordance with applicable accounting standards once the terms are finalized, and the awards are executed.

The Company will provide additional disclosures regarding these stock options in future filings as more information becomes available.

On March 25, 2025, the Company entered into a Definitive Agreement with an investor, pursuant to which the investor agreed to provide $ 1,095,000 in funding to the Company.

The funds are intended to be used in support of the Company’s carbon trading activities, including trading in EU compliance-related products.

Under the terms of the agreement, the investment will accrue interest at a rate of 20% per annum, payable quarterly in either cash or common stock, at the investor’s discretion.

The conversion price for stock payments is capped at USD $0.90 per share or 80% of the 20-day volume-weighted average price ("VWAP") if below $0.90 .

Additionally, the investor is entitled to a royalty equal to 5% of trading profits, with the total royalty amount dependent on the timing of the investment’s full repayment.

If repaid within six months, the royalty is equal to 50% of the investment amount.

If repaid after six months, the royalty increases to 100% of the investment amount .

Royalty payments commence upon full repayment of the investment and continue every 30 days thereafter until the full royalty obligation is satisfied.

The Company evaluated this agreement and determined that it represents a Type II subsequent event, as it relates to conditions that arose after the end of the reporting period (February 28, 2025).

Accordingly, no adjustments have been made to the financial statements included in this Form 10-Q.

On April 7, 2025, the holder of the $ 250,000 convertible promissory note exercised its conversion option, resulting in the issuance of 295,873 shares of common stock.

The shares were issued at a conversion price of $ 0.90 per share and represent the full principal amount of the note plus accrued interest.

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 1. Financial Statements