UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended: March 31, 2024

 

or

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the transition period from ___________ to ___________

 

Commission File Number: 000-56567

 

General Enterprise Ventures, Inc.

(Exact name of registrant as specified in its charter)

 

Wyoming

 

87-2765150

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

 

1740H Del Range BlvdSuite 166

CheyenneWY

82009

(Address of principal executive offices)

(Zip Code)

 

(800401-4535

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated Filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES      NO ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

36,302,150 shares of common stock issued and outstanding as of May 14, 2024.

 

 

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

 

3

 

Item 2.

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

 

18

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

22

 

Item 4.

Controls and Procedures

 

22

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

23

 

Item 1A.

Risk Factors

 

23

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

23

 

Item 3.

Defaults Upon Senior Securities

 

23

 

Item 4.

Mine Safety Disclosures

 

23

 

Item 5.

Other Information

 

23

 

Item 6.

Exhibits

 

24

 

 

 

 

SIGNATURES

 

25

 

 
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Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

General Enterprise Ventures, Inc.

Consolidated Balance Sheets

(Unaudited)

 

 

 

 March 31,

 

 

December 31,

 

 

 

 2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash

 

$371,095

 

 

$549,755

 

Accounts receivable

 

 

680,965

 

 

 

427,433

 

Inventory

 

 

188,791

 

 

 

230,197

 

Prepaid expenses

 

 

11,463

 

 

 

10,671

 

Total Current Assets

 

 

1,252,314

 

 

 

1,218,056

 

 

 

 

 

 

 

 

 

 

Equipment, net

 

 

6,639

 

 

 

7,299

 

Intangible assets

 

 

3,884,931

 

 

 

3,948,106

 

Operating lease right-of-use asset

 

 

110,081

 

 

 

129,683

 

Total Assets

 

$5,253,965

 

 

$5,303,144

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$70,257

 

 

$54,572

 

Promissory note

 

 

-

 

 

 

120,000

 

Convertible note payable

 

 

-

 

 

 

54,000

 

Due to related parties

 

 

1,309,077

 

 

 

1,309,077

 

Operating lease liability - current portion

 

 

82,051

 

 

 

80,136

 

Total Current Liabilities

 

 

1,461,385

 

 

 

1,617,785

 

 

 

 

 

 

 

 

 

 

Operating lease liability

 

 

28,830

 

 

 

50,047

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

1,490,215

 

 

 

1,667,832

 

 

 

 

 

 

 

 

 

 

Commitment and contingencies

 

 

 -

 

 

 

 -

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Series A Preferred Stock, par value $0.0001, designated 10,000,000 shares,  10,000,000 shares issued and outstanding

 

 

1,000

 

 

 

1,000

 

Series C Convertible Preferred Stock, par value $0.0001, designated 5,000,000 shares,  2,471,832 and 2,273,499 issued and outstanding, respectively

 

 

247

 

 

 

227

 

Common Stock par value $0.0001, authorized 1,000,000,000 shares, 36,302,150 and 97,545,388 shares issued and outstanding, respectively

 

 

3,630

 

 

 

9,755

 

Additional paid-in capital

 

 

76,492,249

 

 

 

72,427,996

 

Common Stock to be issued - 250,000 and 500,000 shares, respectively

 

 

90,000

 

 

 

180,000

 

Subscription received - 75,000 and 183,333 shares of Series C Preferred stock to be issued, respectively

 

 

180,000

 

 

 

500,000

 

Accumulated deficit

 

 

(73,003,376)

 

 

(69,483,666)

Total Stockholders' Equity

 

 

3,763,750

 

 

 

3,635,312

 

Total Liabilities and Stockholders' Equity

 

$5,253,965

 

 

$5,303,144

 

 

See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements.

 

 
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General Enterprise Ventures, Inc.

Consolidated Statement of Operations and Comprehensive Loss

 (Unaudited)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

 2024

 

 

2023

 

 

 

 

 

 

 

 

Revenue

 

$433,018

 

 

$55,595

 

Cost of revenue

 

 

89,872

 

 

 

13,854

 

Gross Profit

 

 

343,146

 

 

 

41,741

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

General and administration

 

 

197,357

 

 

 

88,456

 

Marketing

 

 

110,206

 

 

 

11,592

 

Professional fees

 

 

2,672,129

 

 

 

295,129

 

Total operating expenses

 

 

2,979,692

 

 

 

395,177

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(2,636,546)

 

 

(353,436)

 

 

 

 

 

 

 

 

 

Other Expense

 

 

 

 

 

 

 

 

Interest expense

 

 

(885)

 

 

(175)

Loss on debt settled by common stock

 

 

(882,279)

 

 

-

 

Total other expense

 

 

(883,164)

 

 

(175)

 

 

 

 

 

 

 

 

 

Loss from operations before taxes

 

 

(3,519,710)

 

 

(353,611)

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

 

-

 

Net Loss

 

$(3,519,710)

 

$(353,611)

 

 

 

 

 

 

 

 

 

Comprehensive Loss

 

$(3,519,710)

 

$(353,611)

 

 

 

 

 

 

 

 

 

Net loss per common share - Basic and diluted

 

$(0.04)

 

$(0.00)

Basic and Diluted Weighted Average Number of Common Shares Outstanding

 

 

92,232,946

 

 

 

94,165,388

 

 

See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements.

 

 
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General Enterprise Ventures, Inc.

Consolidated Statements of Change in Stockholders’ Deficit

 (Unaudited)

 

For the three months ended March 31, 2024

 

 

 

Series A

 

 

Convertible Series C

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Total

 

 

 

Preferred stock

 

 

Preferred stock

 

 

Common Stock

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

 Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

  Shares

 

 

 Amount

 

 

 to be issued 

 

 

 to be 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 cash

 

 

-

 

 

 

-

 

 

 

158,333

 

 

 

16

 

 

 

-

 

 

 

-

 

 

 

(320,000)

 

 

-

 

 

 

484,984

 

 

 

-

 

 

 

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

 

 

For the three months ended March 31, 2023

 

 

 

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, 2022

 

 

10,000,000

 

 

$10,000

 

 

 

950,000

 

 

$950

 

 

 

93,945,388

 

 

$93,945

 

 

$62,625,173

 

 

$(59,381,400 )

 

$3,348,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

300,000

 

 

 

300

 

 

 

86,550

 

 

 

-

 

 

 

86,850

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(353,611 )

 

 

(353,611 )

Balance - March 31, 2023

 

 

10,000,000

 

 

$10,000

 

 

 

950,000

 

 

$950

 

 

 

94,245,388

 

 

$94,245

 

 

$62,711,723

 

 

$(59,735,011 )

 

$3,081,907

 

 

See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements.

 

 
5

Table of Contents

 

General Enterprise Ventures, Inc.

Consolidated Statement of Cash Flows

 (Unaudited)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net loss

 

$(3,519,710)

 

$(353,611)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Common stock-based compensation

 

 

1,702,000

 

 

 

86,850

 

Series C Preferred stock-based compensation

 

 

696,000

 

 

 

-

 

Non-cash lease expenses

 

 

19,602

 

 

 

15,000

 

Depreciation and amortization

 

 

63,835

 

 

 

264

 

Loss on settlement of debt

 

 

882,279

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(253,532)

 

 

-

 

Inventory

 

 

41,406

 

 

 

12,377

 

Prepaid expense

 

 

(792)

 

 

(6,300)

Related party advances funding operating expense

 

 

-

 

 

 

49,052

 

Accounts payable and accrued liabilities

 

 

44,554

 

 

 

34,463

 

Operating lease liabilities

 

 

(19,302)

 

 

(15,000)

Net Cash used in Operating Activities

 

 

(343,660)

 

 

(176,905)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from loan - related party

 

 

-

 

 

 

185,000

 

Proceed from issuance Series C Preferred Stock

 

 

165,000

 

 

 

-

 

Net Cash provided by Financing Activities

 

 

165,000

 

 

 

185,000

 

 

 

 

 

 

 

 

 

 

Change in cash

 

 

(178,660)

 

 

8,095

 

Cash, beginning of period

 

 

549,755

 

 

 

55,434

 

Cash, end of period

 

$371,095

 

 

$63,529

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure Information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$-

 

 

$-

 

Cash paid for taxes

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Non-Cash Financing Disclosure:

 

 

 

 

 

 

 

 

Common stock issued for conversion and settlement of debt

 

$1,085,148

 

 

$-

 

Common stock issued for stock to be issued - management

 

$90,000

 

 

$-

 

Series C Preferred stock issued for subscription received

 

$320,000

 

 

$-

 

Cancellation comment stock -related party

 

$6,500

 

 

$-

 

 

See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements.

 

 
6

Table of Contents

 

General Enterprise Ventures, Inc.

Notes to Consolidated Financial Statements

March 31, 2024

 

Note 1 – Organization, Business and Going Concern

 

General Enterprise Ventures, Inc., (the “Company” “GEVI”), 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.

 

Business

 

The Company’s U.S. subsidiary, Mighty Fire Breaker LLC (“MFB”) is engaged in developing solutions to support the resolution of the insurance crisis in the western United States by use of its EPA approved CitroTech products. MFB has developed and patented additional intellectual property in this regard, such as a system for commercial properties and homes that puts a fire inhibiting buffer zone around a property, blocking blown-in embers from igniting. The technology continues to work dry, which unlike other products allows for early deployment and evacuation of people. MFB also has developed a job site trailer allowing for the fire protection of property during the construction phase and fire hardening of the inner construction and installation of our patented system during that phase. The intent is for the home owner to be able to bind insurance to start a construction project. The Company has achieved USDA approval. It has sold products to various fire departments and continues to demonstrate a market for its products.

 

Going Concern

 

The Company’s consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States including the assumption of a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as shown in the accompanying consolidated financial statements, during the three months ended March 31, 2024, the Company had a net loss of approximately $3.5 million, an accumulated deficit of $73 million as of the period end, and used cash in operations of approximately $343,660 for the three months ended March 31, 2024 and negative working capital of $3.8 million. The Company expects to continue to incur significant expenditures to develop its operations. As such, there is substantial doubt about the company’s ability to continue as a going concern.

 

Management recognizes that the Company must obtain additional resources to successfully develop its operations and implement its business plans. Through March 31, 2024, the Company has received funding in the form of the sale preferred stock subscriptions and historically loans from related parties. Management plans to continue to raise funds and/or refinance our indebtedness to support our operations in 2024 and beyond. However, no assurances can be given that we will be successful. If management is not able to timely and successfully raise additional capital and/or refinance indebtedness, the implementation of the Company’s business plan, financial condition and results of operations will be materially affected These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

 
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In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the unaudited interim financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2023, as filed with the SEC on April 15, 2024.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of General Enterprise Ventures, Inc., and its wholly owned subsidiary, Mighty Fire Breaker, LLC, an Ohio Limited Liability company. Intercompany transactions and balances have been eliminated.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments. 

 

Cash and Cash Equivalents

 

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company did not have any cash equivalents at March 31, 2024 and December 31, 2023. The Company had cash of $371,095 and $549,755 at March 31, 2024 and December 31, 2023, respectively.

 

Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000 per institution. The amount in excess of the FDIC insurance as of March 31, 2024 was approximately $112,000. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 

Accounts Receivable

 

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make the required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered. As of March 31, 2024 and December 31, 2023, the Company had no allowance for doubtful accounts.

 

Inventory

 

Inventories consist of raw materials which are stated at lower cost or net realizable value, with cost being determined on the weighted average method. As of March 31, 2024 and December 31, 2023, the Company held inventories of $188,791 and $230,197, respectively.

 

During the three months ended March 31, 2024, and 2023, the Company recorded cost of goods sold of $89,872 and $13,854 associated with the cost of inventories sold, respectively. The Company did not write-off any inventories as unsalable during the three months ended March 31, 2024 and 2023.

 

 
8

Table of Contents

 

Fair Value of Financial Instruments 

 

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

 

 

Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

 

 

 

 

Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

 

 

 

 

Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

 

The Company’s financial instruments, including cash, accounts receivable, prepaid expenses, accounts payable and accrued liabilities, due to related parties and loans payable, are carried at historical cost. At March 31, 2024 and December 31, 2023, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

 

Revenue

 

The Company recognizes revenue from its contracts with customers in accordance with ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.

 

Revenue related to contracts with customers is evaluated utilizing the following steps:

 

 

(i)

Identify the contract, or contracts, with a customer;

 

(ii)

Identify the performance obligations in the contract;

 

(iii)

Determine the transaction price;

 

(iv)

Allocate the transaction price to the performance obligations in the contract;

 

(v)

Recognize revenue when the Company satisfies a performance obligation.

 

Our revenues currently consist of products used for lumber products for fire prevention. Revenue is recognized at a point in time, that is which the risks and rewards of ownership of the products transfer from the Company to the customer.

 

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 three months ended March 31, 2024 and 2023, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

 

 

 

March 31,

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

 

 Shares 

 

 

 Shares 

 

 Convertible notes 

 

 

-

 

 

 

194,444

 

 Convertible Series C Preferred Stock 

 

 

47,562,284

 

 

 

19,002,023

 

 Convertible Series A Preferred Stock(1) 

 

 

-

 

 

 

10,000,000,000

 

 

(1)    Series A Preferred Stock was amended in March 2024 to remove the conversion feature (Note 9).

 

 
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For the three months ended March 31, 2024 and 2023 the reconciliation to net loss per common share basic and the anti-dilutive impact on net loss per share, are as follows:

 

 

 

 Three months ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

 

Net Loss

 

$(3,519,710)

 

$(353,611)

Net Loss - diluted

 

$(3,519,710)

 

$(353,611)

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

92,232,946

 

 

 

94,165,388

 

Effect of dilutive shares

 

 

 

 

 

 

 

 

Convertible notes

 

 

-

 

 

 

194,444

 

Preferred stock

 

 

47,562,284

 

 

 

10,019,002,023

 

Diluted

 

 

139,795,231

 

 

 

10,113,361,855

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

Basic

 

$(0.04)

 

$(0.00)

Diluted

 

$(0.03)

 

$(0.00)

 

Recently Issued Accounting Pronouncements

 

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 on our consolidated 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.

 

Reclassification

 

Certain accounts from prior periods have been reclassified to conform to the current period presentation.

 

Note 3 – Equipment

 

At March 31, 2024 and December 31, 2023, equipment consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Cost:

 

 

 

 

 

 

Furniture and equipment

 

$9,365

 

 

$9,365

 

Less: accumulated depreciation

 

 

(2,726)

 

 

(2,066)

Property and equipment, net

 

$6,639

 

 

$7,299

 

 

During the three months ended March 31, 2024, and 2023, the Company recorded depreciation of $660 and $264, respectively.

 

 
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Note 4 – Intangible Assets

 

The Company has capitalized the costs associated with acquiring the intellectual property of MFB at a value of $4,195,353 as of March 31, 2024 and December 31, 2023, respectively.

 

The amount capitalized consisted of a portion of the fair value of 1,000,000 shares of Convertible Preferred C stock of $4,200,000. During the year ended December 31, 2023 and three months ended March 31, 2024, no additional costs met the criteria for capitalization as an intangible asset.

 

As of March 31, 2024 and December 31, 2023, finite lived intangible assets consisted of the following:

 

 

 

 March 31,

 

 

 December 31,

 

 

 

2024

 

 

2023

 

Patents

 

$4,195,353

 

 

$4,195,353

 

Accumulated amortization

 

 

(310,422)

 

 

(247,247)

Intangible assets, net

 

$3,884,931

 

 

$3,948,106

 

 

Estimated future amortization expense for finite lived intangibles are as follows:

 

December 31,

 

 

 

2024 (excluding the three months ended March 31, 2024)

 

$185,440

 

2025

 

 

247,931

 

2026

 

 

247,931

 

2027

 

 

247,931

 

2028

 

 

247,931

 

Thereafter

 

 

2,707,767

 

 

 

$3,884,931

 

 

As of March 31, 2024, the weighted-average useful life is 16.00 years.

 

During the three months ended March 31, 2024 and 2023, the amortization expense was $63,175 and $0, respectively. The Company commenced with amortization from later 2023, when the Company started operations using the acquired assets.

 

Note 5 – Lease

 

In March 2022, the Company has entered into an operating lease for the office, with the term of 18 months. In July 2023, the Company amended the contract and extended the lease term to July 2025.

 

The following summarizes right-of-use asset and lease information about the Company’s operating lease for the three months ended March 31, 2024 and 2023:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

The components of lease expense were as follows:

 

 

 

 

 

 

Operating lease expense

 

$21,498

 

 

$15,000

 

Short-term lease expense

 

 

2,393

 

 

 

6,651

 

Total lease expense

 

$23,891

 

 

$21,651

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information related to leases was as follows:

 

 

 

 

 

 

 

 

Cash paid for operating cash flows from operating leases

 

$21,198

 

 

$15,000

 

 

 

 

 

 

 

 

 

 

Weighted-average remaining lease term - operating leases (year)

 

 

1.33

 

 

 

0.42

 

Weighted-average discount rate — operating leases

 

 

6.50%

 

 

5.50%

 

 
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Supplemental balance sheet information related to leases was as follows:

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Operating lease right-of-use asset

 

$110,081

 

 

$129,683

 

 

 

 

 March 31,

 

 

 December 31,

 

 

 

2024

 

 

2023

 

Operating lease liabilities:

 

 

 

 

 

 

Current portion

 

$82,051

 

 

$80,136

 

Non-current portion

 

 

28,830

 

 

 

50,047

 

 

 

$110,881

 

 

$130,183

 

 

The following table outlines maturities of our lease liabilities as of March 31, 2024:

 

Year ending December 31,

 

 

 

2024 (excluding the three months ended March 31, 2024)

 

$64,594

 

2025

 

 

50,862

 

Thereafter

 

 

-

 

 

 

 

115,456

 

Less: Imputed interest

 

 

(4,575)

Operating lease liabilities

 

$110,881

 

 

Note 6 – Convertible Note

 

On September 30, 2022, the Company entered into a convertible note agreement for the amount of $54,000, with term of six (6) months from the date of receipt of the funds, at interest rate of 2% per annum. At the sole option of the Lender, all or part of unpaid principal then outstanding may be converted into shares of common stock at any time starting 24 hours after payment at a fixed conversion price of $0.18 per share.  As of March 31, 2024 and December 31, 2023, following is the summary of funds received from the lender:

 

 

 

Principal

 

 

 

 

Interest

 

 

 March 31,

 

 

 December 31,

 

Payment date

 

Amount

 

 

Maturity date

 

Rate

 

 

2024

 

 

2023

 

August 11, 2022

 

$18,000

 

 

2/11/2023

 

 

2%

 

$-

 

 

$18,000

 

September 2, 2022

 

$17,000

 

 

3/2/2023

 

 

2%

 

 

-

 

 

 

17,000

 

April 1, 2023

 

$19,000

 

 

Due on demand

 

 

2%

 

 

-

 

 

 

19,000

 

Total Convertible notes

 

 

 

 

 

 

 

 

 

 

 

$-

 

 

$54,000

 

Current portion

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

(54,000)

Long -term portion

 

 

 

 

 

 

 

 

 

 

 

$-

 

 

$-

 

 

 
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During the three months ended March 31, 2024, the Company settled liabilities of $23,400 and converted notes with principal amounts of $54,000 and accrued interest of $1,702 into 456,762 shares of common stock. The fair market value of the common shares converted was $126,655 at the issuance date, as a result, the Company recognized a loss on debt settled by common stock of $103,255.

 

During the three months ended March 31, 2024, and 2023, the Company recognized interest expenses of $135 and $175, respectively. As of March 31, 2024 and December 31, 2023, the Company owned principal of $0 and $54,000 and accrued interest of $0 and $1,567, respectively.

 

Note 7 – Promissory Note

 

On June 7, 2023, the Company entered into a promissory note agreement for the amount of $120,000, in terms of twelve (12) months and interest rate of 5% per annum. During the three months ended March 31, 2024, the Company recognized $750 interest.

 

During the three months ended March 31, 2024, the Company settled the promissory note with principal amount of $120,000 and accrued interest of $3,767 into 1,050,000 shares of common stock. The fair market value of the common shares converted was $902,790 at the issuance date, as a result, the Company recognized a loss on debt settled by common stock of $779,024.

 

Note 8 – Related Party Transactions

 

On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each of the two independent directors for their board services in support of the Company. During the three months ended March 31, 2024, 250,000 shares of common stock were issued, valued at $90,000 at market price on approval date. As of March 31, 2024, the remaining 250,000 shares balance have not been issued, and the Company valued the 250,000 shares of common stock at market price on approval date and accrued $90,000.

 

During the three months ended March 31, 2024 and 2023, a related party advanced to the Company an amount of $0 and $185,000 for working capital propose and $0 and $49,052 for operating expenses on behalf of the Company, respectively.

 

During the three months ended March 31, 2024, and 2023, the Company record and paid management fees of $25,000 and $0, respectively.

 

During the three months ended March 31, 2024, and 2023, the Company recorded and paid consulting expense of $21,000 and $45,000 to an entity under common control of a related party and commission fee of $72,000 and $40,000 to a related party, respectively.

 

As of March 31, 2024 and December 31, 2023, the Company was obliged to related parties, for unsecured, non-interest-bearing demand loans with a balance of $1,309,077.

 

Note 9 – Stockholders’ Equity

 

Preferred Shares

 

Shares Outstanding

 

The Company is authorized to issue up to 15,000,000 shares of Preferred Stock, par value $0.0001 per share.

 

Series A Preferred Stock

 

The Company originally designated 10,000,000 shares of its Preferred Stock as Series A Convertible Preferred Stock. Issued and outstanding Series A Convertible Preferred stock as of March 31, 2024 and December 31, 2023, was 10,000,000On March 29, 2024, the Company amended and restated its Series A Convertible Preferred Stock to designate 10,000,000 shares of its Preferred Stock as Series A Preferred Stock, par value $0.0001, with the following rights and privileges.

 

 
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Dividends. Holders of shares of Series A Preferred Stock are not entitled to receive dividends.

 

Voting Rights. Each share of Series A Preferred Stock is entitled to 1,000 votes on all matters submitted to a vote of stockholders. Holders of shares of Series A Preferred Stock do not have cumulative voting rights. This means a holder of a single share of Series A Preferred Stock cannot cast more than one vote for each position to be filled on the Board.

 

Other Rights. Shares of Series A Preferred Stock are not entitled to a liquidation preference. The holders of the Series A Preferred Stock may not be redeemed without the consent of the holders of the Series A Preferred Stock. The holder of the Series A Preferred Stock are not entitled to pre-emptive rights or subscription rights.

 

The Company will not, by amendment of its Charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of its Charter and in the taking of all such action as may be necessary or appropriate to protect the rights of the holders of the Series A Preferred Stock against impairment.

 

So long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent as provided by the Wyoming Business Corporations Act) of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock: (a) alter or change the rights, preferences or privileges of the Series A Preferred Stock; (b) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series A Preferred Stock; (c) increase the authorized number of shares of Series A Preferred Stock; or (d) authorize or issue any shares of senior securities.

 

Fully Paid. The issued and outstanding shares of Series A Preferred Stock are fully paid and non-assessable. This means the full purchase price for the outstanding shares of Series A Preferred Stock has been paid and the holders of such shares will not be assessed any additional amounts for such shares.

 

Series C Convertible Preferred Stock

 

The Company has designated 5,000,000 shares of its Preferred Stock as Series C Convertible Preferred Stock with the following rights and privileges.

 

Dividends. Holders of shares of Series C Convertible Preferred Stock are not entitled to receive dividends.

 

Voting Rights. The holders of the Series C Convertible Preferred Stock are not entitled to vote.

 

Conversion Rights. Each share of Series C Convertible Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into 20 shares of the Common Stock of the Company (the “Conversion Ratio”). Such Conversion Ratio, and the rate at which shares of Series C Convertible Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment.

 

If at any time or from time to time there shall be (i) a merger or consolidation of the Company with or into another corporation, (ii) the sale of all or substantially all of the Company’s capital stock or assets to any other person, (iii) any other form of business combination or reorganization in which the Company shall not be the continuing or surviving entity of such business combination or reorganization, or (iv) any transaction or series of transactions by the Company in which more than 50 percent (50%) of the Company’s voting power is transferred (each a “Reorganization”) then as a part of such Reorganization, the provision shall be made so that the holders of the Series C Convertible Preferred Stock shall thereafter be entitled to receive the same kind and amount of stock or other securities or property (including cash) of the Company, or the successor corporation resulting from such Reorganization.

 

Other Rights. The holders of the Series C Convertible Preferred Stock are not entitled to a liquidation preference. The holders of the Series C Convertible Preferred Stock may not be redeemed without the consent of the holders of the Series C Convertible Preferred Stock. The holder of the Series C Convertible Preferred Stock are not entitled to pre-emptive rights or subscription rights.

 

 
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The Company will not, by amendment of its Charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of its Charter and in the taking of all such action as may be necessary or appropriate to protect the rights of the holders of the Series C Convertible Preferred Stock against impairment. 

 

So long as any shares of Series C Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent as provided by the Wyoming Business Corporations Act) of the holders of at least a majority of the then outstanding shares of Series C Convertible Preferred Stock: (a) alter or change the rights, preferences or privileges of the Series C Convertible Preferred Stock; (b) alter or change the rights, preferences or privileges of any capital stock of the Company so as to affect adversely the Series C Convertible Preferred Stock; (c) increase the authorized number of shares of Series C Convertible Preferred Stock; or (d) authorize or issue any shares of senior securities.

 

Fully Paid. The issued and outstanding shares of Series C Convertible Preferred Stock are fully paid and non-assessable. This means the full purchase price for the outstanding shares of Series C Convertible Preferred Stock has been paid and the holders of such shares will not be assessed any additional amounts for such shares.

 

During the three months ended March 31, 2024, the Company issued 198,333 shares of Series C Preferred Stock as follow;

 

 

·

108,333 shares issued for stock payable of $320,000.

 

 

 

 

·

50,000 shares for $165,000 cash subscription.

 

 

 

 

·

40,000 issued for services, valued at $696,000 at market price on issuance date.

 

Subscription received

 

During the year ended December 31, 2023, the Company received $500,000 for stock subscriptions. As of March 31, 2024 and December 31, 2023, 75,000 and 183,333 shares were not issued and are recorded as preferred stock to be issued with value of $180,000 and $500,000 in equity, respectively. Subsequently on April 24, 2024, the Company issued 74,999 shares of Convertible Series C Preferred Stock.

 

As of March 31, 2024, and December 31, 2023, there were 2,471,832 and 2,273,499 shares of the Company’s Convertible Series C Preferred Stock issued and outstanding, respectively.

 

Common Stock 

 

The Company has authorized 1,000,000,000 shares of common stock with a par value of $0.0001. Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

During the three months ended March 31, 2024, the Company issued 3,756,762 shares of Common Stock and cancelled 65,000,000 shares as follow;

 

 

·

2,000,000 shares issued for services, valued at $1,702,000 at market price on issuance date.

 

 

 

 

·

1,506,762 shares for conversion and settlement of debt of $1,085,148 at market price on issuance date.

 

 

 

 

·

250,000 shares for stock to be issued - management, valued $90,000 at market price on approval date.

 

 

 

 

·

65,000,000 shares were cancelled by the Company's President, valued $6,500 at par value.

 

As of March 31, 2024 and December 31, 2023, there were 36,302,150 and 97,545,388 shares of the Company’s common stock issued and outstanding, respectively.

 

 
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Stock-Based Compensation

 

On June 13, 2022, the Company issued 70,000,000 Restricted Stock Awards (“RSAs”) to a member of the board of directors and President of the Company. Set out below is a summary of the changes in the Restricted Shares during the three months ended March 31, 2024:

 

 

 

Restricted Stock Award

 

 

Weighted-Average Grant Price

 

Balance, December 31, 2023

 

 

70,000,000

 

 

$0.03

 

Granted

 

 

-

 

 

 

-

 

Vested

 

 

-

 

 

 

-

 

Cancelled

 

 

(65,000,000)

 

 

0.03

 

Balance, March 31, 2024

 

 

5,000,000

 

 

$0.03

 

 

As of December 31, 2023, 70,000,000 shares issued to a member of the board of directors and President of the Company are restricted (the “Restricted Stock Award”) and shall be released only upon the Company achieving gross revenue in each of the calendar years ended December 31, 2023, 2024, 2025 and 2026, of not less than $100,000,000. The holder of the Restricted stock shall be entitled to vote but is not entitled to dividends or disposal. The Company valued the voting rights associated with the awards at $2,100,000 which is recorded as stock-based compensation during the year ended December 31, 2022.

 

Common Stock to be Issued

 

On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each of the two independent directors for their board services in support of the Company. The Company valued the 500,000 shares of common stock at the market value of the Company’s common stock at approval date for the amount of $180,000.  As of March 31, 2024, and December 31, 2023, 250,000 and 500,000 shares were not yet issued and are recorded as common stock to be issued of $90,000 and $180,000 in equity, respectively.

 

Note 10– Commitments and Contingencies

 

As part of the consideration for the Company’s acquisition of Mighty Fire Breaker, LLC (“MFB’), the vendor will be entitled to a ten (10%) percent royalty on the gross sales before taxes of products sold under the MFB family of products.

 

Note 11 – Concentration

 

As of March 31, 2024 and December 31, 2023 and for three months ended March 31, 2024 and 2023, customer and supplier concentrations (more than 10%) were as follows:

 

Revenue and accounts receivable

 

 

 

Percentage of Revenue

 

 

Percentage of

 

 

 

For Three Months ended

 

 

Accounts receivable

 

 

 

March 31,

 

 

March 31,

 

 

December 31

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Customer A

 

 

28.17%

 

 

-

 

 

 

17.92%

 

 

-

 

Customer B

 

 

25.55%

 

 

-

 

 

 

16.25%

 

 

-

 

Customer C

 

 

36.49%

 

 

-

 

 

 

23.20%

 

 

39.77%

Customer D

 

 

-

 

 

 

-

 

 

 

33.78%

 

 

53.83%

Total (as a group)

 

 

90.21%

 

 

-

 

 

 

91.15%

 

 

93.60%

 

 
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Purchase and accounts payable

 

 

 

Percentage of Purchase

 

 

Percentage of

 

 

 

For Three Months ended

 

 

Accounts Payable

 

 

 

March 31,

 

 

March 31,

 

 

December 31

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Supplier A

 

 

34.04%

 

 

-

 

 

 

-

 

 

 

-

 

Supplier B

 

 

9.90%

 

 

-

 

 

 

-

 

 

 

-

 

Supplier C

 

 

37.61%

 

 

-

 

 

 

-

 

 

 

-

 

Supplier D

 

 

18.45%

 

 

-

 

 

 

-

 

 

 

-

 

Supplier E

 

 

-

 

 

 

100%

 

 

-

 

 

 

-

 

Total (as a group)

 

 

100%

 

 

100%

 

 

-

 

 

 

-

 

 

To reduce risk, the Company closely monitors the amounts due from its customers and assesses the financial strength of its customers through a variety of methods that include, but are not limited to, engaging directly with customer operations and leadership personnel, visiting customer locations to observe operating activities, and assessing customer longevity and reputation in the marketplace. As a result, the Company believes that its accounts receivable credit risk exposure is limited.

 

Note 12 – Subsequent Events

 

Management evaluated all additional events through May 15, 2024, which is the date the financial statements were available to be issued. Based upon this review, unless noted below, the Company did not identify any material subsequent events that would have required adjustment or disclosure in the financial statements.

 

 
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Table of Contents

 

Item 2. Management’s 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 audited 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

 

The Company’s U.S. subsidiary, Mighty Fire Breaker LLC (“MFB”) is engaged in developing solutions to support the resolution of the insurance crisis in the western United States by use of its EPA approved CitroTech products. MFB has developed and patented additional intellectual property in this regard, such as a system for commercial properties and homes that puts a fire inhibiting buffer zone around a property, blocking blown-in embers from igniting. The technology continues to work dry, which unlike other products allows for early deployment and evacuation of people. MFB also has developed a job site trailer allowing for the fire protection of property during the construction phase and fire hardening of the inner construction and installation of our patented system during that phase. The intent is for the home owner to be able to bind insurance to start a construction project. The Company has achieved USDA approval. It has sold products to various fire departments and continues to demonstrate a market for its products.

 

Results of Operations

 

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the period ended March 31, 2024, which are included herein.

 

 
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Table of Contents

 

Our operating results for the three months ended March 31, 2024, and 2023 and the changes between those periods for the respective items are summarized as follows:

 

Results of Operations for the three months ended March 31, 2024, and the three months ended March 31, 2023

 

 

 

 Three Months Ended

 

 

 

 

 

March 31,

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

Revenue

 

$433,018

 

 

$55,595

 

 

$377,423

 

Operating expenses

 

$2,979,692

 

 

$395,177

 

 

$2,584,515

 

Other expense

 

$883,164

 

 

$175

 

 

$882,989

 

Net loss

 

$(3,519,710)

 

 

$(353,611)

 

 

$(3,166,099)

 

 

Revenue

 

The Company’s revenue is associated with revenue from MFB which acquired intellectual property to fire suppression in April 2022. The cost of revenue was $89,872 and 13,854 for three months ended March 31, 2024 and 2023, respectively.

 

Operating Expenses

 

 

 

 Three months ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

Stock-based management compensation

 

$1,422,750

 

 

$-

 

 

$1,422,750

 

Stock -based compensation

 

 

975,250

 

 

 

-

 

 

 

975,250

 

Professional fees -related party

 

 

88,800

 

 

 

85,000

 

 

 

3,800

 

Professional fees

 

 

185,330

 

 

 

210,129

 

 

 

(24,799)

Marketing expenses

 

 

110,205

 

 

 

11,602

 

 

 

98,603

 

Depreciation

 

 

63,835

 

 

 

264

 

 

 

63,571

 

General and administrative expenses

 

 

133,522

 

 

 

88,182

 

 

 

45,340

 

 

 

$2,979,692

 

 

$395,177

 

 

$2,584,515

 

 

The increase in operating expenses was primarily attributed to stock -base management compensation of $1,422,750, stock-based services companion of $975,250, marketing expenses of $98,603, depreciation of $63,571 and general and administrative expenses of $45,340.

 

Other Expenses

 

For the three months ended March 31, 2024, and 2023, the other expenses consisted of $885 and $175 interest related to convertible note payable and loss on settlement of debt of $882,279 and $0, respectively. 

 

Net Loss

 

As a result of the foregoing, we incurred a net loss of $3,519,710, for the three months ended March 31, 2024, compared to a net loss of $353,611 for the corresponding three months ended March 31, 2023.

 

 
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Table of Contents

 

Liquidity and Capital Resources

 

 

 

March 31,

 

 

December 31,

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

Cash

 

$371,095

 

 

$549,755

 

 

$(178,660)

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

$1,252,314

 

 

$1,218,056

 

 

$34,258

 

Current Liabilities

 

$1,461,385

 

 

$1,617,785

 

 

$(156,400)

Working Capital (Deficiency)

 

$(209,071)

 

$(399,729)

 

$190,658

 

 

The increase in working capital in 2024 was primarily the result of an increase in accounts receivable of $253,532, prepaid expenses of $792 and a decrease in cash of $178,660 and inventory of 41,406 offset by an increase in accounts payable and accrued liabilities of $15,685, operating lease liability -current portion of $1,915, a decrease in promissory note of $120,000 and convertible note of $54,000.

 

As of March 31, 2024, and December 31, 2023, the current assets consisted primarily of cash of $371,095 and $549,755, inventory of $188,791 and $230,197, accounts receivable of $680,965 and $427,433, and prepaid expenses of $11,463 and 10,671, respectively.

 

As of March 31, 2024, and December 31, 2023, the current liabilities consisted of accounts payable and accrued liabilities of $70,257 and $54,572, due to related party of $1,309,077 and $1,309,077, convertible note of $0 and $54,000, promissory note of $0 and $120,000 and current portion of operating lease liability of $82,051 and $80,136, respectively.

 

Cash Flows

 

 

 

 Three months ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Cash used in operating activities

 

$(343,660)

 

 

$(176,905)

 

Cash provided by investing activities

 

$-

 

 

$-

 

Cash provided by financing activities

 

$165,000

 

 

$185,000

 

Net Change in Cash

 

$(178,660)

 

$8,095

 

 

Cash Flows from Operating Activities

 

We have not generated positive cash flows from operating activities. For the three months ended March 31, 2023, net cash flows used in operating activities was $343,660, consisting of a net loss of $3,519,710, reduced by stock-based compensation of $2,398,000, non-cash lease expenses of $19,602, depreciation of $63,835, loss on settlement of debt of $882,279 and increased by changes in operating assets and liabilities of $187,666.

 

For the three months ended March 31, 2023, net cash flows used in operating activities was $176,905, consisting of a net loss of $353,611, reduced by stock-based compensation of $86,850, depreciation of $264, non-cash lease expenses of $15,000 and reduced by changes in operating assets and liabilities of $75,592.

 

Cash Flows from Investing Activities

 

The Company did not use any funds for investing activities during the three months ended March 31, 2024, and 2023. 

 

Cash Flows from Financing Activities

 

For the three months ended March 31, 2024, net cash provided by financing activities consisted of $165,000 proceed from issuance Series C Preferred Stock.  

 

For the three months ended March 31, 2023, net cash provided by financing activities consisted of $185,000 received from a related party.

 

 
20

Table of Contents

 

Going Concern

 

The accompanying consolidated financial statements have been prepared (i) in accordance with accounting principles generally accepted in the United States, and (ii) assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated significant income to date. The Company is subject to the risks and uncertainties associated with a business with no substantive revenue, as well as limitations on its operating capital resources. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. In light of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise capital and generate revenue and profits in the future. 

 

Critical Accounting Policies

 

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

Our most critical accounting policies and estimates relate to the following:

 

Revenue Recognition

Incremental borrowing rate for Right of Use Assets

Share based compensation

 

Revenue Recognition

 

Revenue is recognized when performance obligations under the terms of the contracts with our customers are satisfied. Our revenues currently consist of products used for lumber products for fire prevention. Revenue is recognized at a point in time, that is which the risks and rewards of ownership of the products transfer from the Company to the customer. All of our performance obligations under the terms of contracts with our customers have an original duration of one year or less.

 

Incremental borrowing rate for Right of Use Assets

 

As the Company’s operating leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate. The assessment of the Company’s incremental borrowing rate involves judgment regarding the cost of borrowing funds on a collateralized basis over a similar term and in a similar economic environment.

 

Share-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.

 

 
21

Table of Contents

 

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.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

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

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2024. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms as a result of the following material weaknesses: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management is dominated by one individual without adequate compensating controls.

 

A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis.

 

We expect to be materially dependent upon a third party to provide us with accounting consulting services for the foreseeable future. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses in our disclosure controls and procedures and internal control over financial reporting will not result in errors in our financial statements which could lead to a restatement of those financial statements.

 

Changes in Internal Controls

 

There has been no change in the Company’s internal control over financial reporting during the three months ended March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. Management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional improvements as necessary.

 

 
22

Table of Contents

  

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations. We are not currently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business, financial condition, and results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

 

Item 1A. Risk Factors

 

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

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

 
23

Table of Contents

 

Item 6. Exhibits

 

Exhibit Number

Description

31.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

32.1*

Certification of Chief Executive Officer and Chief Financial Officer Pursuant Section 906 Certifications under Sarbanes-Oxley Act of 2002

 

 

 

101*

 

Inline XBRL Document Set for the condensed financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.

 

 

 

104*

 

Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

________

* Filed herewith.

 

 
24

Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

General Enterprise Ventures, Inc.

 

(Registrant)

 

 

 

Dated: May 15, 2024

 

/s/ Joshua Ralston

 

Joshua Ralston

 

Chief Executive Officer and

Chief Financial Officer

 

 

25

 

nullnullv3.24.1.1.u2
Cover - shares
3 Months Ended
Mar. 31, 2024
May 14, 2024
Cover [Abstract]    
Entity Registrant Name General Enterprise Ventures, Inc.  
Entity Central Index Key 0000894556  
Document Type 10-Q  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Current Reporting Status Yes  
Document Period End Date Mar. 31, 2024  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2024  
Entity Common Stock Shares Outstanding   36,302,150
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 000-56567  
Entity Incorporation State Country Code WY  
Entity Tax Identification Number 87-2765150  
Entity Address Address Line 1 1740H Del Range Blvd  
Entity Address Address Line 2 Suite 166  
Entity Address City Or Town Cheyenne  
Entity Address State Or Province WY  
Entity Address Postal Zip Code 82009  
City Area Code 800  
Local Phone Number 401-4535  
Entity Interactive Data Current Yes  
v3.24.1.1.u2
Consolidated Balance Sheets - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Current Assets    
Cash $ 371,095 $ 549,755
Accounts receivable 680,965 427,433
Inventory 188,791 230,197
Prepaid expenses 11,463 10,671
Total Current Assets 1,252,314 1,218,056
Equipment, net 6,639 7,299
Intangible assets 3,884,931 3,948,106
Operating lease right-of-use asset 110,081 129,683
Total Assets 5,253,965 5,303,144
Current liabilities    
Accounts payable and accrued liabilities 70,257 54,572
Promissory note 0 120,000
Convertible note payable 0 54,000
Due to related parties 1,309,077 1,309,077
Operating lease liability - current portion 82,051 80,136
Total Current Liabilities 1,461,385 1,617,785
Operating lease liability 28,830 50,047
Total Liabilities 1,490,215 1,667,832
Stockholders' Equity    
Common Stock par value $0.0001, authorized 1,000,000,000 shares, 36,302,150 and 97,545,388 shares issued and outstanding, respectively 3,630 9,755
Additional paid-in capital 76,492,249 72,427,996
Common Stock to be issued - 250,000 and 500,000 shares, respectively 90,000 180,000
Subscription received - 75,000 and 183,333 shares of Series C Preferred stock to be issued, respectively 180,000 500,000
Accumulated deficit (73,003,376) (69,483,666)
Total Stockholders' Equity 3,763,750 3,635,312
Total Liabilities and Stockholders' Equity 5,253,965 5,303,144
Convertible Preferred Stock Series A    
Stockholders' Equity    
Common Stock par value $0.0001, authorized 1,000,000,000 shares, 36,302,150 and 97,545,388 shares issued and outstanding, respectively 1,000 1,000
Convertible Preferred Sock Series C    
Stockholders' Equity    
Series C Convertible Preferred Stock, par value $0.0001, designated 5,000,000 shares, 2,471,832 and 2,273,499 issued and outstanding, respectively $ 247 $ 227
v3.24.1.1.u2
Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 31, 2024
Dec. 31, 2023
Common stock, shares par value $ 0.0001 $ 0.0001
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 36,302,150 97,545,388
Common stock, shares outstanding 36,302,150 97,545,388
Common stock to be issued 250,000 500,000
Convertible Preferred Stock Series C    
Preferred stock, shares par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares issued 2,471,832 2,273,499
Preferred stock, shares outstanding 2,471,832 2,273,499
Shares to be issued 75,000 183,333
Preferred Stock Series A    
Preferred stock, shares par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 10,000,000 10,000,000
Preferred stock, shares outstanding 10,000,000 10,000,000
v3.24.1.1.u2
Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Consolidated Statements of Operations (Unaudited)    
Revenue $ 433,018 $ 55,595
Cost of revenue 89,872 13,854
Gross Profit 343,146 41,741
Operating Expenses    
General and administration 197,357 88,456
Marketing 110,206 11,592
Professional fees 2,672,129 295,129
Total operating expenses 2,979,692 395,177
Loss from Operations (2,636,546) (353,436)
Other Expense    
Interest expense (885) (175)
Loss on debt settled by common stock (882,279) 0
Total other expense (883,164) (175)
Loss from operations before taxes (3,519,710) (353,611)
Provision for income taxes 0 0
Net Loss (3,519,710) (353,611)
Comprehensive Loss $ (3,519,710) $ (353,611)
Net loss per common share - Basic and diluted $ (0.04) $ (0.00)
Basic and Diluted Weighted Average Number of Common Shares Outstanding 92,232,946 94,165,388
v3.24.1.1.u2
Consolidated Statements of Change in Stockholders' Deficit (Unaudited) - USD ($)
Total
Series A Preferred Stock
Convertible Series C Preferred Stock
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Preferred Stock To Be Issued
Common Stock To Be Issued
Balance, shares at Dec. 31, 2022   10,000,000 950,000 93,945,388        
Balance, amount at Dec. 31, 2022 $ 3,348,668 $ 10,000 $ 950 $ 93,945 $ 62,625,173 $ (59,381,400)    
Common stock issued for services, shares       300,000        
Common stock issued for services, amount 86,850 0 0 $ 300 86,550 0    
Net loss (353,611) $ 0 $ 0 $ 0 0 (353,611)    
Balance, shares at Mar. 31, 2023   10,000,000 950,000 94,245,388        
Balance, amount at Mar. 31, 2023 3,081,907 $ 10,000 $ 950 $ 94,245 62,711,723 (59,735,011)    
Balance, shares at Dec. 31, 2023   10,000,000 2,273,499 97,545,388        
Balance, amount at Dec. 31, 2023 3,635,312 $ 1,000 $ 227 $ 9,755 72,427,996 (69,483,666) $ 500,000 $ 180,000
Common stock issued for services, shares       2,000,000        
Common stock issued for services, amount 1,702,000 0 0 $ 200 1,701,800 0 0 0
Net loss (3,519,710) 0 $ 0 0 0 (3,519,710) 0 0
Series C Preferred Stock issued for cash, shares     158,333          
Series C Preferred Stock issued for cash, amount 165,000 0 $ 16 0 484,984 0 (320,000) 0
Series C Preferred Stock issued for services, shares     40,000          
Series C Preferred Stock issued for services, amount 696,000 0 $ 4 $ 0 695,996 0 0 0
Common stock issued for stock to be issued - management, shares       250,000        
Common stock issued for stock to be issued - management, amount 0 0 0 $ 25 89,975 0 0 (90,000)
Common stock issued for conversion and settlement of debt, shares       1,506,762        
Common stock issued for conversion and settlement of debt, amount 1,085,148 0 0 $ 150 1,084,998 0 0 0
Cancellation of comment stock -related party, shares       (65,000,000)        
Cancellation of comment stock -related party, amount 0 $ 0 $ 0 $ (6,500) 6,500 0 0 0
Balance, shares at Mar. 31, 2024   10,000,000 2,471,832 36,302,150        
Balance, amount at Mar. 31, 2024 $ 3,763,750 $ 1,000 $ 247 $ 3,630 $ 76,492,249 $ (73,003,376) $ 180,000 $ 90,000
v3.24.1.1.u2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash Flows from Operating Activities:    
Net loss $ (3,519,710) $ (353,611)
Adjustments to reconcile net loss to net cash used in operating activities