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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended:
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or
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ___________ to ___________ |
Commission File Number:
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(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
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(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.
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).
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.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
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TABLE OF CONTENTS
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3 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Table of Contents |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
General Enterprise Ventures, Inc.
Consolidated Balance Sheets
(Unaudited)
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March 31, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current Assets |
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Cash |
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$ |
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$ |
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Accounts receivable |
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Inventory |
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Prepaid expenses |
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Total Current Assets |
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Equipment, net |
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Intangible assets |
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Operating lease right-of-use asset |
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Total Assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current liabilities |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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Promissory note |
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Convertible note payable |
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Due to related parties |
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Operating lease liability - current portion |
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Total Current Liabilities |
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Operating lease liability |
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Total Liabilities |
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Commitment and contingencies |
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- |
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- |
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Stockholders' Equity |
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Series A Preferred Stock, par value $
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Series C Convertible Preferred Stock, par value $
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Common Stock par value $
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Additional paid-in capital |
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Common Stock to be issued -
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Subscription received -
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Accumulated deficit |
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(
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Total Stockholders' Equity |
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Total Liabilities and Stockholders' Equity |
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$ |
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$ |
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See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements.
| 3 |
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| Table of Contents |
General Enterprise Ventures, Inc.
Consolidated Statement of Operations and Comprehensive Loss
(Unaudited)
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Three months ended |
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March 31, |
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2024 |
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2023 |
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Revenue |
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$ |
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$ |
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Cost of revenue |
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Gross Profit |
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Operating Expenses |
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General and administration |
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Marketing |
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Professional fees |
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Total operating expenses |
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Loss from Operations |
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(
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Other Expense |
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Interest expense |
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Loss on debt settled by common stock |
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(
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Total other expense |
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Loss from operations before taxes |
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Provision for income taxes |
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Net Loss |
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$ |
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Comprehensive Loss |
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$ |
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Net loss per common share - Basic and diluted |
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$ |
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Basic and Diluted Weighted Average Number of Common Shares Outstanding |
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See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements.
| 4 |
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| Table of Contents |
General Enterprise Ventures, Inc.
Consolidated Statements of Change in Stockholders’ Deficit
(Unaudited)
For the three months ended March 31, 2024
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Series A |
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Convertible Series C |
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Additional |
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Total |
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Preferred stock |
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Preferred stock |
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Common Stock |
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Preferred Stock |
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Common Stock |
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Paid-In |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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to be issued |
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to be issued |
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Capital |
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Deficit |
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Equity |
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Balance - December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
(
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$ |
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Series C Preferred Stock issued for cash |
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- |
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- |
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(
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Series C Preferred Stock issued for services |
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- |
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- |
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Common stock issued for stock to be issued - management |
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- |
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- |
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(
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Common stock issued for conversion and settlement of debt |
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- |
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- |
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Cancellation of comment stock -related party |
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- |
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- |
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(
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(
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Common stock issued for services |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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(
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(
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Balance - March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
(
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$ |
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For the three months ended March 31, 2023
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Series A |
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Convertible Series C |
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Additional |
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Total |
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Preferred stock |
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Preferred stock |
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Common Stock |
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Paid-In |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance - December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
(
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$ |
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Common stock issued for services |
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- |
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- |
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Net loss |
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- |
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- |
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- |
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(
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(
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Balance - March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
(
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$ |
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See the accompanying Notes, which are an integral part of these unaudited consolidated financial statements.
| 5 |
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| Table of Contents |
General Enterprise Ventures, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
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Three months ended |
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March 31, |
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2024 |
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2023 |
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Cash Flows from Operating Activities: |
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Net loss |
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$ |
(
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$ |
(
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Common stock-based compensation |
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Series C Preferred stock-based compensation |
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Non-cash lease expenses |
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Depreciation and amortization |
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Loss on settlement of debt |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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(
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Inventory |
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Prepaid expense |
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(
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(
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Related party advances funding operating expense |
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Accounts payable and accrued liabilities |
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Operating lease liabilities |
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(
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(
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Net Cash used in Operating Activities |
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(
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(
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Cash Flows from Financing Activities: |
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Proceeds from loan - related party |
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Proceed from issuance Series C Preferred Stock |
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Net Cash provided by Financing Activities |
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Change in cash |
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(
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Cash, beginning of period |
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Cash, end of period |
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$ |
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$ |
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Supplemental Disclosure Information: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for taxes |
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$ |
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$ |
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Non-Cash Financing Disclosure: |
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Common stock issued for conversion and settlement of debt |
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$ |
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$ |
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Common stock issued for stock to be issued - management |
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$ |
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$ |
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Series C Preferred stock issued for subscription received |
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$ |
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$ |
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Cancellation comment stock -related party |
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$ |
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$ |
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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 $
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 $
Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $
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 $
During the three months ended March 31, 2024, and 2023, the Company recorded cost of goods sold of $
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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:
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Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; |
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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 |
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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:
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(i) |
Identify the contract, or contracts, with a customer; |
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Identify the performance obligations in the contract; |
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Determine the transaction price; |
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Allocate the transaction price to the performance obligations in the contract; |
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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.
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March 31, |
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March 31, |
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2024 |
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2023 |
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Shares |
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Shares |
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Convertible notes |
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- |
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Convertible Series C Preferred Stock |
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Convertible Series A Preferred Stock (1) |
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- |
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(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:
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Three months ended |
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March 31, |
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2024 |
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2023 |
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Numerator: |
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Net Loss |
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$ |
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$ |
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Net Loss - diluted |
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$ |
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$ |
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Denominator: |
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Weighted average common shares outstanding |
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Effect of dilutive shares |
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Convertible notes |
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- |
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Preferred stock |
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Diluted |
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Net income per common share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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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:
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March 31, |
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December 31, |
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2024 |
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2023 |
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Cost: |
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Furniture and equipment |
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$ |
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$ |
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Less: accumulated depreciation |
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Property and equipment, net |
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$ |
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$ |
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During the three months ended March 31, 2024, and 2023, the Company recorded depreciation of $
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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 $
The amount capitalized consisted of a portion of the fair value of
As of March 31, 2024 and December 31, 2023, finite lived intangible assets consisted of the following:
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March 31, |
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December 31, |
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2024 |
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2023 |
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Patents |
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$ |
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$ |
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Accumulated amortization |
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Intangible assets, net |
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$ |
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$ |
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Estimated future amortization expense for finite lived intangibles are as follows:
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December 31, |
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2024 (excluding the three months ended March 31, 2024) |
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$ |
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2025 |
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2026 |
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2027 |
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2028 |
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Thereafter |
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$ |
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As of March 31, 2024, the weighted-average useful life is
During the three months ended March 31, 2024 and 2023, the amortization expense was $
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:
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Three months ended |
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March 31, |
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2024 |
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2023 |
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The components of lease expense were as follows: |
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Operating lease expense |
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$ |
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$ |
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Short-term lease expense |
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Total lease expense |
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$ |
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$ |
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Supplemental cash flow information related to leases was as follows: |
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Cash paid for operating cash flows from operating leases |
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$ |
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$ |
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Weighted-average remaining lease term - operating leases (year) |
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Weighted-average discount rate — operating leases |
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% |
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% |
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Supplemental balance sheet information related to leases was as follows:
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March 31, |
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December 31, |
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2024 |
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2023 |
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Operating lease right-of-use asset |
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$ |
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$ |
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March 31, |
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December 31, |
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2024 |
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2023 |
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Operating lease liabilities: |
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Current portion |
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$ |
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$ |
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Non-current portion |
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$ |
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$ |
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The following table outlines maturities of our lease liabilities as of March 31, 2024:
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Year ending December 31, |
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2024 (excluding the three months ended March 31, 2024) |
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$ |
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2025 |
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Thereafter |
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Less: Imputed interest |
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(
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Operating lease liabilities |
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$ |
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Note 6 – Convertible Note
On September 30, 2022, the Company entered into a convertible note agreement for the amount of $
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Principal |
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Interest |
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March 31, |
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December 31, |
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Payment date |
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Amount |
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Maturity date |
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Rate |
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2024 |
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2023 |
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August 11, 2022 |
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$ |
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% |
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$ | - |
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$ |
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September 2, 2022 |
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$ |
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% |
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- |
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April 1, 2023 |
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$ |
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% |
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- |
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Total Convertible notes |
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$ | - |
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$ |
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Current portion |
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- |
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Long -term portion |
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$ | - |
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$ |
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During the three months ended March 31, 2024, the Company settled liabilities of $
During the three months ended March 31, 2024, and 2023, the Company recognized interest expenses of $
Note 7 – Promissory Note
On June 7, 2023, the Company entered into a promissory note agreement for the amount of $
During the three months ended March 31, 2024, the Company settled the promissory note with principal amount of $
Note 8 – Related Party Transactions
On November 1, 2022, the Company’s Board of Directors approved the issuance of
During the three months ended March 31, 2024 and 2023, a related party advanced to the Company an amount of $
During the three months ended March 31, 2024, and 2023, the Company record and paid management fees of $
During the three months ended March 31, 2024, and 2023, the Company recorded and paid consulting expense of $
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 $
Note 9 – Stockholders’ Equity
Preferred Shares
Shares Outstanding
The Company is authorized to issue up to
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
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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
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
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
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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,
As of March 31, 2024, and December 31, 2023, there were
Common Stock
The Company has authorized
During the three months ended March 31, 2024, the Company issued
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1,506,762 shares for conversion and settlement of debt of $
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As of March 31, 2024 and December 31, 2023, there were
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Stock-Based Compensation
On June 13, 2022, the Company issued
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Restricted Stock Award |
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Weighted-Average Grant Price |
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Balance, December 31, 2023 |
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$ |
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Granted |
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- |
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Vested |
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- |
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Cancelled |
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(
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Balance, March 31, 2024 |
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$ |
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As of December 31, 2023,
Common Stock to be Issued
On November 1, 2022, the Company’s Board of Directors approved the issuance of
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
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Percentage of Revenue |
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Percentage of |
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For Three Months ended |
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Accounts receivable |
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March 31, |
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March 31, |
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December 31 |
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2024 |
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2023 |
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2024 |
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2023 |
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Customer A |
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% |
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% |
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- |
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Customer B |
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% |
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- |
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% |
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- |
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Customer C |
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% |
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- |
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% |
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% |
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Customer D |
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- |
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- |
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% |
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% |
|
Total (as a group) |
|
|
|
% |
|
|
- |
|
|
|
|
% |
|
|
|
% |
| 16 |
|
|
| Table of Contents |
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 |
|
|
|
% |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Supplier B |
|
|
|
% |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Supplier C |
|
|
|
% |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Supplier D |
|
|
|
% |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Supplier E |
|
|
- |
|
|
|
|
% |
|
|
- |
|
|
|
- |
|
|
Total (as a group) |
|
|
|
% |
|
|
|
% |
|
|
- |
|
|
|
- |
|
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.
| 17 |
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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.
| 18 |
|
|
| 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.
| 19 |
|
|
| 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 |
|
|
|
|
|
|
|
|
|
|
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 |