CitroTech Inc.: Form 10-Q for the period ended Sep 30, 2022

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results.

We caution that the factors described herein, and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Our unaudited financial statements are stated in United States Dollars (USD) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

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

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

General Overview

General Enterprise Ventures, Inc. (the “Company”) was originally incorporated under the laws of the State of Nevada on March 14, 1990.

Effective April 1, 2022, the Company implemented a plan that is now complete to divest its Crypto Mining operations out of the company. The Company intends to focus resources on the operations of the Mighty Fire Breaker LLC (“MFB”) acquisition.

On April 13, 2022, General Enterprise Ventures, Inc. acquired Mighty Fire Breaker LLC and all associated IP, in exchange for 1,000,000 Preferred C Shares.

On April 13, 2022, The Company designated 5,000,000 shares of Series C convertible Preferred Stock (“Series C Preferred Stock”). The Series C Preferred Stock is convertible into twenty (20) shares of Common Stock for each share of Series C Preferred Stock at the option of the stockholder. The Series C Preferred Stock does not have voting rights and is not eligible to receive dividends

On April 28, 2022, Jan Ralston transferred ownership of 10,000,000 Preferred A shares to CEO, Joshua Ralston, making Mr. Ralston the new Majority Shareholder.

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Current Operations

Fully Integrated Services

We are a fully integrated technology company structured to provide mergers and acquisitions of new and available technology. Through our services, we incubate first-to-market products and help existing companies accelerate their product development within all regulatory requirements.

Environmental Impact

At this time, there are no significant environmental impacts occurring from the services, products, or activities of General Enterprise Ventures.

Human Services

The Company currently employees, 2 people full-time and hosts several consultants, attorneys, and independent contractors that all perform tasks on behalf of the company.

Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited financial statements for the period ended September 30, 2022, which are included herein.

Our operating results for the nine months ended September 30, 2022, and 2021 and the changes between those periods for the respective items are summarized as follows:

For the three months ended September 30, 2022, compared to three months ended September 30, 2021

Revenue

Our Company generated $19,033 and $0 revenue for the three months ended September 30, 2022 and 2021, respectively. The Company’s revenue is associated with revenue from MFB which was acquired in April 2022.

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Operating Expenses

For the three months ended September 30, 2022, operating expenses consisted of professional fees of $111,783, general and administrative expenses of $202,309 and depreciation of $132. For the three months ended September 30, 2021, operating expenses consisted of management compensation of $13250.

Other expenses

For the three months ended September 30,2022 and 2021, the other expenses consisted of interest expense $76 and $945, respectively.

Discontinued operations

During the three months ended September 30, 2022, loss on discontinued operations was $0. During the three months ended September 30, 2021, loss on discontinued operations of $6,371 was the result of the net loss incurred from the operations of Strategic Asset Holdings, which was divested in October 2021.

Net Loss

As a result of the foregoing, we incurred a net loss of $297,065, for the three months ended September 30, 2022, compared to a net loss of $20,566 for the three months ended September 30, 2021.

For the nine months ended September 30, 2022, compared to nine months ended September 30, 2021

Revenue

Our Company generated $60,501 and $0 revenue for the nine months ended September 30, 2022 and 2021, respectively. The Company’s revenue is associated with revenue from MFB which was acquired in April 2022.

Operating Expenses

For the nine months ended September 30, 2022, operating expenses consisted of management compensation of $2,100,000 associated with the issuance of 70,000,000 restricted stock units as compensation, professional fees of $334,249, general and administrative expenses of $283,015 and depreciation of $267. For the nine months ended September 30,2021, operating expenses consisted of management compensation of $13.250.

Other expenses

For the nine months ended September 30, 2022 and 2021, the other expenses consisted of interest expense $76 and $1,469, respectively.

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Discontinued operations

During the nine months ended September 30, 2022, income from discontinued operations of $10,986 was the result of net income generated from the Company’s crypto mining activities of $13,016 reduced by a loss on disposition of the Company’s digital currency assets of $2,030, which includes the disposition of equipment and digital currency, against a note payable issued as consideration for the equipment when it was previously acquired. During the nine months ended September 30, 2021, loss on discontinued operations of $69,574 was the result of the net loss incurred from the operations of Strategic Asset Holdings, which was divested in October 2021.

Net Loss

As a result of the foregoing, we incurred a net loss of $2,647,918, for the nine months ended September 30, 2022, compared to a net loss of $84,293 for the nine months ended September 30, 2021.

Liquidity and Capital Resources

As of September 30, 2022, and December 31, 2021, we had $57,152 and $5,469 in cash, respectively.

As of September 30, 2022, and December 31, 2021, we had current assets of $171,565 and $5,469, current liabilities of $822,375 and $383,090, and our working capital deficiency were $650,810 and $377,621, respectively. The increase in working capital deficiency of $273,189, was primarily the result of increases in cash on hand and inventory of $166,096 offset by increases in accounts payable and accrued liabilities of $34,470, due to related party of $316,053, convertible note of $35,000 and current portion of operating lease liability of $53,762.

As of September 30, 2022, and December 31, 2021, the current assets consisted of cash of $57,152 and $5,469 and inventory of $114,413 and $0, respectively.

As of September 30, 2022, and December 31, 2021, the current liabilities consisted of accounts payable and accrued liabilities of $45,211 and $10,741, due to related parties of $688,402 and $372,349, convertible note of $35,000 and $0, and current portion of operating lease liability of $53,762 and $0, respectively.

Cash Flows

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Cash Flows from Operating Activities

For the nine months ended September 30, 2022, net cash flows used in operating activities were $506,731, consisting of a net loss of $2,647,918, reduced by non-cash management compensation of $2,100,000 associated with the issuance of 70,000,000 restricted stock units as compensation, loss on disposition of digital currency and digital currency assets of $2,030, impairment loss on digital assets of $6,125, non-cash lease expense of $29,647, depreciation of $15,326 and increased by an increase in inventory of $114,413, prepaid expenses of $5,190 , fixed cash payments on operating leases of $25,000 and decreased by an increase in due to related part of $97,819, accounts payable and accrued liabilities of $34,469 and change in digital currency of $374.

For the nine months ended September 30, 2021, net cash flows used in operating activities of $18,889, consisting of a net loss of $84,293, reduced by impairment loss on digital assets of $52,976, an increase in due to related party of $10,959 and accounts payable and accrued liabilities of $1,469.

Cash Flows from Investing Activities

Cash flows used in investing activities of $5,350 during the nine months ended September 30, 2022, was the result of the purchase of equipment. Cash flows provided by investing activities of $14,075 during the nine months ended September 30, 2021, was the result of cash acquired from the acquisition of SAH.

Cash Flows from Financing Activities

For the nine months ended September 30, 2022, net cash provided by financing activities was $563,764, consisting of $584,484 received from related parties, $35,000 from convertible note and repayments of $55,720 to related parties. For the nine months ended September 30,2021, net cash provided from financing activities was $5,500, was the result of a loan received of $5,500.

Going Concern

The accompanying 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.

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 revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

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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.

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 September 30, 2022. 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 have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the period ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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