CitroTech Inc.: Form 10-K/A for the period ended Dec 31, 2023

General Enterprise Ventures, Inc., (“GEVI,” “we,” “us,” or the “Company”) was originally incorporated in Nevada on March 14, 1990. Our offices are located at 1740H Del Range Blvd., Suite 166, Cheyenne, Wyoming 82009. Our telephone number is (800) 401-4535. Our websites are www.generalenterpriseventures.com (http://www.generalenterpriseventures.com) and www.mightyfirebreaker.com (http://www.mightyfirebreaker.com).

We do not incorporate the information on or accessible through our website into this Annual Report, and you should not consider any information on, or that can be accessed through, our website a part of this Registration Statement.

We are an environmentally sustainable flame retardant and flame suppression company for the residential home industry throughout the United States and international markets. The Company is bringing to the marketplace unique, disruptive products with significant environmental impact potential.

We operate one line of business. On January 3, 2022, the Company formed Mighty Fire Breaker, LLC, an Ohio limited liability company (“MFB Ohio”), to acquire all the intellectual property of Mighty Fire Breaker, LLC, a California limited liability company (“MFB California”) in connection with the flame retardant and flame suppression segments of the environmental industry, including patents and patents pending. On April 13, 2022, the transaction between the Company, MFB Ohio and MFB California closed. The transaction consideration to the equity holders of MFB California was 1,000,000 shares of the Series C Convertible Preferred Stock of the Company with a value at closing of $4,200,000, and a 10% royalty on gross sales before taxes of the MFB Ohio family of products.

In addition, on November 14, 2022, the Company formed Mighty Fire Breaker UK Limited (“MFB UK” and together with MFB Ohio, collectively, “MFB”). MFB has 56 patents pertaining to its CitroTech MFB 31 Technology™ (“CitroTech” or the “MFB Technology”) for the prevention and spread of wildfires. . When CitroTech is applied it converts flammable fuels like dry native vegetation and wood into non-combustible materials. During the third quarter of 2022 the Company received EPA Safer Choice status and UL Green-Guard Gold approval on its CitroTech fire inhibitor. The Company continues to pursue accreditations such as the Missoula Testing approval for selling products to the government. Currently. MFB Ohio is involved in installing commercial and large residential Proactive Wildfire Prevention Systems.

Our management is comprised of three individuals, Joshua Ralston, who acts as our President, Secretary, Chief Executive officer, Chief Financial Officer and Chairman of the Board of Directors; John Costa who serves on the Board of Directors; and Jeffery Pomerantz, who serves on the Board of Directors. Mr. Ralston has sufficient voting power through his ownership of 10,000,000 shares of the Company’s Series A Preferred Stock that feature super majority voting rights to control the vote on all matters.

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Corporate History

Ultronics Corporation (the “UC”) was incorporated under the laws of the State of Nevada on March 14, 1990. UC never had operations and was formed to investigate potential companies that would be interested in merging with it.

On December 21, 2004, UC formed a subsidiary, Ultronics Acquisition Corporation (“UAC”) for the purpose of facilitating an agreement and plan of merger. UAC was incorporated in the State of Nevada. On December 23, 2004, UC, UAC and General Environmental Management, Inc. (“GEM”) entered into an Agreement and Plan of Merger whereby UAC would be merged into GEM (“Merger”) with GEM to be the surviving corporation. On February 14, 2005, a Certificate of Merger was filed in Delaware; however, there is no evidence of a Certificate of Merger being filed in Nevada. As such, GEM did not cease to exist in Nevada.

The acquisition was treated as a reverse merger with GEM deemed to be the accounting acquiror, and UAC the legal acquiror. UAC’s name was changed to General Environmental Management, Inc. (the “Company”) on March 16, 2005. On March 10, 2006, the Company entered into an Agreement with K2M Mobile Treatment Services, Inc. of Long Beach, California (“K2M”), a privately held company, pursuant to which the Company acquired all of the issued and outstanding common stock of K2M.

On August 31, 2008, the Company entered into an agreement with Island Environmental Services, Inc. of Pomona, California (“Island”), a privately held company, pursuant to which The Company acquired all of the issued and outstanding common stock of Island, a California-based provider of hazardous and non-hazardous waste removal and remediation services to a variety of private and public sector establishments.

On November 6, 2009, the Company entered into a Stock Purchase Agreement (“CLW Agreement”) with United States Environmental Response, LLC, a California limited liability company pursuant to which the Company purchased all of the issued and outstanding capital stock of California Living Waters, Incorporated (“CLW”), a privately held company. CLW owned all of the issued and outstanding capital stock of Santa Clara Waste Water Company (“SCWW”) a California corporation. CLW's only operating subsidiary was SCWW.

On November 25, 2009, the Company entered into an Agreement with Luntz Acquisition (Delaware), LLC. (“Buyer”) pursuant to which the Company sold to Luntz all of the issued and outstanding stock of the Company's primary operating subsidiaries for cash (the “Sale”). On February 26, 2010, after approval of the transaction by the Company’s shareholders at a special meeting held on February 19, 2010, the Company completed the sale of the entities created out of GEM DE. The net cash proceeds from the transaction were used by the Company to retire senior debt and other obligations of the Company. The Company was not merged out of Nevada pursuant to this transaction.

Subsequent to the Luntz transaction, the Company’s revenues and expenses, operations, assets and liabilities were discontinued from February 2010 until January 2021.

On March 19, 2019, Small Cap Compliance, LLC was awarded custodianship of the Company by the Eighth Judicial District Court of Nevada. On May 19, 2019, the Company was revived in Nevada. On May 30, 2019, the custodian filed an Amendment to the Designations of the Series A Convertible Preferred Stock of the Company and filed a Custodian’s Certification of Amendment certifying the same.

On January 15, 2021, the Company filed a Certificate of Conversion from a Non-Delaware Corporation to a Delaware Corporation, and the associated Certificate of Incorporation, to become a corporation in Delaware. Delaware recognized this domestication of the Company.

On March 31, 2021, the Company formed General Entertainment Ventures, Inc. (“GEVI”) in Delaware as a wholly owned subsidiary of the Company. The purpose of the formation of GEVI was to merge the Company into GEVI pursuant to Section 251(g) of the General Corporation Law of the State of Delaware.

On April 10, 2021, after approval by the board of directors and shareholders of the Company, the Company was merged into GEVI pursuant to an Agreement and Plan of Merger dated as of the same date. GEVI is the accounting and legal acquiror of the Company.

On June 3, 2021, after approval by the board of directors and shareholders of the Company, the Company was redomiciled to the State of Wyoming.

On October 11, 2021, after approval by the board of directors and shareholders of the Company, the Company was renamed General Enterprise Ventures, Inc., in the State of Wyoming.

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Change of Control

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

Series C Preferred Stock

On April 13, 2022, The Company designated 5,000,000 shares of Series C convertible Preferred Stock (“Series C Preferred Stock”), par value $0.0001. 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.

Corporate changes

On January 3, 2022, the Company formed Mighty Fire Breaker, LLC, an Ohio limited liability company (“MFB Ohio”), to acquire all the intellectual property of Mighty Fire Breaker, LLC, a California limited liability company (“MFB California”) in connection with the flame retardant and flame suppression segments of the environmental industry, including patents and patents pending. On April 13, 2022, the transaction between the Company, MFB Ohio and MFB California closed. The transaction consideration to the equity holders of MFB California was 1,000,000 shares of the Series C Convertible Preferred Stock of the Company with a value at closing of $4,200,000, and a 10% royalty on gross sales before taxes of the MFB Ohio family of products. MFB has 56 patents pertaining to its CitroTech MFB 31 Technology™ (“CitroTech” or the “MFB Technology”) for the prevention and spread of wildfires. . When CitroTech is applied it converts flammable fuels like dry native vegetation and wood into non-combustible materials. During the third quarter of 2022 the Company received EPA Safer Choice status and UL Green-Guard Gold approval on its CitroTech fire inhibitor. The Company continues to pursue accreditations such as the Missoula Testing approval for selling products to the government. Currently. MFB Ohio is involved in installing commercial and large residential Proactive Wildfire Prevention Systems.

Effective April 1, 2022, the Company implemented a plan to divest its Crypto Mining operations and focus its resources on MFB.

On November 20, 2022, the Company. formed a UK branch of MFB, Mighty Fire Breaker UK Limited. The new subsidiary, headquartered in the United Kingdom, will be used to direct sales of the MFB products and technologies in Europe, the Middle East and Africa.

Current operations

Principal products, services and markets

MFB holds various intellectual property in the form of patents and trademarks in the fields of fire suppression, mapping and tracking of fire retardant dispersion and fire inhibition chemistry and technology. The Company and MFB have obtained certification and accreditations in this industry, such as being the only EPA Safer Choice approved, long-term fire retardant, as well as the UL GreenGaurd Gold, California Bioassay water approval, LENS, and in the process of USDA approval.

The fire-retardant market is forecast to be $13.6 billion dollars globally by 2034. MFB markets home, industrial and commercial proactive fire defense systems directly and in conjunction with large insurance companies, sells EPA products through retailers and wholesalers directly to large users such as Fire Departments and other countries.

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Distribution methods

MFB ships directly from its Rohnert Park, California facility, can drop ship large volume orders through toll blenders and has product available at 12 regional retailers for smaller consumers.

Status of publicly announced product or service

To date, all publicly announced orders have been shipped and delivered, including the San Diego Fire Department, Brazil, various retailers and system installers.

Competitive business conditions and the Company’s competitive position in the industry

The fire-retardant market has been status quo for many years without significant innovation. Typically, the market is regarded as having products that are not known for their environmental safety or sustainability, and are generally considered as not friendly toward humans, wildlife, fish, water, and plants. CitroTech is the first all-green, food grade EPA approved fire retardant. MFB’s products are sold at substantial margins and can be competitive in many markets. The need for safer and sustainable chemistry should drive demand for MFB’s products.

Sources and availability of raw materials

MFB’s products are food grade and readily available from multiple sources. The Company maintains significant inventory at all times.

Dependence on one or a few customers

Use of fire retardant is spread widely over multiple markets. There is little likelihood that as the popularity of a green chemistry spreads that there will be a business concentration, until USDA approval is obtained, at which point the U.S. government could be could a significant customer.

Patents, trademarks and licenses and their duration

MFB currently holds 56 total patents and patents pending with 30 patents granted, including U.S. and international patents. The granted patents include MFB’s main chemistry and applications include technology patents. MFB has 21 trademarks and various copyrights, both in the United States and internationally. Granted patents offer up to 20 years from the application filing date for infringement protection with additional continuation patents frequently filed. The Company plans to file additional patents stemming from its research and development endeavors.

Need for government approval of principal products or services.

Use of MFB’s product on government land typically requires USDA approval, which MFB is in the process of obtaining. In many cases, entities such as Fire Departments can request a waiver. The Company has sold to customers under the waiver process. MFB’s EPA approval supports this process.

Effect of existing or probably government regulations on the business

MFB is ahead of the regulations that have been proposed by the U.S. government by already having EPA approval. MFB tracks all proposed regulatory changes and makes commercially reasonable efforts to comply in advance. MFB maintains an advisory board of retired high-level fire officials who watch for regulatory changes for the benefit of the Company. MFB also retains experienced legal counsel.

Cost and effects of compliance with environmental laws

All expenses for the USDA application and the EPA application and subsequent approval have been paid. MFB’s products are green and EPA approved, making the only significant maintenance cost the USDA QPL approval and EPA annual testing.

Employees

The Company currently employs eight (8) people full-time and hosts several consultants, attorneys, and independent contractors that all perform tasks on behalf of the company.

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We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this Item.

The Company has cloud-based security, and their computers and servers are fire walled. In addition, the Company does not allow virtual log-in on their computers.

Our Company owns no real property. Our principal office is located at 2170 Allentown Rd, Lima, OH 45808 which is commercial space under on one year lease agreement at $500 per month In addition, the Company leases commercial space for retail and warehousing at 5050 Commerce Blvd., Rohnert Park, CA 90928, which is under a two year lease agreement at $5,200 per month.

Currently, there are no legal proceedings pending or threatened against us. We are not presently party to any pending or other threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results, although from time to time, we may become involved in legal proceedings in the ordinary course of business.

The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Annual Report. The Management’s Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Annual Report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors including, but not limited to, those noted under “Risk Factors” in this Annual Report.

We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report, except as required by U.S. federal securities laws.

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Overview

The Company’s U.S. subsidiary, Mighty Fire Breaker LLC (“MFB”) is currently engaged in developing solutions to support the resolution of the insurance crisis in the western United States by use of it’s EPA approved CitroTech products. MFB has developed and patented addition intellectual property in this regard, such as a system for commercial properties and homes that puts 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. It also has developed a job site trailer allowing for the fire protection of the property during the construction phase and the fire hardening of the inner construction and installation of our patented system during that phase. Hopefully allow the owner to get insurance to start the project. The company also is continuing its USDA approval process. It has sold products to various fire departments and continues to demonstrate market its products.

Results of Operations

The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the years ended December 31, 2023, and 2022, which are included herein.

Our results of operations for the years ended December 31, 2023 and 2022 are summarized below:

(*) not applicable.

Revenue

The Company’s revenue is associated with revenue from Mighty Fire Breaker, LLC (“MFB”) which was formed in April 2022. Revenue increased $458,000 over fiscal year 2022 due to MFBs EPA approval and the filing of additional patents. With the EPA approval, MFB started the marketing phase of the company’s evolution. MFB started selling directly to fire departments and launched its proactive wild-fire defense systems and is gaining momentum with commercial customers, along with attempting to influence the insurance industry to the benefit of consumers.

The net loss for 2023 increased by $7.2 million as compared to 2022 primarily due to the increase in operating expenses, largely from stock-based compensation awards.

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Operating Expenses

(*) not relevant disclosure, due to large amount.

Cost of revenue

Cost of revenue increased 137,000 or 244% over fiscal year 2022, due to the start of MFB operations in April 2022 and having a full year of operations for MFB in 2023. The increase in 2023, is primarily due to increase in cost of inventory and royalty and sales commissions.

Cost of inventory consists of the sales of product, related supplies and direct testing our CitroTech product and various components required to for installation of Mighty Firese Breaker proactive fire systems. Cost of inventory increased in 2023 primarily due to an increase in product sales and supplies by $44,000 and increased direct CitroTech testing of $37,000.

Royality and sales commissions increased in 2023 from more revenue. The Company recognizes an allocated portion of consulting and direct labour costs associated with our revenue.

Amortization and depreciation

The increase in amortization and depreciation is due to the commencement of amortization on our intangible assets during fiscal year 2023.

Management compensation

Management compensation decreased in 2023 as compared to 2022, as the Company recorded $2,100,000 related to our Chief Executive Officer (CEO) for the issuance of 70,000,000 restricted stock awards.

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Professional fees

The increase in professional fees in 2023 of $9 million over 2022, is primarily due to the issuance of 1,200,000 shares of Convertible Series C Preferred Stock to a related party for consulting services rendered to the Company from October 2021 through July 2023. The Company valued the 1,200,000 shares of Convertible Preferred Stock, as if converted to 24,000,000 shares of common stock, using the quoted stock price of the Company’s common stock at approval date (November 1, 2022), resulting in a value of $8,640,000.

On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each of the two independent directors for their board services in support of the Company. During the year ended December 31, 2023, the Company valued the 500,000 shares of common stock at the market value of the Company’s common stock at approval date for the amount of $180,000.

Other expense

Other expense consists of interest expense.

Income from discontinued operations

For 2022, income from discontinued operations of $13,016 was the result of the net income from the operations of crypto mining and the disposition of crypto mining which the Company implemented a plan to divest its crypto mining operations to focus its resources on the MFB acquisition. The loss on disposition of digital currency and digital currency assets of $2,030 was the result of a loss on disposition of the Company’s digital currency assets, including equipment and digital currency.

Liquidity and Capital Resources

The increase in working capital in 2023, was primarily the result of an increases in cash of $494,00, inventory of $116,000, accounts receivable of $427,000 and prepaid expenses of $11,000 offset by an increase in due to related parties of $410,000, promissory note of $120,000, convertible note of $19,000 and current portion of operating lease liability of $41,000 and a reduction in accounts payable and accrued liabilities of $33,000.

As of December 31, 2023 and 2022, the current assets consisted of cash of $550,000 and $55,4000, inventory of $230,000 and $115,000, accounts receivable of $427,000 and $0, and prepaid expenses of $11,000 and 240, respectively.

As of December 31, 2023 and 2022, the current liabilities consisted of accounts payable and accrued liabilities of $55,000 and $87,000, due to related parties of $1.3 million and $900,000, promissory note of $120,000 and $0, convertible note of $54,000 and $35,000, and current portion of operating lease liability of $80,000 and $39,000, respectively.

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Cash Flows

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities.

For 2023, net cash flows used in operating activities was $1.2 million, consisting of a net loss of $10 million, reduced by stock-based compensation of $9 million, non-cash lease expenses of $71,000, amortization and depreciation of $249,000 and increased by net changes in operating assets and liabilities of $396,000.

For 2022, net cash flows used in operating activities were $708,000, consisting of a net loss of $3 million, reduced by stock-based compensation of $2.1 million, loss on disposition of digital currency and digital currency assets of $2,000, impairment loss on digital assets of $6,000, non-cash lease expense of $45,000, depreciation of $16,000 and reduced by an increase in changes in operating assets and liabilities of $31,000.

Cash Flows from Investing Activities

Cash flows from investing activities was from the purchase of equipment.

Cash Flows from Financing Activities

For 2023 financing cash flows, consisted of $308,000 received from a related party, $908,000 from issuance Convertible Series C Preferred Stock, $500,000 from stock subscriptions, $120,000 from promissory notes and repayments of $125,000 to a related party.

For 2022, financing cash flows, consisted of $784,000 received from related parties, $35,000 from convertible note and repayments of $56,000 to a related party.

Contractual Obligations

Lease Agreements

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

The following table outlines maturities of our lease liabilities as of December 31, 2023:

Year ended December 31,

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.

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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 performance obligation generally 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.

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

Disclosure controls and procedures (as defined in Exchange Act Rule 15d-15(e)) are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of December 31, 2023, our management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Such evaluation was carried out under the supervision of our Chief Executive Officer, who is also our Chief Financial Officer, and our third party financial service provider, PubCo Reporting. Based on this evaluation, management concluded that our disclosure controls and procedures were, and continues to be, ineffective as of December 31, 2023. Based on the foregoing, our management concluded that our internal controls over the following financial reporting areas to be material weaknesses:

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• Due to our size and stage of development, segregation of all conflicting duties may not always be possible and may not be economically feasible. During the year, we lacked sufficient review procedures and segregation of duties such that a proper review had not been performed by someone other than preparer, including manual journal entries, and that process documentation is lacking for review and monitoring controls over financial statements close process and financial reporting.
• We identified findings related to overall information technology general controls (“ITGCs”) including issues with access and segregation of duties for systems supporting the Company’s internal control processes and controls.

Changes in Internal Controls over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the three months ended December 31, 2023 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 are committed to taking further action and implementing additional improvements as necessary.