Citrotech Inc. — Filing Summary
Filing identity: The supplied filing is a Form 10-K for General Enterprise Ventures, Inc. (formerly General Entertainment Ventures, Inc.), not Citrotech Inc. It covers the fiscal year ended December 31, 2021, with 2020 comparatives, and was signed April 12, 2022. The filing describes an early-stage cryptocurrency-mining and technology-development business.
Business context and material changes
- The company reported cryptocurrency mining as its operating business, mining Bitcoin, Litecoin, and Dogecoin. Operations began in November 2021; the company disclosed 20 Antminer S19 Pro units and 99 Mini-Doge miners.
- 2021 included a change of control: Jan Ralston acquired all 10 million Series A preferred shares, carrying 1,000 votes and conversion shares per preferred share. Joshua Ralston became CEO and chairman in October.
- The company acquired Strategic Asset Holdings, LLC (SAH) for a $50,000 note in May 2021 and divested it in October. SAH was controlled by the former CEO and owned a provisional night-light patent.
Financial results and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $38,919 | $0 |
| Gross profit | $20,306 | $0 |
| Gross margin | Approximately 52% | Not applicable |
| Operating expenses | $58,213 | $109,355 |
| Net loss from continuing operations | $44,973 | $109,355 |
| Net loss, including discontinued operations | $94,973 | $109,355 |
| Cash at year-end | $5,469 | $0 |
| Total current liabilities | $383,090 | $9,355 |
| Working-capital deficiency | $377,621 | $9,355 |
- Audited statements report operating cash used of $24,206, investing cash used of $287,100, and financing cash provided of $316,775 in 2021; net cash increased by $5,469. The 2020 cash flows were zero.
- Year-end assets included $291,438 of net mining equipment and $33,324 of digital currency. Related-party obligations were a major funding source; the balance sheet reports $372,349 due to related parties, largely associated with equipment financing and other advances. The filing describes related-party balances as generally non-interest-bearing and due on demand.
- The company recorded $5,595 of impairment on digital currency and $9,737 of equipment depreciation/amortization. A $51,469 related-party note and accrued interest were forgiven and recorded as additional paid-in capital.
- The audit opinion was unqualified, but the auditor highlighted substantial doubt about the company’s ability to continue as a going concern. Management says continued operations depend on raising capital and generating revenue and profits.
Outlook, risks, and controls
- No quantified revenue, earnings, or cash-flow guidance is provided. Management said it did not intend to expand the mining farm at that time; cryptocurrency equipment supply constraints were described as not affecting that plan.
- Key risks include limited operating capital, cryptocurrency price and market exposure, thinly traded OTC Pink shares, and dependence on related-party financing. The company reported no pending legal proceedings or material off-balance-sheet arrangements.
- Management concluded disclosure controls and internal control over financial reporting were ineffective at year-end. Cited weaknesses included inadequate segregation of duties and no formal review and approval process for financial reporting. The company said it was using accounting staff and an outside financial firm to help address deficiencies.
- The filing says the April 2021 change of control may limit use of prior net operating losses under Section 382. It reports approximately $11.9 million of NOL carryforwards, but states that approximately $56.4 million generated before the change of control cannot be carried forward to offset future income.
Important facts to verify
- Confirm the issuer: the supplied filing identifies General Enterprise Ventures, Inc., not Citrotech Inc.
- Reconcile material inconsistencies within the filing. MD&A reports operating cash provided of $276,969 and investing cash used of $287,100, while the audited cash-flow statement reports operating cash used of $24,206 and investing cash used of $287,100. MD&A also gives year-end current-liability components that differ substantially from the audited balance sheet.
- Verify related-party balances, terms, and equipment financing, including the $372,349 balance-sheet amount due to related parties and the $301,175 equipment purchase financed by a related party.
- Verify mining revenue, digital-asset holdings and valuation, equipment deployment, and whether subsequent capital raising or operating developments addressed the going-concern concern.
- Review filing compliance and governance: the cover page indicates the company had not filed all required reports during the preceding 12 months; it also disclosed no independent directors or board committees.