Business context and reporting period
This Form 10-Q is for the three months ended March 31, 2023. The registrant is General Enterprise Ventures, Inc. (GEVI), not “Citrotech Inc.” as stated in the request; the filing describes its MFB subsidiary’s fire-prevention products under the CitroTech name. GEVI acquired Mighty Fire Breaker (MFB) in April 2022 and has exited crypto mining to focus on MFB.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 or comparison |
|---|---|---|
| Revenue | $55,595 | $0 |
| Gross profit / margin | $41,741 / 75.1% | No revenue |
| Operating expenses | $395,177 | $42,766 |
| Net loss | $353,611 | $29,750 |
| Operating cash flow | $(176,905) | $33,524 |
| Cash at period end | $63,529 | $55,434 at Dec. 31, 2022 |
| Working capital | $(1,142,502) | $(890,599) at Dec. 31, 2022 |
At March 31, total assets were $4.40 million, including $4.20 million of MFB-related intangible assets. Current liabilities totaled $1.31 million, including $1.13 million due to related parties, $121,861 of accounts payable and accrued liabilities, and a $35,000 convertible note in default. Stockholders’ equity was $3.08 million. Financing cash inflow was $185,000, entirely from a related party.
Material changes and unusual items
- Revenue began following the MFB acquisition; the prior-year quarter reported none. Professional fees increased to $295,129 from $40,171, and general and administrative expense rose to $99,784 from $2,595.
- Q1 2023 included $86,850 of stock-based compensation for 300,000 shares issued for services. Related parties advanced $185,000 and paid $49,052 of company operating expenses; the company also paid related parties $45,000 for consulting and $40,000 in commissions.
- MFB acquisition consideration includes a 10% royalty on pretax gross sales of MFB-family products. The company reported $25,000 of remaining 2023 operating lease payments.
- After quarter end, on April 5, 2023, 150,000 Series C preferred shares converted into 3,000,000 common shares. The filing reports 94,245,388 common shares outstanding at March 31 and 97,245,388 as of May 15.
Outlook, risks and controls
The filing provides no quantified revenue or earnings guidance. Management says the business is pursuing fire-prevention product sales and accreditations, including government-related testing; it reports EPA Safer Choice status and UL GreenGuard Gold approval, and says testing is underway at three U.S. government agencies. The filing cautions that future results may differ materially from forward-looking statements.
Management states that substantial doubt exists about the company’s ability to continue as a going concern, citing limited operating capital and lack of significant income. Continued operations depend on raising capital and generating revenue and profits. The company reported a significant working-capital deficit and reliance on related-party funding. Disclosure controls were deemed ineffective due to material weaknesses, including no functioning audit committee, insufficient independent board oversight, inadequate segregation of duties, and management concentration in one individual. No material legal proceedings were reported as likely to adversely affect the company.
Important facts for investors to verify
- Confirm the issuer’s identity and relationship to the “Citrotech Inc.” name in the request; this filing is for General Enterprise Ventures, Inc.
- Assess the sustainability and collection of MFB sales, the product royalty burden, and the status and outcomes of government testing and accreditations.
- Review the company’s ability to fund operations given its cash balance, negative working capital, going-concern warning, and dependence on related-party advances.
- Verify the default status and conversion terms of the $35,000 note, and the terms and balances of related-party obligations.
- Evaluate the valuation and recoverability of the $4.20 million MFB intangible asset and progress in remediating reported control weaknesses.
- Reconcile share counts and potential dilution, including the post-quarter Series C conversion and the 70 million restricted shares tied to annual gross revenue of at least $100 million in each year from 2023 through 2026.