Citrotech Inc. — 2022 Q1 Form 10-Q Summary
Filing identity: The provided filing is for General Enterprise Ventures, Inc. (GEVI), not Citrotech Inc. It covers the unaudited quarter ended March 31, 2022, and was signed May 16, 2022.
Business context and reporting period
GEVI reported cryptocurrency mining as its operating activity, mining Bitcoin, Dogecoin and Litecoin through F2Pool. It said it had 20 Bitmain Antminer machines and 99 Mini-Doge miners deployed. The company stated it was not planning to expand the mining farm at that time. It also described a technology and acquisition strategy.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 or prior balance-sheet date |
|---|---|---|
| Mining revenue | $46,976 | $0 |
| Cost of revenue | $27,835 | $0 |
| Gross profit / margin | $19,141 / approximately 40.7% | $0 |
| Operating expenses | $42,766 | $0 |
| Impairment expense on digital currency | $6,125 | $0 |
| Net loss | $(29,750) | $0 |
| Cash | $46,670 | $5,469 at December 31, 2021 |
| Total assets | $349,874 | $330,231 at December 31, 2021 |
| Current liabilities | $423,128 | $383,090 at December 31, 2021 |
| Working capital deficit | $(376,458) | $(377,621) at December 31, 2021 |
Net loss margin was approximately 63.3% of revenue. Mining costs included $12,776 of electricity and $15,059 of equipment depreciation. Professional fees were $40,171; general and administrative expense was $2,595.
Cash from operating activities was $33,524, cash from financing activities was $7,677, and cash increased by $41,201. Operating cash flow included $40,171 of related-party-funded operating expenses and noncash add-backs for $15,059 depreciation and $6,125 impairment. Financing included $55,000 of related-party loan proceeds and $47,323 of repayments. No investing cash flow or cash interest or taxes were reported.
Related-party obligations were $410,842 at March 31, 2022, up from $372,349 at year-end. The filing describes these as unsecured, non-interest-bearing demand loans. Total liabilities exceeded total assets, resulting in a stockholders’ deficit of $73,254.
Material changes and unusual items
- Mining revenue began after operations commenced in November 2021; the comparable 2021 quarter had no reported revenue or loss.
- Digital currency holdings were reported at $26,825, after a $6,125 impairment. Under the stated accounting policy, impairment write-downs are not reversed if market prices later recover.
- A former officer forgave $9,355 of accrued salary, recorded as additional paid-in capital.
- After quarter-end, on April 13, 2022, GEVI acquired Mighty Fire Breaker LLC and associated intellectual property in exchange for 1,000,000 Series C preferred shares. The company also designated 5,000,000 Series C shares; each is convertible into 20 common shares at the holder’s option and has no voting or dividend rights.
- On April 28, 2022, Jan Ralston transferred 10,000,000 Series A preferred shares to CEO Joshua Ralston, making him the majority shareholder. The filing reports 22,945,388 common shares outstanding as of May 13, 2022.
Outlook, risks and controls
The filing provides no numerical guidance. Management stated that the company had not generated significant income and had limited operating capital. It concluded that these conditions raise substantial doubt about the company’s ability to continue as a going concern; continuation depends on raising capital and generating future revenue and profits. No financial-statement adjustments for a possible failure to continue as a going concern were included.
Management reported that disclosure controls were not effective as of March 31, 2022, citing no functioning audit committee, insufficient independent board oversight, inadequate segregation of duties and management dominance by one individual. The company expected to depend materially on third-party accounting consultants and warned of potential financial-statement errors or restatement. Management reported no material off-balance-sheet arrangements and no legal proceedings it believed likely to have a material adverse effect. The filing does not provide a detailed risk-factor discussion, citing smaller-reporting-company status.
Important facts for investors to verify
- Confirm that this GEVI filing is the intended filing: the request identifies Citrotech Inc., while the filing names General Enterprise Ventures, Inc.
- Review the terms, dilution effects and ownership implications of the Series C issuance and the post-quarter acquisition; the filing says the acquisition consideration was 1,000,000 preferred shares.
- Assess the company’s ability to meet demand obligations, given its $46,670 cash balance, $410,842 related-party balance and disclosed going-concern uncertainty.
- Evaluate mining economics, including cryptocurrency price and network risks, electricity costs, equipment depreciation and the digital-asset impairment accounting policy.
- Track remediation of the disclosed material weaknesses in controls and verify the accuracy of future filings.