Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the unaudited interim financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K/A, for the year ended December 31, 2023, as filed with the SEC on July 30, 2024.

Principles of Consolidation

The consolidated financial statements include the accounts of General Enterprise Ventures, Inc., and its wholly owned subsidiaries, Mighty Fire Breaker, LLC, an Ohio Limited Liability company and GEVI Insurance Holdings Inc., an Ohio corporation. Intercompany transactions and balances have been eliminated.

Restatement

For the three and nine months ended September 30, 2023, the company restated the Consolidated Financial Statements for the calculation of amortization on intangible assets.

The impact on the Consolidated Statement of Operations and Comprehensive Loss of the restatement is as follows:

	Three Months Ended									Nine Months Ended
	September 30, 2023									September 30, 2023
	As Filed			Adjustment			As Restated			As Filed			Adjustment			As Restated
Amortization and depreciation	$	340		$	61,812		$	62,152		$	871		$	185,435		$	186,306
Total operating expense	$	9,156,070		$	61,812		$	9,217,882		$	9,930,183		$	185,435		$	10,115,618
Loss from operations	$	(9,021,243	)	$	(61,812	)	$	(9,083,055	)	$	(9,730,153	)	$	(185,435	)	$	(9,915,588	)
Net loss	$	(9,023,003	)	$	(61,812	)	$	(9,084,815	)	$	(9,732,672	)	$	(185,435	)	$	(9,918,107	)

The impact on the Consolidated Statement of Cash Flows of the restatement is as follows:

	Nine Months
	September 30, 2023
	As Filed			Adjustment			As Restated
Cash Flows from Operating Activities:
Net loss	$	(9,732,672	)	$	(185,435	)	$	(9,918,107	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		871			185,435			186,306
Net Cash used in Operating Activities	$	(819,936	)	$	-		$	(819,936	)

The impact on the Consolidated Statement of Stockholders’ Equity of the restatement is as follows:

	September 30, 2023
	As Filed			Adjustment			As Restated
Stockholders' equity:
Accumulated deficit	$	(69,114,072	)	$	(185,435	)	$	(69,299,507	)
Total stockholders' equity	$	3,504,906		$	(185,435	)	$	3,319,471

Reclassification

For the three and nine months ended September 30, 2023, certain amounts have been reclassified to improve the clarity and comparability of the Consolidated Financial Statements. An adjustment has been made to the Consolidated Statements of Operations and Comprehensive Loss and for the three and nine months ended September 30, 2023, to reclassify partial operating expenses to cost of revenue, and to separately disclose professional service provided by related party from line-item professional service to professional fees- related party.

The impact on the Consolidated Statement of Operations and Comprehensive Loss, with no change to the restated loss from operations or net loss, respectively, as follows:

	Three Months Ended									Nine Months Ended
	September 30, 2023									September 30, 2023
	As Filed and Restated (*)			Adjustment			As Reclassified			As Filed and Restated (*)			Adjustment			As Reclassified
Revenue	$	174,710		$	-		$	174,710		$	258,660		$	-		$	258,660
Cost of revenue		39,883			(39,883	)		-			58,630			(58,630	)		-
		134,827			39,883			174,710			200,030			58,630			258,660
Operating expenses
Cost of revenue (exclusive of amortization and depreciation shown separately below)		-			103,290			103,290			-			171,641			171,641
Amortization and depreciation		62,152			-			62,152			186,306			-			186,306
General and administration		146,222			(58,692	)		87,530			360,157			(120,949	)		239,208
Marketing		-			18,656			18,656			-			58,474			58,474
Management compensation		180,000			-			180,000			180,000			-			180,000
Stock-based professional fees - related party		8,640,000			(8,640,000	)		-			8,640,000			(8,640,000	)		-
Professional fees- related party		-			8,688,629			8,688,629			-			8,845,464			8,845,464
Professional fees		189,508			(72,000	)		117,508			749,155			(256,000	)		493,155
Total operating expenses		9,217,882			39,883			9,257,765			10,115,618			58,630			10,174,248
Loss from operations	$	(9,083,055	)	$	-		$	(9,083,055	)	$	(9,915,588	)	$	-		$	(9,915,588	)

(*) Originally as filed for September 30, 2023, and restated for the change for amortization of intangible assets.

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

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company did not have any cash equivalents at September 30, 2024 and December 31, 2023. The Company had cash of $309,129 and $549,755 at September 30, 2024 and December 31, 2023, respectively.

Periodically, the Company may carry cash balances at financial institutions in excess of the federally insured limit of $250,000 per institution. The amount in excess of the FDIC insurance as of September 30, 2024, was $0. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Accounts Receivable

Trade accounts receivable is recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make the required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered. As of September 30, 2024, and December 31, 2023, the Company had no allowance for doubtful accounts.

Inventory

Inventories consist of raw materials which are stated at lower cost or net realizable value, with cost being determined on the weighted average method. As of September 30, 2024, and December 31, 2023, the Company held inventories of $271,143 and $230,197, respectively. The Company did not write-off any inventories as unsalable during the nine months ended September 30, 2024, and 2023.

Deferred Offering Costs

Pursuant to ASC 340-10-S99-1, costs directly attributable to an offering of equity securities are deferred and would be charged against the gross proceeds of the offering as a reduction of additional paid-in capital. Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the proposed public offering. Should the proposed public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be expensed.

As of September 30, 2024 and December 31, 2023, deferred offering costs consisted of the following:

	September 30		December 31
	2024		2023
Legal fees	$	52,131	$	-
Accounting fees		5,000		-
Total	$	57,131	$	-

Fair Value of Financial Instruments 

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

The Company’s financial instruments, including cash, accounts receivable, prepaid expenses, accounts payable and accrued liabilities, due to related parties and loans payable, are carried at historical cost. At September 30, 2024 and December 31, 2023, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.

Revenue

The Company recognizes revenue from its contracts with customers in accordance with ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.

Revenue related to contracts with customers is evaluated utilizing the following steps:

(i)	Identify the contract, or contracts, with a customer;
(ii)	Identify the performance obligations in the contract;
(iii)	Determine the transaction price;
(iv)	Allocate the transaction price to the performance obligations in the contract;
(v)	Recognize revenue when the Company satisfies a performance obligation.

Our revenues currently consist 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.

Cost of Revenue

For the three and nine months ended September 30, 2024 and 2023, cost of revenue consists of:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Cost of inventory	$	98,637	$	79,919	$	233,362	$	110,680
Freight and shipping		1,171		-		9,321		10,425
Consulting and advisory - related party		5,800		5,900		16,200		26,700
Royalty and sales commission - related party		20,456		17,471		83,192		23,836
Total cost of revenue	$	126,064	$	103,290	$	342,075	$	171,641

Basic and Diluted Net Loss Per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued.

For the nine months ended September 30, 2024 and 2023, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

	September 30,		September 30,
	2024		2023
	Shares		Shares
Convertible notes		2,802,500		300,000
Convertible Series C Preferred Stock		49,690,036		19,021,061
Common stock warrants		1,401,250		-
Convertible Series A Preferred Stock(1)		-		10,000,000,000
		53,893,786		10,019,321,061

(1)    Series A Preferred Stock was amended in March 2024 to remove the conversion feature (Note 9).

For the three and nine months ended September 30, 2024 and 2023, the reconciliation to net loss per common share basic and the anti-dilutive impact on net loss per share, are as follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Numerator:
Net loss	$	(655,238	)	$	(9,084,815	)	$	(5,082,352	)	$	(9,918,107	)
Interest on convertible debts		20,879			276			21,014			1,035
Net loss - diluted	$	(634,359	)	$	(9,084,539	)	$	(5,061,338	)	$	(9,917,072	)
Denominator:
Weighted average common shares outstanding		36,563,020			97,545,388			54,993,582			96,366,267
Effect of dilutive shares
Convertible notes		2,101,413			300,000			705,584			300,000
Preferred stock		50,936,620			10,019,198,547			49,690,036			10,019,019,038
Common stock warrants		295,290			-			114,116			-
Diluted		89,896,343			10,117,043,935			105,503,318			10,115,685,305
Net income per common share:
Basic	$	(0.02	)	$	(0.09	)	$	(0.09	)	$	(0.10	)
Diluted	$	(0.01	)	$	(0.00	)	$	(0.05	)	$	(0.00	)

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures ("ASU 2023-09"), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures.

We have evaluated all other recently issued, but not yet effective, accounting pronouncements and do not believe that these accounting pronouncements will have any material impact on our consolidated financial statements or disclosures upon adoption.