CORPORATE UNIVERSE INC - Quarter Report: 2023 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

Or

Commission File Number: 000-56271

(302) 273-1150

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No ☒

Securities registered pursuant to section 12(b) of the Act:

The number of shares outstanding of the registrant’s common stock, par value of $0.0001, on November 15, 2023 was 625,068,420.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements 

Financial Statements

Corporate Universe, Inc.

CORPORATE UNIVERSE, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(See accompanying notes to the unaudited consolidated financial statements)

CORPORATE UNIVERSE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(See accompanying notes to the unaudited consolidated financial statements)

CORPORATE UNIVERSE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

(Unaudited)

(See accompanying notes to the unaudited consolidated financial statements)

CORPORATE UNIVERSE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

(Unaudited)

(See accompanying notes to the unaudited consolidated financial statements)

CORPORATE UNIVERSE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(See accompanying notes to the unaudited consolidated financial statements)

Corporate Universe, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

For The Three and Nine Months Ended September 30, 2023

(1) Organization and Business Description

Corporate Universe, Inc. ("COUV”) was incorporated in Delaware on May 28, 1986. On July 17, 2020, the Company changed its name from Carrier Alliance Group Inc. to Corporate Universe, Inc.

The accompanying unaudited consolidated financial statements include COUV and its wholly-owned subsidiary Carbon-Ion Energy, Inc. (“CIE”), which includes its wholly owned subsidiary Oxcion Limited (“OXC”) (collectively, the “Company”).

CIE was incorporated under the laws of the State of Delaware on December 29, 2020 and operates as a holding company for OXC, which was incorporated under the laws of England and Wales on February 20, 2009. OXC operated as a business consulting entity until December 31, 2020. Effective March 11, 2021, OXC became a wholly-owned subsidiary of CIE pursuant to a share exchange agreement whereby the existing stockholders of OXC received the same pro-rata equity interests in CIE. Going forward, OXC plans to market its patented super capacitor technology to customers worldwide.

Effective November 12, 2021, CIE became a wholly-owned subsidiary of COUV pursuant to a share exchange agreement whereby the existing stockholders of CIE obtained control of COUV. The transaction was accounted for as a change in control with COUV being considered the accounting acquired company and CIE being considered the accounting acquirer. The fiscal year end of the consolidated Company is December 31st.

(2) Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash

For financial statement presentation purposes, the Company considers all short-term investments with an original maturity date of three months or less to be cash equivalents.

Inventory

Inventory, which consists substantially of raw materials, is stated at the lower of cost (first-in, first-out basis) or market (net realizable value). The inventory is valued at the end of each fiscal period for the purpose of determining if a reserve for obsolescence needs to be recorded. There is no reserve for obsolescence as of September 30, 2023 and December 31, 2022.

Property and Equipment

Property and equipment is stated at cost. Maintenance and repairs are expensed as incurred. Upon sale or disposition of assets, any gain or loss is included in the consolidated statements of operations. The cost of property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets when placed in service, which range from three to seven years.

Income Taxes

The Company has adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740-10, “Accounting for Income Taxes”, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. The Company’s federal tax return and any state tax returns are not currently under examination.

OXC accrues research and development (“R&D”) tax credits receivable from the HM Revenue and Customs (“HMRC”) in England based on 14.50% of qualified R&D payroll costs. OXC, at its sole discretion, can elect to forego the tax credit and carry forward the qualified R&D payroll costs to offset future taxable income in England.

Intellectual Property

The Company’s intangible assets consist of patents on its technology, recorded at cost. Cost is based on third party expenditures for patent acquisitions and applications. OXC will begin amortizing the intangibles over their estimated remaining useful life when they commence revenue-producing activities. OXC will determine the useful lives of its intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors that will be considered when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, the long-term strategy for using the asset, any laws or other local regulations that could impact the useful life of the asset, and other economic factors, including competition and specific market conditions.

Impairment of Long-lived Assets

Potential impairments of long-lived assets are reviewed when events or changes in circumstances indicate a potential impairment may exist. In accordance with FASB ASC 360-10, “Property, Plant and Equipment - Overall,” impairment is determined when estimated future undiscounted cash flows associated with an asset are less than the asset’s carrying value. The reserve for impairment for obsolescence as of September 30, 2023 and December 31, 2022 was $271,875 and $240,609, respectively.

Revenue Recognition

The Company recognizes revenue in accordance with FASB ASC 606, “Revenue from contracts with customers.” Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of FASB ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company expects to recognize revenues as the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied.

Stock Based Compensation Expense

The Company records stock-based compensation in accordance with the provisions of FASB ASC 718, “Accounting for Stock Compensation,” which establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. In accordance with guidance provided under FASB ASC Topic 718, the Company recognizes an expense for the fair value of its stock awards at the time of grant and the fair value of its outstanding stock options as they vest, whether held by employees or others. As of September 30, 2023 and December 31, 2022, there were no options outstanding.

Convertible Debentures

The Company adopted the guidance in Accounting Standards Updated (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity on January 1, 2022. ASU 2020-06 simplifies an issuer’s accounting for convertible instruments and its application of the derivatives scope exception for contracts in its own equity. Additionally. ASU 2020-06 removes the requirements for accounting for beneficial conversion features. The Company adopted ASU 2020-06 utilizing the modified retrospective method, which resulted in an immaterial impact to the Company.

Leases

The Company accounts for leases in accordance with FASB ASC 842, “Leases”. Based on this standard, the Company determines if an agreement is a lease at inception. Operating leases are included in right-of-use assets, current portion of operating lease liabilities, and operating lease liabilities in the Company’s unaudited consolidated balance sheets. Finance leases are included in property and equipment, current portion of long-term debt, and long-term debt in the Company’s unaudited consolidated balance sheets.

As permitted under FASB ASC 842, the Company has made an accounting policy election not to apply the recognition provisions to short term leases (leases with a lease term of twelve months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the lease term. The Company did not have any short-term leases as of September 30, 2023 and December 31, 2022.

Foreign Currency Translation

Assets and liabilities of CIE’s United Kingdom subsidiary are translated from pounds sterling to United States dollars at the exchange rate in effect as of the consolidated balance sheet dates. Income and expenses are translated at the average quarterly exchange rates in effect for each reporting period. The translation adjustments for reporting periods are included in the Company’s consolidated statements of operations and comprehensive loss, and the cumulative effect of such adjustments are reported in the Company’s balance sheets as a cumulative translation adjustment within stockholders’ deficit.

Net Income (Loss) Per Common Share

The Company computes loss per common share, in accordance with FASB ASC 260, “Earnings Per Share”, which requires dual presentation of basic and diluted earnings per share. Basic income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding, plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options, warrants and convertible preferred stock.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the unaudited consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

(3) Going Concern

As of September 30, 2023, the Company has accumulated operating losses of $7,350,085, has yet to commence operations and has no product sales related to its patented battery storage technology that was acquired on September 11, 2020, all of which raise substantial doubt about its ability to continue as a going concern. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. However, the Company is currently addressing its liquidity issues by continually seeking investment capital through private placement of common stock and debt. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that the Company will be able to complete any additional sales of equity securities or be able to arrange for other financing to fund planned business activities.

(4) Property and Equipment

Property and equipment consisted of the following:

Pursuant to the operating lease agreement for laboratory space in Oxfordshire, England, the leasehold improvements are presented net of the buildout paid by the landlord in the amount of $113,373 and $109,725 as of September 30, 2023 and December 31, 2022, respectively.

Property and equipment has not been placed in service and, as such, there was no depreciation expense for the three and nine months ended September 30, 2023 and 2022.

(5) Intellectual Property

Intellectual property as of September 30, 2023 and December 31, 2022 in the amounts of $550,504 and $528,357 are presented net of impairment reserves of $271,875 and $240,609, respectively. The intellectual property includes various super capacitor technology patents that were acquired on September 11, 2020 as part of the ZapGo Ltd acquisition, plus legal fees subsequently incurred directly related to these patents and additional patent applications. The Company has deferred amortizing the intellectual property until it begins revenue operations in order to more accurately match the expense with the revenue. As such, there was no amortization expense for the three and nine months ended September 30, 2023 and 2022.

(6) Operating Lease Right-of-Use Assets and Operating Lease Liabilities

On May 5, 2021, the Company entered into two operating lease agreements for laboratory equipment. The leases ran through April 5, 2023 and May 5, 2023 with monthly rental payments of $1,221 and $605, respectively.

On July 31, 2021, the Company entered into a three-year operating lease agreement for laboratory equipment. The lease runs through July 31, 2024 with monthly rental payments of approximately $4,600, including VAT, plus utilities and a pro-rata share of any joint charges as reasonably determined by the landlord.

On August 2, 2021, the Company entered into a five-year operating lease agreement for laboratory space in Oxfordshire, England. The lease runs through August 2, 2026 with average monthly rental payments of approximately $8,500, including VAT, plus utilities and a pro-rata share of any joint charges as reasonably determined by the landlord.

Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is the Company’s incremental borrowing rate is estimated to be 10% as the interest rate implicit in most of the Company’s leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. The Company recorded $20,182 and $41,753 as operating lease expense for the three months ended September 30, 2023 and 2022, respectively, and $123,559 and $125,259 as operating lease expense for the nine months ended September 30, 2023 and 2022, respectively. Such expense was classified in general and administrative expenses on the consolidated statements of operations and comprehensive loss.

Operating lease liabilities consisted of the following:

The maturity of lease liabilities for the years ending each December 31st are as follows:

(7) Payroll Taxes Payable

On August 27, 2021, OXC entered into an installment payment arrangement with HM Revenue & Customs (“HMRC”) in England for the payroll taxes balance due of $364,538 as of June 30, 2021 plus approximately $54,600 for the July payroll tax liability. Payments were to be made in five monthly installments of approximately $76,120 beginning in October 2021 with the final installment due in March 2022 of approximately $38,600 plus any interest due. This final balance was not paid when due and, as such, was added to the additional installment payment arrangement with HMRC dated April 2, 2022.

On April 2, 2022, OXC entered into an additional installment payment arrangement with HMRC for payroll taxes liabilities of approximately $277,000, including the $38,600 balance due from the previous installment payment arrangement. Payments were to be made in four monthly installments of approximately $69,250 each beginning in May 2022 through August 2022, but were put on hold while the R&D income tax credits through March 31, 2022 were processed by HMRC. The R&D income tax credits were finalized and remitted to OXC on August 24, 2022 and an updated installment payment arrangement needed to be established with HMRC.

On January 13, 2023, OXC entered into an additional installment payment arrangement with HMRC for payroll taxes liabilities incurred during the year ended December 31, 2022 of approximately $198,000, which is net of R&D income tax credits due from HMRC of approximately $262,000 as of December 31, 2022. The net balance due was paid in four monthly installments of approximately $49,500 each month from February 2023 through May 2023.

Payroll taxes payable as of September 30, 2023 and December 31, 2022 were $149,325 and $386,001, respectively.

(8) Due to Stockholders

Due to stockholders totaled $824,893 and $610,908 as of September 30, 2023 and December 31, 2022, respectively, and consist of funds advanced to CIE for working capital purposes by the President of COUV, who is also a director and stockholder, and the Chief Financial Officer, who is also a director and stockholder. These obligations are unsecured, non-interest bearing, and payable upon demand.

(9) Notes Payable Related Party

On December 31, 2021, CIE executed a promissory note in the amount of $585,000 due to an entity that is beneficially owned and controlled by the President of COUV, who is also a director and stockholder, and received proceeds in the same amount for working capital purposes. This note is unsecured, accrues interest at a rate of 1.9% per annum, and is payable on demand. Principal outstanding in connection with this note totaled $585,000 as of both September 30, 2023 and December 31, 2022. Accrued interest outstanding in connection with this note totaled $19,451 and $11,115 as of September 30, 2023 and December 31, 2022, respectively, which is included within accounts payable and accrued expenses on the consolidated balance sheets. Interest expense in connection with this note totaled $2,779 for the three months ended September 30, 2023 and 2022 and $8,336 for the nine months ended September 30, 2023 and 2022.

(10) Notes Payable

(11) Convertible Notes Payable

On various dates from July 26, 2022 through November 29, 2022, CIE executed a series of promissory notes in amounts totaling $206,500 due to unrelated third parties and received proceeds of $199,866 for working capital purposes. The difference of $6,634 relates to transaction fees which were immediately expensed and classified in general and administrative expenses. These notes are unsecured, accrue interest at the rate of 10% per annum, and mature on June 15, 2024. Principal outstanding in connection with these notes totaled $196,500 and $206,500 as of September 30, 2023 and December 31, 2022, respectively. Accrued interest outstanding in connection with these notes totaled $21,999 and $7,374 as of September 30, 2023 and December 31, 2022, respectively. Interest expense in connection with these notes totaled $4,953 and $2,607 for the three months ended September 30, 2023 and 2022, respectively, and $14,625 and $2,607 for the nine months ended September 30, 2023 and 2022, respectively.

These notes will convert into CIE common shares upon the completion of the COUV reorganization and the occurrence of one of the following:

(12) Equity

Preferred Stock

The Company has 1,000,000 Shares of Preferred Stock authorized with a par value of $0.0001. The Company has allocated 100,000 Shares for Series C Preferred, 100,000 Shares for Series D Preferred, 81,100 Shares for Series E Preferred, 100,000 Shares for Series F Preferred, and 25 Shares for Series G Preferred.

During the nine months ended September 30, 2022, the Company sold and issued 0.075 shares of Series G Convertible Preferred Stock at $100,000 per share for total proceeds of $7,500.

The Company has evaluated each series of the Preferred Stock for proper classification under FASB ASC 480 “Distinguishing Liabilities from Equity” and FASB ASC 815 “Derivatives and Hedging”.

FASB ASC 480 generally requires liability classification for financial instruments that are certain to be redeemed, represent obligations to purchase shares of stock or represent obligations to issue a variable number of common shares. The Company concluded that each series of Preferred Stock was not within the scope of FASB ASC 480 because none of the three conditions for liability classification was present.

FASB ASC 815 generally requires an analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. However, in order to perform this analysis, the Company was first required to evaluate the economic risks and characteristics of each series of the Preferred Stock in its entirety as being either akin to equity or akin to debt. The Company’s evaluation concluded that each series of Preferred Stock was more akin to an equity-like contract largely due to the fact the financial instrument is not mandatorily redeemable for cash and the holders are not entitled to any dividends. Other features of the Preferred Stock that operate like equity, such as the conversion option and voting feature, afforded more evidence, in the Company’s view, that the instrument is more akin to equity. As a result, the embedded conversion features are clearly and closely related to their equity host instruments. Therefore, the embedded conversion features do not require bifurcation and classification as derivative liabilities.

Common Stock

The Company has 2,500,000,000 shares of Common Stock authorized with a par value of $0.0001. As of September 30, 2023 and December 31, 2022 there were 625,068,420 and 568,849,670 shares issued and outstanding, respectively.

During the nine months ended September 30, 2022, the Company issued 26,425,000 shares of restricted common stock to unrelated third parties in a series of private placements at $0.04 per share for total proceeds of $1,057,000.

During the quarters ended December 31, 2022, March 31, 2023, June 30, 2023, and September 30, 2023 and as further described in Note 10(d), Notes Payable, the Company issued 13,250,000, 7,125,000, 11,593,750, and 37,500,000 shares, respectively, an aggregate of 69,468,750 shares, of restricted common stock in connection with the issuance of a series of notes payable to unrelated third parties with total proceeds of $2,778,750. Such proceeds were allocated equally between the notes and the shares of common stock issued for accounting purposes. This resulted in an allocation to common stock of $0.02 per share for total proceeds of $1,389,375.

During the quarters ended December 31, 2022, March 31, 2023, June 30, 2023, and September 30, 2023 we issued 13,250,000, 7,125,000, 11,593,750, and 37,500,000 shares of our common stock in connection with the issuance of promissory notes to unrelated third parties totaling $2,778,750 for working capital purposes and received proceeds of the same amount. A portion of such proceeds, $1,389,375, was allocated to the issuance of those 69,468,750 shares. Those issuances were exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

(13) Income Taxes

As of September 30, 2023 and December 31, 2022, the Company had net operating loss carry forwards of approximately $7,350,085 and $5,132,000 that may be available to reduce future years’ taxable income in varying amounts through 2038. Future tax benefits which may arise as a result of these losses have not been recognized in these unaudited consolidated financial statements, as their realization is determined not likely to occur and, accordingly, the Company has recorded a full valuation allowance equal to the deferred tax asset relating to these tax loss carry-forwards of approximately $1,544,000 and $1,078,000 as of September 30, 2023 and December 31, 2022, respectively.

The Company periodically evaluates the likelihood of the realization of deferred tax assets and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.

Future changes in the unrecognized tax benefit will have no impact on the effective tax rate due to the existence of the valuation allowance. The Company estimates that the unrecognized tax benefit will not change significantly within the next twelve months. The Company will continue to classify income tax penalties and interest as part of general and administrative expense in its consolidated statements of operations and comprehensive loss. There were no interest or penalties accrued as of September 30, 2023 or December 31, 2022.

The Company recorded R&D income tax credits in the amounts of $55,669 and $56,401 for the three months ended September 30, 2023 and 2022, respectively, and $177,418 and $238,714 for the nine months ended September 30, 2023 and 2022, respectively. The balances due from the HMRC for these R&D income tax credits totaled $174,187 and $0 as of September 30, 2023 and December 31, 2022, respectively.

(14) Commitments and Contingencies

During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, “Contingencies”. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of September 30, 2023, the Company is not aware of any contingent liabilities that should be reflected in the unaudited consolidated financial statements.

On March 31, 2021, CIE entered into an Employment Agreement (the “Agreement”) with the Chief Executive Officer (“CEO”), who is also a director, for an initial term of one year with a base salary of $465,000 per annum paid in equal monthly installments, less applicable withholdings and deductions as required by law. The Company shall review the base salary on an annual basis and has the right, but not the obligation, to increase it, but has no right to decrease the base salary. This Agreement automatically extends for additional terms of one year unless either party provided at least six months prior written notice of non-renewal during the initial term or the then current renewal term. In addition, the CEO is entitled to receive an annual bonus up to $400,000 if the Company meets or exceeds criteria adopted by the Compensation Committee of the Board of Directors on an annual basis. Effective March 1, 2023, CIE entered into a New Employment Agreement (the “New Agreement”) with the CEO, which superseded the Agreement described above. The initial term of this New Agreement is for a period of two years, and it shall automatically extend for an additional term of one year unless either party gives notice of non-renewal at least six months prior to the expiration of the term then in effect. Under the provisions of this New Agreement, the CEO shall be paid a base salary of $200,000 per annum plus annual cash bonuses and an option to purchase shares of the Company’s common stock in amounts to be determined at the discretion of the Compensation Committee of the Board of Directors. Concurrent with the execution of this New Agreement, the CEO waived all amounts due to him under the previous Agreement totaling $371,600 as of December 31, 2022. As such, the Company wrote-off this accrued balance against compensation expense for the year ended December 31, 2022. See Note 16, Subsequent Events, for additional information regarding this New Agreement.

On April 12, 2021, CIE entered into an Employment Agreement (the “Agreement”) with the Chief Financial Officer (“CFO”) who is also a director, for an initial term of one year with a base salary of $250,000 per annum paid in equal monthly installments, less applicable withholdings and deductions as required by law. The Company is also obligated to increase the base salary on an annual basis between $15,000 and $30,000 at the discretion of the Compensation Committee of the Board of Directors. The CFO is also entitled to receive a car allowance of $1,000 per month and five weeks paid vacation per year. This Agreement automatically extends for additional terms of one year unless either party provides at least six months prior written notice of non-renewal during the initial term or the then current renewal term. In addition, the CFO is entitled to receive a bonus determined by the Compensation Committee of the Board of Directors on an annual basis. Effective March 14, 2023, CIE entered into a New Employment Agreement (the “New Agreement”) with the CFO, which supersedes the Agreement described above. The initial term of this New Agreement is for a period of two years and it shall automatically extend for an additional term of one year unless either party provides notice of non-renewal at least six months prior to the expiration of the term then in effect. Under the provisions of this New Agreement, the CFO shall be paid a base salary of $180,000 per annum plus annual cash bonuses and an option to purchase shares of the Company’s common stock in amounts to be determined at the discretion of the Compensation Committee of the Board of Directors. Concurrent with the execution of this New Agreement, the CFO waived all amounts due to him under the previous Agreement totaling $196,570 as of December 31, 2022. As such, the Company wrote-off this accrued balance against compensation expense for the year ended December 31, 2022.

On February 21, 2022, OXC entered into consulting agreement with an unrelated third-party company and the associated consultant on a non-exclusive basis. Pursuant to terms of the agreement, the consultant company is entitled to receive £15,000 per quarter, plus qualified expenses, until it is terminated by either party giving to the other no less than three months written notice. However, OXC can immediately terminate this agreement, without prejudice, if the consultant commits a material breach or various other forms of misconduct as defined. As additional compensation, the Company’s intends to recommend to the Board of Directors that the consultant be issued a stock grant equal to 3% of the post reorganized shares of CIE’s common stock, when effective, on a fully diluted basis. The Company intends this grant, when issued, will vest over a three-year term at 1% per year as defined. Furthermore, it is the Company’s intention to offer the consultant a seat on the Board of Directors, without compensation. See Note 16, Subsequent Events, for additional information regarding this consulting agreement.

On July 1, 2022, CIE entered into consulting agreement with an individual, who is also a major shareholder of the Company, on a non-exclusive basis. Pursuant to terms of the agreement, the consultant is entitled to receive $15,000 per month, plus qualified expenses, until it is terminated by either party giving to the other no less than three months written notice. However, CIE can immediately terminate this agreement, without prejudice, if the consultant commits a material breach or various other forms of misconduct as defined.

(15) Concentration of Credit Risk

The Company maintains cash balances in interest and non-interest-bearing bank accounts which exceed federally insured limits by $222,111 as of September 30, 2023. The Company has not experienced any losses in any of its accounts and management believes not to be exposed to any significant credit risk on cash.

(16) Subsequent Events

Effective October 31, 2023, the unrelated third-party company and associated consultant mutually agreed to terminate the consulting agreement dated February 21, 2022 with OXC without any further obligation between the parties.

Effective November 1, 2023, Andrew Sispoidis resigned from all director, officer, and any other positions and/or roles he had with the Company and each of its wholly-owned subsidiaries, Carbon-Ion and Oxcion, including Chief Executive Officer and Secretary. In addition, the Company, collectively with its wholly-owned subsidiaries CIE and OXC, agreed to pay the former CEO a severance equal to $200,000, payable to him in equal monthly instalments for a period of twelve months following his resignation.

Management has evaluated subsequent events through November 17, 2023, the date these unaudited consolidated financial statements were available to be issued, and has determined that there are o other events that would require an adjustment to, or disclosure in, the unaudited consolidated financial statements as of September 30, 2023.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in the section titled “Risk Factors” of our Annual Report on Form 10K for the fiscal year ended December 31, 2022 filed on April 17, 2023. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

Forward-Looking Statements

Some of the statements under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” and “would” or the negatives of these terms or other comparable terminology.

You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things: