Karbon-X Corp.

Karbon-X Corp.

Overview

• Public Nevada corporation focused on providing exposure to certified carbon credits and participating in the voluntary carbon market.
• ESG-oriented model: partners with carbon-project developers and companies to generate or trade Verified Emissions Reduction (VER) credits to help corporations meet carbon-neutral and net-zero goals.
• Core offerings:
  • Carbon credit trading and procurement for industrial buyers (B2B) and the general public via a subscription-based mobile app.
  • Customized transactional options to offset corporate carbon footprints and scaled access to VER markets.
  • Proprietary app platform for subscribers to offset emissions with credits from various projects.

Business model and operations

Revenue generation

• Industrial carbon credit trading through Karbon-X Trading Limited (Cyprus) and related subsidiaries.
• Subscription-based carbon offset sales to the general public via the Karbon-X app.
• Advisory, services and maintenance-related arrangements contribute a smaller portion of revenue.
• Total revenue:
  • FY2026: 55,860,322 USD
  • FY2025: 3,163,772 USD
• FY2026 revenue by jurisdiction:
  • Cyprus: 47,878,698
  • Canada: 6,054,808
  • United States: 1,415,055
  • Ireland: 425,135
  • Colombia: 86,626
  • Spain: 0
  • Total: 55,860,322
• Platform-generated direct consumer sales: first direct app sales occurred in fiscal 2026, approximately 6,300 USD (immaterial).

Cost structure and gross margin

• Cost of revenue FY2026: 55,000,480; gross profit: 859,842; gross margin ≈ 1.5%.
• FY2025 gross profit: 801,467; gross margin: 25.3%.
• The decline in gross margin in 2026 reflects a shift toward high-volume, low-margin trading activity.

Acquisitions and assets

• June 27, 2025 asset acquisition from Allcot AG for 666,990 USD (cash plus related costs). Treated as an asset acquisition (ASC 805-50) focused on a project pipeline.
• Acquired project pipeline recorded as an intangible asset: net 644,345 USD after amortization.
• Acquired or formed subsidiaries (2025–2026), consolidated from date of inception:
  • Karbon-X Trading Limited (Cyprus)
  • Allcot Limited (Ireland)
  • Karbon-X Iberia SL (Spain) (formerly Allcot Soluciones España S.L.)
  • Allcot X Colombia S.A.S. (Colombia)
• Acquired pipeline amortized over a weighted-average useful life of 27 years.

Inventory and related accounting

• Carbon credit inventory carried at the lower of cost and net realizable value. As of May 31, 2026, carbon credit inventory: 649,973 USD.

Revenue recognition and controls

• Revenue recognized under ASC 606. Substantially recognized as principal where Karbon-X controls credits before transfer (credits held in company registries; inventory risk retained by Karbon-X).
• A portion of revenue arises from arrangements where Karbon-X acts as an agent and reports net revenue.

Corporate structure and geography

• Parent: Karbon-X Corp., consolidated with Karbon-X Project, Inc. (Canada) and multiple foreign subsidiaries:
  • Karbon-X Trading Limited (Cyprus)
  • Allcot Limited (Ireland)
  • Karbon-X Iberia SL (Spain)
  • Allcot X Colombia S.A.S. (Colombia)
  • Karbon-X USA Corp (U.S.)
• Principal office: 6575 West Loop South, Suite 500, Bellaire, TX 77401.
• Operational footprint: United States, Canada, Cyprus, Ireland, Spain, and Colombia. Capabilities to transact in USD, CAD, EUR and other currencies.

Customers and concentration

• The largest single customer accounted for about 86% of consolidated revenue in the year ended May 31, 2026.
• A single trade receivable represented 69% of accounts receivable at May 31, 2026.
• The company relies on a small number of customers and counterparties; loss of a major customer or counterparty could materially affect revenue and cash flows.

Employees and governance

• Headcount: 43 employees as of the filing date.
• Leadership (as of the filing):
  • Chad Clovis: Chief Executive Officer, President, and Director
  • Brett Hull: Director
  • Justin Bourque: Director
  • Adriana Ebell: Chief Financial Officer (appointed July 29, 2025)
  • Samuel Nelson: Chief Accounting Officer (appointed February 2026)
• The Board currently serves as the Audit Committee; formal committee structures are planned as the company grows.

Financial position and results (fiscal year ended May 31, 2026)

Selected statements of operations

• Total revenue: 55,860,322
• Cost of revenue: 55,000,480
• Gross profit: 859,842
• Operating expenses: 11,925,399
  • Salaries and wages: 5,558,515
  • Marketing: 3,037,475
  • Professional fees: 1,471,523
  • Provisions for credit losses: 628,196
  • Other operating: 1,229,690
• Loss from operations: (11,065,557)
• Interest expense: (3,321,168)
• Change in fair value of derivative liabilities: 845,280
• Other income/expenses: (48,101)
• Net loss before taxes: (13,589,546)
• Net loss: (13,589,546)
• Other comprehensive income: Foreign currency translation gain 241,080
• Total comprehensive loss: (13,348,466)

Selected balance sheet highlights (as of May 31, 2026)

• Total assets: 9,617,713
  • Current assets: 6,061,591
  • Cash and cash equivalents: 1,155,289
  • Accounts receivable, net: 634,291
  • Carbon credit inventory: 649,973
  • Investments in equity securities: 22,663
• Total liabilities: 15,601,815
  • Current liabilities: 10,101,595
  • Long-term debt: 4,880,960
  • Non-current lease liabilities: 369,260
  • Convertible notes payable (non-current): 250,000
• Shareholders’ equity (deficit): (5,984,102)

Liquidity and capital resources

• Cash used in operating activities: (7,861,240)
• Cash provided by financing activities: 10,503,188
• Cash used in investing activities: (2,433,113)
• Net increase in cash: 450,943
• Cash, end of period: 1,155,289
• Working capital: negative (4,040,004); current assets 6,061,591 vs current liabilities 10,101,595.

Capital structure and financing activity

• Convertible notes payable outstanding at May 31, 2026: 1,906,056 (current) and 250,000 (non-current)
• Long-term debt: 4,880,960
• Total issued common stock: 94,885,028 outstanding as of May 31, 2026
• Warrants outstanding: 508,064 at May 31, 2026
• Share-based compensation and warrants issued during the year contributed to additional paid-in capital.

Going concern and risk

• The company reports substantial doubt about its ability to continue as a going concern due to recurring losses and negative working capital.
• Management identified a material weakness in internal control over financial reporting as of May 31, 2026; remediation began in February 2026 with the Chief Accounting Officer appointment.
• The business is capital intensive and relies on ongoing financing; success depends on securing additional capital and achieving profitability.

Recent developments and post-fiscal 2026 events (as disclosed in the 10-K)

• Note 24 describes several post-year-end financing and equity events:
  • Mutual Termination Agreement with DevvStream/DEVS related to a forward purchase and related share positions; DEVS shares subsequently delisted from Nasdaq (June 24, 2026).
  • Share cancellations and exchanges affecting the DEVS position; proceeds and potential fair value implications were disclosed.
  • Subsequent financing activities between June and September 2026 included additional convertible notes and other debt instruments, some with a 4.99% beneficial ownership cap and related warrants, plus several conversions and equity issuances.
  • Further equity issuances and option grants to management and directors occurred in June 2026.

Key takeaways

• Business focus: Operates in the voluntary carbon market, purchasing and trading carbon credits and offering an app-based subscription platform for public offsets. The business is supported by an acquired project pipeline and multiple international subsidiaries.
• Revenue and profitability: FY2026 revenue of 55.9 million USD with a gross margin of about 1.5% and a net loss of 13.59 million USD, driven by a shift to high-volume, low-margin trading and notable interest and derivative-related costs.
• Scale and concentration: 43 employees; 94.9 million shares outstanding as of May 31, 2026; largest customer accounted for roughly 86% of revenue, creating concentration risk in both revenue and receivables.
• Financial position: Negative working capital and a stockholders’ deficit; substantial reliance on external financing. Liquidity and ongoing operations depend on securing additional capital and improving operating results.
• Governance and controls: Material weakness in financial reporting controls identified; remediation is underway with strengthened accounting leadership and enhanced closing and controls processes.