Quarterly Report for Quarter Ending November 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion pertains to the historical operations and financial statements of Karbon-X Corp. ("Karbon-X" or the "Company") for the six months ended November 30, 2025 and 2024. This discussion should be read in conjunction with the Company's most recent Annual Report on Form 10-K/A for the year ended May 31, 2025, filed on September 17, 2025, which provides additional context and details on the Company's financial condition and results of operations.

Forward-Looking Statements

The following Management's Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Quarterly Report. The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect," and the like, and/or future-tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Quarterly Report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risk Factors" in our various filings with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

The following discussion highlights the Company's results of operations and the principal factors that have affected its consolidated financial condition as well as its liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the Company's consolidated financial condition and results of operations presented herein. The following discussion and analysis are based upon Karbon-X Corp's unaudited financial statements contained in this Current Report on Form 10-Q, which have been prepared in accordance with generally accepted accounting principles in the United States. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Overview

The Company was incorporated in the State of Nevada under the name Cocoluv, Inc. on September 13, 2017, and established a fiscal year end of May 31.

On February 21, 2022, pursuant to the terms of a Share Exchange Agreement, the Company acquired all of the issued and outstanding shares of common stock of Karbon-X Project Inc. ("Karbon-X Project"), and Karbon-X Project became the wholly owned subsidiary of the Company in a reverse acquisition (the "Reverse Acquisition"). Pursuant to the Reverse Acquisition, all of the issued and outstanding shares of Karbon-X common stock were converted, at an exchange ratio of 20,000-for-1, into an aggregate of 20,000,000 shares of the Company's common stock, resulting in Karbon-X Project becoming a wholly owned subsidiary of the Company and all debt owed to the related party of Cocoluv, Inc. (the Company) was forgiven. The accompanying financial statements' share information has been retroactively adjusted to reflect the exchange ratio in the Reverse Acquisition. As part of the Reverse Acquisition, on April 14, 2022, the Company changed its name to Karbon-X Corp. The Company has newly formed subsidiaries, Karbon-X Trading LTD, Allcot Limited, Allcot Soluciones España S.L and Allcot X Colombia S.A.S, which are consolidated with the Company and existing subsidiaries, Karbon-X Project, Inc and Karbon-X USA Corp.

Karbon-X provides customized transactional options, tailored insights, and scalable access to the Verified Emissions Reduction markets. Karbon-X changes the marketing framework of traditional carbon marketing by engaging the public versus industry with multiple forms of technology-based greenhouse gas reduction builds. Karbon-X will allow the public to purchase carbon offsets from an app that is subscription-based, with multiple levels of investment for every budget. Each subscription will support clean energy projects such as solar or wind power, methane capture, or reforestation and will reduce greenhouse gas emissions with provable, verifiable carbon credits.

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Karbon-X is in development of NFTs to digitize and allow for the trading of tokenized carbon credits in order to bring transparency and liquidity to the global carbon offset market. The aim of the decentralized platform is to enable offset trading on existing tokenized exchanges and their own exchange, accepting all forms of payment, including crypto, fiat, or card. The NFT minting platform for carbon credits allows carbon credit owners to mint their credits into NFTs for a secure and efficient method of trading in a market that appears set to grow rapidly in the coming years. A trading platform will allow the owners of the NFTs to monitor their assets while tracking their value and trading history. This is done on the blockchain to mitigate many risks such as double trading and long-term record-keeping issues. By using a "side chain" of Ethereum, costs are kept to a minimum for users.

References in this periodic report on Form 10-Q to "Karbon-X" or the "Company" may include references to the operations of our subsidiaries Karbon-X Trading LTD, Allcot Limited, Allcot Soluciones España S.L, Allcot X Colombia S.A.S and Karbon-X Project. These entities are wholly owned subsidiaries of Karbon-X and consequently report quarterly financials up to a consolidated quarterly submission.

Critical Accounting Policies

The consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Note 1 discusses the company's accounting policies.

Results of Operations

Unaudited Results for the Three Months Ended November 30, 2025, and 2024

Sales and Revenue

For the three-month period ended November 30, 2025, the Company reported revenue of USD $20,847,625, an increase of 1,674% compared to $1,175,060 in the same period in 2024. The significant increase in sales was primarily due to selling of carbon credits through its new trading subsidiary.

Operating Expenses

Operating expenses for the three-month period ended November 30, 2025, were $2,872,771, compared to $1,735,881 in the same period in 2024, representing a 68% increase. The key factors driving this increase were:

	·	Marketing Expenses: Investment in customer acquisition and brand-building efforts, including strategic partnerships like the Oilers initiative, resulted in marketing expenses of $683,361, up from $370,488 in the same period in 2024.
	·	Salaries and Wages: Increased headcount, subcontractor costs, and wage adjustments contributed to payroll expenses of $1,605,992, a significant rise from $922,139 in the same period in 2024.
	·	Professional Fees: Costs related to legal, advisory, and compliance efforts amounted to $377,109, compared to $265,570 in the same period in 2024.
	·	Other Operating Expenses: These totaled $206,309, up from $177,684, reflecting the Company's operational scale-up.

Net Income/Loss from Operations

The operating loss for the three-month period ended November 30, 2025, was $1,447,776, compared to $1,161,555 loss in the same period in 2024. While revenue was stable, increased operating expenses offset these gains, as the Company continues to invest heavily in marketing, payroll, and compliance to drive long-term growth.

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Unaudited Results for the Six Months Ended November 30, 2025, and 2024

Sales and Revenue

For the six-month period ended November 30, 2025, the Company reported revenue of USD $56,506,557, an increase of 4,238% compared to $1,302,489 in the same period in 2024. The significant increase in sales was primarily due to selling of carbon credits through its new trading subsidiary.

Operating Expenses

Operating expenses for the six-month period ended November 30, 2025, were $5,531,705, compared to $2,561,565 in the same period in 2024, representing a 116% increase. The key factors driving this increase were:

	·	Marketing Expenses: Investment in customer acquisition and brand-building efforts, including strategic partnerships like the Oilers initiative, resulted in marketing expenses of $1,311,901, up from $382,839 in the same period in 2024.
	·	Salaries and Wages: Increased headcount, subcontractor costs, and wage adjustments contributed to payroll expenses of $3,204,641, a significant rise from $1,455,733 in the same period in 2024.
	·	Professional Fees: Costs related to legal, advisory, and compliance efforts amounted to $484,556, compared to $410,843 in the same period in 2024.
	·	Other Operating Expenses: These totaled $530,607, up from $312,150, reflecting the Company's operational scale-up.

Net Income/Loss from Operations

The operating loss for the six-month period ended November 30, 2025, was $4,044,012, compared to $1,966,321 loss in the same period in 2024. While revenue was stable, increased operating expenses offset these gains, as the Company continues to invest heavily in marketing, payroll, and compliance to drive long-term growth.

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Liquidity and Capital Resources

The following table sets forth the major components of our statements and consolidated statements of cash flows for the periods presented.

		Six months ended November 30, 2025				Six months ended November 30, 2024
Cash used in operating activities			(4,726,948	)			(3,364,533	)
Cash used in investing activities			(605,093	)			-
Cash from financing activities			9,791,321				2,240,772
Change in cash during the period			(5,669,466	)			(1,123,761	)
Effect of exchange rate change			145,038				(91,958	)
Cash, beginning of period			704,346				2,675,400
Cash, end of period			6,518,850				1,459,681

As of November 30, 2025, the Company had USD $17,534,424 in current assets

To date, the Company has financed its operations through equity sales and note issuances.

During June - November 2025, Karbon-X Corp. converted loan principal and interest of $2,284,148 into 4,870,291 shares at price of $0.90 - $0.45 per share.

Recent Developments

During the six months ended November 30, 2025, the Company strengthened its executive leadership team with the appointment of key hires. Adriana Ebell, a seasoned financial executive with over 23 years of experience, joined the Company as Acting Chief Financial Officer (CFO). In this role, she will oversee the Company's financial strategy, reporting, and compliance functions, contributing to enhanced financial management and planning as the Company continues its growth trajectory.

This appointment reflect our commitment to building a strong leadership team as we continue to execute on our strategic priorities and drive value for stockholders.

Revenue Growth

	·	For the six months ended November 30, 2025, revenue surged to $56.5 million, a 4,238% increase compared to $1.3 million in the same period in 2024.
	·	This growth was driven by the successful launch and scaling of Karbon-X's carbon credit trading subsidiary.

Strategic Capital Formation

·

$2.28 million in debt converted to equity, reflecting investor confidence and reducing future interest obligations.

Strengthened Liquidity Position

	·	Cash and cash equivalents increased by 826%, from $704,346 at the beginning of the fiscal year to $6.5 million at quarter-end.
	·	Total current assets rose to $17.5 million, up from $5.8 million in the prior fiscal year.

Asset Acquisition with High Upside

	·	Completed a strategic carbon-offset project portfolio acquisition for $605,093.
	·	Management estimates the fair market value of acquired projects exceeds $22 million, representing a significant potential return on investment.

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Operational Expansion

·

Inventory increased by 1,398%, from $99,644 to $1.5 million, reflecting ramp-up in carbon credit production and project development.

Global Impact & Innovation

·

Continued development of NFT-based carbon credit trading platform, enhancing transparency and liquidity in the voluntary carbon market.

Improved Financial Efficiency

·

For the six months ended November 30, 2025, the company maintained a gross profit of $2.3 million, up from $564,154 in the same period in 2024.

Future Financing

In connection with its proposed business plan and currently ongoing and proposed acquisitions, in addition to the possible proceeds from this offering, the Company will be required to complete substantial and significant additional capital formation. Such formation could be through additional equity offerings, debt, bank financings, or a combination of any source of financing. There can be no assurance that the Company will be successful in completing such financings.

Plan of Operations

As noted above, the continuation of our current plan of operations requires us to raise significant additional capital. If we are successful in raising capital through the sale of convertible notes or common shares, we believe that we will have sufficient cash resources to fund our plan of operations through 2025. If we are unable to do so, we may have to curtail and possibly cease some operations. We intend to use the net proceeds from the offering for operations, regulatory compliance, intellectual property, working capital, and general corporate purposes.

We continually evaluate our plan of operations to determine the manner in which we can most effectively utilize our limited cash resources. The timing of completion of any aspect of our plan of operations is highly dependent upon the availability of cash to implement that aspect of the plan and other factors beyond our control. There is no assurance that we will successfully obtain the required capital or revenues, or, if obtained, that the amounts will be sufficient to fund our ongoing operations.

Capital Expenditures

As of November 30, 2025, we had one asset acquisition as disclosed above, and no other capital expenditures.

Commitments and Contractual Obligations

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

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