Quarterly Report for Quarter Ending December 31, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-looking Information

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "we believe," "we intend," "may," "should," "will," "could" and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.

Examples of forward-looking statements include:

	·	the timing of the development of our products;
	·	projections of costs, revenue, earnings, capital structure and other financial items;
	·	statements of our plans and objectives;
	·	statements regarding the capabilities of our business operations;
	·	statements regarding our sales pipeline, potential contract values and timing of future customer agreements;
	·	statements of expected future economic performance;
	·	statements regarding competition in our market; and
	·	assumptions underlying statements regarding us or our business.

The ultimate correctness of these forward-looking statements depends upon several known and unknown risks and events. We discuss our known material risks under Part I Item 1.A "Risk Factors" in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 19, 2025. Many factors could cause our actual results to differ materially from the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast by our forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Overview

We are an early-stage company that developed a more sustainable collapsible marine container (the "GenFlat Container"), that can be collapsed when emptied and stacked in bundles of four collapsed containers that take the same space as a standard marine container. When GenFlat Containers are stacked 4-to-1, they can save up to 75% on: 1) freight costs, terminal handling fees, transloading fees, and other fees; 2) carbon emitted by ocean vessels, trucks, and trains by reducing the number of trips necessary; and 3) space required at ports, container yards, and distribution centers. We operate as a container sales and leasing company and supply GenFlat's patented marine container primarily to shipping line customers under a variety of short and long-term lease structures.

The GenFlat Containers are manufactured by China International Mariner Containers ("CIMC") in Dalian, China. Manufacturing and marketing of the containers commenced in September 2023.

Commencement of Commercial Operations

We commenced commercial operations in May 2024. Presently, our commercial operations consist of one rental agreement and two equipment lease agreements to provide GenFlat Containers to a total of three customers, including one agreement entered into in August 2025 and one agreement entered into in September 2025. The lease agreements demonstrate commercial acceptance of our GenFlat Container. Our Company is also in various stages of evaluation with potential customers to lease GenFlat Containers, including shipping lines, retailers, logistics companies, and the United States military.

For the three months ended December 31, 2025, and 2024, we generated no revenue from our operations, and our net losses from operations were $424,796 and $844,391, respectively. For the six months ended December 31, 2025, and 2024, we generated revenue from our operations of $6,120 and $7,894, and our net losses from operations were $925,210 and $2,611,438, respectively.

Components of Results of Operations

Revenue

Revenue is from fees charged for rental and lease of collapsible marine shipping containers.

Costs of Revenue

Costs of revenue include depreciation expense on rental inventory, freight and transportation costs to move collapsible marine shipping containers.

General and Administrative Expenses

General and administrative expenses include all corporate and administrative functions that support our Company, including personnel-related expense; costs related to investor relations activities; professional fees; consulting and marketing and advertising-related expenses.

Research and Development Costs

These expenses are substantially related to our engineering, consulting and research and development activity.

Other Income/Expenses, Net

Other income/expenses include non-operating income and expenses, including interest income and expense.

Results of Operations

For the Three Months ended December 31, 2025, compared to the Three Months ended December 31, 2024

The following discussion compares operating data for the three months ended December 31, 2025, to the data for the three months ended December 31, 2024:

		Three Months Ended December 31,
		2025				2024				$ Change				% Change
Revenue		$	-			$	-			$	-				-
Cost of Goods Sold			21,846				52,717				(30,871	)			59	%
Gross Profit			(21,846	)			(52,717	)			30,871				59	%
Research and Development			-				52,000				(52,000	)			100	%
General and administrative			402,950				739,674				(336,724	)			46	%
Total operating expenses			402,950				791,674				(388,724	)			49	%
Loss from operations		$	(424,796	)		$	(844,391	)		$	419,595				50	%

Revenue

Revenue was $0 for the three months ended December 31, 2025 and 2024.

Cost of Goods Sold

Cost of goods sold was $21,846 for the three months ended December 31, 2025, as compared to $52,717 for 2024, a decrease of $30,871. The cost of goods sold for the three months ended December 31, 2025 primarily related to $21,846 of depreciation expense of rental inventory. The cost of goods sold for the three months ended December 31, 2024 related to $45,692 of depreciation expense of rental inventory and $7,025 transportation expenses of the Company's collapsible marine container.

Research and Development Expenses

Research and development expenses were $0 for the three months ended December 31, 2025, as compared to $52,000 for 2024, a decrease of $52,000, which was the result of decreased engineering, consulting and research and development activity of the Company's collapsible marine containers.

General and Administrative Expenses

General and administrative expenses for the three months ended December 31, 2025, were $402,950, compared to $739,674 for 2024, a decrease of $336,724, which was primarily related to a decrease in stock-based compensation expense of $284,125 associated with advisor agreements executed during the three months ended December 31, 2024.

For the Six Months ended December 31, 2025, compared to the Six Months ended December 31, 2024

The following discussion compares operating data for the six months ended December 31, 2025, to the data for the six months ended December 31, 2024:

		Six Months Ended December 31,
		2025				2024				$ Change				% Change
Revenue		$	6,120			$	7,894			$	(1,774	)			22	%
Cost of Goods Sold			42,916				105,911				(62,995	)			59	%
Gross Profit			(36,796	)			(98,017	)			61,221				62	%
Research and Development			-				88,000				(88,000	)			100	%
General and administrative			888,414				2,425,421				(1,537,007	)			63	%
Total operating expenses			888,414				2,513,421				(1,625,007	)			65	%
Loss from operations		$	(925,210	)		$	(2,611,438	)		$	1,686,228				65	%

Revenue

Revenue was $6,120 for the six months ended December 31, 2025, as compared to $7,894 for 2024, a decrease of $1,774.

Cost of Goods Sold

Cost of goods sold was $42,916 for the six months ended December 31, 2025, as compared to $105,911 for 2024, a decrease of $62,995. The cost of goods sold for the six months ended December 31, 2025 primarily related to $40,550 of depreciation expense of rental inventory, and $2,365 transportation expenses of the Company's collapsible marine container. The cost of goods sold for the six months ended December 31, 2024 related to $85,442 of depreciation expense of rental inventory and $20,469 transportation expenses of the Company's collapsible marine container.

Research and Development Expenses

Research and development expenses were $0 for the six months ended December 31, 2025, as compared to $88,000 for 2024, a decrease of $88,000, which was the result of decreased engineering, consulting and research and development activity of the Company's collapsible marine containers.

General and Administrative Expenses

General and administrative expenses for the six months ended December 31, 2025, were $888,414, compared to $2,425,421 for 2024, a decrease of $1,537,007, which was primarily related to a decrease in stock-based compensation expense of $1,570,146 associated with advisor agreements executed during the six months ended December 31, 2024.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended December 31, 2025, and 2024:

		Six months ended December 31,
		2025				2024
Cash flows used in operating activities		$	(464,531	)		$	(656,533	)
Cash flows used in investing activities			-				-
Cash flows provided by financing activities			432,100				958,529
Net change in cash		$	(32,431	)		$	301,996

Operating Activities

Cash used in operating activities is primarily the result of our operating losses, reduced by the impact of non-cash expenses, including non-cash depreciation and amortization expenses, and changes in the asset and liability accounts.

Net cash used in operating activities for the six months ended December 31, 2025, was $464,531 versus net cash used in operating activities of $656,533 for the six months ended December 31, 2024, a decrease of $192,002. The decrease in net cash used in operating activities was primarily due to decrease in net loss and stock-based compensation compared to the prior period.

We expect cash used in operating activities to fluctuate significantly in future periods because of a number of factors, some of which are outside of our control, including, among others: obtaining additional lease contracts and manufacturing containers, and the success we achieve in generating revenue.

Investing Activities

There was no cashflow from investing activities during the six months ended December 31, 2025 and December 31, 2024.

Financing Activities

Net cash provided by financing activities during the six months ended December 31, 2025 was $432,100, a decrease of $526,429 from cash provided by financing activities in 2024 of $958,529. Net cash provided consisted of proceeds from notes payable were $0, advances from related party were $4,000, proceeds from exercise of common stock options were $600, and proceeds from related party notes were $427,500 during the six months ended December 31, 2025. During the six months ended December 31, 2025, the Company issued 16,667 shares pursuant to the conversion of $99,996 in notes payable and $4,311 of accrued interest.

Net cash provided by financing activities during the six months ended December 31, 2024 was $958,529. Net cash provided consisted of $94,750 of proceeds from loans from related party, $99,996 of proceeds from note payable from a related party, partially offset by repayments on related party notes payable, and repayment of advances from related party of $208,481.

Liquidity and Capital Resources

Our future expenditures and capital requirements will depend on numerous factors, including: the rate at which we can lease additional GenFlat containers to new and existing customers, the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; market acceptance of our products and competing products, and the rate at which we hire employees to support operations. We expect that we will incur approximately $403,000 of expenditures per month over the next 12 months since closing of the Public Offering.

As of December 31, 2025, we had cash of $17,399, and working capital deficit of $517,659. We believe that our existing cash will not be sufficient to fund our present operations during the next 12 months and beyond. The Company's audited annual consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At December 31, 2025 the Company had not yet achieved consistent profitable operations and expects to incur further losses in the development of its business, all of which raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has initiated a formal sales and marketing plan including direct email campaigns, industry events, and business to business digital advertising to generate sales.

In February 2026, the Company also raised gross proceeds of approximately $6,461,000 after deducting underwriting discounts and commissions through the sale of 2,333,333 shares of common stock to meet the capital requirements to manufacturer its products. However, there is no assurance of additional funding being available through the sale of additional equity other sources.

During the period ended September 30, 2025, the Company issued a total of 20,000 shares of its common stock for subscriptions paid for during the year ended June 30, 2025, and issued 16,667 shares pursuant to the conversion of $99,996 in notes payable and $4,311 of accrued interest. During the period ended September 30, 2024, the Company sold a total of 23,000 shares of common stock for total proceeds of $138,000.

During the period ended December 31, 2025, the Company issued a total of 23,667 shares of its common stock for subscriptions paid for during the year ended June 30, 2025. During the period ended December 31, 2024, GenFlat sold a total of 139,044 shares of its common stock in exchange for net cash proceeds of $834,264. These shares were issued subsequent to the period ended December 31, 2024.

During the year ended June 30, 2025, the Company sold a total of 183,711 shares of common stock in exchange for gross cash proceeds of $1,102,264. Of these shares, 43,667 shares sold for $262,000 were not issued as of June 30, 2025 and are recorded as subscription payable on the consolidated balance sheet as of June 30, 2025. The Company also issued 33,333 shares related to subscriptions received during the year ended June 30, 2024. In aggregate the Company issued 173,377 shares of common stock during the year ended June 30, 2025.

During the three months ended December 31, 2024, GenFlat sold a total of 139,044 shares of its common stock in exchange for net cash proceeds of $834,264. These shares were issued subsequent to the period ended December 31, 2024.

Capital Expenditures

We do not have any contractual obligations for ongoing capital expenditures at this time. We do, however, purchase equipment necessary to conduct our operations on an as needed basis.

Contractual Obligations

As of December 31, 2025, there were no material changes in our contractual obligations from those disclosed in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 19, 2025, other than those appearing in the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Estimates

The Company considers its critical accounting policies and estimates to be as follows:

Revenue Recognition

The Company is principally engaged in the business of renting collapsible marine shipping containers. The Company's rental transactions are accounted for under ASC Topic 842, Leases, ("Topic 842"). Our revenue includes revenue generated from renting equipment to customers and is recognized on a straight-line basis over the length of the rental contract. As part of this straight-line methodology, when the equipment is returned, the Company recognizes as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental contract period applicable to the actual number of days the equipment was out on rent, over the cumulative amount of revenue recognized to date. In any given accounting period, the Company will have customers return equipment and be contractually required to pay more than the cumulative amount of revenue recognized to date under the straight-line methodology. Provisions for discounts, rebates to customers and other adjustments are provided for in the period the related revenue is recorded.

The Company's sale of rental and new equipment, parts and supplies to customers are recognized under ASC Topic 606, Revenue from Contracts with Customers, ("Topic 606"). The Company recognizes revenue in these transactions when it satisfies a performance obligation by transferring control over a product or service to a customer. These transactions typically contain a single performance obligation, and a recognized at a point in time. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for such products or services.

Rental Inventory

Rental inventory consists of collapsible marine shipping containers. Rental inventory is stated at cost, with an estimated useful life of 10 years. Generally, when rental equipment is acquired, the Company estimates the period that it will hold the asset, primarily based on historical measures of the amount of rental activity (e.g. equipment usage) and the targeted age of equipment at the time of disposal. The Company also estimates the residual value of the applicable rental equipment at the expected time of disposal. The residual value for rental equipment is affected by factors which include equipment age and amount of usage. Depreciation is recorded over the estimated holding period. Depreciation rates are reviewed on a quarterly basis based on management's ongoing assessment of present and estimated future market conditions, their effect on residual values at the time of disposal and the estimated holding periods. Market conditions for used equipment sales can also be affected by external factors such as the economy, natural disasters, fuel prices, supply of similar used equipment, the market price for similar new equipment and incentives offered by manufacturers of new equipment. These key factors are considered when estimating future residual values and assessing depreciation rates. As a result of this ongoing assessment, the Company makes periodic adjustments to depreciation rates of rental equipment in response to changed market conditions. We had an inventory impairment loss of $0 at December 31, 2025, and 2024, related to a decline in the expected net realizable value of the 40 foot containers.

Accounts Receivable

Accounts receivable is carried at their estimated collectible amounts. Accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. We had an allowance of $0 at December 31, 2025, and recognized bad debt expense of $6,120 during the three months ended December 31, 2025. We had an allowance of $13,127 at June 30, 2025, and recognized credit losses of $13,127 during the year ended June 30, 2025.

Long-lived Assets

The Company amortizes acquired definite-lived intangible assets over their estimated useful lives. Other indefinite-lived intangible assets are not amortized but subject to annual impairment tests. In accordance with ASC 360 "Property Plant and Equipment," the Company reviews the carrying value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.

Leases

We account for our leases under ASC 842 - Leases. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, current portion of obligations under operating leases, and obligations under operating leases, non-current on our balance sheets.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted by the deferred rent liabilities at the adoption date. Short-term leases of one year or less are not recognized as ROU assets and liabilities. If our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") that are adopted by us as of the specified effective date.

In November 2023, the Financial Accounting Standard Board ("FASB") issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which amends the existing segment reporting guidance (ASC Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The Company adopted this standard effective July 1, 2024.

There are no other recently issued accounting pronouncements that we have yet to adopt that are expected to have a material effect on our financial position, results of operations, or cash flows.