Karbon-X Corp., a public Nevada corporation specializing in providing exposure to certified carbon credits, has released its annual Form 10-K report. The company operates within the environmental, social, and governance (ESG) framework, partnering with high-quality projects in the voluntary carbon credit market. The report details the company’s financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive carbon credit industry.
Financial Highlights
- Total Revenue: $3.16 million, reflecting the company’s early commercialization efforts with expectations for improvement.
- Gross Profit: $0.80 million, indicating a significant increase from the previous year.
- Net loss before income taxes: $(7.05) million, primarily due to investment losses and increased operating expenses.
- Net loss: $(7.05) million, driven by marketing expenses and losses related to investments.
- Basic and fully diluted loss per share: $(0.08), reflecting the company’s ongoing investment in growth and development.
Business Highlights
- Business Overview: Karbon-X Corp is focused on providing exposure to certified carbon credits, essential for achieving carbon neutrality and net-zero goals. The company operates within the ESG framework, partnering with high-quality projects in the voluntary carbon credit market.
- Carbon Credit Generation: The company has initiated the purchase of verified carbon credits from various vendors and is funding projects to generate its own carbon credits. These credits will be sold on Karbon-X’s proprietary app platform once verified.
- Sales Channels: Karbon-X Corp’s main revenue streams include industrial sales and subscription-based sales through a mobile app. Industrial sales target sectors like mining, forestry, and transportation, while the app offers subscription options for the general public to offset their carbon footprint.
- New Product Launch: The Karbon-X app, which allows the public to purchase carbon offsets, was soft-launched in 2023 and became fully available in March 2025. The app offers multiple subscription levels to support CO2-reducing projects.
- Competition: The company faces intense competition from established players like Indigo Carbon, Nori, TruCarbon by TruTerra, Bayer Carbon Initiative, Nutrien Ag, Carbon Streaming Corp, Base Carbon, and Climeworks. These competitors have greater resources and longer operating histories, posing challenges to Karbon-X’s market share.
- Employee Growth: As of the filing date, Karbon-X Corp has 25 employees and is actively recruiting to expand its team across various levels.
- Legal Proceedings: The company is involved in a legal dispute with a former employee over wrongful termination, with Karbon-X counter-suing and expecting to prevail.
- Future Outlook: Karbon-X plans to continue its commercialization efforts and expand its market presence. The company is seeking additional capital to support its operations and strategic initiatives, with a focus on research and development, regulatory compliance, and general corporate purposes.
Strategic Initiatives
- Strategic Initiatives: Karbon-X Corp. has engaged in strategic initiatives to enhance its market presence and operational capabilities. The company entered into a Carbon Credit Purchase Agreement and a Carbon Credit Forward Purchase Agreement with DevvStream Holdings Inc., which involved receiving shares of a Nasdaq-listed company as part of the transaction. Additionally, the company is focusing on expanding its product offerings through the development of a subscription-based app for purchasing carbon offsets, supporting clean energy projects. The company also adopted a stock option plan to attract and retain key personnel.
- Capital Management: Karbon-X Corp. has been actively managing its capital through various financing activities. During the fiscal year, the company issued convertible promissory notes totaling $2,443,195 to raise capital, with conversion features allowing for potential equity participation. The company also completed a private placement, selling 1,926,742 shares at $0.90 per share, raising $1,712,099. Additionally, the company converted loans and options into shares, further strengthening its equity base. The company has not issued any dividends and does not plan to in the near future, focusing instead on reinvesting profits into growth and development.
- Future Outlook: Looking ahead, Karbon-X Corp. plans to continue its strategic focus on expanding its market presence and operational capabilities. The company intends to raise significant additional capital to support its business plan and potential acquisitions, which may include equity offerings, debt, or bank financings. The company is also exploring opportunities to enhance its product offerings and market reach, with an emphasis on sustainable growth initiatives. The ability to secure additional funding will be crucial for the continuation of its operations and strategic initiatives.
Challenges and Risks
- Operational Risks: Karbon-X Corp operates in the voluntary carbon credit market, which is subject to intense competition from companies with greater resources, potentially impacting its market share and pricing strategies. The company is also reliant on third-party service providers for distribution and invoicing, which poses operational risks if these partners fail to meet obligations or comply with regulations.
- Financial Risks: The company faces significant operational risks, including the potential for continued losses and the need for additional capital to sustain operations. There is no guarantee of profitability, and failure to secure financing could lead to cost-cutting measures that may harm business prospects. The company also has limited sales and marketing experience, which could hinder the successful commercialization of its products.
- Regulatory Risks: Reliance on third-party distributors and service providers introduces risks related to compliance and performance, which could impact revenue and profitability. Regulatory risks are present, as non-compliance could result in sanctions such as fines or production suspensions.
- Market Risks: The company also faces market risks from potential dilution of common stock and the impact of significant stock sales by officers and directors.
- Management’s Discussion: The company has incurred significant operating losses and requires additional funding to continue operations, raising concerns about its ability to continue as a going concern. Management acknowledges the need for substantial capital formation to support its business plan and potential acquisitions. The company is exploring various financing options, but there is no assurance of success. The impact of COVID-19 has been monitored, but no significant effects on operations have been noted. The company is also exposed to risks related to fair value measurements of financial instruments, which involve significant management judgment and unobservable inputs.
SEC Filing: Karbon-X Corp. [ KARX ] – 10-K – Sep. 15, 2025
