v3.26.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 3 Months Ended
Mar. 31, 2026
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

The accompanying unaudited condensed interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) as found in the Accounting Standards Codification (“ASC”), and the Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and are expressed in US Dollars. The unaudited condensed interim consolidated financial statements should be read in conjunction with the notes contained herein as part of the Company’s Quarterly Report in its Form 10-Q filing under the Securities Exchange Commission, and with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

 
Reclassification

Reclassification

 

Certain reclassifications have been made to prior periods to conform with current reporting. These reclassifications did not affect net income, total assets, liabilities or equity reported.

 
Basis of Consolidation

Basis of Consolidation

 

The consolidated statements include the accounts of the Company and its subsidiaries. CurrencyWorks USA Inc. (“CW”) (formerly ICOx USA, Inc.), Energy Works Inc. (“EWI”) and Enderby Works LLC (“EW”) are wholly owned subsidiaries. EW became a wholly owned subsidiary in 2023, see Note 6 Notes Receivable. MotoClub (“MB”) is a majority-owned subsidiary, 80% held by (“WEC”). All intercompany transactions and balances have been eliminated.

 
Discontinued Operations

Discontinued Operations

 

The Company accounts for discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations. The disposal of a component or group of components is classified as a discontinued operation if the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results. This includes the sale, abandonment, or other disposal of legal entities, business segments, or significant components.

 

Upon meeting the criteria for discontinued operations, the results of operations, including any gain or loss on disposal, are presented separately in the consolidated statements of operations for all periods presented.

 

 
Segment Reporting

Segment Reporting

 

The Company uses the “management approach” to identify its reportable segments. Under this approach, the Company has determined that it operates through four reportable segments: the Holding Segment (corporate functions, finance, legal, human resources, executive management, and parent-level financing activities); the Renewable Energy Consulting Segment (advisory and implementation services related to clean energy solutions); the Recyclable Material Intake Segment (collection and processing of recyclable materials, including waste tires); and Discontinued Operations (operations that no longer meet the criteria for continuing operations).

 

Segmented Information- Statements of Operations

 

March 31, 2026

  Holding Segment   Waste Conversion Segment    Total 
Revenue and other income:                
Consulting revenue  $-   $83,333    $83,333 
Cost of sales   

-

    

30,000

     

30,000

 
Revenue and other income   -    53,333     53,333 
Expenses                
Advertising & Marketing  $35,474   $-    $35,474 
Consulting fees   151,134    -     151,134 
Professional fees   23,014    -     23,014 
Other general and administrative expenses   156,217    -     156,217 
Change in derivative liability   

1,650,733

    -     

1,650,733

 
Interest expense and charges - note payable   473,918    -     473,918 
Net Income (loss) before income taxes  $(2,490,490)  $53,333    $(2,437,157)

 

March 31, 2025

  Holding Segment   Waste Conversion Segment    Total 
Revenue and other income:                
Consulting revenue  $-   $41,667    $41,667 
Recyclable material intake   -    -     - 
Note interest revenue   -    -     - 
Gain on extinguishment of debt   -    -     - 
Investment write off   -    -     - 
Other income   -    -     - 
Revenue and other income   -    41,667     41,667 
Expenses              - 
Advertising & Marketing  $3,264   $-    $3,264 
Consulting fees   -    -     - 
Licenses   172    -     172 
Stock based compensation (related and non-related party)   24,378    -     24,378 
Rent   -    -     - 
Professional fees   3,539    -     3,539 
Other general and administrative expenses   15,505    -     15,505 
Change in derivative liability   -    -     - 
Interest expense and charges - note payable   17,877    -     17,877 
Interest write off   -    -     - 
Net Income (loss) before income taxes  $(64,735)  $41,667    $(23,068)

 

 

Segmented Information- Balance Sheets

 

March 31, 2026 

Holding

Segment

  

Renewable

Energy

Consulting

segment

  

Recyclable

Material

Intake

segment

   Total 
Total assets  $67,408   $-   $930,715   $998,123 
                               
Net assets  $67,408   $-   $930,715   $998,123 
                     
Current liabilities  $6,613,905   $-   $217,200   $6,831,105 

Non-current liabilities

 

$

-   $-   $

154,291

   $

154,291

 
Net liabilities  $6,613,905   $-   $371,491   $6,985,396 

 

December 31, 2025 

Holding

Segment

  

Renewable

Energy

Consulting

segment

  

Recyclable

Material

Intake

segment

   Total 
Total assets  $68,244   $-   $957,547   $1,025,791 
                                
Net assets  $68,244   $-   $957,547   $1,025,791 
                     
Current liabilities  $4,301,054   $-   $296,033   $4,597,087 
Non-current liabilities  $-   $-    

170,878

   $170,878 
Net liabilities  $4,301,054   $-   $466,911   $4,767,965 

 
Use of Estimates

Use of Estimates

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 these estimates and these differences could be material.

 
Cash and Cash Equivalents

Cash and Cash Equivalents

 

Cash and cash equivalents include short-term, highly liquid investments, such as cash on account with commercial banks, certificates of deposit or money market funds that are readily convertible to known amounts of cash and have original maturities of three months or less. All cash balances are held by major banking institutions.

 
Contingent Liabilities

Contingent Liabilities

 

The Company accounts for its contingent liabilities in accordance with ASC No. 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

 

With respect to legal matters, provisions are reviewed and financial information is adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The Company is party to a lawsuit see note 10.

 

 
Income Taxes

Income Taxes

 

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

FASB Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”), clarifies the accounting for uncertainty in income taxes recognized in the financial statements. ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have determined that the Company does not have uncertain tax positions on its tax returns for the years 2025, and prior. Based on the evaluation of the 2025 transactions and events, the Company does not believe it has any material uncertain tax positions that require measurement.

 

The IRS requires all domestic corporations in existence for any part of the tax year to file an income tax return whether or not they have taxable income. The Company incurred a loss for the fiscal years ended December 31, 2025, and 2024 and has not filed tax returns for either year. The Company has not received any notifications from the IRS. Reported tax benefits and valuation allowances are the Company’s best estimate of its tax positions and have not been reviewed by the taxing authority.

 

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our consolidated balance sheets at December 31, 2025 or 2024, and have not recognized interest and/or penalties in the consolidated statement of operations for the year ended December 31, 2025 or 2024.

 

We are subject to taxation in the U.S. and the state of California. The Company’s tax returns for tax years from 2022 to recent filings remain subject to potential examination by the tax authorities.

 
Accounts Receivable

Accounts Receivable

 

The collectability of accounts receivable is determined by the Company’s legal obligation for payment by the customer, as well as the ability of the customer to pay its debts. The carrying amount of accounts receivable represents the maximum credit exposure of this balance.

 

Accounts receivable primarily consists of amounts due from customers for prior movie distribution rights and recyclable material intake and are reported at their net realizable value. From management’s best estimate, there is no allowance for doubtful accounts on March 31, 2026 and December 31, 2025. Management individually reviews accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that may not be collected and would directly write off these balances. Management considers several factors, including the age of the receivables, current economic conditions and other information management obtains regarding the financial condition of customers. The policy for determining the past due status is based on the contractual payment terms of each customer. If conditions are identified that pose significant risk of non-collections the determination to directly write off uncollectible receivables is made.

 
Allowance for Credit Losses

Allowance for Credit Losses

 

The Company estimates its allowance for credit losses using the Current Expected Credit Loss (CECL) model under ASC 326. The CECL model requires recognition of expected credit losses over the contractual life of financial assets held at the reporting date, considering historical experience, current conditions, and reasonable and supportable forecasts.

 

 

Financial assets subject to CECL include trade receivables, notes receivable, and held-to- maturity debt securities. The Company groups financial assets based on shared risk characteristics and evaluates them collectively. The allowance is measured using a combination of historical loss rates, adjusted for current economic trends and forward-looking factors such as industry outlook and macroeconomic indicators (e.g., unemployment rate, GDP).

 

Under CECL, the carrying amount of a financial asset (net of the allowance for credit losses) represents the amount the Company expects to collect. This means that when the CECL estimate is appropriately recorded, the net reported balance of financial assets reflects management’s best estimate of collectible cash flows, based on available and supportable information.

 

Management reviews the adequacy of the allowance at each reporting period and updates estimates as appropriate. Changes in estimates are recorded in the income statement as a component of credit loss expense.

 
Earnings per Share

Earnings per Share

 

The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted EPS on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of warrants or stock options (Note 13 and Note 16 respectively). Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

 

On March 31, 2026 the Company had convertible debt outstanding, warrants exercisable to 7,437,500 shares of common stock and stock options exercisable to 33,129,998 shares of common stock. On December 31, 2025 the Company had convertible debt outstanding, warrants exercisable to 7,437,500 shares of common stock and stock options exercisable to 32,129,998 shares of common stock. For both years the effect of exercisable options and warrants is anti-dilutive and they have been excluded from dilutive EPS.

 
Stock-Based Compensation

Stock-Based Compensation

 

The Company has adopted FASB guidance on stock-based compensation. Under ASC 718-10-30-2 Stock Compensation, all share-based payments to employees, including grants of employee stock options, are to be recognized in the consolidated statements of operations based on their fair values. The fair value of the options is calculated using the Black Scholes valuation model (Note 16).

 

The Company has issued stock options to employees and non-employees. Stock options granted to non-employees for services or performance not yet rendered would be expensed over the service period or until the goals had been reached. Stock options granted to employees are expensed over the vesting period of the options. The fair value of stock options is determined on the grant date.

 

Forfeitures of options are recognized as they occur. Compensation cost previously recognized is reversed on the date of forfeiture for any options that are forfeited prior to the completion of the requisite service period or vesting period.

 

Cancellation of an award accompanied by the concurrent grant of (or offer to grant) a replacement award of other valuable consideration is accounted for as a modification of the terms of the canceled award. The total compensation cost measured on the date of a cancellation and replacement id the portion of the grant-date fair value of the original award for which the requisite service is expected to be rendered (or has already been rendered) at that date plus the incremental cost resulting from the cancellation and replacement.

 

A cancelation of an award that is not accompanied by the concurrent grant of (or offer to grant) a replacement award of other valuable consideration is accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation cost is recognized on the cancellation date.

 

 
Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The fair value is an exit price representing the amount that would be received to sell an asset or required to transfer a liability in an orderly transaction between market participants. As such, fair value of a financial instrument is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

 

A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

 

  ● Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
  ● Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
  ● Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participants assumptions that are reasonably available.

 

The Company’s financial instruments consist of equity investments, note receivables, derivative liabilities and notes payable. The Company’s note receivables were indirectly written down to zero due to potential non-collections. The Company’s derivative liabilities have a fair value of zero principally due to a decline in the stock price. These instruments are in level 3 of the fair value hierarchy.

 

When determining fair value, whenever possible, the Company uses observable market data and relies on unobservable inputs only when observable market data is not available. As at March 31, 2026 and December 31, 2025, the Company did not have any level 1 or 2 financial instruments. As at March 31, 2026 and December 31, 2025, the Company’s level 3 financial instruments were derivative liabilities for warrants issued and outstanding that were not indexed to the Company’s stock, notes payable and notes receivable valued at their present values and equity investments in other entities.

 

The following table presents the Company’s assets and liabilities that are measured at fair value on a non-recurring basis at March 31, 2026.

 

  

Quoted

Prices

in Active

Markets for

Identical

Assets

(Level 1)

  

Significant

Other

Observable

Inputs

(Level2)

  

Significant

Unobservable

Inputs

(Level3)

 
Liabilities               
Notes Payable   -    -   $117,000 
Derivative liability   -    -   $4,045,667 
Convertible note payable   -    -   $916,832 

 

The following table presents the Company’s assets and liabilities that are measured at fair value on a non-recurring basis at December 31, 2025.

 

  

Quoted

Prices

in Active

Markets for

Identical

Assets
(Level 1)

  

Significant

Other

Observable

Inputs

(Level2)

  

Significant

Unobservable

Inputs

(Level3)

 
Liabilities               
Notes payable   -    -   $117,000 
Derivatives liability   -    -   $1,828,934 
Convertible note payable   -    -   $857,353 

 

 
Derivative Liabilities – Conversion Features

Derivative Liabilities – Conversion Features

 

The Company evaluates whether embedded conversion features in its financial instruments meet the criteria for separate accounting under ASC 815, “Derivatives and Hedging.” If the conversion feature is not clearly and closely related to the host debt instrument and does not meet the scope exception for equity classification, it is bifurcated and accounted for as a derivative liability, remeasured to fair value each period using the Black-Scholes or binomial option pricing models.

 
Revenue Recognition

Revenue Recognition

 

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers, applying the standard five-step model to consulting services, recyclable material intake, and (for discontinued operations only) prior movie distribution and NFT revenue streams.

 

Consulting Services

 

Revenue from Renewable Energy Consulting services is derived from advisory and implementation services related to clean energy solutions. Revenue is recognized in accordance with ASC 606, Revenue from Contracts with Customers, when a service is performed for the customer, services may occur over time or under a services contract or for a specific event as stipulated in client contracts. Contract terms typically provide for billing upon completion of defined milestones or within standard payment cycles.

 

Movie Distribution Revenue

 

Movie distribution revenue is derived from the use of the Company’s intangible assets. Revenues earned to date are from nonrefundable minimum guaranteed payments recognized on the date distribution rights were granted to the purchaser and royalty revenues when certain cost recuperation thresholds and other contractual conditions are met. Future revenues may be recognized from revenue generated by the purchaser or by additional distribution sales over the term of the movie rights license. During 2024 operations ceased due to Management’s decisions to pursue a new line of business in renewable waste energy. There may be rights to residual collections from a past contract that may be transferred to a functioning entity at a future date.

 

Funds received for unearned revenue are deferred revenue on the consolidated balance sheet and are recognized as revenue upon completion of milestones or specified tasks.

 

Recyclable Material Intake

 

The Company recognizes revenue from waste tires received from customers. Customers pay the Company for the collection, acceptance, and processing of waste tires. Revenue is recognized in accordance with ASC 606, Revenue from Contracts with Customers, at the point in time when the company accepts the waste material for processing and the agreed fee is due from the customer.

 

Disaggregated Revenue Disclosure

 

The Company’s customers or sources of revenue generation were only in the United States during the period ended March 31, 2026. Below is a table of revenue by type:

 

Revenue Type  March 31, 2026   March 31, 2025 
Renewable consulting revenue  $83,333   $41,667 
Recyclable Material intake revenue   -    - 
Revenue  $83,333   $41,667 

 

 
Operating Leases

Operating Leases

 

The Company accounts for leases in accordance with ASC 842, Leases. At the commencement of a lease, the Company determines whether the arrangement is a finance or operating lease. Operating lease right-of-use (“ROU”) assets and related lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. The Company uses its incremental borrowing rate to determine the present value of future lease payments when the implicit rate in the lease is not readily determinable.

 

ROU assets include any prepaid lease payments and are reduced by lease incentives received. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Short-term leases (terms of twelve months or less) are not recorded on the balance sheet, and payments are recognized as expense when incurred.

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

Environmental Credits (Proposed Topic 818) - New guidance on how to account for environmental credits like carbon offsets and renewable energy certificates. Focus on consistent recognition, measurement, and disclosure. Still in proposal stage (comment period through April 2025).

 

Disaggregation of Income Statement Expenses (ASU 2024-03) - Companies must break out major expense categories (e.g., labor, depreciation) in the notes to financial statements. Aimed at improving transparency. Effective for annual periods after Dec 15, 2026 (early adoption allowed).

 

Income Tax Disclosure Improvements (ASU 2023-09) - Requires clearer details on income taxes paid (by federal, state, and foreign) and better breakdowns of rate reconciliations. Helps investors better understand a company’s tax situation.