UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~August~~November 3130, 2025

Commission File Number 000-56288

KARBON-X CORP.

(Exact name of registrant as specified in its charter)

Nevada

82-2882342

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

6575 West Loop South, Suite 500 Bellaire, TX 77401

(Address of principal executive offices) (Zip Code)

844-462-3637

(Registrant’s telephone number, including area code)

____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act

Title of Each Class

Trading Symbol(s)

Name of each Exchange

on which registered

N/A

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large, accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large, accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~October~~January 1319, ~~2025~~2026, there were 8788,~~163~~018,~~563~~947 shares of common stock issued and outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION 4 Item 1. Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3. Quantitative and Qualitative Disclosures about Market Risk 25 Item 4. Controls and Procedures 25 PART II—OTHER INFORMATION 26 Item 1. Legal Proceedings 26 Item 1A. Risk Factors 26 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26 Item 3. Defaults Upon Senior Securities 26 Item 4. Mine Safety Disclosures 26 Item 5. Other Information 26 Item 6. Exhibits 26

PART I - FINANCIAL INFORMATION		3

Item 1. Financial Statements		4

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		21

Item 3. Quantitative and Qualitative Disclosures about Market Risk		26

Item 4. Controls and Procedures		26

PART II - OTHER INFORMATION		27

Item 1. Legal Proceedings		27

Item 1A. Risk Factors		27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		27

Item 3. Defaults Upon Senior Securities		27

Item 4. Mine Safety Disclosures		27

Item 5. Other Information		27

Item 6. Exhibits		27

Table of Contents

Contents

PART 1 FINANCIAL INFORMATION
PART I FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets at August 31, 2025 (Unaudited) and May 31, 2025	4
Condensed Consolidated Balance Sheets at November 30, 2025 (Unaudited) and May 31, 2025		4
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended August 31, 2025, and August 31, 2024 (Unaudited)	5
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended November 30, 2025, and November 30, 2024 (Unaudited)		5
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended August 31, 2025, and August 31, 2024 (Unaudited)	6
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended November 30, 2025, and November 30, 2024 (Unaudited)		6
Condensed Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2025, and August 31, 2024 (Unaudited)	7
Condensed Consolidated Statements of Cash Flows for the Six Months Ended November 30, 2025, and November 30, 2024 (Unaudited)		7
Notes to the Consolidated Financial Statements	8	8

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KARBON-X CORP.

Condensed Consolidated Balance Sheets

	August 31, 2025			May 31, 2025
	November 30, 2025			May 31, 2025
	(Unaudited)			(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	16,~~358~~518,~~662~~850		$	704,346
Accounts receivable, net		85,~~012~~230,247			1,782
Inventories, net		~~847~~1,~~017~~492,692			99,644
Prepaid expenses and other current assets		~~194~~264,~~413~~977			865,674
Deposits		81,~~813~~422			23,815
Investments in equity securities		~~142~~103,~~922~~519			301,260
Securities receivables		3,~~952~~922,~~752~~717			3,789,651
Total current assets		617,~~512~~534,~~591~~424			5,786,172
Property and equipment, net		54,~~373~~490			6,132
Right of use asset, net		~~481~~452,~~823~~054			503,091
Other assets		1057,~~695~~193			10,682
Internally developed software, net		~~431~~395,~~316~~249			473,895
Total assets	$	718,~~441~~443,~~798~~410		$	6,779,972
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	~~961~~6,~~910~~912,484		$	1,091,701
Deferred Revenue		2,~~947~~914,~~469~~901			3,864,080
Short term loan payable		49,645			-
Related party loan		80,000			-
Other current liabilities		7196,~~009~~383			-
Payroll liabilities		2745,~~913~~447			21,146
Convertible notes payable, net of discounts		34,~~481~~020,~~191~~567			2,~~301~~051,666
Convertible notes – interest payable		~~195~~501,~~001~~355			181,353
Embedded Derivative		~~351~~307,~~630~~021			168,358
Receivables financing obligation		~~161~~288,~~898~~192			-
Current portion of lease liabilities		8082,~~793~~810			60,475
Total current liabilities		815,~~358~~298,~~814~~805			7,~~688~~438,779
Non-current portion of lease liabilities		428,523			460,266
Long term debt		4,867,484			-
Total liabilities		8,787,337			8,149,045
Long term convertible notes payable		250,000			250,000
Non-current portion of lease liabilities		396,801			460,266
Total liabilities		20,813,090			8,149,045
Commitments and contingencies		-			-
Stockholders’ equity (deficit)
Common stock $0.001 par value, 200,000,000 shares authorized, 86,973,148 and 81,992,857 shares issued and outstanding as of August 31, 2025 and May 31, 2025, respectively.		86,974			81,994
Common stock $0.001 par value, 200,000,000 shares authorized, 87,535,809 and 81,992,857 shares issued and outstanding as of November 30, 2025 and May 31, 2025, respectively.		87,537			81,994
Additional Paid-in capital		13,~~029~~464,~~618~~396			10,563,141
Accumulated deficit		(1416,~~587~~034,~~068~~844	)		(11,990,834	)
Accumulated other comprehensive gain (loss)		~~124~~113,~~937~~231			(23,374	)
Total stockholders’ equity		(12,~~345~~369,~~539~~680	)		(1,369,073	)
Total liabilities and stockholders’ equity	$	718,~~441~~443,~~798~~410		$	6,779,972

See notes to condensed consolidated financial statements.

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KARBON-X CORP.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

	For theThree Months Ended			For theThree Months Ended			For theSix Months Ended			For theSix Months Ended
	August 31,2025			August 31,2024
	November 30,2025			November 30,2024			November 30,2025			November 30,2024
Operations
Total revenue	$	3520,~~658~~847,~~933~~625		$	~~127~~1,~~429~~175,060		$	56,506,557		$	1,302,489
Cost of revenue		3518,~~365~~843,~~064~~914			94644,~~098~~237			54,208,979			738,335
Gross profit		~~293~~2,~~869~~003,711			33530,~~331~~823			2,297,578			564,154
Marketing expenses		~~628~~683,~~540~~361			12370,~~351~~488			1,311,901			382,839
Salaries and wages		1,~~598~~605,~~649~~992			~~533~~922,~~594~~139			3,204,641			1,455,733
Professional fees		~~107~~377,~~447~~109			~~145~~265,~~273~~570			484,556			410,843
Other operating expenses		~~324~~206,~~298~~309			~~134~~177,~~466~~684			530,607			312,150
Total operating expenses		2,~~658~~872,~~934~~771			~~825~~1,~~684~~735,881			5,531,705			2,561,565
Loss from Operations		(2,365,065	)		(792,353	)
Income (Loss) from Operations		(869,060	)		(1,205,058	)		(3,234,127	)		(1,997,411	)
Interest income (expense)		(~~306~~619,~~262~~936	)		~~(12,413~~928	)		(926,198	)		928
Gain (loss) on change in fair value of derivative liabilities		9544,~~835~~609			-			140,444			-
Other income (expenses)		(203,~~742~~389	)		-30,162			(24,131	)		30,162
Net loss before income taxes		(21,~~596~~447,~~234~~776	)		(~~804~~1,~~766~~161,555	)		(4,044,012	)		(1,966,321	)
Federal income tax expense		-			-			-			-
Net loss		(2,596,234	)		(804,766	)
Net income (loss)		(1,447,776	)		(1,161,555	)		(4,044,012	)		(1,966,321	)
Other comprehensive loss
Other comprehensive income
Foreign currency translation gain (loss)		~~148~~(11,~~311~~706	)		33(125,~~381~~339	)		136,605			(91,958	)
Total comprehensive loss		(2,447,923	)		(771,385	)
Total comprehensive income		(1,459,482	)		(1,286,894	)		(3,907,407	)		(2,058,279	)
Earnings Per Share
Weighted average basic and diluted shares outstanding		8287,~~305~~249,~~910~~811			81,~~501~~737,~~984~~822			84,778,061			81,619,321
Basic and fully diluted loss per share	$	(0.0302	)	$	(0.01	)	$	(0.05	)	$	(0.02	)

See notes to condensed consolidated financial statements.

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KARBON-X CORP.

Condensed Consolidated Statement of ~~Changes in~~ Stockholders’ Equity

For the Three Months and Six Ended ~~August~~November 3130, 2025 and 2024

(Unaudited)

Three and Six Months Ended ~~August~~November 3130, 2024

	Common stock				Additionalpaid-in		Retainedearnings			Accumulated othercomprehensive			Total Stockholders'
	Shares		Amount		capital		(deficit)			profit (loss)			Equity
Balance at May 31, 2024		82,174,750	$	82,176	$	7,675,826	$	(4,937,342	)	$	7,597		$	2,828,257
Issuance of shares for cash		1,~~288~~238,~~890~~887		1,239		1,091,261		-			-			1,092,500
Net income (loss)								(804,766	)		-			(804,766	)
Foreign currency translation								-			33,381			33,381
Balance at August 31, 2024		83,~~463~~413,~~640~~637	$	83,415	$	8,767,087	$	(5,742,108	)	$	40,978		$	3,149,372
Issuance of shares for cash		155,771		156		138,313		-			-			138,469
Option compensation expense						290,263								290,263
Net income (loss)								(1,161,555	)		-			(1,161,555	)
Foreign currency translation								-			(125,339	)		(125,339	)
Balance at November 30, 2024		83,569,408	$	83,571	$	9,195,663	$	(6,903,663	)	$	(84,361	)	$	2,291,210

Three and Six Months Ended ~~August~~November 3130, 2025

	Common stock				Additionalpaid-in		Retainedearnings			Accumulated othercomprehensive			Total Stockholders'
	Shares		Amount		capital		(deficit)			profit (loss)			Equity
Balance at May 31, 2025		81,992,857	$	81,994	$	10,563,141	$	(11,990,834	)	$	(23,374	)	$	(1,369,073	)
Issuance of shares as compensation		110,000		110		94,890		-			-			95,000
Issuance of shares upon conversion of loan		4,870,291		4,870		2,279,278		-			-			2,284,148
Option compensation expense				-		92,309		-			-			92,309
Net income (loss)								(2,596,234	)	$	-			(2,596,234	)
Foreign currency translation											148,311			148,311
Balance at August 31, 2025		86,973,148	$	86,974	$	13,029,618	$	(14,587,068	)	$	124,937		$	(1,345,539	)
Issuance of shares for cash, net		130,000		130		116,870		-			-			117,000
Issuance of shares as compensation		344,661		345		159,523		-			-			159,868
Issuance of commitment shares		88,000		88		53,952								54,040
Option compensation expense				-		104,433		-			-			104,433
Net income (loss)								(1,447,776	)		-			(1,447,776	)
Foreign currency translation											(11,706	)		(11,706	)
Balance at November 30, 2025		87,535,809	$	87,537	$	13,464,396	$	(16,034,844	)	$	113,231		$	(2,369,680	)

See notes to condensed consolidated financial statements.

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KARBON-X CORP.

Condensed Consolidated Statements of Cash ~~Flow~~Flows

(Unaudited)

	For the Three MonthsEnded			For the Three MonthsEnded
	For the Six MonthsEnded			For the Six MonthsEnded
	August 31, 2025			August 31, 2024
	November 30, 2025			November 30, 2024
Cash flows from operating activities
Net (loss) income	$	(24,~~596~~044,~~234~~012	)	$	(~~804~~1,~~766~~966,321	)
Adjustments to reconcile net loss to net cash:
Depreciation and amortization expense		4379,~~347~~433			~~542~~1,242
Gain on change in fair value of derivative		(95140,~~835~~444	)		-
Amortization of Right of Use Asset		2143,~~842~~462			~~320~~290,~~061~~263
Amortization of debt discount		~~102~~295,~~182~~677			-
Stock based compensation		~~187~~451,~~309~~609			-
Changes in operating assets and liabilities:
Sales tax receivable		-			(4,504	)
Accounts receivable		(5,228,465	)		120,284
Accounts receivable		(6,230	)		56,181
Marketable securities		197,741			(581,639	)
Marketable securities		158,338			-
Securities receivable		(133,066	)		(3,434,113	)
Due to related parties		-			(630,000	)
Accounts payable		5,820,783			(652,103	)
Securities receivable		(163,101	)		-
Deferred revenue		(949,179	)		-
Accounts payable		(129,791	)		(16,596	)
Other current liabilities		342,205			2,549,279
Deferred revenue		(916,611	)		-
Other assets		(46,511	)		245,484
Other current liabilities		182,377			-
Inventory		(787,955	)		243,065
Inventory		(142,280	)		(46,155	)
Prepaid expenses		623,090			(179,974	)
Prepaid expenses		686,263			(8,246	)
Payments made on operating lease		(41,130	)		-
Payments made on operating lease		(11,425	)		(328,134	)
Cash used in operating activities		(3,516,762	)		(3,364,533	)
Cash used in operating activities		(2,679,849	)		(1,460,119	)
Cash flows from investing activities
Acquisition of carbon projects		(605,093	)		-
Cash used in investing activities		(605,093	)		-
Cash flows from financing activities
Repayments from short term loan		-			(36,500	)
Proceeds from short term loan		49,645			-
Proceeds from related party loan		80,000			-
Proceeds from convertible notes		34,~~500~~389,000			-1,009,803
Proceeds from receivables financing obligation		388,800			-
Proceeds from long term debt		4,867,484			-
Payments on receivables financing obligation		(226,902	)		-
Proceeds from receivables financing obligation		788,800			-
Proceeds from issuance of shares		-			1,092,500
Payments on receivables financing obligation		(500,608	)		-
Cash provided by financing activities		3,791,543			1,056,000
Proceeds from issuance of shares		117,000			1,230,969
Effect of translation changes on cash		147,715			27,565
Cash provided by financing activities		9,791,321			2,240,772
Change in cash and cash equivalents		654,316			(376,555	)
Effect of translation changes on cash		145,038			(91,958	)
Change in cash and cash equivalents		5,814,504			(1,215,719	)
Cash, beginning of period		704,346			2,675,400
Cash, end of period	$	16,~~358~~518,~~662~~850		$	21,~~298~~459,~~845~~681
Non cash investing and financing activities
Non cash investing and financing activities,
Issuance of shares upon convertible loan principal and interest		2,284,148			-
Issuance of shares upon conversion of loan principal and interest		2,284,148			-
Issuance of commitment shares as debt discount		54,040			-
Derivative recorded for debt discount at inception		279,107
Supplemental disclosures
Cash paid for interest	$	54,117		$	-
Cash paid for income taxes	$	-		$	-

See notes to condensed consolidated financial statements.

Table of Contents

~~NOTE~~Note 1 – ~~BACKGROUND~~Background, ~~BASIS~~Basis OFof ~~PRESENTATION~~Presentation ~~AND~~and ~~SIGNIFICANT~~Significant ~~ACCOUNTING~~Accounting ~~POLICIES~~Policies

Business Operations

Karbon-X Corp. 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"), and Karbon-X became the wholly owned subsidiary of the Company in a reverse merger (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 becoming a wholly owned subsidiary of the Company and all debt owed to the related party of Cocoluv, Inc. was forgiven. Karbon-X Project Inc. was incorporated in British Columbia on February 11, 2022 and established a fiscal year end of May 31. 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.

Under generally accepted accounting principles in the United States ("US GAAP"), because the combined entity will be dependent on Karbon-X's senior management, the Reverse Acquisition was accounted for as a recapitalization effected by a share exchange, wherein Karbon-X is considered the acquirer for accounting and financial reporting purposes. On the date of the reorganization, the assets and liabilities of Karbon-X have been brought forward at their book value and consolidated with Cocoluv, Inc.’s assets, which comprised of cash and cash equivalents of $134 and liabilities which comprises due to related party of $99,902 (see Note 1 Basis of Presentation below). No goodwill has been recognized. Accordingly, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements are those of Karbon-X and are recorded at the historical cost basis of Karbon-X.

On June 27, 2025, the Company completed an asset acquisition consisting of a portfolio of carbon-offset projects (the “Projects”). The transaction did not meet the definition of a business combination under ASC 805-10 because the acquired group of assets did not include an integrated set of activities capable of producing outputs. Accordingly, the acquisition has been accounted for as an asset acquisition in accordance with ASC 805-50. See Note 8 for further discussion.

Going Concern

ToThe ~~date, the~~ Company has ~~generated~~recently ~~minimal~~begun ramping up revenues from its business operations, ~~and~~however it has incurred operating losses since inception of $1416,~~180~~034,~~370~~844. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. This includes 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.

All significant intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements present the condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive income (loss), condensed consolidated statements of stockholders’ equity and condensed consolidated statement of cash flows of the Company. These consolidated financial statements are presented in the United States dollar and have been prepared in accordance with accounting principles generally accepted in the United States.

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Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as related disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with an original maturity of three months or less at the date of purchase.

Accounts Receivable

Accounts receivable represent amounts due from customers for goods or services provided by the Company. Accounts receivable are recorded at the invoiced amount, net of allowance of $0 and $0 as of ~~August~~November 3130, 2025 and May 31, 2025, respectively.

In accordance with Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326), also known as the Current Expected Credit Loss (CECL) model, the Company now utilizes a forward-looking approach to estimate expected credit losses over the lifetime of the receivables. This model considers historical loss experience, current conditions, and reasonable and supportable forecasts to assess credit risk.

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets which are all five years.

Costs of major additions and improvements are capitalized while expenditures for maintenance and repairs, which do not extend the life of the asset, are expensed. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is credited or charged to income. Long-lived assets held and used by us are reviewed based on market factors and operational considerations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Fair Value of Financial Instruments

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

	·	Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

	·	Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

	·	Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

Other than the derivative liabilities presented below, the carrying amount of the Company’s financial assets and liabilities approximate their fair values.

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The Company measures certain financial instruments at fair value on a recurring basis in accordance with ASC 820, Fair Value Measurement. As of May 31, 2025, the Company evaluated the conversion features embedded in certain convertible promissory notes and determined that they represent derivative liabilities requiring bifurcation under ASC 815-15.

The Company uses the binomial model to estimate the fair value of the derivative liabilities associated with its convertible notes. The model incorporates significant unobservable inputs, including:

	·	Expected stock price volatility
	·	Risk-free interest rates
	·	Estimated time to maturity
	·	Probability of uplisting
	·	Expected trading volumes

Because these inputs are unobservable and require significant management judgment, the Company has classified the derivative liabilities as Level 3 in the fair value hierarchy.

The following table summarizes the fair value hierarchy of the Company’s financial liabilities measured at fair value on a recurring basis as of ~~August~~November 3130, 2025:

Level 1

Level 2

Level 3

Total

Derivative liabilities – convertible notes

~~351~~307,~~630~~021

Other financial instruments

Total Embedded Derivatives

~~351~~307,~~630~~021

The following table summarizes the changes in Level 3 derivative liabilities measured at fair value on a recurring basis.

	August 31, 2025
	November 30, 2025
Balance at beginning of period May 31, 2025	$	168,358
Issuances		279,107
Total (gains) losses recognized in earnings		-
Settlements (net)		-
Change in unrealized (gains) losses included in earnings for instruments still held at period end		(95140,~~835~~444	)
Balance at end of period August 31, 2025	$	351,630
Balance at end of period November 30, 2025	$	307,021

Receivables Financing

The Company has entered into receivables financing arrangements whereby it receives cash advances in exchange for rights to future trade receivables. These transactions do not qualify for sale accounting under ASC 860 and are accounted for as secured borrowings. As such, the receivables remain on the consolidated balance sheet and the related obligations are recorded within “Receivables financing obligation.” The obligations are repaid as the receivables are collected. Related fees are recorded in interest expense.

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under ASC 606, the Company recognizes revenue from the commercial sales of carbon credits and consulting services by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

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Rates for consulting services are typically per day, per hour, or a similar basis. Consulting revenue is recognized over the period in which the service is provided.

Revenue for sales of carbon credits is recognized at a point in time when control of the credit transfers to the buyer. The Company acts as a principal in all revenue transactions.

Foreign Currency Translation

The functional currency of the Company is the Canadian Dollar (“CAD”). For financial statement purposes, the reporting currency is the United States Dollar (“USD”). The Company conducts certain operations and transactions in Euros (“EUR”) and Colombian Pesos (“COP”).

For financial reporting purposes, the consolidated financial statements are translated into the Company’s reporting currency, USD. Asset, liability and equity accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period.

Adjustments resulting from the translation, if any, are included in accumulated other comprehensive loss in stockholder’s equity (deficit).

Significant Estimates

Significant estimates applied in the preparation of these financial statements include the estimated useful lives of property and equipment, the inputs used in the valuation of embedded derivatives on convertible notes, share volatility and estimated life of options ~~and warrants~~ in determining their fair value as well as the expected potential for the realization of deferred tax assets in determining the amount of the valuation allowance thereto.

Earnings per Common Share

The basic loss per share is calculated by dividing the Company’s net loss available to common stockholders by the weighted average number of common shares during the period. The diluted loss per share is calculated by dividing the Company’s net loss available to common stockholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As of ~~August~~November 3130, 2025, ~~potential~~diluted shares were calculated and included on the income statement. Potential dilutive securities of approximately 4,~~425~~072,~~000~~ 375 shares from stock options and 4,222,222 shares related to convertible notes had an anti-dilutive effect and were not included in the calculation of diluted net loss per share.

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Our Chief Operating Decision Maker, Chad Clovis, Chief Executive Officer, President, and Director, reviews financial information and allocates resources on a consolidated basis. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

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Reclassifications

Certain amounts in the comparative periods presented have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the previously reported net income, comprehensive income, total assets, or stockholders' equity.

Recently Issued Accounting Standards

The Financial Accounting Standards Board (FASB) has issued several updates relevant to the Company:

· Update 2025-01: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date Effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. · Update 2025-05: Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. Effective for fiscal years beginning after December 15, 2025. Early adoption is permitted. · Update 2024-04: Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. Effective for annual reporting periods beginning after December 15, 2025, and interim periods within those annual periods. Early adoption is permitted. · Update 2024-03: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. Effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted.

The Company is evaluating the impact of the above provisions on its consolidated financial statements

	·	Update 2024-02: Codification Improvements—Amendments to Remove References to the Concepts Statements. Effective and adopted for public business entities for fiscal years beginning after December 15, 2024. For all other entities, effective for fiscal years beginning after December 15, 2025. Early application is permitted.

	·	Update 2024-01: Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. Effective and adopted for public business entities for annual periods beginning after December 15, 2024, and interim periods within those annual periods. For all other entities, effective for annual periods beginning after December 15, 2025, and interim periods within those annual periods. Early adoption is permitted.

The Company has adopted the above provisions, which had no material impact on its consolidated financial statements

Note 2 – Prepaid Expenses

As of ~~August~~November 3130, 2025 and May 31, 2025, prepaid expenses consisted of the following:

Description	~~August~~November 3130,2025		May 31,2025
Advertising & Promotional Agreement	$	83212,~~673~~036	$	179,532
Prepaid inventory		-		636,562
Other Prepaids		~~110~~52,~~740~~941		49,580
Total	$	~~194~~264,~~413~~977	$	865,674

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Note 3 – Inventory

Inventory as of ~~August~~November 3130, 2025 and May 31, 2025, consisted of the following:

Description	~~August~~November 3130,2025		May 31,2025
Carbon Credit Inventory	$	~~105~~441,~~612~~291	$	99,644
Project - Work in progress		~~741~~1,~~404~~051,401		-
Total	$	~~847~~1,~~017~~492,692	$	99,644

Carbon credit inventory represents carbon credits currently held for sale and are stated at the lower of cost or market.

Work-in-progress represents the costs incurred on projects that are in the process of development and are expected to generate carbon credits in the future. Such costs may include project design, permitting, verification, and other directly attributable expenditures necessary to bring the projects to a stage where credits can be issued. Work-in-progress is carried at cost, and upon certification and issuance of the underlying carbon credits, the related costs are reclassified from work-in-progress to carbon credit inventory.

Note 4 -– Property and Equipment

The amount of property and equipment as of ~~August~~November 3130, 2025 and May 31, 2025, consisted of the following:

Description	~~August~~November 3130,2025			May 31,2025
Furniture and fixtures	$	98,~~087~~933		$	9,076
Computer and equipment		3,~~668~~606			3,664
Total property cost	$	12,~~755~~539		$	12,741
Accumulated depreciation		(78,~~382~~049	)		(6,608	)
Property and equipment, net	$	54,~~373~~490		$	6,132

The Company did not purchase significant property, plant and equipment for the ~~three~~six months ended ~~August~~November 3130, 2025 and 2024. Depreciation expense for the ~~three~~six months ended ~~August~~November 3130, 2025 was $~~768~~1,501.

Note 5 – Convertible Notes

As of ~~August~~November 3130, 2025, Karbon-X Corp. issued convertible promissory notes totaling USD $34,~~750~~639,000 to multiple investors as part of its capital-raising efforts. The notes bear simple interest at a rate of 10% per quarter, and have maturity terms of 1 year or less.

During the ~~three~~six months ended, ~~August~~November 3130, 2025, five notes of principal $2,193,195 and interest of $90,954 were converted into 4,870,291 shares at $0.90 - $0.45/share.

The Company recorded discounts of $~~318~~387,~~455~~265, interest expense and discount amortization related to convertible notes of $264,416 and gain on change in fair value of derivatives of $95140,~~835~~444 for the ~~three~~six months ended ~~August~~November 3130, 2025.

The notes include a conversion feature, allowing the holders to convert the principal and accrued interest into the Company's common stock. For a significant amount of the notes, Conversion is permitted at the option of the lender at any time after the earlier of:

1.	Twenty-four months from the date of issuance, or

2.		The Company’s listing on OTCQX, Nasdaq, or NYSE.

The conversion price is the lesser of:

	1.	80% of the twenty-day weighted average closing price of the Company’s common stock preceding the conversion (but not less than the average of the two notes $0.56 per share), and of the trading day immediately preceding such conversion (but not less than $0.75 per share) or (ii) $0.90 per share.

	2.	The notes range from $0.75 - $0.90 per share.

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Conversion is further restricted to ensure that no lender converts an amount of the note that would result in owning more than 4.9% of the outstanding common stock at any time.

The Borrower may prepay the principal amount and any unpaid interest or any portion thereof at any time without notice, further interest, bonus, or penalty, provided that a minimum of six months’ interest shall be payable regardless of the prepayment date.

The issuance of these convertible promissory notes provided the Company with necessary capital to support its operations and strategic initiatives while offering investors the potential for equity participation in the Company's future growth.

Prepayment Option

The Company may prepay the notes at any time without penalty, provided that a minimum of six months’ interest is payable. This provision ensures lenders are compensated regardless of the prepayment date.

As of ~~August~~November 3130, 2025, the Company owed principal of $34,~~431~~270,~~545~~567, net of discounts of $~~318~~368,~~455~~433, accrued interest of $~~241~~501,~~668~~355, and carried embedded liabilities of $~~351~~307,~~630~~021. As of November 30, 2025, principal of $250,000 was classified as a long term liability and principal of $4,020,567 was classified as a current liability.

Note 6 – Investments

On October 24, 2024, Karbon-X Corp. entered into a Carbon Credit Purchase Agreement with DevvStream Holdings Inc. As part of this agreement, Karbon-X Corp. received 174,953 common shares of New Pubco, a company formed from the merger of DevvStream Holdings Inc. and Focus Impact Acquisition Corp., a special purpose acquisition company (SPAC) listed on the Nasdaq Stock Exchange. The shares were issued at a deemed price of $6.50 per share, resulting in an initial valuation of USD $1,137,197.

On October 28, 2024, Karbon-X Corp. entered into a Carbon Credit Forward Purchase Agreement with DevvStream Holdings Inc., under which Karbon-X Corp. will sell verified greenhouse gas offset or carbon credits, specifically C-Sink Credits, to DevvStream Holdings Inc. The purchase price for these credits is USD $2,892,000, payable in 444,923 common shares of New Pubco at a deemed price of $6.50 per share. This agreement is classified as a futures contract under relevant U.S. GAAP guidance.

Initial Recognition and Measurement

At initial recognition, the common shares of New Pubco received under the agreements are classified as equity securities and measured at fair value upon initial recognition in accordance with ASC 321, "Investments—Equity Securities". The Company recorded an initial fair value of the securities based on observable market prices at the time of execution, consistent with a Level 1 fair value measurement, as the shares were actively traded on the Nasdaq Stock Exchange.

	·	For the Carbon Credit Purchase Agreement, the fair value of the 17,495 shares was recognized as $68,232.

	·	For the Carbon Credit Forward Purchase Agreement, the 44,492 shares were valued at $173,520, representing the purchase price of the C-Sink Credits to be delivered in the future.

Upon entering into the forward purchase agreement, Karbon-X Corp. also recognized a deferred revenue liability of $2,892,000, as the performance obligation to deliver the carbon credits had not yet been satisfied. This deferred revenue will be recognized as income upon delivery of the carbon credits.

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Subsequent Measurement and True-Up Provision

Subsequent to initial recognition, the equity securities are measured at fair value in accordance with ASC 321, "Investments—Equity Securities". Additionally, as the securities are denominated in a foreign currency, a currency translation adjustment (CTA) is recorded to reflect the impact of exchange rate fluctuations. The CTA is included in other comprehensive income (OCI) in accordance with ASC 830, "Foreign Currency Matters".

As of ~~August~~November 3130, 2025, the fair market value (FMV) of New Pubco shares was USD $21.3067 per share. In compliance with ASC 321, the Company marked the investment to fair value, resulting in the following adjustments:

	·	The fair value of investments was at the current market price of $21.3067 per share.
	·	To address the difference between the contractual price and the current market price, Karbon-X recorded a securities receivable for the true-up portion guaranteed under the agreements. The true-up provision ensures that the Company will be made whole if the market value of the shares remains below the contracted value during the adjustment period. As of ~~August~~November 3130, 2025, no additional shares have been issued under these provisions.

As of ~~August~~November 3130, 2025, the balances were as follows:

Description	Balance (USD)
Investments in Equity Securities	$	~~142~~103,~~922~~519
Securities Receivable	$	3,~~952~~922,~~752~~717
Total Value	$	4,~~095~~026,~~674~~236

Fair Value Hierarchy

The equity securities of New Pubco are measured using Level 1 inputs, as the shares are actively traded on the Nasdaq Stock Exchange.

The Company's exposure to impairment is mitigated by the true-up provision, which ensures no loss is ultimately recognized. While the securities are remeasured to fair market value quarterly, the receivable reflects the guaranteed recovery under the agreement.

Note 7 – Internally Developed Software

In accordance with ASC 350-40, the Company has capitalized internally developed software for its development of a mobile application. The software completed its application development stage and all related costs as of March 1, 2025 and any additional costs since then are being expensed as incurred. The software has been completed and placed into service; the Company began amortizing the software over its estimated useful life of three years on March 1, 2025.

As of ~~August~~November 3130, 2025 and May 31, 2025, the Company has capitalized internally developed software of $~~460~~395,~~070~~249 and $473,895, respectively. The Company recorded amortization expense of $4363,~~200~~504 and $0 for the ~~three~~six months ended ~~August~~November 3130, 2025 and 2024, respectively. The decrease in value is primarily attributed to amortization over the asset’s useful life, other changes in value are the result of the impact of cumulative translation adjustments (CTA) resulting from the remeasurement of foreign currency values to USD.

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Note 8 —– Asset Acquisition and Project Work in Progress

Total Cost of Acquisition

The Company paid cash consideration of $314,441 to the sellers and incurred $180,819 of direct legal expenses and $109,833 of due-diligence fees directly attributable to the acquisition. In accordance with ASC 805-50, these transaction costs were capitalized as part of the acquisition cost. The total capitalized cost of the Projects was $605,093.

Nature of Assets Acquired

Management evaluated the nature of the assets acquired and determined that no separately identifiable intangible rights, contractual concessions, or tangible property were transferred other than the underlying in-process project activities. Substantially all economic value acquired relates to carbon-credit production already in progress at the acquisition date, which is expected to result in verified credits upon completion of the remaining verification and issuance procedures. Because the acquired value represents in-process production intended for sale, the total purchase price and capitalized transaction costs have been allocated entirely to Inventory – Project Work in Progress.

Measurement Basis

The Projects are recorded at cost, representing the total consideration transferred and directly attributable acquisition expenditures, consistent with ASC 805-50-30-3. Work-in-progress inventory is subsequently measured at the lower of cost or net realizable value in accordance with ASC 330. No goodwill or other identifiable intangible assets were recognized. Costs incurred after the acquisition that relate directly to continued project development are capitalized as additions to WIP until verified carbon credits are issued, at which time such balances will be reclassified to Inventory – Carbon Credits.

Fair-Value Considerations

Although recorded at cost, management believes the estimated fair value of the acquired Projects exceeds $22 million, based on market-based indications of expected credit issuance volumes and prevailing carbon-credit pricing. The difference between the purchase price and management’s view of fair value primarily reflects the project-specific risks and uncertainties evaluated by market participants at the time of negotiation, including verification timelines, regulatory changes, and potential variability in issuance volumes. In accordance with U.S. GAAP, such fair-value differences are not recognized in the financial statements, and the Projects continue to be carried at their historical cost basis.

Subsequent Developments and Valuation Sensitivity

Management continually monitors market conditions, verification milestones, and registry guidance that could affect the estimated realizable value of the Projects. As each Project progresses toward independent verification and credit issuance, management intends to reassess key assumptions including verified-credit volumes, expected market prices, and discount factors to evaluate whether any indicators of impairment or changes in net realizable value exist. Should verification proceed as anticipated and market pricing remain consistent with current levels, the Company expects the aggregate realizable value of the Projects to approximate or exceed management’s current fair-value estimate. However, adverse developments in regulatory frameworks, verification timing, or market demand for voluntary carbon credits could materially reduce future realized values.

Note 9 – Stockholders’ Equity

During the ~~three~~six months ended ~~August~~November 3130, 2025, the Company converted loans of $2,193,195 and interest of $90,954 into 4,870,291 shares at a price of $0.90 - $0.45/share.

During the ~~three~~six months ended ~~August~~November 3130, 2025, the Company issued ~~110~~130,000 shares atfor cash of $~~0.90~~117,000 -at $0.~~50/share~~90 ~~for~~per ~~compensation of $95,000~~share.

During the six months ended November 30, 2025, the Company issued 454,661 shares at $0.90 - $0.44/share for compensation of $254,868.

During the six months ended November 30, 2025, the Company issued commitment shares of 88,000 at $0.70 - $0.52/share valued at $54,040 to three note holders in connection with the purchase of their respective notes. These commitment shares are reflected in equity and as debt discounts on their respective notes.

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Note 10 -– Stock Option Plan

Description of the Plan

The Company has adopted the 2024 Employees', Directors', Officers', and Consultants' Stock Option Plan (the "Plan") on May 16, 2024, which authorizes the issuance of options to purchase up to 5,000,000 shares of common stock. The Plan was amended to authorize the issuance of options to purchase up to 15,000,000 shares of common stock. The Plan is designed to attract, retain, and motivate employees, directors, officers, and consultants by providing them with an opportunity to acquire a proprietary interest in the Company.

Types of Options

The Plan provides for the issuance of both Incentive Stock Options (ISOs) and Nonstatutory Stock Options (NSOs). ISOs are intended to qualify under Section 422 of the Internal Revenue Code, while NSOs do not qualify under Section 422.

Eligibility

Options may be granted to employees, directors, officers, and consultants of the Company. Special provisions apply to individuals owning more than 10% of the Company's stock.

Administration

The Plan is administered by the Compensation Committee of the Board of Directors, which has the authority to determine the terms and conditions of each option grant.

Shares Available

The maximum number of shares that may be issued under the Plan is 5,000,000 shares of common stock.

Option Terms:

	·	Exercise Price: The exercise price of options granted under the Plan must be at least 100% of the fair market value of the stock on the date of grant.
	·	Term: Options granted under the Plan have a maximum term of ten years from the date of grant.
	·	Vesting: The vesting schedule for options is determined by the Compensation Committee at the time of grant.

Payment for Shares

Upon exercise of an option, the optionee may pay the exercise price in cash or cashless exercise, with the consent of the Compensation Committee, by tendering shares of common stock.

Adjustments

In the event of a stock split, merger, or other corporate event, the number of shares subject to the Plan and the exercise price of outstanding options will be adjusted as determined by the Compensation Committee.

Transferability

Options granted under the Plan are generally non-transferable, except under specific conditions as outlined in the Plan.

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Termination of Employment

The Plan provides specific rules for the exercise of options upon termination of employment, including termination for cause, disability, or death.

Legal Compliance

The issuance of shares under the Plan is subject to compliance with federal and state securities laws.

Plan Duration

The Plan became effective upon adoption by the Board of Directors and options may not be granted after December 31, 2026.

Activity Under the Plan

As of ~~August~~November 3130, 2025, the following activity has occurred under the Plan, which started in the second quarter of 2024 :

Description	Number of Shares			Weighted Average Exercise Price		Weighted average remaining life (in years)
Options Authorized		15,000,000
Options Granted		4,~~612~~804,000		$	0.79		5.00
Options Exercised		360,000		$	0.79
Options Forfeited		(~~371~~521,625	)	$	0.75
Options Outstanding		3,~~880~~922,375		$	0.79		4.00
Options Vested		1,~~543~~872,~~000~~817		$	0.79		3.75
Options Unvested		2,~~337~~049,~~375~~558		$	0.79		4.05

As of ~~August~~November 3130, 2025, the intrinsic value of the 4,~~226~~072,~~875~~375 outstanding options was $-.

Fair Value of Options

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

Expected Volatility: 35%

○

The Company determined expected volatility based on an analysis of comparable publicly traded companies in the same or similar industry. As a startup in a new industry, Karbon-X lacks sufficient historical trading data. The analysis considered market trends and the high-growth, high-risk nature of the carbon management and sustainability sector. The selected volatility reflects industry patterns of startups in comparable markets, ensuring reasonability and alignment with peer data.

Expected Life: 5 Years

○

Based on the vesting schedule and anticipated exercise behavior of option holders.

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Risk-Free Interest Rate: 5%

○

The rate reflects the yield on U.S. Treasury securities with a term consistent with the expected life of the options. Given the current interest rate environment, a 5% rate is appropriate for options granted during Q3 FY2025. This aligns with the Federal Reserve’s policy rates and prevailing market conditions.

Expected Dividends: 0%

○

The Company does not currently pay dividends, consistent with its growth-oriented business strategy.

Stock-Based Compensation Expense

For the ~~three~~six months ended ~~August~~November 3130, 2025, the Company recognized stock-based compensation expense related to options of USD $~~101~~196,~~624~~742.

Note 11 – Commitments and Contingencies

Promissory Notes

During the period, the Company issued multiple promissory notes, including convertible and non-convertible debt instruments. Certain notes are unsecured obligations of the Company, while other notes are secured by security interests in certain Company assets pursuant to the related loan and security agreements. The specific terms of each note, including maturity, interest, conversion features, and collateral, vary by instrument.

Legal Proceedings

In February 2024, Karbon-X were notified of a former employee filing a lawsuit against the company for wrongful termination. The Company is currently counter-suing and is expecting to prevail.

Operating Leases

The Company has entered into a operating lease for office space commencing on July 1, 2025, with an early occupancy period beginning on February 1, 2025. The lease has a term of 5 years, expiring on June 30, 2030. During the early occupancy period (February 1, 2025 – June 30, 2025), no rent payments are required.

Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our estimated incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, if applicable. When lease terms include an option to extend the lease, we have not assumed the options will be exercised.

Lease expense for operating leases generally consist of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include agreed-upon changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognized total lease expense of approximately $67100,~~578~~581 and $8,875 for the ~~three~~six months ended ~~August~~November 3130, 2025 and 2024, primarily related to operating lease costs paid to lessors from operating cash flows. We entered into our operating lease in April 2024 with a term of five years.

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Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at ~~August~~November 3130, 2025 were as follows:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES	Total
Calendar Year Ended
2025	$	379,~~128~~282
2026		116,228
2027		123,492
2028		125,913
2029		128,335
Thereafter		54,482
Total lease payment		~~585~~557,~~577~~731
Less: Imputed interest		(7678,~~261~~121	)
Operating lease liabilities		~~509~~479,~~316~~611
Operating lease liability - current		8082,~~793~~810
Operating lease liability - non-current	$	~~428~~396,~~523~~801

SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE
Weighted average discount rate	5.00	%
Weighted average remaining lease term (years)	4.9375

Note 12 – Subsequent Events

~~The~~On ~~Company~~December ~~entered into a receivables financing arrangement on September 5~~19, 2025, ~~for~~126,888 ~~receivables~~shares ofwere ~~$426,700~~issued at a$0.45/share ~~purchase~~as ~~price~~compensation for of commissions $~~313~~57,~~750~~100.

On ~~October~~January 17, ~~2025~~2026, ~~the Company issued 83~~200,~~332~~000 shares towere ~~two~~issued ~~directors~~at $0.38/share as compensation for professional services of $76,000.

~~The~~On ~~Company~~January ~~evaluated~~7, ~~subsequent~~2026, ~~events through October 15~~100,000 ~~2025~~shares ~~and~~were ~~identified~~issued noat ~~other~~$0.38/share ~~events~~as ~~requiring~~employee ~~recognition~~bonuses orof ~~additional disclosure~~$38,000.

On January 9, 2026, a $500,000 note was issued to a lender; in connection with this note, 56,250 shares were issued to a third party as compensation of $22,500.

The Company evaluated subsequent events through January 20, 2026 and identified no other events requiring recognition or additional disclosure.

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Item 2. 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 ~~three~~six months ended ~~August~~November 3130, 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 ~~subsidiary~~subsidiaries Karbon-X ~~Project~~Trading LTD, Allcot Limited, Allcot Soluciones España S.L, ~~This~~Allcot ~~entity~~X isColombia aS.A.S ~~100%~~and Karbon-X Project. These entities are wholly owned ~~subsidiary~~subsidiaries of Karbon-X and consequently ~~reports~~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 ~~August~~November 3130, 2025, and 2024

Sales and Revenue

For the three-month period ended ~~August~~November 3130, 2025, the Company reported revenue of USD $3520,~~658~~847,~~933~~625, an increase of 271,~~883~~674% compared to $~~127~~1,~~429~~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 ~~August~~November 3130, 2025, were $2,~~658~~872,~~934~~771, compared to $~~825~~1,~~684~~735,881 in the same period in 2024, representing a ~~222~~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 $~~628~~683,~~540~~361, up from $12370,~~351~~488 in the same period in 2024. · Salaries and Wages: Increased headcount, subcontractor costs, and wage adjustments contributed to payroll expenses of $1,~~598~~605,~~649~~992, a significant rise from $~~533~~922,~~594~~139 in the same period in 2024. · Professional Fees: Costs related to legal, advisory, and compliance efforts amounted to $~~107~~377,~~447~~109, compared to $~~145~~265,~~273~~570 in the same period in 2024. · Other Operating Expenses: These totaled $~~324~~206,~~298~~309, up from $~~134~~177,~~466~~684, reflecting the Company’s operational scale-up.

Net Income/Loss from Operations

The operating loss for the three-month period ended ~~August~~November 3130, 2025, was $21,~~596~~447,~~234~~776, compared to $~~804~~1,~~766~~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.

	Three months ended August 31, 2025			Three months ended August 31, 2024
	Six months ended November 30, 2025			Six months ended November 30, 2024
Cash used in operating activities		(24,~~679~~726,~~849~~948	)		(13,~~460~~364,~~119~~533	)
Cash used in investing activities		(605,093	)		-
Cash from financing activities		39,791,~~543~~321			12,~~056~~240,~~000~~772
Change in cash during the period		(~~506~~5,~~601~~669,466	)		(~~348~~1,~~990~~123,761	)
Effect of exchange rate change		~~(147~~145,~~715~~038	)		27(91,~~565~~958	)
Cash, beginning of period		704,346			2,675,400
Cash, end of period		16,~~358~~518,~~662~~850			21,~~298~~459,~~845~~681

As of ~~August~~November 3130, 2025, the Company had USD $617,~~512~~534,~~590~~424 in current assets

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

During June – ~~August~~November 2025, Karbon-X Corp. converted ~~loans~~loan ~~for~~principal and interest of $2,~~193~~284,~~195~~148 into 4,870,291 shares at price of $0.90 - $0.45 per share.

Recent Developments

During the ~~three~~six months ended ~~August~~November 3130, 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

	·	Q1For ~~2026~~the six months ended November 30, 2025, revenue surged to $3556.75 million, a 274,~~883~~238% increase compared to $~~127,429~~1.3 million in Q1the ~~2025~~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

	·	$3.88 million raised
	·	$2.28 million in debt converted to equity, reflecting investor confidence and reducing future interest obligations.

$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 93826%, from $704,346 at the beginning of the ~~quarter~~fiscal year to $16.365 million at quarter-end.
	·	Total current assets rose to $617.5 million, up from $5.8 million in the prior ~~quarter~~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 ~~750~~1,398%, from $99,644 to $~~847~~1.5 million,~~017,~~ 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

· ~~Company~~For the six months ended November 30, 2025, the company maintained a gross profit of $~~293~~2.3 million,~~869,~~ up from $33564,~~331~~154 in Q1the ~~2025~~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 ~~August~~November 3130, 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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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management evaluated the effectiveness of the Company's internal control over financial reporting as of ~~August~~November 3130, 2025. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework (2013). Based on this evaluation, our management concluded that, as of ~~August~~November 3130, 2025, our internal control over financial reporting was not effective.

The Company has hired a Chief Financial Officer who can act as a second control person relative to the Company's financial operations. in order to improve the Company’s processes and controls over financial reporting. This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management's report in this quarterly report.

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PART II— - OTHER INFORMATION

Item 1. Legal Proceedings

As of the date here of the Company is not party to any other material legal proceedings and is not aware any legal proceedings contemplated by any governmental authority or any other party involving us or our properties other than the following:

In February 2024, Karbon-X were notified of a former employee filing a lawsuit against the company for wrongful termination. The Company is currently counter-suing and is expecting to prevail.

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During June – August 2025, Karbon-X Corp. converted loans for $2,193,195 into 4,870,291 shares at price of $0.90 - $0.45 per share.

During the six months ended November 30, 2025, the Company issued 130,000 shares for cash of $117,000 at $0.90 per share.

During the six months ended November 30, 2025, the Company issued 454,661 shares at $0.90 - $0.44/share for compensation of $254,868.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

Not applicable

Item 6. Exhibits

31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101	Interactive data files pursuant to Rule 405 of Regulation S-T.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Karbon-X Corp.(Registrant)
Date: October 15, 2025	By:	/s/ Chad Clovis
Date: January 20, 2026	By:	/s/ Chad Clovis
	Chad ClovisChief Executive Officer and Director(Principal Executive Officer)
Date: October 15, 2025	By:	/s/ Adriana Ebell
Date: January 20, 2026	By:	/s/ Adriana Ebell
	Adriana EbellActing Chief Financial Officer,(Principal Financial Officer)

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