Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2024

or

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______________ to _______________.

Commission file number 002-76219-NY

VICTORY CLEAN ENERGY, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada		87-0564472
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
14425 Falcon Head Blvd., Building E - Suite 100, Austin, Texas		78738
(Address of principal executive offices)		(Zip Code)

(512)-347-7300

(Registrant's telephone number, including area code)

N/A

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

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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 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 November 14, 2024, there were 530,704,753shares of common stock, par value $0.001, issued and outstanding.

VICTORY OILFIELD TECH, INC.

TABLE OF CONTENTS

			Page
Part I - Financial Information
Item 1.	Financial Statements		1
	Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023		1
	Consolidated Statements of Operations for the Three and Nine months ended September 30, 2024 and 2023 (unaudited)		2
	Consolidated Statements of Stockholders' Deficit for the Three and Nine months ended September 30, 2024 and 2023 (unaudited)		3
	Consolidated Statements of Cash Flows for the Nine months ended September 30, 2024 and 2023 (unaudited)		5
	Notes to Consolidated Financial Statements (unaudited)		6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Qualitative and Quantitative Discussions about Market Risk		22
Item 4.	Controls and Procedures		22
Part II - Other Information
Item 1.	Legal Proceedings		24
Item 1A.	Risk Factors		24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		24
Item 3.	Default Upon Senior Securities		24
Item 4.	Mine Safety Disclosures		24
Item 5.	Other Information		24
Item 6.	Exhibits		24

i

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDEX TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023		1
Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2024 and 2023		2
Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) for the three and nine months ended September 30, 2024 and 2023		3
Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2024 and 2023		5
Notes to Unaudited Consolidated Financial Statements		6 to 16

ii

VICTORY CLEAN ENERGY, INC.

(Formerly Victory Oilfield Tech, Inc.)

CONSOLIDATED BALANCE SHEETS

		September 30,		December 31,
		2024		2023
			(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	19,196			$	240,654
Prepaid expenses			14,766				-
Total current assets			33,962				240,654
Intangible assets, net			3,029				6,567
Total assets		$	36,991			$	247,221
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	360,990			$	111,200
Accrued and other short term liabilities			579,697				52,970
Due to related party			250,000				250,000
Loan from affiliate			-				968,000
Notes payable			50,000				-
Convertible note payable, net of $13,402and $0in debt discount			186,598				-
Loan from shareholders			125,830				145,830
Total liabilities			1,553,115				1,528,000
Commitments and contingencies (Note 9)
Stockholders' deficit
Preferred Series D stock, $0.001par value, 20,000shares authorized;0 shares issued and outstanding			-				-
Preferred Series E stock, $0.001par value, 67,797shares authorized;0 shares issued and outstanding			-				-
Common stock, $0.001par value, 2,000,000,000shares authorized, 530,704,753and 418,822,708shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively			530,707				418,823
Shares to be issued			29				-
Receivable for stock subscription			(245,000	)			-
Additional paid in capital			5,986,299				-
Accumulated deficit			(7,788,159	)			(1,699,602	)
Total stockholders' deficit			(1,516,124	)			(1,280,779	)
Total liabilities and stockholders' deficit		$	36,991			$	247,221

The accompanying notes are an integral part of these unaudited consolidated financial statements.

VICTORY CLEAN ENERGY, INC.

(Formerly Victory Oilfield Tech, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

		For the three months ended September 30,		For the nine months ended September 30,
		2024		2023		2024		2023
Revenues
Sales		$	-			$	-			$	-			$	-
Operating expenses
Consulting expenses			136,161				-				4,273,719				-
Licensing fees			415,000				-				1,015,000				-
Personnel expenses			447,104				72,665				1,004,346				112,597
General and administrative			42,527				38,867				419,976				58,171
Professional fees			115,102				12,000				295,686				27,000
Total operating expenses			1,155,894				123,532				7,008,727				197,768
Net operating loss			(1,155,894	)			(123,532	)			(7,008,727	)			(197,768	)
Other income (expense)
Amortization of debt discount			(777	)			-				(777	)			-
Interest expense			(4,609	)			(1,930	)			(11,041	)			(4,798	)
Gain (Loss) on forgiveness of debt			-				-				1,260,782				-
Loss on disposal of Subsidiary			-				-				(328,794	)			-
Total other income (expense)			(5,386	)			(1,930	)			920,170				(4,798	)
Net loss before income tax expense			(1,161,280	)			(125,462	)			(6,088,557	)			(202,566	)
Income tax expense			-				-				-				-
Net loss		$	(1,161,280	)		$	(125,462	)		$	(6,088,557	)		$	(202,566	)
Basic and diluted loss per share		$	(0.00	)		$	(0.00	)		$	(0.01	)		$	(0.00	)
Weighted average number of shares outstanding, basic and diluted			530,704,753				418,822,708				528,063,645				418,822,708

The accompanying notes are an integral part of these unaudited consolidated financial statements.

VICTORY CLEAN ENERGY, INC.

(Formerly Victory Oilfield Tech, Inc.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

UNAUDITED

		Preferred Stock		Common Stock		Shares to be Issued		Receivable for Stock		Additional Paid-In		Accumulated
		Shares		Amount		Shares		Amount		Shares		Amount		Subscription		Capital		Deficit		Total
Balance, December 31, 2023 (retroactively restated to effect recapitalization)			-			$	-				418,822,708			$	418,823				-			$	-			$	-			$	-			$	(1,699,602	)		$	(1,280,779	)
Conversion of notes payable, prior to recapitalization			-				-				69,385,685				69,386				-				-				-				4,024,370				-				4,093,756
Effects of recapitalization			8,333				8				28,591,593				28,592				-				-				(245,000	)			(3,871,027	)			-				(4,087,427	)
Conversion of Series D preferred stock into common stock, post recapitalization			(8,333	)			(8	)			3,961,539				3,962				-				-				-				(3,954	)			-				-
Conversion of notes payable, post recapitalization			-				-				3,135,594				3,136				-				-				-				181,864				-				185,000
Common stock issued for services, post recapitalization			-				-				6,807,634				6,808				-				-				-				394,847				-				401,655
Warrants issued for services, post recapitalization			-				-				-				-				-				-				-				3,483,548				-				3,483,548
Sale of Series E Preferred Stock			-				-				-				-				4,238				4				-				249,996				-				250,000
Net loss			-				-				-				-				-				-				-				-				(3,821,365	)			(3,821,365	)
Balance, March 31, 2024			-				-				530,704,753				530,707				4,238				4				(245,000	)			4,459,644				(5,520,967	)			(775,612	)
Sale of Series E Preferred Stock			-				-				-				-				20,215				20				-				1,192,480				-				1,192,500
Net loss			-				-				-				-				-				-				-				-				(1,105,912	)			(1,105,912	)
Balance, June 30, 2024			-				-				530,704,753				530,707				24,453				24				(245,000	)			5,652,124				(6,626,879	)			(689,024	)
Sale of Series E Preferred Stock			-				-				-				-				5,424				5				-				319,995				-				320,000
Warrants issued with convertible notes payable			-				-				-				-				-				-				-				14,180				-				14,180
Net loss			-				-				-				-				-				-				-				-				(1,161,280	)			(1,161,280	)
Balance, September 30, 2024			-			$	-				530,704,753			$	530,707				29,877			$	29			$	(245,000	)		$	5,986,299			$	(7,788,159	)		$	(1,516,124	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

VICTORY CLEAN ENERGY, INC.

(Formerly Victory Oilfield Tech, Inc.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

UNAUDITED

		Preferred Stock		Common Stock		Common Stock to be Issued		Receivable for Stock		Additional Paid-In		Accumulated
		Shares		Amount		Shares		Amount		Shares		Amount		Subscription		Capital		Deficit		Total
Balance, December 31, 2022 (retroactively restated to effect recapitalization)			-			$	-				418,822,708			$	418,823				-			$	-			$	-			$	-			$	(444,243	)		$	(25,420	)
Net loss			-				-				-				-				-				-				-				-				(31,093	)			(31,093	)
Balance, March 31, 2023			-				-				418,822,708				418,823				-				-				-				-				(475,336	)			(56,513	)
Net loss			-				-				-				-				-				-				-				-				(46,011	)			(46,011	)
Balance, June 30, 2023			-				-				418,822,708				418,823				-				-				-				-				(521,347	)			(102,524	)
Net loss			-				-				-				-				-				-				-				-				(125,462	)			(125,462	)
Balance, September 30, 2023			-			$	-				418,822,708			$	418,823				-			$	-			$	-			$	-			$	(646,809	)		$	(227,986	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

VICTORY CLEAN ENERGY, INC.

(Formerly Victory Oilfield Tech, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

		For the nine months ended September 30,
		2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(6,088,557	)		$	(202,566	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization expense			3,538				3,538
Amortization of debt discount			777				-
Stock issued for services			384,693				-
Warrants issued for services			3,483,548				-
Changes in working capital requirements:
Prepaid expenses			2,197				-
Accounts payable			235,111				(50,000	)
Accrued and other short-term liabilities			443,654				24,251
Net cash from operating activities			(1,535,039	)			(224,777	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of assets through reverse recapitalization			(863,919	)			-
Net cash from investing activities			(863,919	)			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from sale of Series E preferred stock			1,762,500				-
Cash received from convertible notes payable			385,000				-
Cash received from loan from affiliate			-				56,830
Cash received from loan from notes payable			50,000				-
Cash received from related party			-				240,000
Repayment of loans from shareholders			(20,000	)			-
Net cash from financing activities			2,177,500				296,830
NET CHANGE IN CASH			(221,458	)			72,053
CASH, BEGINNING OF PERIOD			240,654				26,480
CASH, END OF PERIOD		$	19,196			$	98,533
Supplemental disclosure of cash flow information
Cash paid for interest expense		$	-			$	-
Cash paid for income taxes		$	-			$	-
Non-cash operating and financing activities:
Conversion of notes payable		$	4,278,756			$	-
Gain on forgiveness of debt		$	1,260,782			$	-
Warrants issued with convertible notes		$	14,180			$	-

The accompanying notes are an integral part of these unaudited consolidated financial statements.

VICTORY CLEAN ENERGY, INC.

(Formerly Victory Oilfield Tech, Inc.)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

1. Organization and Summary of Significant Accounting Policies:

Organization and Nature of Operations

Victory Clean Energy, Inc., formerly Victory Oilfield Tech, Inc. ("Victory"), a Nevada corporation, has historically operated as an oilfield technology products company offering patented oil and gas drilling products. On July 31, 2018, Victory entered into an agreement to acquire Pro-Tech Hardbanding Services, Inc., an Oklahoma corporation ("Pro-Tech"), which provides various hardbanding solutions to oilfield operators for drill pipe, weight pipe, tubing and drill collars.

On January 1, 2024, Victory completed a merger agreement with H2 Energy Group Inc., a Delaware corporation ("H2EG") (the "Merger"). As a result of the Merger, a change in control of Victory occurred, and H2EG became a wholly owned subsidiary of Victory. On January 1, 2024, Victory completed the sale of Pro-Tech to Flagstaff International, LLC, a Delaware limited liability company. On January 11, 2024, Victory amended its Articles of Incorporation to authorize 2,000,000,000 common shares and change its name to Victory Clean Energy, Inc.

H2EG uses scalable and modular technology to produce low-cost hydrogen-rich syngas from renewable woody biomass. The Company plans to construct a renewable hydrogen production facility and install four hydrogen refueling stations in California.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Victory and H2EG, its wholly owned subsidiary, for all periods presented. All significant intercompany transactions and accounts between Victory and H2EG (together, the "Company") have been eliminated.

The results reported in these consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for any future periods.

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). In the opinion of management, all adjustments, consisting of normal and recurring accruals considered necessary for a fair presentation, have been included.

Going Concern

Historically the Company has experienced, and continues to experience, net losses, net losses from operations, negative cash flow from operating activities, and working capital deficits. The Company has incurred an accumulated deficit of $(7,788,159)through September 30, 2024, and has a working capital deficit of $(1,519,153)at September 30, 2024. These conditions raise substantial doubt about the Company's ability to continue as a going concern within one year after the date of issuance of the consolidated financial statements. The consolidated financial statements do not reflect any adjustments that might result if the Company was unable to continue as a going concern.

The Company anticipates that operating losses will continue in the near term as its management continues its efforts to raise additional capital and pursue the development and implementation of clean, sustainable low-cost energy solutions with applications across various industries, including transportation, power generation, and industrial processes. Based upon anticipated new sources of capital, and cash flow from operations, it believes it will have enough capital to cover expenses through at least the next twelve months. The Company will continue to monitor liquidity carefully, and in the event it does not have enough capital to cover expenses, the Company will make the necessary and appropriate reductions in spending to remain cash flow positive. While management believes its plans, including the Merger, help mitigate the substantial doubt that they are a going concern, there is no guarantee that the Company's plans will be successful or if they are, will fully alleviate the conditions that raise substantial doubt that the Company is a going concern.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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 those estimates. Estimates are used primarily when accounting for depreciation and amortization expense, various common stock, warrants and option transactions, evaluation of intangible assets, and loss contingencies.

Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all liquid investments with original maturities of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents. The Company had no cash equivalents at September 30, 2024 and December 31, 2023.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash equivalents with financial institutions and invests its excess cash primarily in certificates of deposit, deposit accounts or treasury bills. The Company has established guidelines relative to credit ratings and maturities that seek to maintain stability and liquidity.

Fair Value

Financial Accounting Standard Board, or FASB, Accounting Standards Codification, or ASC, Topic 820, Fair Value Measurements and Disclosures, established a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring fair value. This framework defined three levels of inputs to the fair value measurement process and requires that each fair value measurement be assigned to a level corresponding to the lowest level input that is significant to the fair value measurement in its entirety. The three broad levels of inputs defined by FASB ASC Topic 820 hierarchy are as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;

Leve1 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Leve1 2 input must be observable for substantially the full term of the asset or liability; and

Leve1 3 - unobservable inputs for the asset or liability. These unobservable inputs reflect the entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances (which might include the reporting entity's own data).

At September 30, 2024 and December 31, 2023, the carrying value of the Company's financial instruments such as accounts payables approximated their fair values based on the short-term nature of these instruments. The carrying value of short-term notes and advances approximated their fair values because the underlying interest rates approximated market rates at the balance sheet dates.

Website Development Costs

The Company capitalizes costs related to the development of their website in accordance with ASC 350- 50, Website Development Costs. The Company amortizes website development costs on a straight-line basis over the estimated life of the site, which is 36 months. Amortization begins at the completion of the website. During the year ended December 31, 2021, the Company capitalized $7,492for such costs. The website was placed in service in January 2022. During the first 10 months of 2022 additional costs of $6,660were capitalized and website improvements were placed in service on November 1, 2022. Nocosts were capitalized during the nine months ended September 30, 2024. Amortization expense for the for the nine months ended September 30, 2024 and 2023 was $3,538. Amortization expense for the for the three months ended September 30, 2024 and 2023 was $1,179.

Impairment of Long-Lived Assets

Long-lived assets are assessed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. The impairment testing involves comparing the carrying amount to the forecasted undiscounted future cash flows generated by that asset. In the event the carrying value of the assets exceeds the undiscounted future cash flows generated by that asset and the carrying value is not considered recoverable, impairment exists. An impairment loss is measured as the excess of the asset's carrying value over its fair value, calculated using a discounted future cash flow method. An impairment loss would be recognized in net income (loss) in the period that the impairment occurs.

Revenue Recognition

The Company will recognize revenue in accordance with ASC 606 Revenue from Contracts with Customers. The Company will determine revenue recognition through the following steps:

·

Identification of a contract with a customer;

·

Identification of the performance obligations in the contract;

·

Determination of the transaction price;

·

Allocation of the transaction price to the performance obligations in the contract; and

·

Recognition of revenue when or as the performance obligations are satisfied.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. No revenue has been generated to date.

Share-Based Compensation

The Company from time to time may issue stock options, warrants and restricted stock as compensation to employees, directors, officers and affiliates, as well as to acquire goods or services from third parties. In all cases, the Company calculates share-based compensation using the Black-Scholes option pricing model and expenses awards based on fair value at the grant date on a straight-line basis over the requisite service period. In the case of third-party suppliers, the service period is the shorter of the period over which services are to be received or the vesting period. For employees, directors, officers and affiliates, the service period is typically the vesting period. During the nine months ended September 30, 2024 and 2023, the Company recorded $3,662,104and $0in share-based compensation expense, respectively. There was noshare-based compensation expense recorded for the three months ended September 30, 2024 and 2023. Share-based compensation is included in the consolidated statements of operations under consulting expenses. See Note 8 Stockholders' Equity, for further information.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires an asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. Deferred tax assets, if any, include tax loss and credit carry forwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Earnings per Share

Basic earnings (loss) per share are calculated by dividing the Company's net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share are based on the weighted average number of shares of common stock outstanding during the period plus potentially dilutive shares of common stock outstanding during the period such as options, warrants and convertible securities. Given the historical and projected future losses of the Company, all potentially dilutive common stock equivalents are considered anti-dilutive. The following potential common shares were excluded from the calculation of diluted net income (loss) per share available to common stockholders because their effect would have been antidilutive:

		Three and Nine months ended September 30,
		2024		2023
Warrants			102,659,990				-
Convertible notes payable			2,459,016				-
Total			105,119,006				-

Recently Adopted Accounting Standards

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", and has since issued various amendments including ASU No. 2018-19, ASU No. 2019-04, and ASU No. 2019-05. The guidance and related amendments modify the accounting for credit losses for most financial assets and require the use of an expected loss model, replacing the currently used incurred loss method. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. The Company adopted ASU-2016-13 effective January 1, 2023. The adoption of ASU 2016-13 had no material impact on the Company's consolidated financial statements.

2. Reverse Merger and Reverse Recapitalization

Merger - Acquisition of H2 Energy Group Inc.

On January 1, 2024, Victory completed a merger agreement with H2EG (the "Merger"). As a result of the Merger, a change in control of Victory occurred, and H2EG became a wholly owned subsidiary of Victory.

Pursuant to the merger each share of H2EG's Capital Stock issued and outstanding immediately prior to the Effective Time (January 1, 2024), subject to and upon the terms and conditions set forth in the Merger Agreement, was cancelled and extinguished and converted automatically into the right to receive 418,822,708 shares of Victory's Common Stock ("Victory Common Stock").

As a result of the merger on the effective date of January 1, 2024, the H2EG Stockholders own 81% of Victory's issued and outstanding Common Stock immediately upon Closing. As contemplated in the Merger Agreement, Visionary Private Equity Group I, LP ("VPEG") Note holder converted the $3,006,756VPEG Note at the Effective Time in exchange for 50,961,957shares of common stock. In addition, holders of $1,087,000in convertible notes payable converted the notes into 18,423,728of common stock.

The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted as a reverse merger with H2EG as the accounting acquirer and Victory as the accounting acquiree. The financial reporting will reflect the accounting from the perspective of H2EG ("accounting acquirer"), except for the legal capital, which has retroactively adjusted to reflect the capital of Victory ("accounting acquiree") in accordance with ASC 805-40-45-1. The cost of the acquisition, which represents the consideration transferred to Victory's stockholders in the Victory Acquisition, was calculated based on the fair value of common stock of the combined company that Victory stockholders own as of the closing of the Victory Acquisition on January 1, 2024.

The merger transaction is considered to be a capital transaction of the legal acquiree and are equivalent to the issuance of shares by the private entity for the net monetary assets of the public shell corporation accompanied by a recapitalization.

The number of shares of Common Stock issued immediately following the consummation of the Reverse Recapitalization were as follows:

		Number of
		shares
Common Stock outstanding at January 1, 2024 prior to Merger			28,591,593
Convertible notes ($4,966,345) converted into common stock			69,385,685
Common stock issuable to H2EG holders			418,822,708
Total shares of Common Stock as of close of Reverse Recapitalization			516,799,986

3. Intangible Assets

The following table shows intangible assets and related accumulated amortization as of September 30, 2024 and December 31, 2023.

		September 30, 2024		December 31, 2023
			(unaudited)
Website		$	14,152			$	14,152
Accumulated amortization			(11,123	)			(7,585	)
Other intangible assets, net		$	3,029			$	6,567

Amortization expense for the for the nine months ended September 30, 2024 and 2023 was $3,538. Amortization expense for the for the three months ended September 30, 2024 and 2023 was $1,179.

4. Related party transactions

Effective July 1, 2020, the Company entered into an agreement (the "License Agreement") for certain intellectual property with a related party. On January 12, 2022, the Company amended the License Agreement to remove the running royalty, the sublicensing revenue royalty, and the payments related to the running royalties. No additional payments are required other than the $250,000payable recorded on the consolidated balance sheets as of September 30, 2024 and December 31, 2023. See Notes 5 and 7 for additional related party transactions.

The above transactions and amounts are not necessarily indicative of what third parties would have agreed to.

5. Loan from affiliate

On November 13, 2023, H2EG entered into a series of forgivable notes with Victory Clean Energy, Inc. for the principal amount of $968,000. The term of the note is 60 days and has a coupon rate of 5%. The note was forgivable upon the completion of the merger between H2EG and Victory.

The above transactions and amounts are not necessarily indicative of what third parties would have agreed to.

6. Notes payable

On September 16, 2024, the Company issued a note payable in the amount of $50,000. The note matures on December 31, 2024and has a coupon rate of 7%.

7. Convertible notes payable

On September 10, 2024, the Company issued a convertible promissory note to a holder with a face value of $200,000. The note has an interest rate of 12% and matures one year after the issuance date. The note can be converted at a fixed rate of $0.061 per share. The note also includes a warrant feature providing 2.25 warrants per principal dollar exercisable at $0.061 expiring 5 years from issuance.

The Company evaluated the detachable warrants under the requirements of ASC 480 and concluded that the warrants do not fall within the scope of ASC 480. The Company next evaluated the notes under the requirements of ASC 815 "Derivatives and Hedging" and concluded the warrants meet equity classification. The warrants were issued during the nine months ended September 30, 2024, were valued using the Black-Scholes-Merton ("BSM") method and were determined to have a value of $14,180.

8. Loan from shareholders

In previous years, the Company issued multiple short term notes to several of the members of the management team. Interest is to accrue and be paid with the repayment of loans at maturity. The Company has the option to pay the note back early with interest accrued to date with no penalty. Interest expense for the for the nine months ended September 30, 2024 and 2023 was $3,164and $4,798, respectively. Interest for the for the three months ended September 30, 2024 and 2023 was $1,583and $1,930, respectively. As of September 30, 2024 and December 31, 2023 the total principal due was $125,830and $145,830with total interest accrued of $11,782and $7,190, respectively. Accrued interest is included in the consolidated balance sheets under accrued and other short-term liabilities. The details are as follows:

Lender	June 30, 2024	December 31, 2023	Term	Interest Rate
	Note 1		$	125,830		$	125,830			10 Months			5	%
	Note 2			-			20,000			10 Months			5	%
			$	125,830		$	145,830

Of the loans, $100,000is in default as of September 30, 2024 and December 31, 2023.

The above transactions and amounts are not necessarily indicative of what third parties would have agreed to.

9. Stockholders' Equity

Preferred Stock

The Company has 10,000,000shares of Preferred Stock authorized with a par value of $.001.

Series D Preferred Stock

The terms of the Series D Preferred Stock are governed by a certificate of designation (the "Series D Certificate of Designation") filed by the Company with the Nevada Secretary of State on August 21, 2017. Pursuant to the Series D Certificate of Designation, the Company designated 20,000 shares of its preferred stock as Series D Preferred Stock.

Dividends. Except for stock dividends and distributions for which adjustments are to be made pursuant to the Series D Certificate of Designation, holders of Series D Preferred Stock are not entitled to dividends.

Liquidation. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of shares of Series D Preferred Stock are entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of shares of common stock, an amount equal to the Stated Value per share, plus any dividends declared but unpaid thereon. The "Stated Value" shall initially be $19.01615 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series D Preferred Stock.

Voting Rights. Holders of shares of Series D Preferred Stock vote together with the holders of common stock on an as-if-converted-to-common-stock basis. Except as provided by law, the holders of shares of Series D Preferred Stock vote together with the holders of shares of common stock as a single class. However, as long as any shares of Series D Preferred Stock are outstanding, the Company may not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series D Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series D Preferred Stock or alter or amend the Series D Certificate of Designation, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a liquidation senior to the Series D Preferred Stock, (c) amend the Company's articles of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (d) increase the number of authorized shares of Series D Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.

Redemption. To the extent of funds legally available for the payment therefor, the Company is required to redeem the outstanding shares of Series D Preferred Stock, at a redemption price equal to the Stated Value per share (subject to adjustment), payable in cash in equal monthly installments commencing on the fifteenth (15th) calendar day following the date that the Company obtained stockholder approval (which was obtained on November 20, 2017) (each such date, a "Redemption Date"). If funds legally available for redemption on the Redemption Date are insufficient to redeem the total number of outstanding shares of Series D Preferred Stock, the holders of shares of Series D Preferred Stock shall share ratably in any funds legally available for redemption of such shares according to the respective amounts which would be payable with respect to the full number of shares owned by them if all such outstanding shares were redeemed in full. At any time thereafter when additional funds are legally available for the redemption, such funds will be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are then legally available.

Conversion. If, following the date when stockholder approval has been obtained, any portion of the redemption price has not been paid by the Company on any Redemption Date, the holder may, at its option, elect to convert each share of Series D Preferred Stock plus accrued, but unpaid dividends thereon, into such number of fully paid and non-assessable shares of common stock as is determined by dividing the Stated Value by the Conversion Price in effect on such conversion date; provided, however, that in lieu of such conversion and before giving effect thereto, the Company may elect to bring current the redemption payments payable. The "Conversion Price" is initially equal to $0.04, subject to adjustment as set forth in the Series D Certificate of Designation.

Other Rights. Holders of Series D Preferred Stock have no preemptive or subscription rights and there are no sinking fund provisions applicable to Series D Preferred Stock.

On January 1, 2024, the holder of Series D Preferred Stock converted 8,333shares into 3,961,539shares of common stock. As of September 30, 2024, there are noshares outstanding.

Series E Preferred Stock

The series of preferred stock is designated as Series E Preferred Stock and the number of shares so designated is 67,797, which cannot be increased without the written consent of the holders of the Preferred Stock. Each share of Preferred Stock has a par value of $0.001per share and a stated value of $ 58.999608per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock.

Dividends. In addition to stock dividends and distributions for which adjustments are to be made pursuant to the Series E Certificate of Designation, holders of Series E Preferred Stock are entitled to receive when, as and if dividends are declared and paid on the Corporation's Common Stock, an equivalent dividend on such Holders Preferred Stock (with the same dividend declaration date and payment date), calculated on an as-converted basis. Other than the foregoing, the Holders of Preferred Stock shall not be entitled to receive any dividends in respect of the Preferred Stock, unless and until specifically declared by the Board of Directors of the Corporation to be payable to the Holders of the Preferred Stock.

Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the Holders of shares of Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, before any payment shall be made to the holders of shares of Common Stock or any other capital stock (other than Senior Preferred Stock) by reason of their ownership thereof, an amount equal to the stated value per share, plus any dividends declared but unpaid thereon, which amount shall be paid pari passu with all holders of the Corporation's Senior Preferred Stock.

Voting Rights. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each Holder is entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such Holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Certificate of Designation, the Holders shall vote together with the holders of shares of Common Stock as a single class. However, as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend the Certificate of Designation, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation senior to the Preferred Stock, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders, (d) increase the number of authorized shares of Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.

Conversion. Each Holder may, at its option, at any time and from time to time, elect to convert each share of Preferred Stock plus accrued, but unpaid dividends thereon, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Stated Value by the Conversion Price in effect on the Conversion Date. The "Conversion Price" shall initially be equal to $ 0.058999608. Such initial Conversion Price, and the rate at which shares of Preferred Stock plus accrued, but unpaid dividends thereon, may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

Other Rights. Holders of Series E Preferred Stock have no preemptive or subscription rights and there are no sinking fund provisions applicable to Series E Preferred Stock.

On January 1, 2024, the Company entered into an agreement with Flagstaff International, LLC under which Flagstaff committed to invest $4,000,000 in Victory in exchange for 67,797Shares of Victory Series E Preferred Stock. As of September 30, 2024, Flagstaff has invested $1,762,500in exchange for 29,877shares which are categorized in shares to be issued.

Common Stock

As a result of the reverse merger, the equity structure has been recast in all comparative periods up to the Closing date to reflect the number of shares of the Company's Common Stock (418,822,708), $0.001 par value per share, issued to H2EG shareholders in connection with the Reverse Recapitalization. As such, the shares and corresponding capital amounts and loss per share related to H2EG Common Stock prior to the Reverse Recapitalization have been retroactively recast.

On January 11, 2024, Victory amended its Articles of Incorporation to authorize 2,000,000,000 common shares.

Shares to be Issued

As of September 30, 2024, the Company has recorded 29,877shares of Series E Preferred Stock in shares to be issued.

Common Stock Purchase Warrants

Warrant activity is summarized as follows:

				Weighted		Weighted
				Average		Average
		Shares		Exercise Price		Remaining Term
	Warrants outstanding January 1, 2024
	Issued				102,659,990			$	0.059				3.79Years
	Exercised				-				-				-
	Expired				-				-				-
	Warrants outstanding at September 30, 2024				102,659,990			$	0.059				3.05Years
	Warrants exercisable at September 30, 2024				102,659,990			$	0.059				3.05Years

The weighted average range of inputs to the Black-Scholes Model for the warrants issued during the nine months ended September 30, 2024 is as follows:

Stock Price		$	0.059
Exercise Price		$	0.059- 0.061
Dividend yield			0	%
Expected volatility			74.17- 74.52	%
Risk-Free interest rate			34.43- 3.93	%
Expected life (in years)			4- 5

10. Commitments and Contingencies

Legal

The Company is not currently involved with, and does not know of, any pending or threatening litigation against the Company.

Consulting Agreement

On November 1, 2023, the Company entered into a two-year agreement with a third party for consulting services. In connection with the agreement, the Company agreed to pay a monthly fee of $15,000. During the nine months ended September 30, 2024 and 2023, the Company recorded $135,000and $0, respectively, related to these agreements. During the three months ended September 30, 2024 and 2023, the Company recorded $45,000and $0, respectively, related to these agreements. As of September 30, 2024 and December 31, 2023, the balance accrued on these agreements was $10,000and $0, respectively, and is included within accounts payable on the consolidated balance sheets.

Collaborative Arrangements

The Company has entered into collaborative arrangements with various parties for the cross promotion of technologies and services within certain geographical areas. These arrangements do not commit the Company or the counterpart to any financial obligation. If these arrangements result in a formal project, the Company and the counterparties will receive certain equity consideration in the project or be given first right of refusal to provide their products or services to the projects, as defined by the respective agreements. To date, these arrangements have not resulted in any formal projects.

Hydrogen Technology Agreement

The Company entered into a Hydrogen Technology Purchase Agreement with Intellectual Property License Agreement signed August 20, 2024, effective April 7, 2024, between Victory Clean Energy Inc. and Proton Power, Inc. The agreement is for the purchase of intellectual property rights to the production of hydrogen for a purchase price of $100,000,000payable within five years from the effective date.

Per the agreement, the Company has been granted an interim license to the intellectual property rights until the total purchase price has been paid. The Company shall pay to Proton Power, Inc. weekly payments totaling $86,000 until $25,000,000 has paid, provided that at the Company's option, the Company may reduce the weekly amount to $50,000 from the effective date until November 15, 2024. The agreement can be terminated at any time by the Company with no further payment or obligation to Proton Power, Inc. The remaining $75,000,000 can be paid at or prior to the end of the five year term to complete the purchase.

As of September 30, 2024, the Company has paid $1,015,000in payments. The Company has license expense totaling $415,000and $1,015,000for the three and nine months ended September 30, 2024.

11. Disposition of Subsidiary

On January 1, 2024, the Company entered into an agreement with Flagstaff International, LLC under which Flagstaff committed to invest $4,000,000in Victory in exchange for Victory Preferred Stock and the transfer to Pro-Tech Holdings of all equity interests held by Victory in Pro-Tech Hardbanding Services, Inc.

On January 1, 2024, Victory completed the sale of Pro-Tech to Flagstaff International, LLC, a Delaware limited liability company. As result of the sale, the Company recorded $328,794as a loss on disposition of Pro-Tech.

12. Subsequent Events

Flagstaff Agreement

As of November 14, Flagstaff has invested $1,772,500under the Series E Preferred Stock Agreement with Flagstaff.

Convertible Note

In October of 2024, the Company issued promissory note to one holder totaling $200,000. The note have an interest rate of 15%. The note can be converted at a fixed rate of $0.061 per share. The note also includes a warrant feature providing 2.25 warrants per principal dollar exercisable at $0.061 expiring 5 years from issuance.

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

Introduction

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand the Victory Clean Energy, Inc. MD&A and is presented in the following seven sections:

	●	Cautionary Information about Forward-Looking Statements;
	●	Business Overview;
	●	Results of Operations;
	●	Liquidity and Capital Resources;
	●	Critical Accounting Policies and Estimates;
	●	Recently Adopted Accounting Standards; and
	●	Recently Issued Accounting Standards.

MD&A is provided as a supplement to, and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

In MD&A, we use "we," "our," "us," "Victory" and "the Company" to refer to Victory Clean Energy. and its wholly owned subsidiary, unless the context requires otherwise. Amounts and percentages in tables may not total due to rounding. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. We caution readers that important facts and factors described in MD&A and elsewhere in this document sometimes have affected, and in the future could affect our actual results, and could cause our actual results during 2024 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us.

As reported in the Report of Independent Registered Public Accounting Firm on our December 31, 2023 consolidated financial statements, we have suffered recurring losses from operations which raises substantial doubt about our ability to continue as a going concern.

CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

Many statements made in the following discussion and analysis of our financial condition and results of operations and elsewhere in this Quarterly Report on Form 10-Q that are not statements of historical fact, including statements about our beliefs and expectations, are "forward-looking statements" within the meaning of federal securities laws and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, including descriptions of our business plan, strategies and capital structure. In particular, the words "anticipate," "expect," "suggests," "plan," "believe," "intend," "estimates," "targets," "projects," "should," "could," "would," "may," "will," "forecast," variations of such words, and other similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking. We base these forward-looking statements or projections on our current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such time. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject to and involve risks, uncertainties and assumptions. Although we believe that these forward-looking statements and projections are based on reasonable assumptions at the time they are made, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those expressed in the forward-looking statements and projections. Factors that may materially affect such forward-looking statements and projections include:

	●	continued operating losses;
	●	adverse developments in economic conditions and, particularly, in conditions in the alternate energy industry;
	●	volatility in the capital, credit and commodities markets;
	●	our inability to successfully execute on our growth strategy;
	●	the competitive nature of our industry;
	●	price increases or business interruptions in our supply of raw materials;
	●	failure to develop and market new products and manage product life cycles;
	●	business disruptions, security threats and security breaches, including security risks to our information technology systems;
	●	terrorist acts, conflicts, wars, natural disasters, pandemics and other health crises that may materially adversely affect our business, financial condition and results of operations;
	●	failure to comply with anti-terrorism laws and regulations and applicable trade embargoes;
	●	risks associated with protecting data privacy;
	●	litigation and other commitments and contingencies;
	●	ability to recruit and retain the experienced and skilled personnel we need to compete;
	●	delays in obtaining permits by our future customers or acquisition targets for their operations;
	●	our ability to protect and enforce intellectual property rights;
	●	intellectual property infringement suits against us by third parties;
	●	our ability to realize the anticipated benefits of any acquisitions and divestitures;
	●	risk that the insurance we maintain may not fully cover all potential exposures;
	●	risks associated with changes in tax rates or regulations, including unexpected impacts of the new U.S. TCJA legislation, which may differ with further regulatory guidance and changes in our current interpretations and assumptions;
	●	risks associated with geopolitical instability, including the conflict between Russia and Ukraine, the conflicts in the Middle East, and growing tensions between U.S. and China and neighboring regions;
	●	our ability to obtain additional capital on commercially reasonable terms may be limited;
	●	any statements of belief and any statements of assumptions underlying any of the foregoing;
	●	other factors disclosed in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission;
	●	and other factors beyond our control.

These cautionary statements should not be construed by you to be exhaustive and are made only as of the date of this Quarterly Report on Form 10-Q. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason. Potential investors should not make an investment decision based solely on our projections, estimates or expectations.

Business Overview

General

Victory Clean Energy, Inc. is a Green Hydrogen energy company dedicated to developing and implementing clean, sustainable low-cost energy solutions with applications across various industries, including transportation, power generation, and industrial processes. We believe the Company's innovative TrueGreen Hydrogen™ production solutions will provide clean, reliable, and cost-effective energy sources to a diverse range of clients. We believe TrueGreen Hydrogen™ positions the Company as a formidable force in the low-cost Green Hydrogen sector, focusing on decarbonization in heavy transportation and industrial Hydrogen markets. Victory Clean Energy is dedicated to shaping a sustainable and cleaner future for industries and communities worldwide.

Our technology offers a viable alternative to traditional fossil fuels, with applications across various industries, including transportation, power generation, and industrial processes.

Recent Developments

On January 1, 2024, Victory completed a merger agreement with H2 Energy Group Inc., a Delaware corporation ("H2EG") (the "Merger"). As a result of the Merger, a change in control of Victory occurred, and H2EG became a wholly owned subsidiary of Victory.

On January 1, 2024, Victory completed the sale of Pro-Tech Hardbanding Services, Inc. to Flagstaff International, LLC, a Delaware limited liability company.

On January 11, 2024, Victory amended its Articles of Incorporation to authorize 2,000,000,000 common shares and change its name to Victory Clean Energy, Inc.

Results of Operations

The following discussion should be read in conjunction with the information contained in the accompanying unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Our historical results of operations summarized and analyzed below may not necessarily reflect what will occur in the future.

Nine months ended September 30, 2024 compared to the Nine months ended September 30, 2023

Total Revenue

The Company had no revenue during the nine months ended September 30, 2024 and 2023.

Consulting expenses

Total consulting expenses for the nine months ended September 30, 2024 was $4,473,719 compared to $0 for the nine months ended September 30, 2023. During the nine months ended September 30, 2024, the Company issued 102,284,990 warrants for consulting services valued at $3,483,548 and 6,807,634 shares of restricted stock valued at $401,655. Of the $401,655 in restricted stock value, $16,963 is unearned compensation as of September 30, 2024. The equity issued for services and other consulting expenses related to services performed in connection with the merger.

Licensing Fees

Total licensing fees for the nine months ended September 30, 2024 was $1,015,000 compared to $0 for the nine months ended September 30, 2023. The Company entered into a licensing agreement during the nine months ended September 30, 2024.

Personnel expenses

Personnel expenses were $1,004,346 in the nine months ended September 30, 2024 as compared to $112,597 for the nine months ended September 30, 2023. The increase was primarily due to hiring more personnel as a result of increased operations related to the merger.

General and administrative

General and administrative was $419,976 for the nine months ended September 30, 2024 as compared to $58,171 for the nine months ended September 30, 2023. The change was primarily due to an increase in operations as a result of the merger.

Professional fees

Professional fees was $295,686 for the nine months ended September 30, 2024 as compared to $27,000 for the nine months ended September 30, 2023. The professional fees in the current period were related to audit fees as a result of the merger.

Loss from Operations

The Company reported a loss from operations for the nine months ended September 30, 2024 of $(7,008,727), which was an increase of $6,810,959, compared to the loss from operations of $(197,768) for the nine months ended September 30, 2023 due primarily to an increase in operations as a result of the merger.

Other income (expenses)

Other income (expenses) consists mainly of interest expense, gain on extinguishment of debt, and loss on disposal of subsidiary. The Company reported other income for the nine months ended September 30, 2024 of $920,170, which was an increase of $924,968, compared to other expenses of $(4,798) for the nine months ended September 30, 2023. The increase was due primarily to a gain on extinguishment of debt in the amount of $1,260,782 as a result of the merger, offset by a loss on disposal of subsidiary (Pro-Tech Hardbanding) in the amount of $328,794.

Three Months Ended September 30, 2024 compared to the Three Months Ended September 30, 2023

Total Revenue

The Company had no revenue during the three months ended September 30, 2024 and 2023.

Consulting expenses

Total consulting expenses for the three months ended September 30, 2024 was $136,161 compared to $0 for the three months ended September 30, 2023. The primary reason for the increase was due to increased operations as a result of the merger.

Licensing Fees

Total licensing fees for the three months ended September 30, 2024 was $415,000 compared to $0 for the three months ended September 30, 2023. The Company entered into a licensing agreement during 2024.

Personnel expenses

Personnel expenses was $447,104 for the three months ended September 30, 2024 as compared to $72,665 for the three months ended September 30, 2023. The increase was primarily due to hiring more personnel as a result of increased operations related to the merger.

General and administrative

General and administrative was $45,527 for the three months ended September 30, 2024 as compared to $38,867 for the three months ended September 30, 2023 due to an increase in operations as a result of the merger.

Professional fees

Professional fees was $115,102 for the three months ended September 30, 2024 as compared to $12,000 for the three months ended September 30, 2023. The professional fees in the current period were related to audit fees as a result of the merger.

Loss from Operations

The Company reported a loss from operations for the three months ended September 30, 2024 of $(1,155,894), which was an increase of $1,032,362, compared to the loss from operations of $(123,532) for the three months ended September 30, 2023 due primarily to an increase in operations as a result of the merger.

Other income (expenses)

Other income (expenses) consists mainly of interest expense, gain on extinguishment of debt, and loss on disposal of subsidiary. The Company reported other expense for the three months ended September 30, 2024 of ($5,386), which was an increase of ($3,456), compared to other expenses of $(1,930) for the three months ended September 30, 2023. The increase was due primarily amortization of debt discount and increased interest expense related to issuing new notes.

Liquidity and Capital Resources

Going Concern

Historically we have experienced, and we continue to experience, net losses, net losses from operations, negative cash flow from operating activities, and working capital deficits. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date of issuance of the accompanying consolidated financial statements. The accompanying consolidated financial statements do not reflect any adjustments that might result if we are unable to continue as a going concern.

We anticipate that operating losses will continue in the near term. We intend to meet near-term obligations with private placement offerings. We currently have no revenue from operations.

In addition to the commitment of $4,000,000 from Flagstaff, we will be required to obtain other liquidity resources in order to support ongoing operations. We are addressing this need by developing additional capital sources, to enable us to execute our growth plan involving the use of proprietary technology to produce low-cost Green Hydrogen from a wide variety of biomass sources.

While management believes our business plans help mitigate the substantial doubt that we are a going concern, there is no guarantee that our plans will be successful or if they are, will fully alleviate the conditions that raise substantial doubt that we are a going concern.

Capital Resources

On January 1, 2024, the Company entered into an agreement with Flagstaff International, LLC under which Flagstaff committed to invest $4,000,000 in Victory in exchange for 67,797 Shares of Victory Series E Preferred Stock. As of September 30, 2024, Flagstaff has invested $1,762,500. As of November 14, 2024, Flagstaff has invested $1,772,500. The Company is currently reliant on this agreement to fund its current operations.

Material Cash Requirements

Our material short-term cash requirements include recurring payroll and benefits obligations for our employees, capital, operating expenditures, IP purchase/license payments and other working capital needs. We believe that material cash requirements for operating expenditures may range from $300,000 per month to $400,000 per month during the twelve months.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition.

Cash Flow

The following table provides detailed information about our net cash flow for the Nine months ended September 30, 2024 and 2023:

		Nine months ended September 30,
		2024		2023
Net cash used in operating activities		$	(1,535,039	)		$	(224,777	)
Net cash used in investing activities			(863,919	)			-
Net cash provided by financing activities			2,717,500				296,830
Net change in cash and cash equivalents			(221,458	)			72,053
Cash and cash equivalents at beginning of period			240,654				26,480
Cash and cash equivalent at end of period		$	19,196			$	98,553

Net cash used in operating activities for the nine months ended September 30, 2024 was $1,535,039 compared to $224,777 for the nine months ended September 30, 2023. This difference primarily related to stock and warrants issued for services in the current period. During the nine months ended September 30, 2024, net cash used in investing activities was ($863,919) compared to $0 during the nine months ended September 30, 2023. This difference related to acquisition of assets through reverse recapitalization in the current period. During the nine months ended September 30, 2024, our financing activities provided cash of $2,177,500 compared to $296,830 during the nine months ended September 30, 2023. The difference primarily related to cash received from sale of Series E preferred stock in the amount of $1,762,500, cash received from convertible notes payable in the amount of $385,000 and $50,000 received from the issuance of a notes payable.

Item 3. Qualitative and Quantitative Discussions about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, we have evaluated, with the participation of our chief executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. Based on this evaluation, our principle executive officer and principal financial officer determined that our disclosure controls and procedures were effective.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Controls

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There have been no changes in our internal control over financial reporting during the nine months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

None

Item 1A. Risk Factors

Not applicable.

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

On January 1, 2024, the Company entered into an agreement with Flagstaff International, LLC under which Flagstaff committed to invest $4,000,000 in Victory in exchange for 67,797 Shares of Victory Series E Preferred Stock. As of November 14, 2024, Flagstaff has invested $1,772,500.

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

During the Company's quarter ended September 30, 2024, no director or officer adoptedor terminateda Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement.

Item 6. Exhibits

Exhibit No.		Description
3.1		Amended and Restated Articles of Incorporation of Victory Energy Corporation (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on November 22, 2017)
3.2		Certificate of Amendment to Articles of Incorporation (Name Change) (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on June 4, 2018)
3.3		Certificate of Amendment to Articles of Incorporation (Name Change & Increased Authorized Common Stock) dated January 11, 2024.(incorporated by reference to Exhibit 3.3 to the Annual Report on Form 10-K filed on May 15, 2024)
3.4		Certificate of Designation of Series D Preferred Stock of Victory Energy Corporation (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K filed on August 24, 2017)
3.5		Amended and Restated Bylaws of Victory Energy Corporation (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on September 20, 2017)
4.1		Form of Common Stock Certificate of Victory Energy Corporation (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K filed on April 8, 2016)
4.2		Common Stock Warrant issued by Victory Energy Corporation to Visionary Private Equity Group I, LP on February 3, 2017 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on February 7, 2017)
4.3		Common Stock Warrant issued by Victory Energy Corporation to Visionary Private Equity Group I, LP on April 13, 2018 (incorporated by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q filed on November 14, 2018)

4.4		Common Stock Purchase Warrant issued by Victory Oilfield Tech, Inc. to Kodak Brothers All America Fund, LP on July 31, 2018 (incorporated by reference to Exhibit 4,1 to the Current Report on Form 8-K filed on August 2, 2018)
4.5		Common Stock Purchase Warrant issued by Victory Oilfield Tech, Inc. to Kevin DeLeon on October 25, 2019 (incorporated by reference to Exhibit 4.5 to the Annual Report on Form 10-K filed on February 9, 2021).
4.6		Form of Warrant issued by Victory Clean Energy, Inc. on January 12, 2024.(incorporated by reference to Exhibit 3.3 to the Annual Report on Form 10-K filed on May 15, 2024)
10.1 †		Victory Energy Corporation 2014 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on February 28, 2014).
10.2 †		Victory Energy Corporation 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.28 to the Registration Statement on Form S-1 filed on February 5, 2018).
10.3		Loan Agreement, dated April 10, 2018, by and between Visionary Private Equity Group I, LP and Victory Energy Corporation (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on April 12, 2018).
10.4		Amendment No. 1 to Loan Agreement, dated October 30, 2020 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed November 6, 2020).
10.5		Amendment No. 2 to Loan Agreement, dated February 8, 2021 (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K filed on February 9, 2021).
10.6		Amendment No. 3 to Loan Agreement, dated September 3, 2021 (incorporated by reference to Exhibit 10.7] to the Annual Report on Form 10-K filed September 3, 2021).
10.8		Promissory Note issued by the Company to Arvest Bank dated April 13, 2020 (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed on August 10, 2021).
10.9		Loan Authorization and Agreement by and between the Company and the U.S. Small Business Administration dated April 13, 2020 (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed on August 10, 2021).
10.10		Amended and Restated Promissory Note by and between Visionary Private Equity Group I, LP and Victory Oilfield Tech, Inc., dated September 3, 2021 (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K filed September 3, 2021).
10.11		Promissory Note issued by the Company to Arvest Bank dated January 28, 2021 (incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q filed August 10, 2021).
10.12		Promissory Note and Security Agreement dated July 11, 2022 by and between Pro-Tech Hardbanding Services, Inc. and Arvest Bank (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed November 14, 2022).
10.13		Agreement And Plan Of Merger, Dated July 25, 2023, By And Among Victory Clean Energy, Inc., Victory H2EG Merger Sub Inc., And H2 Energy Group Inc. (Incorporated By Reference To Exhibit 10.1 To The Current Report On Form 8-K Filed On July 26, 2023)
10.14		Amendment No. 1 To Agreement And Plan Of Merger, Dated December 1, 2023, By and Among Victory Clean Energy, Inc., Victory H2EG Merger Sub Inc., And H2 Energy Group Inc. (Incorporated By Reference To Exhibit 10.2 To The Current Report On Form 8-K Filed On December 5, 2023)
10.15		Securities Purchase Agreement, Dated December 28, 2023, By and Among Victory Clean Energy, Inc., and Flagstaff International, LLC(Incorporated By Reference To Exhibit 10.3 To The Current Report On Form 8-K Filed On January 5, 2024)
10.16		Hydrogen Technology Purchase Agreement with Intellectual Property License Agreement signed August 20, 2024 between Victory Clean Energy Inc. and Proton Power, Inc. (Incorporated By Reference To Exhibit 10.1 to the Current Report On Form 8-K Filed On August 21, 2024)

14.1		Code of Ethics and Business Conduct adopted on September 14, 2017 (incorporated by reference to Exhibit 14.1 to the Current Report on Form 8-K filed on September 20, 2017)
31.1*		Certifications of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certifications of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1		Audit Committee Charter adopted on September 14, 2017 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed on September 20, 2017)
99.2		Compensation Committee Charter adopted on September 14, 2017 (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed on September 20, 2017)
101.INS++		Inline XBRL Instance Document
101.SCH++		Inline XBRL Taxonomy Extension Schema Document
101.CAL++		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF++		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB++		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE++		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104++		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*

Filed herewith.

†

Executive Compensation Plan or Agreement.

++XBRL

(Extensible Business Reporting Language) information is furnished and not filed or a part of a report for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Signature

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.

SIGNATURE		TITLE		DATE
/s/ Christopher Headrick		Executive Chairman (Principle Executive Officer)		November 19, 2024
Christopher Headrick
/s/ Neil Goulden		Chief Administrative Officer, Treasurer, Secretary, and Director (Principal Financial and Accounting Officer)		November 19, 2024
Neil Goulden

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