Quarterly Report for Quarter Ending March 31, 2024 (Form 10-Q)

10-Q

ROC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2024

OR

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

For the transition period from ______ to ______

Commission File Number: 333-254676

CYBER APP SOLUTIONS CORP.

(Exact Name of Registrant as Specified in its Charter)

Nevada	98-1585090
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2000 Bering Drive Suite 875 Houston, Texas	77057
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (725) 231-1001

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		CYRB		OTC Pink Open Markets

Indicate by check mark whether the registrant (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, 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 ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of May 13, 2024, the registrant had 80,896,865shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Changes in Stockholders' Deficit	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
Signatures	27

PART I-FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

Cyber App Solutions Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

		March 31, 2024			December 31, 2023
ASSETS
Current assets
Cash and cash equivalents		$	80,357			$	1,248,191
Related party note receivable			25,000				25,000
Prepaid expenses and other current assets			425,119				502,330
Total current assets			530,476				1,775,521
Property, plant and equipment
Helium and CO2properties, net (full cost method)			12,324,525				12,348,505
Other property, plant and equipment, net			1,833,251				1,854,496
Total property, plant and equipment, net			14,157,776				14,203,001
Other non-current assets
Right-of-use assets - operating leases			985,763				1,023,497
Other long-term assets			187,109				192,103
Total assets		$	15,861,124			$	17,194,122
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable		$	1,820,015			$	1,698,364
Notes payable, fair value option			19,168,307				20,082,880
Interest expense payable			1,612,107				146,667
Derivative liabilities			2,813,832				2,882,692
Accrued expenses and other current liabilities			753,962				542,623
Operating lease liabilities - current			170,959				161,524
Total current liabilities			26,339,182				25,514,750
Long-term liabilities
Asset retirement obligations			769,805				758,373
Operating lease liabilities			817,373				865,113
Total long-term liabilities			1,587,178				1,623,486
Total liabilities			27,926,360				27,138,236
Commitments and contingencies(Note 16)
Stockholders' deficit
Common Stock, $0.001par value, 250,000,000shares authorized; 80,896,865shares and 80,744,354shares issued and outstanding as of March 31,2024 and December 31, 2023, respectively			80,896				80,744
Additional paid-in capital			34,428,503				34,238,016
Accumulated deficit			(46,574,635	)			(44,262,874	)
Total stockholders' deficit			(12,065,236	)			(9,944,114	)
Total liabilities and stockholders' deficit		$	15,861,124			$	17,194,122

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

Cyber App Solutions Corp.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended
	March 31,
	2024			2023
Helium revenue	$	222,088			$	-
Operating expenses
Depreciation, depletion, amortization and accretion		78,339				13,374
Lease and well operating expenses		53,893				13,544
Shut-in expenses		114,237				82,960
Gathering and processing expenses		256,542				-
Production taxes		7,633				-
General and administrative expenses		1,522,807				727,777
General and administrative expenses - related parties		15,000				35,000
Total operating expenses		2,048,451				872,655
Net loss from operations		(1,826,363	)			(872,655	)
Other income (expense)
Interest expense		(723,391	)			(536,337	)
Event of default fees		(745,440	)			(1,927,939	)
Interest income - related parties		-				7
Unrealized gain on fair value of notes payable		914,573				-
Unrealized gain on derivatives mark-to-market		68,860				-
Total other expense		(485,398	)			(2,464,269	)
Net loss before taxes		(2,311,761	)			(3,336,924	)
Income tax expense		-				-
Net loss	$	(2,311,761	)		$	(3,336,924	)
Loss per common share
Basic and Diluted	$	(0.03	)		$	(0.05	)
Weighted Average Number of Common Shares Outstanding:
Basic and Diluted		80,809,396				66,782,084

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

Cyber App Solutions Corp.

Condensed Consolidated Statements of Changes in Stockholders' Deficit

(Unaudited)

		Common Stock			Additional			Accumulated			Total
		Shares			Amount			Paid-In Capital			Deficit			Stockholders' Deficit
December 31, 2022			65,828,862			$	65,829			$	21,885,539			$	(32,515,471	)		$	(10,564,103	)
Capital contributions			1,949,226				1,949				648,051				-				650,000
Equity financing costs			(77,969	)			(78	)			(25,922	)			-				(26,000	)
Net loss			-				-				-				(3,336,924	)			(3,336,924	)
March 31, 2023			67,700,119			$	67,700			$	22,507,668			$	(35,852,395	)		$	(13,277,027	)

		Common Stock			Additional			Accumulated			Total
		Shares			Amount			Paid-In Capital			Deficit			Stockholders' Deficit
December 31, 2023			80,744,354			$	80,744			$	34,238,016			$	(44,262,874	)		$	(9,944,114	)
Stock compensation expense			2,424				2				3,028				-				3,030
Issuance of common stock for cash			150,087				150				187,459				-				187,609
Net loss			-				-				-				(2,311,761	)			(2,311,761	)
March 31, 2024			80,896,865			$	80,896			$	34,428,503			$	(46,574,635	)		$	(12,065,236	)

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

Cyber App Solutions Corp.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Three Months Ended
	March 31,
	2024			2023
Cash Flows From Operating Activities
Net loss	$	(2,311,761	)		$	(3,336,924	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation, depletion, amortization and accretion		78,339				13,374
Stock compensation expense		3,030				-
Interest expense		720,000				536,337
Event of default fees		745,440				1,927,939
Amortization of lease costs		102,253				17,327
Amortization of intangible costs		7,490				7,490
Unrealized gain on derivatives mark-to-market		(68,860	)			-
Unrealized gain on fair value of notes payable		(914,573	)			-
Changes in operating assets and liabilities:
Prepaids and other current assets		74,715				64,054
Other long-term assets		-				-
Accounts payable		148,585				184,082
Accrued expenses and other liabilities		240,679				(41,600	)
Lease liabilities		(102,824	)			(23,495	)
Net cash used in operating activities		(1,277,487	)			(651,416	)
Cash Flows From Investing Activities
Additions to helium properties		(51,022	)			-
Additions to other property, plant and equipment		(26,934	)			(32,541	)
Net cash used in investing activities		(77,956	)			(32,541	)
Cash Flows From Financing Activities
Proceeds from capital contributions		-				650,000
Equity issuance costs		-				(26,000	)
Common stock issuance proceeds		187,609				-
Net cash provided by financing activities		187,609				624,000
Net decrease in cash and cash equivalents		(1,167,834	)			(59,957	)
Cash and cash equivalents, beginning of period		1,248,191				124,489
Cash and cash equivalents, end of period	$	80,357			$	64,532

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

Cyber App Solutions Corp.

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	For the Three Months Ended
	March 31,
	2024			2023
Supplemental disclosures of cash flow information
Cash paid for interest	$	3,391			$	-
Cash paid for taxes	$	-			$	-
Non-cash investing and financing activities
Change in capital accruals	$	(56,274	)		$	868,876

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

Cyber App Solutions Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, market prices for helium and Carbon Dioxide ("CO2"), production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed in our Annual Report on Form 10-K, particularly in "Item 1A. Risk Factors" and below in "Cautionary Statement Concerning Forward-Looking Statements," all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Exchange Act. All statements, other than statements of historical fact included in this report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words "could," "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 (our "Annual Report on Form 10-K"), and the other risk factors and other cautionary statements contained in our other filings with the SEC. These forward-looking statements are based on management's current beliefs as of the date of this Quarterly Report on Form 10-Q, based on currently available information, as to the outcome and timing of future events.

You should not place undue reliance on these forward-looking statements. Forward-looking statements may included statements about:

Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report on Form 10-Q are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied by the forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q.

General

Overview

Cyber App Solutions Corp. (the "Company", "CYRB", "we", "us", or "ours") is a corporation established under the corporation laws in the State of Nevada on February 19, 2021. Our corporate office is in Houston, Texas.

We are focused on the acquisition, exploration, development and production of helium and food grade carbon dioxide (CO2) and we have the capabilities for carbon capture and storage. Our assets are concentrated in the St. Johns Field located in Apache County, Arizona of the United States (the "St. Johns Field").

Market Conditions

Helium

Helium is a unique element in that it is the second most abundant in the universe, the most stable, yet rare and difficult to capture and store on the Earth, found in only a few locations spanning about twenty production fields globally. Its unique qualities make it a non-renewable and limited natural resource, highly demanded in many growing industries such as medical technology, high-tech, space exploration and national defense. Specific uses for helium include: semiconductor and fiber-optics manufacturing, cooling superconducting magnets in MRI machines, leak detection, as a purge gas and pressurizing agent in spacecraft, leak detection, airbags, deep sea diving oxygen tanks, and more.

Production of helium goes back to 1900s. Since that time, the industry has experienced four notable periods of shortage between year 2006 and today, with the helium production currently experiencing a Helium shortage 4.0 started in 2022 and driven by the increased demand from growing industries and technologies and decreased production. Decreased production is partially attributable to the US government, one of the world's largest and most dependable suppliers of helium, selling off its national helium reserve located near the Hugoton-Panhandle field that spans across Texas, Oklahoma, and Kansas and sanctions imposed on Russian exports.The demand for helium is currently estimated at 5.9 billion cubic feet (Bcf) and expected to increase to about 8 Bcf by 20301. The United States has been a leading producer of helium2and currently holds roughly 40% of the global production market share, which is expected to decrease to about 30% by year 2030. The next leading producers of helium have been Russia, Algeria and Qatar.

CO2

The U.S. carbon dioxide market size was valued at $3.2 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 8.4% from 2022 to 2030. The food & beverages segment led with a revenue share of 34.52% in the year 2021.3In the U.S. beverage industry, CO2is commonly utilized for carbonating soft drinks and beer. Additional uses for CO2 are enhanced oil recovery, dry ice production, wastewater treatment, welding, fire suppression, plant growth, food preservation, food refrigeration and freezing, and more. Characteristics of its use include creating carbonation for desired fizziness, diverse sources (industrial processes, fermentation), adherence to food-grade standards, reliance on a stable supply chain, and transportation/storage in liquid or compressed gas forms. Industry-specific details are recommended for the latest information.

CO2 for beverages can come from various sources: fermentation processes (alcoholic beverage production), industrial processes (chemical manufacturing), natural sources (natural springs), dry ice production, biogas production (anaerobic digestion), and upstream oil and gas operations (natural gas processing). Regardless of the source, CO2must meet strict quality standards to ensure safety and taste in the final beverage product, often involving purification processes by manufacturers.

The largest single food and beverage grade CO2supplier in the U.S. is located at Jackson Dome, Mississippi (the "Jackson Dome"). Supply was disrupted recently due to geologic contamination of the reservoir, although it has begun to come back online. Additionally,

ExxonMobil announced in a November 2, 2023 press release that it had completed the acquisition of Denbury, Inc., who was the primary operator at the Jackson Dome. Based on ExxonMobil's July 13, 2023 press release, the acquisition allows them to serve a range of hard-to-decarbonize industries with a comprehensive carbon capture and sequestration offering, which we believe means they are focused on carbon capture and sequestration in the Jackson Dome rather than CO2production. The curtailment of CO2plants here and elsewhere in the country, we believe, has led and will lead to a shortage of CO2supply to the food and beverage industry.

1	https://pubs.aip.org/physicstoday/article/76/9/18/2908156/Helium-prices-surge-to-record-levels-as-shortage
2	https://www.usgs.gov/news/national-news-release/usgs-seeks-public-comment-helium-supply-risk
3	https://www.grandviewresearch.com/industry-analysis/us-carbon-dioxide-market-report

U.S. Department of Energy Program

In August 2023, we received notice regarding a potential financial award from the U.S. Department of Energy ("DoE") that we, as a member of a consortium of companies, which includes us, Black & Veatch, Carbon Collect, CarbonCapture, Carbon Solutions, Arizona State University, University of New Mexico, University of Utah, Tallgrass, and the Arizona Geological Survey, had been selected to receive an approximately $11,600,000 grant for plans to develop the Southwest Regional Direct Air Capture ("DAC") Hub to advance the design of a regional DAC hub. The program aims to expedite the deployment of a nationwide network of large-scale DAC CO2removal sites to address legacy CO2pollution and complement rapid emission reduction in the region. We will work alongside our consortium partners to develop a storage field development plan to securely sequester CO2captured from the atmosphere into our St. Johns Field basin. Under the program, we expect that we will receive reimbursement for certain overhead fees incurred. The negotiations of the DoE award are ongoing and we anticipate completing negotiations during the first half of 2024.

Segment Information

We manage our business globally within one reportable segment, which is consistent with how our management reviews the business, prioritizes investment and resource allocation decisions and assesses operating performance.

Fair Value Measurement

Our financial instruments measured at fair value on a recurring basis consist of convertible promissory notes issued on November 21, 2023 (the "2023 Convertible Notes"), to each of two investors, with an aggregate principal amount of $16,000,000, with a stated interest rate of 5% per annum and default interest rate of 18% per annum and freestanding warrants issued along with the 2023 Convertible Notes. We use significant unobservable inputs (Level 3) to measure the fair value of the instruments. For the three months ended March 31, 2024 and 2023, there was an unrealized gain of $983,433 and $0, respectively, on mark-to-market of the warrants and change in fair value of the notes payable recorded in the accompanying Condensed Consolidated Statement of Operations.

Results of Operations and Financial Condition

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

	For the Three Months Ended
	March 31,			Change
	2024			2023			$			%
Helium revenue	$	222,088			$	-			$	222,088				100	%
Operating expenses
Depreciation, depletion, amortization and accretion		78,339				13,374				64,965				486	%
Lease and well operating expenses		53,893				13,544				40,349				298	%
Shut-in expenses		114,237				82,960				31,277				38	%
Gathering and processing expenses		256,542				-				256,542				100	%
Production taxes		7,633				-				7,633				100	%
General and administrative expenses		1,522,807				727,777				795,030				109	%
General and administrative expenses - related parties		15,000				35,000				(20,000	)			-57	%
Total operating expenses		2,048,451				872,655				1,175,796				135	%
Net loss from operations		(1,826,363	)			(872,655	)			(953,708	)			109	%
Other income (expense)
Interest expense		(723,391	)			(536,337	)			(187,054	)			35	%
Event of default fees		(745,440	)			(1,927,939	)			1,182,499				-61	%
Interest income - related parties		-				7				(7	)			-100	%
Unrealized gain on fair value of notes payable		914,573				-				914,573				100	%
Unrealized gain on derivatives mark-to-market		68,860				-				68,860				100	%
Total other expense		(485,398	)			(2,464,269	)			1,978,871				-80	%
Net loss	$	(2,311,761	)		$	(3,336,924	)		$	1,025,163				-31	%

Revenue

Helium revenue. For the three months ended March 31, 2024 and 2023, helium revenue was $222,088 and $0, respectively. The 100% increase in helium revenues was due to the completion and startup of our first helium plant in the St. Johns Field during the third quarter of 2023. We sold approximately 459 thousand cubic feet of helium during the three months ended March 31, 2024 compared to none during the three months ended March 31, 2023.

Operating Expenses

Depreciation, depletion, amortization and accretion. For the three months ended March 31, 2024 and 2023, depreciation, depletion, amortization and accretion was $78,339 and $13,374, respectively. The 486% increase in depreciation, depletion, amortization and accretion primarily relates to depreciation on the gas processing plant costs in the amount of $18,640 that began production during the third quarter of 2023 and depletion expense in the amount of $45,661, which began in the third quarter of 2023 with the startup of production at our first well. Similar costs were not incurred during the three months ended March 31, 2023.

Lease and well operating expenses. For the three months ended March 31, 2024 and 2023, lease and well operating expenses were $53,893 and $13,544, respectively. The 298% increase is primarily because we commenced production of helium during the third quarter of 2023 and were producing for the three months ended March 31, 2024 compared to no production during the same period in 2023. The increase was primarily due to a an increase of $26,860 in compression costs, $9,000 for lease operators, and $5,116 for sampling and testing gas produced.

Shut-in expenses. For the three months ended March 31, 2024 and 2023, shut-in expenses were $114,237 and $82,960, respectively. The 38% increase in shut-in expenses was due to a significant mineral lease owner being paid a shut-in royalty in 2024 and such shut-in royalty was not required to be paid in 2023.

Gathering and processing expenses. For the three months ended March 31, 2024 and 2023, gathering and processing expenses were $256,542 and $0, respectively. Gathering and processing expenses are the cost incurred to operate the helium plant. The 100% increase is because we commenced production of helium during the third quarter of 2023 and were producing for the three months ended March 31, 2024 compared to no production during the same period in 2023. The increase was primarily due to an increase of $90,000 related to the amortization of leased equipment recorded in right-of-use assets, $106,542 for electricity to power the equipment at the plant, and $60,000 related to labor and maintenance at the helium plant.

Production taxes. For the three months ended March 31, 2024 and 2023, production taxes were $7,633 and $0, respectively. The 100% increase is because we commenced production of helium during the third quarter of 2023 and were producing for the three months ended March 31, 2024 compared to no production during the same period in 2023. We expect production taxes to be approximately 3.437% of helium revenues.

General and administrative expenses. For the three months ended March 31, 2024 and 2023, general and administrative expenses were $1,522,807 and $727,777, respectively. The 109% increase in general and administrative expenses for the three months ended March 31, 2024 compared to the same period in 2023 is primarily due to an increase in professional fees such as legal and accounting, an increase in headcount to operate as a public company, and other costs required to operate as a public company. Note that our wholly owned subsidiary, Proton Green, LLC, was considered the accounting acquirer in our reverse asset acquisition in July 2023 resulting in Proton Green, LLC's historical financial statements being presented for the three months ended March 31, 2023, which did not include increased professional fees for compliance as a public company. The increase was primarily due to an increase of $443,315 related to audit fees and accounting and legal professionals to prepare and/or review Form 10-K and Registration Statement filed with the SEC, $116,758 in payroll and payroll related costs due to an increase in full-time employees, $80,947 for Board of Director fees, and $62,539 in insurance primarily for adding a Directors & Officers policy. The remaining increase was for office supplies and equipment, travel, filing fees, and other overhead costs.

General and administrative expenses - related parties. For the three months ended March 31, 2024 and 2023, general and administrative expenses - related parties were $15,000 and $35,000, respectively. The 57% decrease, as detailed in Note 15 - Transactions with Related Parties, was primarily due to a decrease in advisory consulting fees with TPG Commercial Finance, an entity in which Jim Culver, a principal owner of either directly or indirectly more than 10% of the Company's common stock, is the President/Owner. For the three months ended March 31, 2024 and 2023, the Company incurred costs of $0 and $20,000, respectively, with TPG Commercial Finance.

Other income (expense)

Interest expense. For the three months ended March 31, 2024 and 2023, interest expense was $723,391 and $536,337, respectively. The 35% increase in interest expense for three months ended March 31, 2024 compared to the same period in 2023 is due to an increase of $183,663 primarily related to an increase in principal balance outstanding and $3,391 of interest on our financed insurance premium.

Event of default fees. For the three months ended March 31, 2024 and 2023, event of default fees were $745,440 and $1,927,939, respectively. We had outstanding convertible notes in default during both periods. The 61% decrease is due to the Company's convertible notes outstanding during the three months ended March 31, 2024 having lower default fees compared to the default fees incurred on the convertible notes outstanding during the three months ended March 31, 2023.

Unrealized gain on fair value of notes payable. For the three months ended March 31, 2024 and 2023, unrealized gain on fair value of notes payable was $914,573 and $0, respectively. The Company elected the fair value option on the 2023 Convertible Notes and such notes are still outstanding during the three months ended March 31, 2024. There were no notes outstanding during the three months ended March 31, 2023 with the fair value option elected.

Unrealized gain on derivatives mark-to-market. For the three months ended March 31, 2024 and 2023, unrealized gain on derivatives mark-to-market was $68,860 and $0, respectively. Our notes payable contained conversion features and warrants that were embedded derivatives that required bifurcation. This balance represents the change in fair value of the conversion features and warrants.

Income Taxes

Income taxes have been accounted for in accordance with ASC 740, "Accounting for Income Taxes". We are subject to income taxes in the United States and the State of Arizona. At March 31 and December 31, 2023, we had a full valuation allowance against all of our deferred tax assets, including our NOLs. The factors assumed to make the full valuation allowance includes that we have disclosed in Note 3 - Liquiditythat we have significant doubt about our ability to continue as a going concern and we have a history of pretax operating losses.

Contractual Obligations, Commitments Contingencies

Helium Recovery Unit. On January 3, 2022, we entered into a Master Services Agreement (the "MSA") with a contractor for the contractor to provide certain helium removal and purification services at the plant in the St. Johns Field. The service consist of processing our feed gas using the contractor's pressure swing absorption process and equipment to be operated by the contractor. It is a five-year lease that commenced on April 1, 2023. The fee is $50,000 per month for the service and increases to $70,000 per month if or when we have the contractors add more equipment to increase the capacity of gas the plant can process. We attributed $30,000 per month to the rental of equipment and accounted for it as an operating lease under ASC 842 and recorded it to the balance sheet.

Houston Office Lease. On September 30, 2022, we amended the lease for our corporate office in Houston, Texas. The commencement date of the amendment was October 15, 2022 and the lease expiration date was October 31, 2025. On October 25, 2023, we entered into a second amendment on the lease for our corporate office in Houston, Texas to expand the amount of square feet leased. The commencement date for the expansion is January 1, 2024 and the expiration date will be extended to January 31, 2027. We accounted for this lease under ASC 842 as an operating lease that's been recorded to the balance sheet. The lease payments escalate annually. We have co-tenants with the expansion. This amended lease will result in a straight-line amortization of approximately $3,762 per month in "General and administrative expenses" over the life of the contract.

Legal. On March 1, 2022, a potential lender filed a motion for a default judgment against our wholly owned subsidiary, Proton Green, LLC ("Proton Green") seeking a $1,000,000 break-up fee related to a commitment letter for a proposed senior secured term loan facility. The parties unsuccessfully attempted to mediate the case on October 23, 2023. Discovery is complete and the parties have filed cross-motions for summary judgment. All briefings are complete and the parties are awaiting the court's decision. No accrual has been recorded to the condensed consolidated financial statements because we are unable to conclude that an unfavorable outcome is probable.

Company assets. As of March 31, 2024, all of the assets of the Company have been pledged as collateral for the 2023 Convertible Notes.

Liquidity and Capital Resources

Since inception, we have generated significant losses. As of March 31, 2024, we had an accumulated deficit of $46,574,635. We have only generated limited revenue to date. Our primary sources of capital have been through proceeds from the issuance of debt and equity. The primary uses of capital to date has been for the acquisition of our mineral leases in the St. Johns Field, which gave us operating control over approximately 170,000 acres in Apache County, Arizona, development of the St. Johns Field, paying debt service costs, production start-up costs, helium plant installation and funding corporate overhead.

We define working capital as current assets less current liabilities. At March 31, 2024 and December 31, 2023, we had a working capital deficit of $25,808,706 and $23,739,229, respectively. The deficits were primarily due to the amounts outstanding under our notes, as they are classified as current liabilities, and the fair value of outstanding warrants.

As of May 13, 2024, we had cash on hand of $17,507. Our material liquidity needs over the next twelve months consist of the following:

We have no committed capital to address our material liquidity needs over the next twelve months from the date of these condensed consolidated financial statements being issued. These matters raise substantial doubt about our ability to continue as a going concern for a period of one year after the date that these condensed consolidated financial statements are issued. The condensed consolidated financial statements included in this report have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The condensed consolidated financial statements do not include adjustments that might result from the outcome of these uncertainties.

Our plan is to focus on plant designs that will allow us to continue developing our helium reserves while also developing our CO2reserves. We have front-end engineering design studies underway for our plants. We expect that our next significant capital outlay

will be to install a plant at the St. Johns Field that is capable of producing 100 thousand cubic feet per day of helium and 1,000 tons per day of liquid CO2. Our estimate of the cost for the plant design, equipment and construction is approximately $26,000,000 plus an additional $7,000,000 to $9,000,000 for infrastructure to support operations. Thereafter, we plan to continue adding plants of similar design and drilling wells needed to meet the plant capacity.

We are currently evaluating debt and equity financing strategies that we believe will provide sufficient capital to fund the selected plant design and begin drilling new wells as needed. We believe the cash flows generated from the new plant design will be more than sufficient to address any debt service costs we would incur from debt financing strategies and fund any additional capital needed to drill new wells. Helium and CO2production levels that we believe we are capable of achieving as a result of these capital expenditures will position us as a top tier producer of helium and liquid CO2, thereby giving us considerable bargaining power when negotiating off-take and transportation agreements. If we are unable to execute any of our debt and financing strategies or one on acceptable terms, we may not be able to finance the capital expenditures necessary to develop our helium and CO2 resources. Because we are the operator of all of our acreage, the timing and level of our capital spending is largely discretionary and within our control.

Cash Flows from Operating, Investing and Financing Activities

The following table summarizes our cash flows for the period indicated:

		For the Three Months Ended
		March 31,
		2024			2023
Net cash provided by (used in):		(unaudited)
Operating activities			(1,277,487	)			(651,416	)
Investing activities			(77,956	)			(32,541	)
Financing activities			187,609				624,000

Operating activities. There was an increase in cash used in operating activities of $626,071 for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to an increase in general and administrative expenses.

Investing activities. Net cash used in investing activities for the three months ended March 31, 2024 and 2023 related to capital expenditures at the St. Johns Field for equipment at the helium plant and producing well.

Financing activities. Net cash provided by financing activities for the three months ended March 31, 2024 and 2023 consisted of cash proceeds, net of issuance costs, from the issuance of our common stock.

Off-Balance Sheet Arrangements

As of March 31, 2024, we had no off-balance arrangements or other such unrecorded obligations and we have not guaranteed any debt of any unrelated party.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expense during the reporting periods. Actual results could differ significantly from those estimates.

Our Annual Report on Form 10-K contains a discussion, which is incorporated herein by reference, of the accounting estimates that we believe are critical to the reporting of our financial position and operating results and that require management's judgment. Our more significant policies and estimates include:

Recently Issued Accounting Pronouncements

The information contained in Note 2 - Basis of Presentation and Summary of Significant Accounting Policies to the condensed consolidated financial statements under the heading "Recently Issued Accounting Pronouncements" is hereby incorporated by reference into this Part I, Item 2.

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 under this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Control and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. As of March 31, 2024, our disclosure controls and procedures were not effective as a result of a material weaknesses identified during the year ended December 31, 2023 that we are in the process of remediating. The material weaknesses related to the lack of completeness over the population of leases for ASC 842 booking and disclosures, lack of communication and retention of legal documents and lack of review and management oversight, which led to the incorrect application of generally accepted accounting principles and ineffective controls over the financial statement close and reporting processes.

We are recruiting additional finance and accounting personnel and we will continue to evaluate our personnel in all key finance and accounting positions to see if additional finance and accounting personnel are required.

We are not required to comply with the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act while we qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, 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.

In the ordinary course of business, the Company is party to various legal actions. In management's opinion, the outcome of any such currently pending legal actions will not have a material adverse effect on the Company's financial position or results of operations.

On March 1, 2022, a potential lender filed a motion for a default judgment against the Company's wholly owned subsidiary, Proton Green, LLC ("Proton Green") seeking a $1,000,000 break-up fee related to a commitment letter for a proposed senior secured term loan facility. The parties unsuccessfully attempted to mediate the case on October 23, 2023. Discovery is complete and the parties have filed cross-motions for summary judgment. All briefings are complete and the parties are awaiting the court's decision. No accrual has been recorded to the condensed consolidated financial statements because the Company is unable to conclude that an unfavorable outcome is probable.

The Company was served a lawsuit on May 2, 2024, in which it was named as one of several defendants in a complaint filed in the Federal District Court of the Northern District of Illinois, Eastern Division by Alpha Carta, Ltd. et al (the "Alpha Carta Litigation"). Alpha Carta, Ltd. ("Alpha Carta") alleges that Proton Green breached three promissory notes (the "Notes"), a Forbearance Agreement, and a proposed unexecuted revised Forbearance Agreement with respect to payments due on the Notes and that Proton Green owes,

with an aggregate balance of principal and interest, in excess of $30,000,000 (the "AC Debt"). Other claims against the defendants include conspiracy to commit fraud, rescission, and declaratory judgment, all related to the AC Debt. Proton Green asserts, in contrast, that it reached a loan settlement agreement ("Loan Settlement Agreement") with Alpha Carta to settle the AC Debt for $8,000,000, which has been paid. Alpha Carta denies the existence of such Loan Settlement Agreement and alleges that if such Loan Settlement Agreement does exist, it was executed fraudulently.

The Company believes that the claims asserted in the Alpha Carta Litigation have no merit and intends to vigorously defend them. The Company is unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, and accordingly, it has not accrued any liability associated with the Alpha Carta Litigation.

There are no other material litigation, arbitration or governmental proceeding currently pending against the Company or any members of its management team in their capacity as such requiring a contingent liability to be recognized as of the date of the consolidated financial statements.

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 under this item.

You should carefully consider the risk factors discussed in our Annual Report on Form 10-K under the heading "Part I, Item 1A. Risk Factors," which risks could materially affect our business, financial condition or future results. Such risks are not the only risks facing the Company. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may have a material adverse effect on our business, financial condition and future results or enhance the adverse impact of the risks known to us.

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

None.

Item 3. Defaults Upon Senior Securities.

On November 21, 2023, the Company entered into a Securities Purchase Agreement ("SPA") with Kips Bay Select LP and Cyber One, LTD, pursuant to which the Company agreed to issue and sell to each of Kips Bay Select LP and Cyber One, LTD, i) a convertible promissory note which will be convertible into shares of common stock (the "Conversion Shares") and (ii) a common stock purchase warrant (each a "Warrant" and collectively, the "Warrants") which will be exercisable to purchase shares of common stock (the "Warrant Shares).

On November 21, 2023, pursuant to the SPA, the Company issued a convertible promissory note to each of Kips Bay Select LP ("Kips Bay 2023 Note") and Cyber One, LTD ("Cyber One 2023 Note"), collectively referred to as the Holders, in the principal amount of $8,000,000 to each for an aggregate principal amount of $16,000,000.

The Company failed to make the interest payments starting in December 2023, principal payments starting in January 2024, and did not file with the SEC an initial Registration Statement on Form S-1 covering the resale of all Conversion Shares and Warrant Shares (the "Resale Registration Statement"). These items resulted in Events of Default under the SPA and 2023 Convertible Notes.

The Event of Default had the following significant impacts: (i) the interest rate per annum on outstanding principal amounts increasing from 5.0% to 18.0%; (ii) a mandatory premium amount of $250,000 for every event of default that has occurred; (iii) a $240,000 payment for failure to file the Resale Registration Statement by January 5, 2024 ("Registration Delay Payments") and on every 30-day anniversary of failure to file the Resale Registration Statement; (iv) the Registration Delay Payments bear interest at a rate of 2% per month until paid in full; and (v) the conversion price of the notes were no longer subjected to a floor price.

As of March 31, 2024, the Company owed approximately $22,000,000 to the Holders, which includes principal, interest, and default fees.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Trading Plans/Arrangements.During the quarter ended March 31, 2024, no director or Section 16 officer of Cyber App Solutions Corp. adoptedor terminatedany Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (in each case, as defined in Item 408(a) of Regulation S-K).

Item 6. Exhibits.

Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).

Exhibit Number		Description
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL 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 (embedded within the Inline XBRL document)

* Filed herewith.

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.

		Company Name
Date: May 15, 2024		By:	/s/ Steven Looper
			Steven Looper
			Chief Executive Officer
			(Principal Executive Officer)
Date: May 15, 2024		By:	/s/ Kenneth Winters
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

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