Key Highlights

● Fiscal 2026 revenue was US$55.86 million, up from US$3.16 million.

● Gross profit was US$859,842, a margin of about 1.5%.

● Net loss widened to US$13.59 million, and the auditor flagged going-concern doubt.

● One customer accounted for roughly 86% of revenue.

Karbon-X Corp (OTC:KARX) is worth a close read because its latest annual report pairs a sharp jump in sales with an auditor's warning. In its Form 10-K for the year ended May 31, 2026, with the auditor's report dated September 15, 2026, the company reported revenue of US$55.86 million, up from US$3.16 million in fiscal 2025, driven mainly by industrial carbon credit trading. Gross profit was only US$859,842, a margin of about 1.5% compared with 25.3% a year earlier.

The Nevada-incorporated company describes itself as giving investors exposure to certified carbon credits. It buys and resells verified credits to corporations and the public, funds its own carbon projects and sells offsets through a subscription mobile app. A June 2025 asset acquisition from Allcot AG added a project pipeline and several foreign subsidiaries. The group operates in Canada, Cyprus, Ireland, Spain and Colombia, which exposes it to currency, regulatory and tax risks.

Losses and the going-concern note

Net loss widened to US$13.59 million, or US$0.16 per share, from US$7.05 million the previous year. Cash at year end was US$1,155,289. The company reported negative working capital of US$4.04 million, a stockholders' deficit of US$5.98 million and an accumulated deficit of US$25.58 million. Its auditor expressed substantial doubt about its ability to continue as a going concern.

Management also reported a material weakness in period-end financial reporting, meaning internal controls and disclosure controls were not effective at year end.

Concentration and dilution

One customer accounted for roughly 86% of revenue. According to the filing, that customer has not paid EUR 3,797,500 invoiced for undelivered credits, and the company has made a written demand for payment. The filing lists that exposure among its principal risks.

Funding has leaned on convertible notes with floating conversion prices. About 23.9 million shares were issuable on those notes at year end, and more notes were issued after year end. Shares outstanding rose from 94,885,028 at May 31, 2026 to 98,964,757 at September 10, 2026, a sign of dilution that may continue. The filing says trading in the stock has been limited and sporadic.

Context from earlier in the year

On April 21, 2026 the company announced nine-month revenue of US$60.8 million for the period ended February 28, 2026, against US$1.5 million a year earlier, with gross profit of US$774,589. Chief executive Chad Clovis said Karbon-X had "scaled significantly over the past twelve months" and that third-quarter volumes reflected "expected variability in settlement timing". That release described the stock as quoted on the OTCQX market, whereas the 10-K says it trades on the OTCQB and that the company is seeking to regain an OTCQX listing. The release also said cash had risen to US$4.1 million at February 28, 2026, helped by US$5.4 million of new capital from convertible notes and equity, and that the company had bought a carbon-offset project portfolio for US$605,093.

The nine-month figure exceeds full-year revenue, so fourth-quarter revenue appears to have been negative or reversed. The company also holds shares in DevvStream, which Nasdaq delisted on June 24, 2026, and a former contractor has threatened litigation over unpaid fees, though no lawsuit has been filed.

Receivable, Dilution and Controls to Watch

Karbon-X's fiscal 2026 revenue of US$55.86 million came with a gross margin of about 1.5%, a net loss of US$13.59 million and an auditor's going-concern doubt. One customer accounted for roughly 86% of revenue and has not paid EUR 3,797,500 invoiced for undelivered credits, while shares outstanding rose from 94,885,028 to 98,964,757 between May 31 and September 10, 2026.

Investors should watch whether the unpaid European receivable is collected, whether further convertible notes are issued, how the company addresses its internal control weakness, and whether it secures an OTCQX quotation. The first-quarter report for fiscal 2027, covering the period to August 31, 2026, is the next periodic report due, and progress on the digital carbon trading platform the company says it is developing is also a useful marker.