Cyber Enviro-Tech, Inc 10-Q for FY2024 Q3
Cyber Enviro-Tech, Inc. (CETI)
About this 10-Q
Cyber Enviro-Tech, Inc filed this 10-Q on November 20, 2024, covering the quarter ended September 30, 2024 (FY2024 Q3).
Headline figures
Quarter ended September 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $10.67K
- compared with $0 a year earlier
- Net loss
- $831.89K
- compared with a net loss of $846.03K a year earlier
- Diluted EPS
- -$0.01
- compared with -$0.01 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Or
For the transition period from ___________ to ___________
Commission file number:
| (Exact name of registrant as specified in charter) |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
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| (Address of principal executive office) | (Zip Code) |
| +1 ( |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
(Title of Class)
Indicate by checkmark whether the registrant has (1)
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.
Indicate by check mark whether the registrant has
submitted electronically if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§229.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit).
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☐ | 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 standard
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 Act). Yes ☐ No
At November 15, 2024 there were shares of the registrant’s Common Stock issued and outstanding.
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
CYBER ENVIRO-TECH, INC.
CONSOLIDATED BALANCE SHEETS
| September 30, 2024 (Unaudited) | December 31, 2023 (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment | ||||||||
| Acquired intangible assets, net | ||||||||
| Assets of discontinued operations, non-current | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable – related parties | ||||||||
| Accrued interest | ||||||||
| Note payables, current maturities | ||||||||
| Convertible notes payable, net of discount of $ |
||||||||
| Convertible notes payable – related parties | ||||||||
| Liabilities of discontinued operations, current | ||||||||
| Liabilities of discontinued operations, current – related parties | ||||||||
| Total current liabilities | ||||||||
| Note payable, related party, net of discount of $ |
||||||||
| Convertible notes payable | ||||||||
| Derivative liability | ||||||||
| Liabilities of discontinued operations, non-current | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 4) | ||||||||
| Stockholders’ Equity: | ||||||||
| Series A Convertible Preferred Stock, par value $, shares authorized; shares issued and outstanding | ||||||||
| Series B Convertible Preferred Stock, par value $, shares authorized; share issued and outstanding | ||||||||
| Series C Non-convertible, Preferred Stock, par value $, shares authorized; shares issued and outstanding | ||||||||
| Special
2020 Series A Preferred Stock, par value $, share authorized; share issued and outstanding |
||||||||
| Common Stock, par value $, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock to be issued | ||||||||
| Treasury stock, at cost | ( |
) | ( |
) | ||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Controlling interest | ||||||||
| Non-controlling interest | ( |
) | ||||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 1 |
CYBER ENVIRO-TECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDING SEPTEMBER 30, 2024 AND 2023
(Unaudited)
| Three Months Ending September 30, 2024 |
Three Months Ending September 30, 2023 | Nine Months Ending September 30, 2024 |
Nine Months Ending September 30, 2023 |
|||||||||||||
| Revenue: | ||||||||||||||||
| Sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ( |
) | ( |
) | ||||||||||||
| Gross margin | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Consulting | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss from continuing operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivatives | ||||||||||||||||
| Loss on issuance of derivatives | ( |
) | ( |
) | ( |
) | ||||||||||
| Gain on extinguishment of derivative liability | ||||||||||||||||
| Amortization of intangible assets | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Change in fair value of contingent liability | ( |
) | ||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total other income (expense) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss from continuing operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Discontinued Operations: | ||||||||||||||||
| Loss from operations of discontinued operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total Discontinued Operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net Loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss attributable: | ||||||||||||||||
| Non-controlling interest | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Common stockholders | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Loss per share, basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 2 |
CYBER ENVIRO-TECH, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
THE THREE, SIX AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Unaudited)
| Preferred | Common Stock | CS to be Issued | Accumulated | Non- Controlling |
||||||||||||||||||||||||||||||||||||||
| Description | Shares | Amt | Shares | Amt | APIC | Treasury | Shares | Amt | Deficit | Interest | Total | |||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
| Options granted for services | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | |||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of convertible notes payable | — | — | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
| Common stock issued from prior periods | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of Advance on joint venture | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Options granted for services | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | |||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with convertible notes payable | — | — | ||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
| Shares issued from prior periods | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Shares issued for interest | — | — | ||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of convertible notes payable | — | — | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
| Shares issued from prior periods | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Shares issued for cash | — | — | ||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | ||||||||||||||||||||||||||||||||||||||||
| Shares issued for interest | — | ( |
) | |||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of convertible notes payable | — | — | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||||||||||||
| Shares issued from prior periods | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Shares issued for cash | — | — | ||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Shares issued for interest | — | — | ||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of convertible notes payable | — | — | ||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interest contributions | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 3 |
CYBER ENVIRO-TECH, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Unaudited)
| September 30, 2024 | September 30, 2023 | |||||||
| Cash flow from activities: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
| Change in fair value of derivatives | ( |
) | ( |
) | ||||
| Loss on issuance of derivatives | ||||||||
| Options issued for services | ||||||||
| Warrants issued for services | ||||||||
| Change in fair value of contingent liability | ( |
) | ||||||
| Gain on extinguishment of derivative liability | ( |
) | ( |
) | ||||
| Stock compensation | ||||||||
| Amortization of debt discount | ||||||||
| Amortization expense | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Prepaid expenses and other current assets | ( |
) | ||||||
| Inventory | ( |
) | ||||||
| Accounts payable | ( |
) | ||||||
| Interest receivable | ( |
) | ||||||
| Accounts receivable | ( |
) | ||||||
| Accrued interest | ( |
) | ||||||
| Net cash from operating activities from continuing operations | ( |
) | ( |
) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( |
) | ||||||
| Issuance of loan receivable | ( |
) | ||||||
| Noncontrolling interest contribution | ||||||||
| Net cash from investing activities from continuing operations | ( |
) | ||||||
| Cash flows from financing activities: | ||||||||
| Repayment of notes payable | ( |
) | ( |
) | ||||
| Repayment of convertible notes payable | ( |
) | ( |
) | ||||
| Proceeds from convertible notes payable | ||||||||
| Shares issued for cash | ||||||||
| Shares issued for interest | ||||||||
| Proceeds from notes payable | ||||||||
| Net cash from financing activities from continuing operations | ||||||||
| Net change in cash and cash equivalents from continuing operations | ||||||||
| Cash flow from discontinued operations: | ||||||||
| Net cash from operating activities from discontinued operations | ||||||||
| Net cash from investing activities from discontinued operations | ( |
) | ( |
) | ||||
| Net cash from financing activities from discontinued operations | ||||||||
| Net change in cash and cash equivalents from discontinued operations | ( |
) | ( |
) | ||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Shares issued or to be issued for conversion of convertible notes payable and accrued interest | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
CYBER
ENVIRO-TECH, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Cyber Enviro-Tech, Inc. (the “Company”) is a publicly held water science technology company that designs water purification solutions for commercial applications and industries with an initial emphasis on the oil & gas industry. The corporate headquarters are located in Scottsdale, Arizona.
On September 3, 2020, Synergy Management Group, LLC
(“Synergy”) and Global Environmental Technologies, Inc. (“Global”), which was formed on April 20, 2020, entered
into a securities purchase agreement, whereby Synergy sold its share of Special 2020 Series A preferred stock and its one-half share of
Series C preferred stock to Global for $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The consolidated financial statements and related disclosures as of September 30, 2024, are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. In our opinion, these unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the years ended December 31, 2023, and 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 28, 2024. The results of operations for the nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the full year ended December 31, 2024.
Use of estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition
The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” (“Topic 606”). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Topic 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company expects to recognize revenues as the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied.
The Company recognizes sales when oil is picked up by the delivery company and control passes to the customer.
Cash equivalents
The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. There were
Property and Equipment
Property and equipment is recorded at cost. Cost of improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repair costs are expensed when incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts.
| 5 |
Discontinued Operations
A component of an entity that is disposed of by sale or abandonment is reported as discontinued operations if the transaction represents a strategic shift that will have a major effect on an entity's operations and financial results. The results of discontinued operations are aggregated and presented separately in the Statement of Operations. Assets and liabilities of the discontinued operations are aggregated and reported separately as assets and liabilities of discontinued operations in the Balance Sheet, including the comparative prior year period. The Company is in the processing of spinning off its oil field operations known as the Alvey oil field (Alvey). Alvey’s cash flows are reflected as cash flows from discontinued operations within the Company’s Statements of Cash Flows for each period presented.
Amounts presented in discontinued operations have been derived from our financial statements and accounting records using the historical basis of assets, liabilities, and historical results of Alvey. The discontinued operations exclude general corporate allocations.
Note Receivable
CETI provided two Short-Term Capital Bridge
Loan totaling $
Impairment of Long-Lived Assets
In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the Accounting Standards Codification (“ASC”), the Company assesses the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Intangible Assets
The Company recognizes intangible assets in accordance with ASC 350. Intangible assets are defined as identifiable non-monetary assets without physical substance, acquired through purchase, internally generated, or acquired as part of a business combination, which provide future economic benefits and are under the control of the Company.
Intangible assets with finite useful lives are amortized over their estimated useful lives on a straight-line basis, unless another systematic and rational method better represents the consumption of the economic benefits. Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually or more frequently if there are indications of impairment.
The Company reviews intangible assets for indicators of impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized if the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Any impairment loss is recognized in the income statement. Upon impairment, the carrying amount of the intangible asset is reduced to its recoverable amount.
Accounting for Majority-Owned Subsidiary
The Company consolidates the financial statements of majority-owned subsidiaries in accordance with Generally Accepted Accounting Principles (GAAP). A subsidiary is classified as majority-owned when the Company owns more than 50% of its voting shares, giving it control over the subsidiary's operations and financial policies.
In the consolidated financial statements, all intercompany transactions, balances, and unrealized gains and losses on transactions between the Company and its subsidiaries have been eliminated. The financial position, results of operations, and cash flows of each majority-owned subsidiary are fully consolidated with the portion attributable to non-controlling interests presented as a separate line item in the equity section of the consolidated balance sheets and as a separate component of net income in the consolidated statements of income. However, for the period ended September 30, 2024, due to the immaterial amount, no non-controlling interest are presented in the financial statements but are noted in the footnotes to the consolidated financial statements.
Non-controlling interests represent the portion of equity in subsidiaries that is not attributable, directly or indirectly, to the Company.
Inventory Accounting Policy
Inventory is stated at the lower of cost or net realizable value. Cost is determined using the First-In, First-Out (FIFO) method. Under this method, inventory costs are based on the costs of the earliest goods purchased or produced.
The cost of inventory includes all direct costs of acquisition, as well as costs necessary to bring the inventory to its present location and condition. This may include materials, labor, and an appropriate portion of fixed and variable overhead, including manufacturing and warehousing expenses.
Net realizable value represents the estimated selling
price in the ordinary course of business, less any applicable selling expenses. The Company reviews inventory regularly for obsolescence
and slow-moving items, and adjusts carrying values when the cost of inventory exceeds its net realizable value. Adjustments for inventory
write-downs, if any, are included in cost of goods sold in the period in which the need for such adjustments is identified. At September
30, 2024, there was $
| 6 |
The Company applies the fair value method of Financial Accounting Standards Board (“FASB”) ASC 718, “Share Based Payment”, in accounting for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock-based compensation at the market price for the Company’s common stock and other pertinent factors at the grant date. During the three and nine months ended September 30, 2024 and 2023, the Company recorded $ and $ and $ and $ respectively, in stock-based compensation expense. In addition, the Company recorded prepaid stock compensation of $ and $ at September 30, 2024 and December 31, 2023, respectively.
Fair Value of Financial Instruments
The Company adopted ASC 820, “Fair Value Measurements.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
| Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3: | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
The Company evaluates convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked to market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
The following table classifies the Company’s liability measured at fair value on a recurring basis into the fair value hierarchy as of September 30, 2024:
| Schedule of derivative liability | ||||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Derivative | $ | $ | $ | $ | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||
The following table classifies the Company’s liability measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2023:
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Derivative | $ | $ | $ | $ | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||
Income taxes
Income states are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measures using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expect to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. The Company’s federal tax return and any state tax returns are not currently under examination.
| 7 |
The Company has adopted ASC 740, “Accounting for Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Under the provisions of ASC 260, “Earnings per Share”, basic loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. 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:
| Schedule of diluted net income (loss) per share available to common stockholders | ||||||||
Nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Warrants | ||||||||
| Stock options | ||||||||
| Convertible notes payable | ||||||||
| Preferred stock | ||||||||
| Total | ||||||||
Concentration of credit risks
The Company maintains accounts with financial institutions. All cash in checking accounts is non-interest bearing and is fully secured by the Federal Deposit Insurance Corporation (FDIC). At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts. The Company believes it mitigates its risk by depositing its cash and cash equivalents with major financial institutions.
Recently issued accounting pronouncements
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 unless otherwise disclosed, 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 consolidated financial position or results of operations.
NOTE 3 – GOING CONCERN
The Company’s consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of business for the foreseeable future. The Company has just begun generating revenue and does not yet have sufficient revenue to cover its operating expenses. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or to obtain the necessary financing to meet the Company’s obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with increased revenue and private placement loans or institutional investors. While the Company believes that it will be successful in obtaining the necessary financing and generating revenue to fund the Company’s operations, meet regulatory requirements and achieve commercial goals, there are no assurances that such additional funding will be achieved and that the Company will succeed in its future operations.
The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
NOTE 4 – COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of September 30, 2024 and December 31, 2023, the Company is not aware of any contingent liabilities related to potential litigation that should be reflected in the consolidated financial statements.
In December 2021, the Company entered into
an agreement to operate the wells on the Alvey Oil Field. Under this agreement, the Company owes a contingent amount based upon a
As of November 14, 2024, CETI is in conversations
with various parties to spinoff the assets related to the Alvey Oil Field operations. These assets total $
In October 2024, CETI decided not to move forward
with the purchase of a salt water disposal facility in Oklahoma. The owner still owes CETI approximately $
| 8 |
NOTE 5 – PROPERTY AND EQUIPMENT
As of September 30, 2024 and December 31, 2023, property and equipment consisted of the following:
| Schedule of property and equipment | ||||||||||
| September 30, 2024 | December 31, 2023 | Useful Lives | ||||||||
| Equipment | $ | $ | ||||||||
| Vehicles | ||||||||||
| Property and equipment, net | $ | $ | — | |||||||
No assets were placed in service for continuing operations under either period so there is no depreciation expense.
NOTE 6 – INTANGIBLE ASSETS
The intangible
assets consist of exclusive licenses for United States distribution obtained by the Company from KAM Biotechnology Ltd
(“KAM”) in May 2023 and the agreement has a term of ten years. The asset is stated at the fair value of $
Future Amortization Schedule over next five years:
Schedule of future amortization |
||||
| Balance | Accumulated Amortization | Net Carrying Amount | ||
| September 30, 2024 | ||||
| December 31, 2024 | | |||
| December 31, 2025 | |
| ||
| December 31, 2026 | |
| ||
| December 31, 2027 | |
| ||
| December 31, 2028 | |
|
And thereafter at $
| 9 |
NOTE 7 – DEBT
| Schedule of debt | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Note payables | $ | $ | ||||||
| Loan payable – related party | ||||||||
| Convertible notes payable | ||||||||
| Convertible notes payable – related party | ||||||||
| Debt discount | ( | ) | ( | ) | ||||
| Less current portion | ||||||||
| Long term portion | $ | $ | ||||||
The following is a schedule of debt maturity and the years in which the debt is scheduled to mature:
| Schedule of debt maturity | |||||
| Year | Amount | ||||
| 2024 | |||||
| 2025 | |||||
| $ | |||||
Notes payable
At December 31, 2022, the Company had a note
payable to a shareholder for $
At December 31, 2022, the Company had a note
payable to a related party for $
In May 2023, the Company acquired certain intellectual
property rights from KAM Biotechnology. The total acquisition price was $
In June 2023, the Company
had a loan payable to an individual for $
In September 2023, a
related party issued a loan to the Company for a total
amount of $
In March 2024, the Company borrowed a total of $
| 10 |
Convertible notes payable
In 2020, the Company
executed a convertible note payable with a related party for $
During the
year ended December 31, 2022, the Company received $
During the year ended December 31, 2023, the Company
raised a net of $
During the
year ended December 31, 2023, the Company converted $
During the first nine months of 2024, the Company
raised a net of $
During the
nine months ended September 30, 2024, the Company converted $
NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS
Embedded derivatives
The Company’s convertible promissory notes gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of September 30, 2024 and December 31, 2023 and the amounts that were reflected in income related to derivatives for the period ended:
| Schedule of derivative liabilities | ||||||||
| September 30, 2024 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares |
Fair Values |
||||||
| Embedded derivatives | $ | |||||||
| Total | $ | |||||||
| December 31, 2023 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares |
Fair Values |
||||||
| Embedded derivatives | $ | |||||||
| Total | $ | |||||||
| 11 |
The following table summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivative financial instruments by type of financing for the three and nine months ended September 30, 2024 and 2023:
| Schedule of changes in gain loss fair values of the derivative financial instruments | ||||||||
| For the Three Months Ended | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Embedded derivatives | $ | $ | ||||||
| Loss on issuance of derivative | ( |
) | ||||||
| Total gain (loss) | $ | $ | ||||||
| For the Nine Months Ended | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Embedded derivatives | $ | $ | ||||||
| Loss on issuance of derivative | ( |
) | ( |
) | ||||
| Total gain (loss) | $ | ( |
) | $ | ( |
) | ||
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. The Company has selected the Monte Carlo Simulation Model, which approximates the Monte Carlo Simulations, valuation technique to fair value the embedded derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Binomial Lattice Model technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has expired, the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market price on the valuation date and the applicable conversion price.
Significant inputs and results arising from the Monte Carlo Simulation process are as follows for the embedded derivatives that have been bifurcated from the convertible notes and classified in liabilities:
| Schedule of embedded derivatives | ||||||||||
Inception Date April 26,2024 Note | Inception Date June 21, 2024 Note | |||||||||
| Quoted market price on valuation date | $ | $ | $ | |||||||
| Effective contractual conversion rates | $ | $ | $ | |||||||
| Contractual term to maturity | ||||||||||
| Market volatility: | ||||||||||
| Volatility | %- | % | %- | % | %- | % | ||||
| Risk-adjusted interest rate | % | % | % | |||||||
The following table reflects the issuances of embedded derivatives and changes in fair value inputs and assumptions related to the embedded derivatives as of September 30, 2024 and December 31, 2023.
| Schedule of fair value assumptions | ||||||||
|
Period Ended September 30, 2024 |
Year Ended December 31, 2023 |
|||||||
| Balances at beginning of period | $ | $ | ||||||
| Issuances: | ||||||||
| Embedded derivatives | ||||||||
| Conversions | ( |
) | ( |
) | ||||
| Changes in fair value inputs and assumptions reflected in income | ( |
) | ( |
) | ||||
| Balances at end of period | $ | $ | ||||||
| 12 |
NOTE 9 – RELATED PARTY TRANSACTIONS
At September 30, 2024 and December 31, 2023, the Company
had a convertible note payable for $
At December 31, 2023, the Company had accounts payable
to various related parties for a total of $
At December 31, 2022, the Company had a note payable
of $
In September 2023, a related party loaned $
During periods ended September 30, 2024 and December
31, 2023, the Company paid various related parties for consulting services in the amounts of $
At September 30, 2024, the Company had accounts payable
to various related parties for a total of $
The above transactions and amounts are not necessarily what third parties would have agreed to.
NOTE 10 – PREFERRED STOCK
Series A Convertible Preferred Stock
The Company previously designated shares of
Preferred Stock as Series A Convertible Preferred Stock and had issued shares.
During 2023, the Company changed the terms this series of stock whereby one (1) share of Series A Convertible Preferred, after a minimum two-year holding period, can be converted into three thousand (3,000) shares of the Company’s common stock and has the same equivalent voting rights. In October 2023, the three top shareholders cancelled common shares of stock and were issued shares of Series A Convertible Preferred Stock. As of September 30, 2024 and December 31, 2023, there are shares of Series A Convertible Stock issued and outstanding.
Series B Convertible Preferred Stock
The Company previously designated
shares of Preferred Stock as Series B Convertible Preferred Stock and had issued
shares.
Series C Non-Convertible Preferred Stock
The Company previously designated shares of
Preferred Stock as Series C Non-Convertible Preferred Stock and had issued all shares.
| 13 |
Special 2020 Series A Preferred
The Company has one share of preferred stock designated
as Special 2020 Series A Preferred, par value $. The holder for the Special 2020 Series A Preferred shall vote with the holders
of both preferred and common stockholders as a single class. The holder is entitled to 60% of all votes. The one share of Series A is
convertible into shares of common stock at any time and is not entitled to dividends. The Company purchased that one series
A preferred share for $
NOTE 11 – STOCK OPTIONS AND WARRANTS
In connection with a consulting agreement dated March
7, 2022, the Company issued options at an exercise price of $
On June 3, 2023,
The following table summarizes the accounting effects of the modification:
| Schedule of accounting effects | ||||
| June 3, 2023 Replacement Award | ||||
| Fair value of new award | $ | |||
| Fair value of original award on modification date | $ | |||
| Incremental cost | $ | |||
| Unrecognized grant-date fair value of original award on modification date | $ | |||
| Cost to be recognized after modification | $ | |||
| Recognition Period | ||||
Significant inputs and results arising from the Black-Scholes process are as follows for the options:
| Schedule of significant inputs and results in options | ||||
| Quoted market price on valuation date | $ | |||
| Exercise price | $ | |||
| Expected life (in years) | Years | |||
| Equivalent volatility | % | |||
| Interest rates | % | |||
Stock option activity for the nine months ended September 30, 2024 is summarized as follows:
| Schedule of stock option activity | ||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||||
| Options outstanding December 31, 2023 | $ | |||||||||||||
| Issued | — | |||||||||||||
| Exercised | — | |||||||||||||
| Cancelled | — | |||||||||||||
| Options outstanding September 30, 2024 | ||||||||||||||
| Options exercisable September 30, 2024 | $ | |||||||||||||
In connection
with a different consulting agreement dated March 1, 2023, the Company initially agreed to pay shares of common stock, along
with a monthly consulting fee. This common stock was valued at $ on the date of the agreement and was amortized equally over the six-month
agreement. On July 1, 2023, the Company and consultant decided to amend the agreement so that the consultant would receive
| 14 |
Significant inputs and results arising from the Black-Scholes process are as follows for the warrants:
| Schedule of assumptions | ||||
| Quoted market price on valuation date | $ | |||
| Effective contractual strike price | $ | |||
| Market volatility | % | |||
| Contractual term to maturity | years | |||
| Risk-adjusted interest rate | % | |||
Stock warrant activity for the nine months ended September 30, 2024 is summarized as follows:
| Schedule of stock warrant activity | ||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||||
| Warrants exercisable December 31, 2023 | $ | |||||||||||||
| Issued | — | |||||||||||||
| Exercised | — | |||||||||||||
| Expired | — | |||||||||||||
| Warrants outstanding September 30, 2024 | ||||||||||||||
| Warrants exercisable September 30, 2024 | $ | |||||||||||||
NOTE 12 – DISCONTINUED OPERATIONS
CETI is planning to spin-off the Alvey oil field operations into a new entity called Phoenix Well Development Inc (PWD). The shareholders of CETI will get a pro rata stock distribution of PWD common shares. A new investor group will run the operation.
Accordingly, the Company has categorized Alvey as discontinued operations in the consolidated financial statements for the periods ended September 30, 2024 and December 31, 2023.
The operating results for discontinued operations have been presented in the accompanying Statement of Operations for the nine months ended September 30, 2024 and 2023 as discontinued operations and are summarized below:
| Schedule of discontinued operations consolidated statement of operations | ||||||||||||||
Three Months Ended September 30 |
Nine Months Ended September 30, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||
| Total cost of revenue | ( |
) | ( |
) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||||
| Operating expenses | ( |
) | ( |
) | ( | ) | ( | ) | ||||||
| Loss from operations | ( |
) | ( |
) | ( | ) | ( | ) | ||||||
| Other income (expenses) | ||||||||||||||
| Loss before tax expense | ( |
) | ( |
) | ( | ) | ( | ) | ||||||
| Tax expense | ||||||||||||||
| Loss from operations of discontinued operations | $ | ( |
) | $ | ( |
$ | ( | ) | $ | ( | ) | |||
The assets and liabilities of the discontinued operations at September 30, 2024 and December 31, 2023 are summarized below:
| Schedule of assets and liabilities of the discontinued operation | ||||||||
| Periods Ended | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Property and equipment, net(1) | $ | $ | ||||||
| Texas Railroad Commission bond | ||||||||
| Assets of discontinued operations, non-current | ||||||||
| Total assets | $ | $ | ||||||
| Accounts payable | $ | $ | ||||||
| Note payable, current maturities | ||||||||
| Liabilities of discontinued operations, current | ||||||||
| Estimated asset retirement obligation | ||||||||
| Liabilities of discontinued operations, non-current | ||||||||
| Total liabilities | $ | $ | ||||||
| 15 |
(1) Property and equipment, net
Property and equipment, at cost, for the discontinued operations consisted of the following at September 30, 2024 and December 31, 2023:
| Schedule of property and equipment cost, for discontinued operations | ||||||||||
| September 30, 2024 | December 31, 2023 | Useful Lives | ||||||||
| Equipment | $ | $ | ||||||||
| Vehicles | ||||||||||
| Well development costs | * | |||||||||
| Less accumulated depreciation | ( | ) | ( | ) | — | |||||
| Property and equipment, net | $ | $ | — | |||||||
| * |
Depreciation expense
for the discontinued operations for the three and nine months periods ended September
30, 2024 and 2023 was $
Oil and Gas Producing Activities
The Company uses the successful efforts method
of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related
asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production
basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses,
and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but
charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest
in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly
affect the units-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. There were
capitalized costs of $
Unproved oil and gas properties are assessed annually
to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which
may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved properties expire, the costs thereof,
net of any related allowance for impairment, is removed from the accounts and charged to expense. During the nine months ended September
30, 2024 and 2023, there was
Costs associated with development wells that are unevaluated or are waiting
on access to transportation or processing facilities are reclassified into developmental wells-in-progress ("WIP"). These costs
are not put into a depletable field basis until the wells are fully evaluated or access is gained to transportation and processing facilities.
Costs associated with WIP are included in the cash flows from investing as part of investment in oil and gas properties. At September
30, 2024 and December 31, 2023,
Depreciation, depletion and amortization of proved
oil and gas properties is calculated using the units-of- production method based on proved reserves and estimated salvage values. During
the nine months ended September 30, 2024 and 2023, the Company recorded
The Company reviews its proved oil and natural gas
properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have
occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted future
cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying
amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural gas properties
to fair value. During the nine months ended September 30, 2024 and 2023, there was
| 16 |
(2) Texas Railroad Commission Bond and Estimated Asset Retirement Obligation
To cover the estimated future asset retirement obligations
("ARO") related to its oil and gas properties, the Company maintains a $
Revisions to the liability could occur due to changes in estimated abandonment costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells
NOTE 13 – MAJORITY-OWNED SUBSIDIARY
On August 13, 2024 CETI Axenic (CAX) was formed in
the state of Wyoming. This company is
CETI licensed to CAX the exclusive right to market
its products in the commercial and non-commercial laundry business. For this licensing right, CETI received a fee of $
As of September 30, 2024, CAX has had very
limited operations. There is a loss of $
attributed mostly to consulting fees paid to non-CETI shareholders of $.
Of this loss,
NOTE 14 – INCOME TAXES
Deferred taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carryforwards and deferred
tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of
Income taxes consist of the following components as of:
| Schedule of federal income tax rate | ||||||||
|
September 30, 2024 |
September 30, 2023 |
|||||||
| Federal income tax benefit attributable to: | ||||||||
| Current Operations | $ | $ | ||||||
| Less: Valuation allowance | ( |
) | ( |
) | ||||
| Net provision for Federal income taxes | $ | $ | ||||||
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the periods ended September 30, 2024 and December 31, 2023, due to the following:
| Schedule of deferred tax asset | ||||||||
| September 30, 2024 |
December 31, 2023 |
|||||||
| Deferred tax asset attributable to: | ||||||||
| Net operating loss carryover | $ | $ | ||||||
| Less: Valuation allowance | ( |
) | ( |
) | ||||
| Net deferred tax asset | $ | $ | ||||||
At September 30, 2024, the Company had net operating
loss carry forwards of $
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
NOTE 15 – SUBSEQUENT EVENTS
The following are subsequent events that the Company considers may be material:
| · | New money raised from investors from October 1, 2024 to November 15, 2024 – $ |
| · | New shares issued to investors who had converted debentures to equity from October 1, 2024 to November 15, 2024 were shares of common stock. |
| · | CETI was under contract to purchase a salt water disposal facility in Oklahoma. Subsequent to quarter end, CETI decided not to move forward with the purchase with the owner regarding payments due and inventory still on the property. |
| · | In October 2024, CETI entered into an agreement with Warrior Operating Group, LLC (WOG) to provide recycled and water processing services for WOG. The services provided are intended to generate additional revenue from the separation of oil from the wastewater produced and sourced by WOG and treated using CETI’s remediation equipment, systems and processes at WOG’s Salt Water Disposal site(s). |
| 17 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our consolidated financial statements, including the notes thereto, appearing in this Form 10-Q and are hereby referenced. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this report. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. We believe it is important to communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology, including words such as “may”, “will”, “believes”, “anticipates”, “estimates”, “expects”, “continues”, “should”, “seeks”, “intends”, “plans”, and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: our sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to maintain and develop relationship with our existing and potential future customers, and, our ability to maintain a level of investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: variability of our revenues and financial performance; risks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption of operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates; and, the continued employment of our key personnel and other risks associated with competition.
GENERAL OVERVIEW
Business Background
CYBER ENVIRO-TECH, INC. is a publicly held Wyoming oil and water filtration technology company that designs water purification solutions for commercial applications and industries
Our principal executive office is located at Cyber Enviro-Tech, Inc., 6991 E. Camelback Road, Suite D-300, Scottsdale, Arizona 85251. Our telephone number is 866 687-6856. Our Internet site is located at: www.cyberenviro.tech. We maintain our statutory registered agent's office at Registered Agents Inc. 30 N Gould St Ste R Sheridan, WY 82801 USA Telephone Number. (307) 200-2803
June 12, 2020, the District Court of Laramie County, Wyoming appointed Benjamin Berry of Synergy Management Group LLC (“Synergy”) as custodian of the Company.
On September 3, 2020, Synergy and Global Environmental Technologies, Inc. (“Global”), entered into a Securities Purchase Agreement, whereby Synergy sold its one share of Special Series A preferred stock and one-half share of Series C preferred stock to Global Environmental Technologies, Inc.
On September 23, 2020, the Company entered into a share exchange agreement with Global Environmental Technologies, Inc., (“Global”) a Wyoming corporation. Per the terms of the agreement, NexGen exchanged thirty-five shares of common stock for one share of Global.
On October 6, 2020, the Company formally changed its name with the State of Wyoming from NexGen Holdings to Cyber Enviro-Tech, Inc.
| 18 |
DESCRIPTION OF BUSINESS
Cyber Enviro-Tech, Inc is a water science technology company focusing on the remediation of contaminated industrial wastewater with an initial emphasis on the oil & gas industry. We are an emerging growth company with limited revenues and operating history. Our independent auditor has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Our pilot project is an oil field in West Texas. We currently own the mineral rights to a 479- acre, 33-well, located in Callahan County, Texas. This oil field operation known as the Alvey oil field will be spun-off into a new entity in the second quarter of 2024. In addition, the Company will soon be testing its oil water filtration machine in a few locations Southwest Texas and Oklahoma. In addition, the Company is in conversations to purchase its own Salt Water Disposal facility.
GENERAL OVERVIEW
Form and year of organization;
Cyber Enviro-Tech, Inc., also referred to as “CETI” and the “Company”, was founded in the State of Wyoming as Biolectronics, Corp. in April 1986.
Bankruptcy, receivership;
The company has never filed Bankruptcy or been involved in any receiverships or similar proceedings.
Material reclassification;
Cyber Enviro-Tech, Inc - CURRENT.
NexGen Holdings Corp - Until April 30, 2021
WindPower Innovations, Inc. until January 2014
Educational Services International, Inc. until November 2009
Bio-Life Systems, Inc. until November 2001
Biolectronics, Corp. to April 1992
Electronic Biotek, Inc. April 1986
Business of the Cyber Enviro-Tech, Inc.;
Cyber Enviro-Tech, Inc is a water science technology company focusing on the remediation of contaminated industrial wastewater with an initial emphasis on the oil & gas industry. We do this by integrating technologies to include cyber, aerospace, satellite, industrial and AI engineering telemetry. Our water filtration, waste water and alternative energy systems will have neural sensors, controls and networks - all connected to a cellular device.
The Company is testing its oil water filtration machine in a few locations Southwest Texas. Upon successful completion, the Company has plans to expand to other locations in Texas.
During 2023, the Company purchased the licensing to several patents from KAM Biotechnology, Ltd. These patents enhance the Company’s ability to treat wastewater in an environmentally friendly manner.
Our focus for the current fiscal year will be on:
| 1) | Expanding our water and oil filtration operations in the Middle East and Texas |
| 2) | Developing in initial commercial tests with at least one significant meat packing client
| |
| 3) | Acquisition of salt water disposal facilities to vertically expand the Company’s operations |
| 4) | Spinning off the Alvey oil field operation into separate corporation called Phoenix Well Development, Inc via stock dividend to current shareholders of CETI. |
| 19 |
Market Demand and Size - CETI’s water filtration system can be modified to address many of the water contamination issue that exists anywhere in the world. The markets envisioned for the CETI Water system when funds permit would be both domestic (U.S.) and global.
Results of Operations for the Three Months Ending September 30, 2024 and 2023
| 2024 | 2023 | $ | % | |||||||||||||
| Revenue: | ||||||||||||||||
| Gross Sales | $ | 10,666 | $ | — | 10,666 | -100 | % | |||||||||
| Cost of sales | (5,265 | ) | — | (5,265 | ) | -100 | % | |||||||||
| Gross margin | 5,401 | — | 5,401 | -100 | % | |||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional Fees | 17,500 | 19,931 | (2,431 | ) | -12 | % | ||||||||||
| General and administrative | 236,236 | 117,907 | 118,329 | 100 | % | |||||||||||
| Consulting | 419,736 | 597,566 | (177,830 | ) | -30 | % | ||||||||||
| Total operating expenses | 673,472 | 735,404 | (61,932 | ) | -8 | % | ||||||||||
| Operating loss from continuing operations | (668,071 | ) | (735,404 | ) | (67,333 | ) | -9 | % | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivative | 38,747 | 35,172 | 3,575 | 10 | % | |||||||||||
| Loss on issuance of derivative | — | (13,513 | ) | (13,513 | ) | -100 | % | |||||||||
| Gain on extinguishment of derivative liability | — | 49,248 | (49,248 | ) | -100 | % | ||||||||||
| Amortization of intangible assets | (28,213 | ) | (31,604 | ) | (3,391 | ) | -11 | % | ||||||||
| Change in fair value of contingent liability | — | (600 | ) | (600 | ) | -100 | % | |||||||||
| Interest income | 2,912 | — | 2,912 | 100 | % | |||||||||||
| Interest expense | (166,984 | ) | (146,870 | ) | (20,114 | ) | 14 | % | ||||||||
| Total Other Income (Expense) | (153,538 | ) | (108,167 | ) | 45,371 | 42 | % | |||||||||
| Loss from continuing operations | (821,609 | ) | (843,571 | ) | (21,962 | ) | -3 | % | ||||||||
| Discontinued operations: | ||||||||||||||||
| Gain (loss) from operations of discontinued operations | (10,280 | ) | (2,459 | ) | (7,821 | ) | 318 | % | ||||||||
| Net Income (Loss) | $ | (831,889 | ) | $ | (846,030 | ) | $ | (179,965 | ) | $ | -22 | % | ||||
| Net loss attributable: | ||||||||||||||||
| Non-controlling interest | $ | (3,645 | ) | $ | — | $ | 3,645 | 100 | % | |||||||
| Common stockholders | (828,244 | ) | (846,030 | ) | (17,786 | ) | -2 | % | ||||||||
| Net loss | $ | (831,889 | ) | $ | (846,030 | ) | $ | (14,141 | ) | -2 | % | |||||
Gross Sales. These sales are from CETI’s temporary operations at a salt water disposal (SWD) facility in Oklahoma. CETI contracted to buy the SWD and during its due diligence was allowed to operate on the property. During this time, CETI generated these sales.
General and administrative Expenses. General and administrative expenses for the three months ended September 30, 2024 were up by 100% vs 2023 largely due to CETI’s temporary operations on a salt water disposal facility in Oklahoma. These operations were done to determine whether to pursue a purchase of the facility which was decided against after quarter end.
Professional fees. These fees are largely made up of audit and audit-related fees ($15,000 and $14,550 as of September 2024 and 2023 respectively).
Consulting fees. Decreased by 30% due largely to the decrease in non-cash, stock-based compensation in 2024 of $186,865 vs $370,762 in 2023.
Other income (expense). Much of this is relates to the derivative accounting for convertible debt from a one lender. This lender offers the Company the option to payoff debt or convert it to stock. For the five loans taken out in 2023 and 2024, the Company has elected to payoff three of them and still has two outstanding. For the interest expense, the 14% increase is largely due to loans payable increase of $150,000 in the third quarter of 2024 vs 2023.
Net income (loss) from continuing operations. The above changes resulted in net loss of $821,609 for the three months ended September 30, 2024 compared to a loss of $846,030 for the similar period in 2023. As noted above, there was increase in revenue and the decrease in consulting expense. These changes largely accounted for the decreased loss in 2024 vs 2023.
Discontinued operations. The Company is looking to spin off the Alvey oil field and this represents the non-capitalized expenses related to the Alvey.
Non-controlling interest. CAX is a 51% controlled subsidiary of CETI and started operations in the 3rd quarter of 2024 and, as such, has shown minimal activity so far. The total loss of $7,439 is largely due to consulting expenses of $7,000. For the loss, $3,794 is attributed to CETI and $3,645 is attributed to CAX.
| 20 |
Results of Operations for the Nine Months Ending September 30, 2024 and 2023
| 2024 | 2023 | $ | % | |||||||||||||
| Revenue: | ||||||||||||||||
| Gross Sales | $ | 10,666 | — | 10,666 | 100 | % | ||||||||||
| Cost of sales | (5,265 | ) | — | (5,265 | ) | -100 | % | |||||||||
| Gross margin | 5,401 | — | 5,401 | 100 | % | |||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional Fees | 91,632 | 85,219 | 6,413 | 8 | % | |||||||||||
| General and administrative | 784,943 | 223,266 | 561,677 | 252 | % | |||||||||||
| Consulting | 1,301,909 | 1,734,080 | (432,171 | ) | -25 | % | ||||||||||
| Total operating expenses | 2,178,484 | 2,042,565 | 135,919 | 7 | % | |||||||||||
| Operating loss from continuing operations | (2,173,083 | ) | (2,042,565 | ) | 130,518 | 7 | % | |||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivative | 20,367 | 84,564 | (64,197 | ) | -76 | % | ||||||||||
| Loss on issuance of derivative | (109,043 | ) | (100,371 | ) | (8,672 | ) | 9 | % | ||||||||
| Amortization of intangible assets | (84,638 | ) | (31,604 | ) | (53,034 | ) | 167 | % | ||||||||
| Interest expense | (587,762 | ) | (225,966 | ) | (361,796 | ) | 160 | % | ||||||||
| Gain on extinguishment of derivative liability | 264,539 | 49,248 | 215,291 | 437 | % | |||||||||||
| Change in fair value of contingent liability | — | 450 | (450 | ) | -100 | % | ||||||||||
| Interest income | 7,596 | — | 7,596 | 100 | % | |||||||||||
| Total Other Income (Expense) | (488,941 | ) | (223,679 | ) | (265,262 | ) | 119 | % | ||||||||
| Loss from continuing operations | (2,662,024 | ) | (2,266,244 | ) | (395,780 | ) | 17 | % | ||||||||
| Discontinued operations: | ||||||||||||||||
| Gain (loss) from operations of discontinued operations | (40,386 | ) | (31,811 | ) | (8,575 | ) | 27 | % | ||||||||
| Net Income (Loss) | (2,702,410 | ) | (2,298,055 | ) | (404,355 | ) | 10 | % | ||||||||
| Net loss attributable: | ||||||||||||||||
| Non-controlling interest | $ | (3,645 | ) | $ | — | $ | 3,645 | 100 | % | |||||||
| Common stockholders | (2,698,765 | ) | (2,298,055 | ) | (400,710 | ) | 17 | % | ||||||||
| Net loss | $ | (2,702,410 | ) | $ | (2,298,055 | ) | $ | (404,355 | ) | 18 | % | |||||
Gross Sales. These sales are from CETI’s temporary operations at a salt water disposal (SWD) facility in Oklahoma. CETI contracted to buy the SWD and during its due diligence was allowed to operate on the property. During this time, CETI generated these sales.
General and administrative Expenses. General and administrative expenses for the nine months ended September 30, 2024 were up by 252% vs 2023 largely due to an increase in testing of CETI’s water filtration system, travel expenses overseas, testing of water samples and increased marketing expenses. In addition, CETI incurred expenses from the temporary operation of a salt water disposal facility in Oklahoma. These operations were done to determine whether to pursue a purchase of the facility which was decided against after quarter end.
Professional fees. These fees are largely made up of audit and audit-related fees, $80,621 and 71,839 as of September 30, 2024 and 2023 respectively,
Consulting fees. Are largely made up from non-cash, stock-based compensation of $746,019 and $995,895 for the first nine months of 2024 and 2023, respectively.
Other income (expense). Much of this is relates to the derivative accounting for convertible debt from a one lender. This lender offers the Company the option to payoff debt or convert it to stock. For the five loans taken out in 2023 and 2024, the Company has elected to payoff three of them and still has two outstanding. For the interest expense, this is largely due to increase in interest due or payable on loans taken on after September 2023 as well as interest on convertible debentures. For the convertible debentures, the average balance of convertible debentures in the first nine months of 2024 was about twice that of the same period in 2023.
Net income (loss) from continuing operations. The above changes resulted in net loss of $2,662,024 for the nine months ended September 30, 2024 compared to a loss of $2,266,244 for the similar period in 2023. Most of the difference is attributable to interest expense and increase in general and administrative expenses as noted above.
Discontinued operations. The Company is looking to spin off the Alvey oil field and this represents the non-capitalized expenses related to the Alvey.
Non-controlling interest. CAX is a 51% controlled subsidiary of CETI and started operations in the 3rd quarter of 2024 and, as such, has shown minimal activity so far. The total loss of $7,439 is largely due to consulting expenses of $7,000. For the loss, $3,794 is attributed to CETI and $3,645 is attributed to CAX.
| 21 |
Liquidity and Capital Resources
As of September 30, 2024, the Company had total assets of $5,766,753 including current assets of $594,925 as well as $3,496,275 from the discontinued operations of the Alvey oil field. We also have current liabilities of $1,205,067 which consist of accounts payable of $237,517 and short-term note payable of $229,319, net of discount of $94,331, notes payable of $177,500 and $489,463 from the discontinued operations of the Alvey oil field which is mostly the payable due on the Alvey Oil Field leasehold improvements. We also have $1,825,417 of long-term liabilities which is largely due to convertible notes payable of $1,404,000. We believe our ability to achieve commercial success and continued growth will be dependent upon our continued access to capital either through sale of additional convertible debentures, sale of our equity or cash generated from operations. We will attempt to obtain additional capital through private investors; however, we have no agreements or understandings with third parties at this time in regards to investing additional monies.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. However, as noted above, the Company is dependent upon raising additional capital to meet its business plans which raises substantial doubt about the Company’s ability to continue as a going concern.
S-1 Registration Statement Effective January 2023
The Company filed an S-1 Registration statement in 2022 and it became effective in January 2023. This gives the Company the right to sell 10 million shares of common stock at $0.40 per share and allowed almost seven million shares of stock from debentures converted in 2022 to become free trading shares. As of November 14, 2024, none of the 10 million shares of common stock have been sold.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a "smaller reporting company," as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 4. Controls and Procedures.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure.
As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our management, with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, being June 30, 2024.
Based on this evaluation, these officers concluded that, as of September 30, 2024 these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission. The conclusion that our disclosure controls and procedures were not effective was due to the Company was lacking in pre-planning for expenses and documentation of all transactions. As of September 30, 2024, some progress has been made in implementing enhanced controls and procedures.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a more than remote possibility that a misstatement of our company's annual or interim consolidated financial statements could occur. In its assessment of the effectiveness of our internal control over financial reporting as of September 30, 2024, we determined that there were control deficiencies that constituted material weaknesses which are indicative of many small companies with small staff, such as:
| (1) | inadequate segregation of duties and effective risk assessment; and |
| (2) | insufficient written policies and procedures for documenting all transactions with vendors. |
Our management is currently evaluating remediation plans for the above deficiencies. During the period covered by this quarterly report on Form 10-Q, we have been able to remediate some of the weaknesses described above. However, we plan to take steps to enhance and improve the design of our internal control over financial reporting.
| 22 |
PART II—OTHER INFORMATION
Instruction. The report shall contain the item numbers and captions of all applicable items of Part II, but the text of such items may be omitted provided the responses clearly indicate the coverage of the item. Any item which is inapplicable or to which the answer is negative may be omitted and no reference thereto need be made in the report. If substantially the same information has been previously reported by the registrant, an additional report of the information on this form need not be made. The term “previously reported” is defined
in Rule 12b-2 (17 CFR 240. 12b-2). A separate response need not be presented in Part II where information called for is already disclosed in the financial information provided in Part I and is incorporated by reference into Part II of the report by means of a statement to that effect in Part II which specifically identifies the incorporated information.
Item 1. Legal Proceedings.
We are not a party to any legal proceedings, nor are we aware of any threatened litigation whatsoever.
Item 1A. Risk Factors.
As a "Smaller Reporting Company," as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Date of Transaction | Transaction type (e.g. new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed). | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing. | |||||||||||||||
| 9/27/2021 | New | 144,033 | Common | 0.097 | Lester Black | Cash | Restricted | |||||||||||||||
| 2/25/2022 | New | 3,000,000 | Common | 0.078 | Markham and ML Broughton RT, Markham Broughton | Cash | Restricted | |||||||||||||||
| 2/25/2022 | New | 750,000 | Common | 0.133 | Gary E. Smith Living Trust, Gary Smith | Cash | Restricted | |||||||||||||||
| 12/31/2022 | New | 400,000 | Common | 0.420 | Joe Isaac, Axiom Group | Services | Restricted | |||||||||||||||
| 12/31/2022 | New | 42,000 | Common | 0.457 | Malcolm Mcquire | Services | Restricted | |||||||||||||||
| 3/24/2023 | New | 300,000 | Common | 0.420 | Joe Isaac, Axiom Group | Services | Restricted | |||||||||||||||
| 4/3/2023 | New | 3,000,000 | Common | 0.001 | Joe Isaacs | Services | Unrestricted | |||||||||||||||
| 5/23/2023 | New | 250,000 | Common | 0.42 | Joe Isaacs | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 250,000 | Common | 0.38 | Frank Straw | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 250,000 | Common | 0.31 | Markus Miller | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 200,000 | Common | 0.38 | Bruce Moore | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 1,000,000 | Common | 0.38 | US Affiliated Inc, Karen Fowler | Services | Restricted | |||||||||||||||
| 23 |
Date of Transaction | Transaction type (e.g. new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed). | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing. | |||||||||||||||
| 7/21/2023 | New | 15,000 | Common | 0.35 | Benjamin Berry | Contingent Lability Paid | Restricted | |||||||||||||||
| 10/18/2023 | New | 600,000 | Common | 0.10 | Jaron Mossman & Jode Vallejos JTTEN | Debt conv | Restricted | |||||||||||||||
| 10/18/2023 | New | 253,180 | Common | 0.10 | Mark Mitrev | Debt conv | Restricted | |||||||||||||||
| 10/18/2023 | New | 101,250 | Common | 0.10 | Jaylen Mossman | Debt conv | Restricted | |||||||||||||||
| 10/18/2023 | New | 252,850 | Common | 0.10 | Peter D. Lawrence | Debt conv | Restricted | |||||||||||||||
| 10/18/2023 | New | 121,370 | Common | 0.10 | Justin Mossman | Debt conv | Restricted | |||||||||||||||
| 11/7/2023 | New | 500,000 | Common | 0.31 | Markus Miller | Services | Restricted | |||||||||||||||
| 11/7/2023 | New | 2,000,000 | Common | 0.335 | Serdar Gurel | Services | Restricted | |||||||||||||||
| 11/7/2023 | New | 252,580 | Common | 0.10 | McKellar R Trust, Donald McKellar III, trustee | Debt conv | Restricted | |||||||||||||||
| 11/7/2023 | New | 252,580 | Common | 0.10 | Susan E. Crossett | Debt conv | Restricted | |||||||||||||||
| 11/7/2023 | New | 505,050 | Common | 0.10 | Douglas Gore | Debt conv | Restricted | |||||||||||||||
| 12/28/2023 | New | 360,000 | Common | 0.25 | Markham and ML Broughton RT, Markham Broughton | Services | Restricted | |||||||||||||||
| 12/28/2023 | New | 253,240 | Common | 0.10 | Timothy and Kim Dukes | Debt conv | Restricted | |||||||||||||||
| 12/28/2023 | New | 252,470 | Common | 0.10 | Alexander Fil | Debt conv | Restricted | |||||||||||||||
| 12/28/2023 | New | 252,360 | Common | 0.10 | Chris Gressinger | Debt conv | Restricted | |||||||||||||||
| 12/28/2023 | New | 256,360 | Common | 0.10 | Dwayne Hay | Debt conv | Restricted | |||||||||||||||
| 2/2/2024 | New | 1,011,620 | Common | 0.10 | DePrima Donnelly Family Trust, Anthony DePrima, trustee | Debt conv | Restricted | |||||||||||||||
| 2/2/2024 | New | 335,850 | Common | 0.10 | Carl R. Vertuca | Debt conv | Restricted | |||||||||||||||
| 2/2/2024 | New | 335,780 | Common | 0.10 | Bryan Vertuca | Debt conv | Restricted | |||||||||||||||
| 2/28/2024 | New | 252,030 | Common | 0.10 | Jeffrey Kelley | Debt conv | Restricted | |||||||||||||||
| 2/28/2024 | New | 302,370 | Common | 0.10 | Leibowitz Living Trust, Alan Leibowitz, trustee | Debt conv | Restricted | |||||||||||||||
| 2/28/2024 | New | 336,790 | Common | 0.10 | Dominic Mancini | Debt conv | Restricted | |||||||||||||||
| 2/28/2024 | New | 253,680 | Common | 0.10 | David Townley Paton | Debt conv | Restricted | |||||||||||||||
| 2/28/2024 | New | 253,240 | Common | 0.10 | Michael Volpe/ Liliane Stachishin-Moura, JTTN | Debt conv | Restricted | |||||||||||||||
| 3/12/2024 | New | 505,820 | Common | 0.10 | Paul Stander, SEP-IRA | Debt conv | Restricted | |||||||||||||||
| 3/12/2024 | New | 202,020 | Common | 0.10 | Nicole M. Hobbs | Debt conv | Restricted | |||||||||||||||
| 3/12/2024 | New | 252,140 | Common | 0.10 | James S Benedict | Debt conv | Restricted | |||||||||||||||
| 24 |
Date of Transaction | Transaction type (e.g. new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed). | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing. | |||||||||||||||
| 3/12/2024 | New | 252,090 | Common | 0.10 | Cameron Turner | Debt conv | Restricted | |||||||||||||||
| 3/12/2024 | New | 100,710 | Common | 0.10 | Jill B. Mossman | Debt conv | Restricted | |||||||||||||||
| 4/2/2024 | New | 256,310 | Common | 0.10 | Dwayne Hay | Debt conv | Restricted | |||||||||||||||
| 4/2/2024 | New | 252,310 | Common | 0.10 | JJJ Enterprises, Jeff J. Jorgenson | Debt conv | Restricted | |||||||||||||||
| 4/2/2024 | New | 251,700 | Common | 0.10 | Michael B. Schuster | Debt conv | Restricted | |||||||||||||||
| 4/2/2024 | New | 126,565 | Common | 0.20 | Business Marketing Group, Brian Foster | Debt conv | Restricted | |||||||||||||||
| 4/2/2024 | New | 252,030 | Common | 0.10 | McKellar Revocable Trust, December 17 2012, Donald McKellar III, trustee | Debt conv | Restricted | |||||||||||||||
| 4/15/2024 | New | 756,250 | Common | 0.10 | Timothy and Kim Dukes | Debt conv | Restricted | |||||||||||||||
| 4/15/2024 | New | 500,760 | Common | 0.10 | Dwayne Hay | Debt conv | Restricted | |||||||||||||||
| 4/15/2024 | New | 34,000 | Common | 0.35 | DePrima Donnelly Family Trust, Anthony DePrima, trustee | Debt conv | Restricted | |||||||||||||||
| 4/15/2024 | New | 66,000 | Common | 0.35 | Neil Superfon | Debt conv | Restricted | |||||||||||||||
| 4/15/2024 | New | 201,360 | Common | 0.20 | Thomas Randall Powell | Debt conv | Restricted | |||||||||||||||
| 5/9/2024 | New | 252,910 | Common | 0.10 | Markl Family Living Trust, Barry Markl | Debt conv | Restricted | |||||||||||||||
| 5/9/2024 | New | 200,970 | Common | 0.10 | Kaan Brian Gokay | Debt conv | Restricted | |||||||||||||||
| 5/9/2024 | New | 253,015 | Common | 0.20 | William and Jennifer Vincent | Debt conv | Restricted | |||||||||||||||
| 5/9/2024 | New | 303,555 | Common | 0.20 | TWCI Consulting LLC, Christopher Ingram | Debt conv | Restricted | |||||||||||||||
| 5/9/2024 | New | 25,255 | Common | 0.20 | Michael Hay | Debt conv | Restricted | |||||||||||||||
| 5/9/2024 | New | 50,505 | Common | 0.20 | Jaye Gene Todd Collier | Debt conv | Restricted | |||||||||||||||
| 5/22/2024 | New | 77,285 | Common | 0.20 | Paul Leonard | Debt conv | Restricted | |||||||||||||||
| 5/22/2024 | New | 128,645 | Common | 0.20 | David Haley | Debt conv | Restricted | |||||||||||||||
| 5/22/2024 | New | 128,535 | Common | 0.20 | Staunton Family 2007 Trust, Richard Staunton, trustee | Debt conv | Restricted | |||||||||||||||
| 5/22/2024 | New | 1,285,070 | Common | 0.20 | Chris Cappuccilli | Debt conv | Restricted | |||||||||||||||
| 5/22/2024 | New | 12,835 | Common | 0.20 | Dallas Dukes | Debt conv | Restricted | |||||||||||||||
| 5/22/2024 | New | 12,835 | Common | 0.20 | T Jordan Dukes | Debt conv | Restricted | |||||||||||||||
| 25 |
Date of Transaction | Transaction type (e.g. new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed). | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing. | |||||||||||||||
| 6/11/2024 | New | 513,155 | Common | 0.20 | Michael and Judith Mendoza Revocable Living Trust dated 8 March 2004, Michael Mendoza, trustee | Debt conv | Restricted | |||||||||||||||
| 6/11/2024 | New | 127,580 | Common | 0.20 | Jessica Patterson | Debt conv | Restricted | |||||||||||||||
| 6/11/2024 | New | 127,140 | Common | 0.20 | F. Stanton Sipes | Debt conv | Restricted | |||||||||||||||
| 6/11/2024 | New | 260,305 | Common | 0.20 | Peter Mitrev | Debt conv | Restricted | |||||||||||||||
| 6/11/2024 | New | 184,620 | Common | 0.20 | Carlos Eduardo Garcia Enriquez | Debt conv | Restricted | |||||||||||||||
| 6/11/2024 | New | 25,785 | Common | 0.20 | Michele Blackman | Debt conv | Restricted | |||||||||||||||
| 6/20/2024 | New | 525,320 | Common | 0.20 | Neil Superfon | Debt conv | Restricted | |||||||||||||||
| 6/20/2024 | New | 127,905 | Common | 0.20 | Michele Blackman | Debt conv | Restricted | |||||||||||||||
| 6/20/2024 | New | 127,330 | Common | 0.20 | Harborside Group Trust, Jim Mead | Debt conv | Restricted | |||||||||||||||
| 6/20/2024 | New | 128,730 | Common | 0.20 | Chase Donaldson | Debt conv | Restricted | |||||||||||||||
| 6/20/2024 | New | 12,870 | Common | 0.20 | David Paton | Debt conv | Restricted | |||||||||||||||
| 6/20/2024 | New | 294,200 | Common | 0.10 | Lawrence Weiss Living Trust, Katherine Lawrence, trustee | Debt conv | Restricted | |||||||||||||||
| 7/10/2024 | New | 170,910 | Common | 0.15 | Mark Mitrev | Debt conv | Restricted | |||||||||||||||
| 7/10/2024 | New | 407,980 | Common | 0.25 | Neil Superfon | Debt conv | Restricted | |||||||||||||||
| 7/10/2024 | New | 252,910 | Common | 0.10 | Lawrence Weiss Living Trust, Katherine Lawrence, trustee | Debt conv | Restricted | |||||||||||||||
| 7/10/2024 | New | 388,975 | Common | 0.20 | Suncoast Financial Mortgage Profit Sharing Plan, David Malcolm, trustee | Debt conv | Restricted | |||||||||||||||
| 7/10/2024 | New | 126,700 | Common | 0.20 | Staunton Family Investment Partnership, Richard Staunton, trustee | Debt conv | Restricted | |||||||||||||||
| 7/10/2024 | New | 127,000 | Common | 0.20 | Gardner Investment Trust, Roy A Gardner, trustee | Debt conv | Restricted | |||||||||||||||
| 7/15/2024 | New | 170 | Common | 0.10 | Timothy and Kim Dukes | Debt conv | Restricted | |||||||||||||||
| 7/15/2024 | New | 25 | Common | 0.20 | Business Marketing Group, Brian Foster | Debt conv | Restricted | |||||||||||||||
| 7/15/2024 | New | 60 | Common | 0.10 | The McKellar Revocable Trust, December 17 2012, Donald McKellar III, trustee | Debt conv | Restricted | |||||||||||||||
| 7/15/2024 | New | 45 | Common | 0.20 | Thomas Randall Powell | Debt conv | Restricted | |||||||||||||||
| 8/1/2024 | New | 500,000 | Common | 0.20 | Michael and Judith Mendoza Revocable Living Trust, dated 8 March 2004, Michael Mendoza, trustee | Cash | Restricted | |||||||||||||||
| 8/1/2024 | New | 334,000 | Common | 0.15 | Jason Black | Cash | Restricted | |||||||||||||||
| 8/1/2024 | New | 281,352 | Common | 0.10 | Julie Kutilek | Debt conv | Restricted | |||||||||||||||
| 8/1/2024 | New | 2,992,822 | Common | 0.10 | Joseph Kutilek | Debt conv | Restricted | |||||||||||||||
| 8/1/2024 | New | 110,669 | Common | 0.10 | Tara Rahr | Debt conv | Restricted | |||||||||||||||
| 8/1/2024 | New | 1,603,902 | Common | 0.10 | Charles Merkel | Debt conv | Restricted | |||||||||||||||
| 8/20/2024 | New | 1,655,192 | Common | 0.10 | Scott Jasper | Debt conv | Restricted | |||||||||||||||
| 8/20/2024 | New | 1,635,472 | Common | 0.10 | Joel Gale | Debt conv | Restricted | |||||||||||||||
| 8/20/2024 | New | 2,192,290 | Common | 0.10 | Larry Grillo | Debt conv | Restricted | |||||||||||||||
| 8/20/2024 | New | 26,742 | Common | 0.20 | Kelsey Mallory | Debt conv | Restricted | |||||||||||||||
| 26 |
Securities authorized for issuance under equity compensation plans
The Company has not reserved any securities for issuance under equity compensation plans for any officers, directors or any beneficial owners.
On December 29, 2020, the Company entered into a consulting agreement with Winston McKellar for professional services wherein the Company paid 250,000 common shares.
On November 21, 2022 the Company entered into a consulting agreement with Axiom Group (Joseph Isaacs, sole Officer and director) for professional services wherein the Company paid Axiom Group (Joseph Isaacs) 950,000 common shares.
On April 25, 2023 the Company entered into a consulting agreement with Dr. Markus Miller for professional services wherein the Company paid 1,000,000 common shares.
On May 17, 2023 the Company entered into a consulting agreement with Frank Straw for professional services wherein the Company paid 1,000,000 common shares.
On June 3, 2023, the Company entered into a consulting agreement with Ken Waters for professional services wherein the Company issued 1,000,000 options with a strike price of $0.20 a share.
On September 15, 2023, the Company entered into a consulting agreement with Kaybrook Client Consulting LLC, Harry Datys, for professional services wherein the Company issued 3,950,000 warrants at a par value of $0.001.
On November 6, 2023 the Company entered into a distribution and consulting agreement with Delta, Serdar Gurel, for professional services wherein the Company paid 1,000,000 common shares.
The Company has had a working relationship with Bruce Moore for several years. To keep him engaged, the Company gave him 200,000 common shares for professional services.
The Company has had a working relationship with US Affiliated, Inc, owned by Karen Fowler, for the past year. To keep the company engaged, CETI gave US Affiliated, Inc 1,000,000 common shares for professional services.
Item 3. Defaults Upon Senior Securities.
There is a loan of $22,000 to a related party that is due and payable as well as two convertible debentures totaling $150,000 that were due in September 2024. In addition, there is a loan of $343,500 due to the estate of Danny Hyde (EDH). However, as noted in the Contingency footnote, over $2 million has been spent on the rework costs of the Alvey and EDH is to bear part of that cost which exceeds what CETI owes EDH.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
During the Company’s quarter ended September
30, 2024, no director or officer
Item 6. Exhibits.
| Incorporated by Reference |
Filed or Furnished | |||||||||
| Exhibit # | Exhibit Description | Form | Date | Number | Herewith | |||||
| 31.1 | Certification of Principal Executive Officer (302) | Filed | ||||||||
| 31.2 | Certification of Principal Financial Officer (302) | Filed | ||||||||
| 32.1 | Certification of Principal Executive and Principal Financial Officers (906) | Furnished* | ||||||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Filed | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed | ||||||||
*This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
| 27 |
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.
| Signature | Title | Date | ||
| /s/ Kim D. Southworth |
Chief Executive Officer |
November 19, 2024 | ||
| Kim D. Southworth | ||||
| /s/ Dan Leboffe | Principal Accounting Officer | November 19, 2024 | ||
| Dan Leboffe |
| 28 |
Exhibit 31.1
302 CERTIFICATION
I, Kim D. Southworth, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Cyber Enviro-Tech, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 19, 2024
| /s/ Kim D. Southworth | |
| Kim D. Southworth | |
| Chief Executive Officer | |
Exhibit 31.2
302 CERTIFICATION
I, Dan Leboffe, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Cyber Enviro-Tech, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 19, 2024
| /s/ Dan Leboffe | |
| Dan Leboffe | |
| Chief Financial Officer | |
EXHIBIT 32.1
SECTION 906 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER
In connection with the Annual Report of Cyber Enviro-Tech, Inc., (the “Company”) on Form 10-Q for the period ended September 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kim D. Southworth, Chief Executive Officer and Dan Leboffe, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| /s/ Kim D. Southworth | |
| Kim D. Southworth | |
| Chief Executive Officer | |
| Dated: November 19, 2024 | |
| /s/ Dan Leboffe | |
| Dan Leboffe | |
| Chief Financial Officer | |
| Dated: November 19, 2024 | |