Waste Energy Corp 10-Q for FY2026 Q2
Waste Energy Corp. (WAST)
About this 10-Q
Waste Energy Corp filed this 10-Q on August 14, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $22.5K
- down 82.0% from $125K a year earlier
- Net income
- $1.85M
- compared with a net loss of $1.54M 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
(Mark One)
For
the quarterly period ended
For the transition period from __________ to ____________
Commission
file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 14, 2026, shares of common stock issued and outstanding.
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Our unaudited condensed interim consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
It is the opinion of management that the unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2026 include all adjustments necessary in order to ensure that the unaudited condensed interim consolidated financial statements are not misleading.
Waste Energy Corp.
Condensed Consolidated Balance Sheets
June 30, 2026 (unaudited) | December 31, 2025 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses | ||||||||
| Security deposit | ||||||||
| Total Current Assets | ||||||||
| Long-Term Assets | ||||||||
| Right-of-use asset | ||||||||
| Property, plant and equipment / Capital investment | ||||||||
| Total Long-Term Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses, related party | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Deposits payable | ||||||||
| Lease liability | ||||||||
| Notes payable – in default | ||||||||
| Derivatives liability | ||||||||
| Convertible notes payable – other | ||||||||
| Total Current Liabilities | ||||||||
| Non-current Liabilities | ||||||||
| Lease liabilities | ||||||||
| Total Non-current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding as at June 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in-capital | ||||||||
| Stock subscriptions payable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Waste Energy Stockholders’ Equity (Deficit) | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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Waste Energy Corp.
Condensed Consolidated Statement of Operations (Unaudited)
| Three months ended June 30, 2026 | Three months ended June 30, 2025 | Six months ended June 30, 2026 | Six months ended June 30, 2025 | |||||||||||||
| Revenues | ||||||||||||||||
| Consulting services | $ | $ | $ | $ | ||||||||||||
| Recyclable material intake | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Service costs | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net income (loss) from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense and charges - note payable | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on new derivatives | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on settled derivatives | ||||||||||||||||
| Net other income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Provision for taxes | ||||||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net profit (loss) from non-controlling interest | ||||||||||||||||
| Net income (loss) attributable to Waste Energy | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Income (loss) per common share – Basic and diluted | $ | $ | ) | $ | ) | $ | ) | |||||||||
| Weighted average number of common shares outstanding, basic | ||||||||||||||||
| Weighted average number of common shares outstanding, diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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Waste Energy Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |||||||
| Operating activities | ||||||||
| Net income (loss) for the period | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Stock-based compensation | ||||||||
| Stock-based compensation and forfeitures, related party | ||||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Gain on new derivatives | ||||||||
| Loss on settled derivatives | ( | ) | ||||||
| Non-cash interest | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued interest on convertible notes payable | ||||||||
| Accounts payable and accrued expenses, related party | ( | ) | ||||||
| Lease liability | ||||||||
| Deferred revenue | ( | ) | ||||||
| Net cash from (used in) operating activities | ( | ) | ||||||
| Investing activities | ||||||||
| Capital advance | $ | ( | ) | $ | ( | ) | ||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities | ||||||||
| Proceeds from the stock to be issued | ||||||||
| Proceeds from issuance of convertible note | ||||||||
| Payments made on nots payable and convertible note | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net changes in cash and equivalents | ( | ) | ||||||
| Cash and equivalents at beginning of the period | ||||||||
| Cash and equivalents at end of the period | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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Waste Energy Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited) (cont’d)
SUPPLEMENTAL CASH FLOW INFORMATION
| Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |||||||
| Cash paid in interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Derivative liability discount | $ | $ | ||||||
| Full conversion of convertible note payable to common stock of WEC - $ | $ | $ | ||||||
| Conversion of convertible notes payable to common stock of WEC - $ | $ | $ | ||||||
| Conversion of convertible note payable to common stock of WEC - $ | $ | $ | ||||||
| Conversion of convertible note payable to common stock of WEC - $ | $ | $ | ||||||
| Partial conversion of convertible note payable to common stock of WEC - $ | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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Waste Energy Corp.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited)
| Common Stock Number of Shares (#) | Common Stock Dollar Amount ($) | Additional Paid-in Capital ($) | Stock Subscriptions Payable ($) | Accumulated Deficit ($) | Non- Controlling Interest ($) | Total Shareholders’ Equity (Deficit) ($) | ||||||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Share issuance on conversion of note payable | ||||||||||||||||||||||||||||
| Private placement for cash - to be issued | - | |||||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Private placement for cash - to be issued | - | |||||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, June 30, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Stock-based compensation, related party | - | |||||||||||||||||||||||||||
| Share issuance on conversion of convertible loan | ||||||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, March 31, 2026 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock based compensation | - | |||||||||||||||||||||||||||
| Stock-based compensation, related party | - | |||||||||||||||||||||||||||
| Net income for the period | - | |||||||||||||||||||||||||||
| Net income /(loss) | - | |||||||||||||||||||||||||||
| Balance, June 30, 2026 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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Waste Energy Corp.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
As at and for the three and six months ended June 30, 2026 and 2025
1. NATURE AND CONTINUANCE OF OPERATIONS
Waste
Energy Corp. (the “Company”) was incorporated under the laws of the State of
On August 1, 2017 the Company incorporated a Nevada subsidiary, AppCoin Innovations (USA) Inc., which was formed to provide blockchain consulting services.
On February 14, 2018, we effected a name change for our subsidiary from “AppCoin Innovations (USA) Inc.” to “ICOx USA, Inc.”
On November 28, 2018, we incorporated a new Delaware subsidiary, Cathio, Inc, to provide blockchain technology opportunities to the Catholic community. Cathio was dissolved on October 20, 2020.
On November 28, 2018, we incorporated a new Delaware subsidiary, GN Innovations, Inc. to provide blockchain technology opportunities to the sports and entertainment industry by working with large and well-established brands.
Effective December 5, 2018, we effected a name change for our subsidiary from “GN Innovations, Inc.” to “GNI, Inc.” Effective February 6, 2019, we effected a name change for our subsidiary from “GN1, Inc.” to “sBetOne, Inc.”. On August 12, 2021, the Company’s subsidiary sBetOne, Inc. (“sBetOne”) entered into a business combination with a related party, VON Acquisition Inc. (“VON”), whereby sBetOne became a wholly owned subsidiary of VON.
On September 3, 2019, the Company changed its name from “ICOx Innovations Inc.” to “CurrencyWorks Inc.” and ICOx USA Inc. a subsidiary of the Company changed its name to “CurrencyWorks USA Inc.”.
On June 22, 2021, we incorporated a new Delaware subsidiary, Motoclub LLC, to create a marketplace for digital automotive collectibles. During 2024 operations ceased due to Management’s decisions to pursue a new line of business in renewable waste energy.
On June 22, 2021, we incorporated a new Delaware subsidiary, EnderbyWorks, LLC, (“EnderbyWorks”) to create a direct-to-consumer, feature-length film viewing and distribution platform delivering feature-length films and digital collectible entertainment content as NFTs. During 2024 operations ceased due to Management’s decisions to pursue a new line of business in renewable waste energy. There may be rights to residual collections from a past movie distribution rights contract that may be transferred to a functioning entity at a future date.
On August 24, 2022, the Company changed its name from CurrencyWorks Inc. to MetaWorks Platforms, Inc (“MWRKS”).
On May 13, 2024, we incorporated a new Florida subsidiary, Energy Works, Inc., (“EnergyWorks”), which was formed to support the Company’s waste-to-energy business and related operations.
On September 6, 2024, the Company changed its name from MetaWorks Platforms, Inc. to Waste Energy Corp.
Going Concern
The
accompanying condensed interim consolidated financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course of business. On a consolidated basis, the Company has
incurred significant operating losses since its inception. For the six months ended June 30, 2026 and 2025, the Company incurred losses
of $
The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) as found in the Accounting Standards Codification (“ASC”), and the Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and are expressed in US Dollars. The unaudited condensed interim consolidated financial statements should be read in conjunction with the notes contained herein as part of the Company’s Quarterly Report in its Form 10-Q filing under the Securities Exchange Commission, and with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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Reclassification
Certain reclassifications have been made to prior periods to conform with current reporting. These reclassifications did not affect net income, total assets, liabilities or equity reported.
Basis of Consolidation
The
consolidated statements include the accounts of the Company and its subsidiaries. CurrencyWorks USA Inc. (“CW”) (formerly
ICOx USA, Inc.), Energy Works Inc. (“EWI”) and Enderby Works LLC (“EW”) are wholly owned subsidiaries. EW became
a wholly owned subsidiary in 2023, see Note 6 Notes Receivable. MotoClub (“MB”) is a majority-owned subsidiary,
Discontinued Operations
The Company accounts for discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations. The disposal of a component or group of components is classified as a discontinued operation if the disposal represents a strategic shift that has, or will have, a major effect on the Company’s operations and financial results. This includes the sale, abandonment, or other disposal of legal entities, business segments, or significant components.
Upon meeting the criteria for discontinued operations, the results of operations, including any gain or loss on disposal, are presented separately in the consolidated statements of operations for all periods presented.
Segment Reporting
The
Company uses the “management approach” to identify its reportable segments. Under this approach, the Company has
determined that it operates through
Segmented Information – Statements of Operations
SCHEDULE OF SEGMENT INFORMATION
| Six months ended June 30, 2026 | Holding Segment | Waste Segment | Total | |||||||||
| Revenue and other income: | ||||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of sales | ||||||||||||
| Revenue and other income | ||||||||||||
| Expenses | ||||||||||||
| Advertising & marketing | ||||||||||||
| Consulting fees | ||||||||||||
| Professional fees | ||||||||||||
| Other general and administrative expenses | ||||||||||||
| Change in derivative liability | ( | ) | ( | ) | ||||||||
| Interest expense and charges - note payable | ||||||||||||
| Net income (loss) before income taxes | $ | ( | ) | $ | $ | ( | ) | |||||
| Six months ended June 30, 2025 | Holding Segment | Waste Conversion Segment | Total | |||||||||
| Revenue and other income: | ||||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of sales | ||||||||||||
| Revenue and other income | ||||||||||||
| Expenses | ||||||||||||
| Stock based compensation (related and non-related party) | ||||||||||||
| Professional fees | ||||||||||||
| Other general and administrative expenses | ||||||||||||
| Change in derivative liability | ||||||||||||
| Interest expense and charges - note payable | ||||||||||||
| Net income (loss) before income taxes | $ | ( | ) | $ | $ | ( | ) | |||||
| 9 |
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and these differences could be material.
Cash and Cash Equivalents
Cash and cash equivalents include short-term, highly liquid investments, such as cash on account with commercial banks, certificates of deposit or money market funds that are readily convertible to known amounts of cash and have original maturities of three months or less. All cash balances are held by major banking institutions.
Contingent Liabilities
The Company accounts for its contingent liabilities in accordance with ASC No. 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
With respect to legal matters, provisions are reviewed and financial information is adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. The Company is party to a lawsuit see note 10.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
FASB Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”), clarifies the accounting for uncertainty in income taxes recognized in the financial statements. ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. We have determined that the Company does not have uncertain tax positions on its tax returns for the years 2025, and prior. Based on the evaluation of the 2026 transactions and events, the Company does not believe it has any material uncertain tax positions that require measurement.
The IRS requires all domestic corporations in existence for any part of the tax year to file an income tax return whether or not they have taxable income. The Company incurred a loss for the fiscal years ended December 31, 2025, and 2024 and has not filed tax returns for either year. The Company has not received any notifications from the IRS. Reported tax benefits and valuation allowances are the Company’s best estimate of its tax positions and have not been reviewed by the taxing authority.
We are subject to taxation in the U.S. and the state of California. The Company’s tax returns for tax years from 2022 to recent filings remain subject to potential examination by the tax authorities.
Accounts Receivable
The collectability of accounts receivable is determined by the Company’s legal obligation for payment by the customer, as well as the ability of the customer to pay its debts. The carrying amount of accounts receivable represents the maximum credit exposure of this balance.
Accounts receivable primarily consists of amounts due from customers for prior movie distribution rights and recyclable material intake and are reported at their net realizable value. From management’s best estimate, there is no allowance for doubtful accounts on June 30, 2026 and December 31, 2025. Management individually reviews accounts receivable balances and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that may not be collected and would directly write off these balances.
Allowance for Credit Losses
The Company estimates its allowance for credit losses using the Current Expected Credit Loss (CECL) model under ASC 326. The CECL model requires recognition of expected credit losses over the contractual life of financial assets held at the reporting date, considering historical experience, current conditions, and reasonable and supportable forecasts. Financial assets subject to CECL include trade receivables, notes receivable, and held-to-maturity debt securities. The Company groups financial assets based on shared risk characteristics and evaluates them collectively. Management reviews the adequacy of the allowance at each reporting period and updates estimates as appropriate. Changes in estimates are recorded in the income statement as a component of credit loss expense.
| 10 |
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted EPS on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
On
June 30, 2026 the Company had convertible debt outstanding convertible to shares of common stock, warrants exercisable to
Stock-Based Compensation
The Company has adopted FASB guidance on stock-based compensation. Under ASC 718-10-30-2 Stock Compensation, all share-based payments to employees, including grants of employee stock options, are to be recognized in the consolidated statements of operations based on their fair values. The fair value of the options is calculated using the Black Scholes valuation model (Note 15). Forfeitures of options are recognized as they occur.
Fair Value of Financial Instruments
The fair value is an exit price representing the amount that would be received to sell an asset or required to transfer a liability in an orderly transaction between market participants. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value: Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3: Unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value.
When determining fair value, whenever possible, the Company uses observable market data and relies on unobservable inputs only when observable market data is not available. As at June 30, 2026 and December 31, 2025, the Company did not have any level 1 or 2 financial instruments. As at June 30, 2026 and December 31, 2025, the Company’s level 3 financial instruments were derivative liabilities for warrants issued and outstanding that were not indexed to the Company’s stock, notes payable and notes receivable valued at their present values and equity investments in other entities.
The following table presents the Company’s assets and liabilities that are measured at fair value on a non-recurring basis at June 30, 2026.
SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE NON RECURRING
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||
| Liabilities | ||||||||||||
| Notes payable | $ | |||||||||||
| Derivative liability | $ | |||||||||||
| Convertible note payable | $ | |||||||||||
The following table presents the Company’s assets and liabilities that are measured at fair value on a non-recurring basis at December 31, 2025.
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||
| Liabilities | ||||||||||||
| Notes payable | $ | |||||||||||
| Derivatives liability | $ | |||||||||||
| Convertible note payable | $ | |||||||||||
Derivative Liabilities – Conversion Features
The Company evaluates whether embedded conversion features in its financial instruments meet the criteria for separate accounting under ASC 815, “Derivatives and Hedging.” If the conversion feature is not clearly and closely related to the host debt instrument and does not meet the scope exception for equity classification, it is bifurcated and accounted for as a derivative liability, remeasured to fair value each period using the Black-Scholes or binomial option pricing models.
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Revenue Recognition
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers, applying the standard five-step model to consulting services, recyclable material intake, and (for discontinued operations only) prior movie distribution and NFT revenue streams.
Consulting Services
Revenue from Renewable Energy Consulting services is derived from advisory and implementation services related to clean energy solutions. Revenue is recognized in accordance with ASC 606, Revenue from Contracts with Customers, when a service is performed for the customer, services may occur over time or under a services contract or for a specific event as stipulated in client contracts. Contract terms typically provide for billing upon completion of defined milestones or within standard payment cycles.
Movie Distribution Revenue
Movie distribution revenue is derived from the use of the Company’s intangible assets. Revenues earned to date are from nonrefundable minimum guaranteed payments recognized on the date distribution rights were granted to the purchaser and royalty revenues when certain cost recuperation thresholds and other contractual conditions are met. During 2024 operations ceased due to Management’s decisions to pursue a new line of business in renewable waste energy. There may be rights to residual collections from a past contract that may be transferred to a functioning entity at a future date. Funds received for unearned revenue are deferred revenue on the consolidated balance sheet and are recognized as revenue upon completion of milestones or specified tasks.
Recyclable Material Intake
The Company recognizes revenue from waste tires received from customers. Customers pay the Company for the collection, acceptance, and processing of waste tires. Revenue is recognized in accordance with ASC 606, Revenue from Contracts with Customers, at the point in time when the company accepts the waste material for processing and the agreed fee is due from the customer.
Disaggregated Revenue Disclosure
The Company’s customers or sources of revenue generation were only in the United States during the six months ended June 30, 2026. Below is a table of revenue by type:
SCHEDULE OF DISAGGREGATED REVENUE DISCLOSURE
| Revenue Type | June 30, 2026 | June 30, 2025 | ||||||
| Renewable consulting revenue | $ | $ | ||||||
| Recyclable Material intake revenue | ||||||||
| Revenue | $ | $ | ||||||
Operating Leases
The Company accounts for leases in accordance with ASC 842, Leases. At the commencement of a lease, the Company determines whether the arrangement is a finance or operating lease. Operating lease right-of-use (“ROU”) assets and related lease liabilities are recognized based on the present value of lease payments over the lease term at the commencement date. The Company uses its incremental borrowing rate to determine the present value of future lease payments when the implicit rate in the lease is not readily determinable. ROU assets include any prepaid lease payments and are reduced by lease incentives received. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Short-term leases (terms of twelve months or less) are not recorded on the balance sheet, and payments are recognized as expense when incurred.
Recent Accounting Pronouncements
Environmental Credits (Proposed Topic 818) - New guidance on how to account for environmental credits like carbon offsets and renewable energy certificates. Focus on consistent recognition, measurement, and disclosure.
Disaggregation of Income Statement Expenses (ASU 2024-03) - Companies must break out major expense categories (e.g., labor, depreciation) in the notes to financial statements. Aimed at improving transparency. Effective for annual periods after Dec 15, 2026 (early adoption allowed).
Income Tax Disclosure Improvements (ASU 2023-09) - Requires clearer details on income taxes paid (by federal, state, and foreign) and better breakdowns of rate reconciliations. Helps investors better understand a company’s tax situation.
3. CONCENTRATION AND CREDIT RISK
Financial
instruments which potentially subject the Company to credit risk consist of cash. Cash is maintained with a major financial institution
in the USA that is creditworthy. The Company maintains cash in bank accounts insured up to $
During
the six months ended June 30, 2026, total consulting revenue was generated from two customers and amounted to $
| 12 |
4. ACCOUNTS RECEIVABLE
As
of June 30, 2026 and December 31, 2025, the Company had accounts receivables of $
SCHEDULE OF ACCOUNTS RECEIVABLE
| Accounts Receivable | June 30, 2026 | December 31, 2025 | ||||||
| Accounts receivable beginning balance | $ | $ | ||||||
| Billings | ||||||||
| Allowance for uncollectable debt | ( | ) | ||||||
| Collections | ( | ) | ||||||
| Accounts receivable ending balance | $ | $ | ||||||
5. CAPITAL ADVANCE / PROPERTY, PLANT AND EQUIPMENT
During the six months ended June 30, 2026, the remaining equipment components cleared U.S. Customs and were delivered to the Company’s Midland facility. Upon delivery and transfer of custody to the Company, the related capital advances were reclassified to property, plant and equipment. As of June 30, 2026, had not yet been placed in service. Depreciation will commence in accordance with the Company’s fixed-asset depreciation policy when the equipment is installed and available for its intended use.
6. NOTES RECEIVABLE – RELATED PARTY
SCHEDULE OF NOTES RECEIVABLE
| June 30, 2026 | December 31, 2025 | |||||||
| Notes receivable - Enderby – current portion | $ | $ | ||||||
| Allowance for doubtful accounts, Enderby | ( | ) | ( | ) | ||||
| Notes receivable, Enderby – net | $ | $ | ||||||
On
August 20, 2021, the Company loaned $
During
the quarter ended September 30, 2024, the Company acquired certain assets of Fogdog for a full and final settlement of the Notes receivable
and made a payment of $
On
March 15, 2023, the Company signed an agreement with its partner in the jointly-owned subsidiary EnderbyWorks to become the
7. LOAN PAYABLES
Notes Payable
On
June 14, 2022, the Company issued a promissory note payable for $
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Convertible Notes Payable
On
June 16, 2023, Waste Energy acquired software, including a Web3 business metaverse platform, Chat GPT-powered AI avatar technology, and
domain portfolio, including UtopiaVR.com. Consideration for the acquisition of the assets included: (i) the issuance of shares
of common stock of the Company; (ii) the issuance of a convertible promissory note in the principal amount of $
On
June 11, 2024, the Company entered into a Convertible Loan Agreement (the “Agreement”) with a holder for a principal amount
of $
On
June 09, 2025, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
June 26, 2025, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
August 27, 2025, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
August 26, 2025, the Company issued a $
On
November 7, 2025, the Company issued a $
On
November 19, 2025, the Company issued a $
On
November 20, 2025, the Company issued a $
On
December 15, 2025, the Company issued a $
| 14 |
On
January 14, 2026, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
February 3, 2026, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
March 2, 2026, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
March 4, 2026, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
March 5, 2026, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
March 26, 2026, the Company entered into a promissory note agreement with one subscriber to raise a net amount of $
On
May 14, 2026, May 26, 2026 and June 22, 2026, the Company entered into separate convertible promissory notes with an accredited investor
and received proceeds of $
8. DERIVATIVE LIABILITIES
The Company has various convertible notes outstanding that requires derivative liability considerations for its conversion features. The following table summarizes the changes in derivative liability:
SCHEDULE OF CHANGES IN DERIVATIVE LIABILITY
| Description | June 30, 2026 | December 31, 2025 | ||||||
| Derivative Liability beginning balance | $ | $ | ||||||
| Initial recognition of derivatives | ||||||||
| Change in fair value | ( | ) | ( | ) | ||||
| Settlements/conversions | ( | ) | ( | ) | ||||
| Derivative Liability ending balance | $ | $ | ||||||
During
the six months ended June 30, 2026, the Company recognized an income of $
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Derivative liability is recognized as a present obligation determined using valuation techniques that rely on market-based or model-based assumptions, and may not require settlement in the form of cash or transfer of assets. Its actual settlement amount and timing are variable and contingent on underlying factors. The following table summarizes the weighted average key inputs used in the Black-Scholes model for all outstanding conversion feature derivative liabilities as of the measurement dates:
SCHEDULE OF DERIVATIVE LIABILITY EVALUATIONS
| Input | June 30, 2026 | December 31, 2025 | ||||||
| Stock price | $ | $ | ||||||
| Exercise price (conversion price) | $ | $ | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
| Dividend yield | % | % | ||||||
9. DEFERRED REVENUE
Prior
to December 31, 2024, the Company received $
During
the year ended December 31, 2025 the Company received $
On
April 21, 2026, the Company received a $
See table below for transactions that occurred during the six months ended June 30, 2026 and the year ended December 31, 2025:
SCHEDULE OF DEFERRED REVENUE
| June 30, 2026 | December 31, 2025 | |||||||
| Opening | $ | $ | ||||||
| Transfers to deposits payable | ( | ) | ||||||
| Customer deposits received | ||||||||
| Consulting fee earned | ( | ) | ( | ) | ||||
| Total deferred revenue | $ | $ | ||||||
10. COMMITMENTS AND CONTINGENCIES
Pledged Receivable
In
2019, the Company agreed to pledge the collections of a specific uncollected customer invoice in the amount of $
LarCo Holdings, LLC Litigation
On July 31, 2024, LarCo filed a complaint in the Superior Court of the State of Arizona, Maricopa County (Case No. CV2024-020438), against the Company; the Vendor; certain current and former executives and affiliates of the Vendor and of the Company’s predecessor entities, and their spouses; and other defendants. The claims arise from the 2019 private loan transaction described above, to which the Company was not a party. The Company’s undertaking in connection with that loan was conditional upon actual collection of the pledged invoice, which has not occurred. Accordingly, the Company believes it has no independent payment obligation to LarCo under the acknowledgment.
On
June 13, 2025, judgment on the loan was entered in LarCo’s favor against the Vendor and a former executive of the Company’s
predecessor, and on September 17, 2025, an amended judgment was entered against those parties in the approximate amount of $
On
January 15, 2026, LarCo filed a First Verified Amended Complaint (the “Amended Complaint”) asserting claims against the Company
for breach of contract, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, fraud-based claims,
conversion, unjust enrichment, and aiding and abetting. As against the Company, the Amended Complaint seeks, among other things, $
| 16 |
The Company believes the claims asserted against it are without merit, disputes the factual premises of the fraud-related allegations, and intends to defend the matter vigorously, including through dispositive motions. The Company is evaluating all rights, remedies, claims, and counterclaims available to it arising from this matter and reserves all such rights.
Management has determined that a loss related to this matter is not probable and that the amount or range of any reasonably possible loss cannot be estimated at this time, principally because dispositive motions directed at the claims that would define any such range remain to be adjudicated and the damages theories asserted are disputed. Accordingly, no loss contingency has been recorded in respect of this matter as of June 30, 2026.
11. LEASE LIABILITY / RIGHT OF USE ASSET
The
Company entered into an operating lease for its office premises beginning July 15, 2025, and expiring July 31, 2028. Monthly rent payments
range from $
Lease
expense is recognized on a straight-line basis over the lease term. For the six months ended June 30, 2026, total lease expense was approximately
$
The future minimum operating lease payments as of June 30, 2026, are as follows:
SCHEDULE OF FUTURE MINIMUM OPERATING LEASE PAYMENTS
| Year Ending December 31 | Amount ($) | |||
| 2026 (remainder) | ||||
| 2027 | ||||
| 2028 | ||||
| Total Lease Payments | ||||
| Less: Imputed Interest | ( | ) | ||
| Present Value of Lease Liability | ||||
12. RELATED PARTY TRANSACTIONS
On
January 22, 2018, the Company appointed James Geiskopf as Lead Director. On June 28, 2024, James resigned from the Company’s Board
of Directors. As of June 30, 2026 and December 31, 2025, the Company has accounts payable and accrued expenses owed to this related party
of $
On
April 1, 2021, the Company appointed Cameron Chell as Executive Chairman. On December 19, 2024, Cameron resigned from the Company’s
Board of Directors. As of June 30, 2026 and December 31, 2025, the Company had accounts payable and accrued expenses owed to this related
party of $
Our former Chairman, Cameron Chell (“Mr. Chell”) is the founder of Business Instincts Group, Inc. (“BIG”), a firm in the business of guiding early-stage ventures. On April 1, 2021, Mr. Chell was appointed Executive Chairman of the Company. On December 19, 2024, Mr. Chell resigned from the Company’s Board of Directors. Following his resignation from the Board, Mr. Chell was appointed chairman of the Company’s advisory board, a position he continues to hold as of the date of this Quarterly Report. During 2024, in the normal course of preparing the Company’s financial statements and evaluating historical transactions, the Company determined that Mr. Chell was a related party of the Company at the time certain obligations to BIG and to Mr. Chell individually were incurred. As a result, BIG and Mr. Chell are treated as related parties for purposes of this disclosure.
As
of June 30, 2026 and December 31, 2025, the Company had recorded accounts payable and accrued expense balances in connection with BIG
and Mr. Chell in the aggregate amount of $
The
entire aggregate balance is currently disputed. Because Mr. Chell’s related-party status was not identified at the time the underlying
obligations were incurred, both in his capacity as founder of BIG and in his capacity as Executive Chairman of the Company, the Company
is unable to confirm that the recorded balances were properly authorized, appropriately valued, or incurred in accordance with the Company’s
related-party transaction policies and applicable governance requirements. Accordingly, the amounts, if any, that may ultimately be determined
to be due and owing to BIG or Mr. Chell are subject to ongoing review and negotiation between the parties, including consideration of
the Company’s right to offset against such amounts any costs and damages incurred as a result of the failure to identify and disclose
the related-party relationship at the time the obligations were incurred. Until these matters are resolved, the full recorded aggregate
balance of $
On
December 4, 2018, the Company appointed Swapan Kakumanu as Chief Financial Officer. On March 5, 2025, Swapan resigned from the Company.
As of June 30, 2026 and December 31, 2025, the Company had
| 17 |
On
October 9, 2017, the Company signed an agreement with RTB LLP, a company owned by Swapan Kakumanu, to provide accounting services. On
December 31, 2024 the company owed a balance of $
On
August 1, 2022, the Company appointed Scott Gallagher as President. As of June 30, 2026 and December 31, 2025, the Company had accounts
payable and accrued expenses owing to this related party of $
On June 30, 2026, Braden Glasbergen resigned as the Company’s Chief Financial Officer, Treasurer and Secretary, effective immediately. Effective July 1, 2026, the Board of Directors appointed Scott Gallagher to serve as Interim Chief Financial Officer and W. Scott McBride to serve as Interim Treasurer and Secretary.
13. WARRANTS
All warrants outstanding on June 30, 2026 and December 31, 2025, have strike prices denominated in USD and met the criteria of equity instruments, therefore no derivative accounting necessary to determine a fair value. The following table summarizes changes in warrant outstanding in each period:
SCHEDULE OF CHANGES IN WARRANTS OUTSTANDING
| June 30, 2026 | December 31, 2025 | |||||||
| Outstanding at beginning of year | ||||||||
| Issuances | ||||||||
| Cancellations | ||||||||
| Expirations | ||||||||
| Outstanding at end of period | ||||||||
| Weighted Average Price | $ | $ | ||||||
| Weighted Average Remaining Years Outstanding | ||||||||
14. SHARE CAPITAL
During the three months ended June 30, 2026, the Company completed the following conversions of debt into common stock; upon each conversion, there was no gain or loss recorded as the conversion was consummated under the terms of the original agreement:
On
February 27, 2026, the Company converted $
On
March 4, 2026, the Company converted $
On
March 5, 2026, the Company converted $
On
March 9, 2026, the Company converted $
On
March 16, 2026, the Company converted $
On
March 18, 2026, the Company converted $
On
March 20, 2026, the Company converted $
On
March 23, 2026, the Company converted $
On
March 24, 2026, the Company converted $
On
July 15, 2026, the Company converted $
On
July 16, 2026, the Company converted $
On
July 16, 2026, the Company converted $
On
July 27, 2026, the Company converted $
On
July 27, 2026, the Company converted $
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Shares to be issued
On
March 12, 2025 the company entered into an agreement for a private placement for shares of the Company’s common stock
at a price of $ per share for the total consideration of $
On
June 16, 2025 the company entered into two agreements for private placements each for shares of the Company’s common
stock at a price of $per share for total consideration of $
On
July 04, 2025, the Company and one of its vendors agreed to settle an outstanding payable of $
On
August 15, 2025, the Company and certain of its vendors agreed to settle outstanding payables of $
Refer to note 12 for the shares issued to a related party. Refer to note 7 for the shares to be issued to the note holder in settlement of notes payable.
15. STOCK-BASED COMPENSATION
The
Company has adopted the 2017 Equity Incentive Plan (“the Plan”) under which non-transferable options to purchase common shares
of the Company may be granted to directors, officers, employees, or consultants of the Company.
The Company has also granted stock options to non-employees. These stock options were granted to consultants who have provided their services for cash compensation below cost, with the stock options providing additional compensation in lieu of cash. Grants prior to 2024 are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
On January 6, 2024, the Company granted a total of stock options to directors, officers and consultants of the Company. The stock options are exercisable at the exercise price of $ per share for a period of from the date of grant. The stock options have a fair value of $. The options vested immediately upon issuance.
On April 8, 2025, the Company granted a total of stock options to directors, officers and consultants of the Company. The stock options are exercisable at the exercise price of $ per share for a period of from the date of grant. The stock options have a fair value of $. The options vested immediately upon issuance.
Stock-based compensation expense recognized for the three and six months ended June 30, 2026 was $ and $ (three and six months ended June 30, 2025 – $ and $). Stock options granted are valued using a fair value calculation based on the Black-Scholes valuation model.
| Number of Options | Weighted Average Grant-Date Fair Value ($) | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Yrs) | |||||||||||||
| Options outstanding, December 31, 2025 | ||||||||||||||||
| Granted | - | |||||||||||||||
| Cancelled | - | |||||||||||||||
| Options outstanding, June 30, 2026 | ||||||||||||||||
| Options exercisable, June 30, 2026 | ||||||||||||||||
| Options exercisable, December 31, 2025 | ||||||||||||||||
As vesting conditions are not wholly dependent on the employee and there is no timeline for them, for accounting purposes, the fair value is calculated and the expense is recognized upon the achievement of the milestones. Nonvested options are valued at the date of the grant at the fair value of the common stock and are expensed over the vesting period.
16. INCOME TAXES
For all results of operations to date, there has been provision for income taxes and deferred tax assets have been entirely offset by valuation allowances.
| 19 |
As
of June 30, 2026 and December 31, 2025, the Company had net operating loss carry forwards of approximately $
SCHEDULE OF TAX COMPUTATIONS
| For the Six Months Ended June 30, 2026 | For the Six Months Ended June 30, 2025 | |||||||
| Net income (loss) before taxes | $ | ( | ) | $ | ( | ) | ||
| Adjustments to arrive at taxable income/loss | ||||||||
| Permanent differences: | ||||||||
| Temporary differences: | ( | ) | ||||||
| Taxable income (loss) | ( | ) | ||||||
| NOL carried forward prior year (tax return) | ( | ) | ( | ) | ||||
| NOL carried forward at period end | ( | ) | ( | ) | ||||
| Deferred Tax Asset - Federal Rate ( | $ | $ | ||||||
| Deferred Tax Asset - State Rate ( | ||||||||
| Total Deferred Tax Asset | ||||||||
| Valuation Allowance | ( | ) | ( | ) | ||||
| Deferred tax per books | $ | $ | ||||||
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities. In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
The returns filed from the year 2019 going forward are subject to examination by the IRS. The Company has not received any notification from the IRS. Reported tax benefits and valuation allowances are the Company’s best estimate of its tax positions and have not been reviewed by the taxing authority.
17. NON-CONTROLLING INTEREST
On
March 15, 2023, the Company signed an agreement with its partner in the jointly owned subsidiary EnderbyWorks, LLC to become the
The following table sets forth a summary of the changes in non-controlling interest:
SCHEDULE OF CHANGES IN NON-CONTROLLING INTEREST
| June 30, 2026 | December 31, 2025 | |||||||
| Non-controlling interest beginning of the period | $ | ( | ) | $ | ( | ) | ||
| Non-controlling interest end of period | $ | ( | ) | $ | ( | ) | ||
18. SUBSEQUENT EVENTS
Management has evaluated subsequent events and transactions through August 14, 2026, the date the consolidated financial statements were issued. Based on this evaluation, management determined that the following material subsequent events require disclosure in the financial statements.
Effective July 1, 2026, the Board of Directors appointed Scott Gallagher to serve as Interim Chief Financial Officer and W. Scott McBride to serve as Interim Treasurer and Secretary, following the resignation of Braden Glasbergen as Chief Financial Officer, Treasurer and Secretary effective June 30, 2026.
Subsequent to the period ending on June 30, 2026, and as a result of the late form 10K and 10Q filings several notes went into default, also after the end of the second quarter the following debt conversions were processed.
On
July 15, 2026, the Company converted $
On
July 16, 2026, the Company converted $
On
July 16, 2026, the Company converted $
On
July 27, 2026, the Company converted $
On
July 27, 2026, the Company converted $
On
July 31, 2026, the Company converted $
On
August 6, 2026, the Company converted $
Also subsequent to the period ending on June 30, 2026 Braden Glasbergen resigned as the Company’s Chief Financial Officer, Treasurer and Secretary, effective immediately. Effective July 1, 2026, the Board of Directors appointed Scott Gallagher to serve as Interim Chief Financial Officer and W. Scott McBride to serve as Interim Treasurer and Secretary.
| 20 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
This Form 10-Q contains forward-looking statements regarding our business, customer prospects, or other factors that may affect future earnings or financial results that are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which could cause actual results to vary materially from those expressed in the forward-looking statements. Investors should read and understand the risk factors detailed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“Annual Report”) and in other filings with the Securities and Exchange Commission.
We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. These risks include, among others: our proposed plan of operations; our financial and operating objectives and strategies to achieve them; the costs and timing of our services; our use of available funds; our capital and funding requirements; and our other financial or operating performances.
These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including our inability to efficiently manage our operations, general economic and business conditions, our negative operating cash flow, our ability to obtain additional financing, our ability to collect outstanding loans, increases in capital and operating costs, risks relating to regulatory changes or actions, and other risk factors discussed in our Annual Report on Form 10-K.
In this quarterly report, unless otherwise specified, all references to “shares” refer to shares of common stock in the capital of our company, and “we”, “us”, “the Company”, “our” and “Waste Energy” mean Waste Energy Corp. and its wholly-owned subsidiaries CurrencyWorks USA Inc., Energy Works, Inc. and EnderbyWorks LLC, and its 80% owned subsidiary Motoclub LLC, unless otherwise specified.
Overview
Waste Energy is a waste-to-energy company focused on converting plastic and tire waste into valuable energy products and environmental commodities. Our mission is to provide a sustainable and economically viable solution to the global plastic and tire waste crisis by utilizing advanced thermal conversion technology to transform waste materials into clean diesel fuel, carbon black, and synthetic gas. In addition to our core waste conversion business, we are actively developing a patent-pending AI-based emissions monitoring, management, and automated carbon credit creation technology to enhance transparency and efficiency in environmental markets.
Results of Operations
Three and Six Months Ended June 30, 2026 compared to the Three and Six Months Ended June 30, 2025
Revenue
During the three and six months ended June 30, 2026 we recognized total revenue of $22,500 and $125,000 for the three months ended June 30, 2026 and 2025, respectively, and $105,833 and $166,667 for the six months ended June 30, 2026 and 2025, respectively, generated from our waste conversion business, primarily from consulting services.
Operating Expenses
We incurred general and administrative expenses of $60,473 and $82,252 for the three months ended June 30, 2026 and 2025, respectively, and $426,312 and $129,111 for the six months ended June 30, 2026 and 2025, respectively, representing an increase (decrease) of $(21,779) and $297,201 between the respective periods. These expenses consisted primarily of stock-based compensation, consulting fees, professional fees, and other general and administrative costs. There was an overall increase in activity during the six months ended June 30, 2026 due to increased business development costs associated with the build out of our Midland waste conversion business.
Net Profit (Loss) from Operations
We incurred net income (loss) from operations of $(37,973) and $42,748 for the three months ended June 30, 2026 and 2025, respectively, and $(350,479) and $37,556 for the six months ended June 30, 2026 and 2025, respectively, primarily attributable to the factors discussed above under the headings “Revenue” and “Operating Expenses”.
Other Income (Expense)
Other income (expense) was $1,884,736 compared to $(1,581,705) for the three months ended June 30, 2026 and 2025, respectively, and $(239,915) compared to $(1,599,582) for the six months ended June 30, 2026 and 2025, respectively, consisting of interest expense and charges on notes payable and changes in the fair value of derivative liabilities, including losses on new derivatives and gains on settled derivatives. The change in expenses was a result of increased financing activities related to the build out of our Midland waste conversion business and loss on change in fair value of derivatives and loss on new and settled derivatives liabilities.
Net and Comprehensive Profit (Loss)
Net income (loss) attributable to Waste Energy was $1,846,763 compared to $(1,538,957) for the three months ended June 30, 2026 and 2025, respectively, and $(590,394) compared to $(1,562,024) for the six months ended June 30, 2026 and 2025, respectively. This change is primarily attributable to the factors discussed above under the headings “Operating Expenses” and “Other Income (Expense)”.
| 21 |
Liquidity and Capital Resources
Working Capital
| As at June 30, 2026 | As at December 31, 2025 | |||||||
| Current Assets | $ | 67,922 | $ | 99,744 | ||||
| Current Liabilities | (5,061,723 | ) | (4,597,087 | ) | ||||
| Working Capital (Deficit) | $ | (4,993,801 | ) | $ | (4,497,343 | ) | ||
Current Assets
Current assets on June 30, 2026, were comprised of cash and cash equivalents of $26,422, prepaid rent of $12,000, security deposit of $12,000 and accounts receivable net of $17,500.
Current assets on December 31, 2025, were comprised of cash and cash equivalents of $68,244, prepaid rent of $12,000, security deposit of $12,000 and accounts receivable net of $7,500.
Current Liabilities
On June 30, 2026, current liabilities were comprised of accounts payable and accrued expenses of $1,560,449 (related and unrelated parties), notes payable of $117,000, convertible notes payable $1,084,179, derivative liability of $2,045,395, current portion of lease liability of $139,500, deferred revenue of $37,500 and deposits payable of $77,700.
On December 31, 2025, current liabilities were comprised of accounts payable and accrued expenses of $1,497,767 (related and unrelated parties), notes payable $117,000, convertible notes payable $857,353, derivative liability of $1,828,934, lease liability of $135,000, deposits payable of $77,700 and deferred revenue of $83,333.
Cash Flow
| Six months ended June 30, 2026 | Six months ended June 30, 2025 | |||||||
| Net cash provided from (used in) operating activities | $ | (385,806 | ) | $ | 261,307 | |||
| Net cash used in investing activities | (111,076 | ) | (468,048 | ) | ||||
| Net cash provided by financing activities | 455,060 | 296,978 | ||||||
| Net changes in cash and cash equivalents | $ | (41,822 | ) | $ | 90,237 | |||
Operating Activities
Net cash provided by (used in) operating activities was $(385,806) for the six-month period ended June 30, 2026, compared to net cash provided of $261,307 for the six-month period ended June 30, 2025, primarily due to a large decrease in deferred revenue and timing of settlement of accounts payable and accrued liabilities.
Investing Activities
Net cash used in investing activities was $111,076 for the six-month period ended June 30, 2026, compared to $468,048 for the same period in 2025. The 2025 amount was primarily attributable to payments made to acquire the waste-to-energy machine, which has yet to be placed in service.
Financing Activities
Net cash provided by financing activities was $455,060 for the six months ended June 30, 2026, compared to $296,978 for the six months ended June 30, 2025. The cash provided during the six months ended June 30, 2026 was primarily due to the issuance of new convertible debentures of $716,000 offset by $260,940 in repayments. The cash provided during the six months ended June 30, 2025 was due to $150,000 from proceeds of stock to be issued, $225,000 in proceeds from convertible notes, less $78,022 in repayments to notes payable and convertible notes.
Cash Requirements
We expect that we will require between $800,000 and $1,000,000, taking into account our current working capital position, to fund our operating expenditures for the next twelve months. Our estimated general and administrative expenses for the next 12 months are comprised of consulting fees, accounting services, board of directors and advisory board fees, investor relations consultants, public relations and marketing consultants, legal and professional fees (including auditing fees), insurance, marketing and advertising expenses, trade shows, travel expenses, office rent and miscellaneous office expenses.
We will require additional cash resources to meet our planned capital expenditures and working capital requirements for the next 12 months. We expect to derive such cash through the sale of equity or debt securities or by obtaining a credit facility. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in debt service obligations, which could cause additional dilution to our stockholders, and could require us to agree to financial covenants that could restrict our operations or modify our plans to source new business opportunities. Financing may not be available in amounts or on terms acceptable to us, if at all. Failure to raise additional funds could cause our company to fail.
| 22 |
Going Concern
The accompanying condensed interim consolidated financial statements have been prepared on a going concern basis. On a consolidated basis, the Company has incurred significant operating losses since its inception. . For the six months ended June 30, 2026 and 2025, the Company incurred a loss of $590,394 and a loss of $1,562,024, respectively. On June 30, 2026 and December 31, 2025, the Company has an accumulated deficit of $51,625,618 and $51,035,224, negative working capital of $4,993,801 and $4,497,343, respectively, and cash balances of $26,422 and $68,244, respectively. Further losses are anticipated as the Company pursues business opportunities, raising substantial doubt about the Company’s ability to continue as a going concern.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
During the fiscal quarter ended June 30, 2026, the Company continued implementing improvements to its internal control over financial reporting. As part of these improvements, the Company retained an outside accounting firm with approximately 25 certified public accountants and substantial experience assisting SEC-reporting companies with public-company accounting and financial reporting requirements.
During the first and second quarters of 2026, the outside accounting firm assisted the Company in reviewing and correcting historical accounting matters, strengthening its financial reporting procedures, preparing account reconciliations and supporting schedules, and assisting with the preparation and review of the Company’s periodic reports. As of June 30, 2026, the management assumed primary responsibility for the Company’s accounting and financial reporting processes with assistance from the outside accounting firm.
The engagement provides the Company with access to a broader group of qualified accounting professionals, additional review and oversight, and improved continuity in the performance of critical accounting and financial reporting functions. Management believes these changes materially improved the Company’s internal control over financial reporting and reduced the risks previously associated with reliance upon a limited number of individuals.
Based upon management’s evaluation,enhanced accounting and financial reporting procedures were implemented but certain controls were not operating effectively as of June 30, 2026 to demonstrate operating effectiveness.
Other than the changes described above, there were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended June 30, 2026, the Company retained an outside accounting firm with approximately 25 certified public accountants and deep experience assisting SEC-reporting companies with public-company accounting and financial reporting requirements. The firm will be assisting management with the preparation and review of the Company’s periodic filings and related financial reporting obligations. This engagement provides the Company with broader access to qualified accounting personnel, additional review and oversight, and reduces the operational risk associated with reliance on a single individual for critical accounting and financial reporting functions.
Braden Glasbergen resigned as the Company’s Chief Financial Officer, Treasurer and Secretary effective June 30, 2026. Effective July 1, 2026, the Board appointed Scott Gallagher as Interim Chief Financial Officer and W. Scott McBride as Interim Treasurer and Secretary.
Other than the changes described above, there were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
LarCo Holdings, LLC Litigation
On July 31, 2024, LarCo Holdings, LLC (“LarCo”) filed a complaint in the Superior Court of the State of Arizona, Maricopa County (Case No. CV2024-020438), against the Company; a vendor of the Company (the “Vendor”); certain current and former executives and affiliates of the Vendor and of the Company’s predecessor entities, and their spouses; and other defendants. The claims arise from a 2019 private loan transaction between LarCo and the Vendor, to which the Company was not a party.
In connection with that loan, the Company executed an acknowledgment pursuant to which it agreed that, if the Company collected on a specific customer invoice in the amount of $752,500 that had been pledged as collateral for the Vendor loan, the Company would remit the proceeds of that collection to LarCo to be applied against the loan. The Company has never collected on the specified customer invoice, and the Company’s commitment to remit funds to LarCo was conditional upon such collection. Accordingly, the Company believes it has no independent payment obligation to LarCo under the acknowledgment.
On June 13, 2025, judgment on the loan was entered in LarCo’s favor against the Vendor and a former executive of the Company’s predecessor, and on September 17, 2025, an amended judgment was entered against those parties in the approximate amount of $1.57 million. The Company was not a party to, and has no liability under, that judgment.
On January 15, 2026, LarCo filed a First Verified Amended Complaint (the “Amended Complaint”) asserting claims against the Company for breach of contract, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, fraud-based claims, conversion, unjust enrichment, and aiding and abetting. As against the Company, the Amended Complaint seeks, among other things, $752,500 in respect of the pledged invoice; joint and several liability for the approximately $1.57 million judgment previously entered against the co-defendants described above; $1,875,000 asserted against all defendants in respect of certain pledged shares; punitive damages; and attorneys’ fees and costs.
In addition, LarCo has asserted purported rights, as a judgment creditor of the Vendor and a former executive of the Company’s predecessor, against amounts allegedly owed by the Company to such parties. The Company disputes that it owes any amounts subject to such claims, disputes the validity and enforceability of the asserted rights as against the Company, and has formally responded accordingly. No resolution of that assertion has been reached as of the date of this Quarterly Report.
The Company believes the claims asserted against it are without merit, disputes the factual premises of the fraud-related allegations, and intends to defend the matter vigorously, including through dispositive motions. The Company is evaluating all rights, remedies, claims, and counterclaims available to it arising from this matter and reserves all such rights.
Management has determined that a loss related to this matter is not probable and that the amount or range of any reasonably possible loss cannot be estimated at this time, principally because dispositive motions directed at the claims that would define any such range remain to be adjudicated and the damages theories asserted are disputed. Accordingly, the Company has not recorded a loss contingency in respect of this matter as of June 30, 2026.
Other Proceedings
From time to time, the Company may be party to or threatened with other litigation arising in the ordinary course of business. Other than as described above, management is not aware of any pending or threatened legal proceedings that are expected to have a material adverse effect on the Company.
ITEM 1A. RISK FACTORS.
As we are a smaller reporting company, we are not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Since the beginning of the fiscal quarter ended June 30, 2026, we have not sold any equity securities that were not registered under the Securities Act of 1933, as amended, that were not previously reported in a quarterly report on Form 10-Q or a current report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None
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ITEM 6. EXHIBITS.
The exhibit index from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 is to be carried forward and updated for agreements entered into during the quarter ended June 30, 2026, including the convertible promissory notes dated May 14, 2026, May 26, 2026 and June 22, 2026, and any other material contracts.
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| Exhibit Number | Description |
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| Exhibit Number | Description |
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| Exhibit Number | Description |
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| Exhibit Number | Description |
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| Exhibit Number | Description |
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WASTE ENERGY CORP. | |
| /s/ Scott Gallagher | |
| Scott Gallagher | |
| Interim Chief Financial Officer | |
| (Duly Authorized Officer) | |
| Date: August 14, 2026 |
| 31 |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a),
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Scott Gallagher, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Waste Energy Corp.;
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 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 this report;
4. I am 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 my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me 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 my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of 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 my 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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my 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 that 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: August 14, 2026
| By: /s/ Scott Gallagher | |
| Scott Gallagher | |
| Chief Executive Officer and Interim Chief Financial Officer | |
| (Principal Executive Officer and Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Waste Energy Corp. (the “Company”) for the quarterly period ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Gallagher, President and Interim Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 14, 2026
| /s/ Scott Gallagher | |
| Scott Gallagher | |
| President and Interim Chief Financial Officer | |
| (Principal Executive Officer and Principal Financial Officer) |
The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and 18 U.S.C. Section 1350 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, except to the extent expressly incorporated by specific reference in such filing.