Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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)".

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.

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.