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 Months Ended March 31, 2026 compared to the Three Months Ended March 31, 2025

Revenue

During the three months ended March 31, 2026 we recognized total revenue of $83,333 generated, coming from our waste conversion business, for the period ending March 31,2026 revenue was generated from consulting services for our waste conversion business. We recognized total revenue of $41,667 for the three months ended March 31, 2025, coming from consulting services.

Operating Expenses

We incurred general and administrative expenses of $ 365,839 and $46,858 for the three months ended March 31, 2026 and 2025, respectively, representing an increase of $318,981 between the two periods. These expenses consisted primarily of stock-based compensation, consulting fees, professional fees, and other general and administrative costs. The increase is a result of increased business development costs associated with the build out of our Midland waste conversion business.

Net Profit (Loss) from Operations

We incurred net loss from operations of $312,506 and $5,191 for the three months ended March 31, 2026 and 2025, respectively, representing an increase in our net loss of $307,315, primarily attributable to the factors discussed above under the headings "Revenue" and "Operating Expenses".

Other Income (Expense)

Other Expense was $2,124,651 compared to $17,877 for the three months ended March 31, 2026 and 2025, resulting in an increase of $2,106,774 for the period ended March 31,2026. The increase 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 liabilties during the three months ended March 31, 2026.

Net and Comprehensive Profit (Loss)

Net loss attributable to Waste Energy was $2,437,157 compared to a net loss of $23,068 for the three months ended March 31, 2026 and 2025, respectively, representing an increase in net loss of $2,414,089. This is primarily attributable to the factors discussed above under the headings "Operating Expenses" and "Other Income (Expense) relating to increased development and financing activities related to the build out of the Midland waste conversion business.

Liquidity and Capital Resources

Working Capital

		As at March 31, 2026				As at December 31, 2025
Current Assets		$	98,908			$	99,744
Current Liabilities			(6,831,105	)			(4,597,087	)
Working Capital (Deficit)		$	(6,732,197	)		$	(4,497,343	)

Current Assets

Current assets on March 31, 2026, were comprised of cash and cash equivalents of $67,408, prepaid rent of $12,000, security deposit of $12,000 and accounts receivable net of $7,500.

Current assets on December 30, 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 March 31, 2026, current liabilities were comprised of accounts payable and accrued expenses of $1,534,406 (related and unrelated parties), notes payable of $117,000, convertible notes payable $916,832, derivative liability of $4,045,667, current portion of lease liability of $139,500 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, and deferred revenue of $83,333.

Cash Flow

		Three months ended March 31, 2026				Three months ended March 31, 2025
Net cash provided from (used in) operating activities		$	(373,040	)		$	339,619
Net cash used in investing activities			-				(310,000	)
Net cash provided by financing activities			372,206				34,005
Net changes in cash and cash equivalents		$	(834	)		$	63,624

Operating Activities

Net cash used by operating activities was $373,040 for the three-month period ended March 31, 2026, compared to net cash used of $339,619 for the three-month period ended March 31, 2025, representing a decrease of $712,659. This decrease was primarily due to a $516,666 year over year decrease in deferred revenue and timing of settlement of accounts payable and accrued liabilities.

Investing Activities

Net cash used in investing activities was $nil for the three-month period ended March 31, 2026, compared to $310,000 for the same period in 2025, a decrease of $310,000. This decrease was primarily attributable to payments made to acquire a waste-to-energy machine during the three months ended March 31, 2025.

Financing Activities

Net cash provided by financing activities was $372,206 for the three months ended March 31, 2026, compared to $34,005 for the three months ended March 31, 2025, representing an increase of $338,201. The increase was primarily due to the Company proceeds from convertible notes during the three months ended March 31, 2026.

Cash Requirements

We expect that we will require between $750,000 and $900,000, including our current working capital, 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, and 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 for amounts at 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 period ended March 31, 2026 and 2025, the Company incurred net loss of $2,437,157 and $23,068, respectively. On March 31, 2026 and December 31, 2025, the Company has an accumulated deficit of $53,472,381 and $51,035,224, negative working capital of $6,732,197 and $4,497,343, respectively, and cash balances of $67,408 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.