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 | (I.R.S. Employer | |
| incorporation or organization) | 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 | ||
| Nil | 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: shares of common stock issued and outstanding as at June 6, 2025.
TABLE OF CONTENTS
| 2 |
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 quarter ended March 31, 2025 include all adjustments necessary in order to ensure that the unaudited condensed interim consolidated financial statements are not misleading.
| 3 |
Waste Energy Corp.
Condensed Consolidated Balance Sheets
| March 31, 2025 | December 31, 2024 | |||||||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Interest receivable, net (see note 7) | ||||||||
| Notes receivable, net (see note 7) | ||||||||
| Total Current Assets | ||||||||
| Non-current assets | ||||||||
| Capital advance | $ | $ | ||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses, related party | ||||||||
| Deferred revenue | ||||||||
| Notes payable, net | ||||||||
| Derivatives liability | ||||||||
| Convertible notes payable – software acquisition | ||||||||
| Convertible notes payable – other | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding as at March 31, 2025 and December 31, 2024, respectively | ||||||||
| Additional paid-in-capital | ||||||||
| Stock subscriptions payable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Waste Energy Corp. Stockholders’ Equity | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 4 |
Waste Energy Corp.
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||
| Revenues | ||||||||
| Consulting services | $ | $ | ||||||
| Total revenues | ||||||||
| Operating expenses | ||||||||
| General and administrative expense | ||||||||
| Total operating expenses | ||||||||
| Net loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Note interest expense | ( | ) | ( | ) | ||||
| Bad debt (recovery) | ||||||||
| Investment write-off | ( | ) | ||||||
| Total other income | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss (income) from non-controlling interest | ||||||||
| Net loss attributable to Waste Energy Corp. | ( | ) | ( | ) | ||||
| Net loss per common share – basic and diluted | $ | ) | $ | ) | ||||
| Weighted average number of common shares outstanding, basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 5 |
Waste Energy Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||
| Operating activities | ||||||||
| Net 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 | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accrued interest on convertible notes payable | ||||||||
| Accounts payable and accrued expenses, related party | ( | ) | ( | ) | ||||
| Deferred revenue | ||||||||
| Net cash used in operating activities | ( | ) | ||||||
| Investing activites | ||||||||
| Capital advance | $ | ( |
) | $ | ||||
| Net cash used in investing activies | ( |
) | ||||||
| Financing activities | ||||||||
| Proceeds from the stock to be issued | ||||||||
| Proceeds from issuance of convertible note | ||||||||
| Proceeds from issuance of note payable | ||||||||
| Payments made on notes payable | ( | ) | ( | ) | ||||
| 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.
| 6 |
Waste Energy Corp.
Condensed Consolidated Statements of Cash Flows (cont’d)
(Unaudited)
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||||||
| Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||
| Cash paid in interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Stock-based compensation | $ | $ | ||||||
| Stock-based compensation – related party | $ | $ | ||||||
| Full 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.
| 7 |
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, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||
| Stock-based compensation, related party | ||||||||||||||||||||||||||||
| Share issuance on conversion of loan payable | ||||||||||||||||||||||||||||
| Share issuance on conversion of loan payable | ||||||||||||||||||||||||||||
| Share issuance for services | ||||||||||||||||||||||||||||
| Shares issuance for services - related party | ||||||||||||||||||||||||||||
| Shares issued for cash – private placement | ||||||||||||||||||||||||||||
| Net income/(loss) for the year | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||
| Share issuance on conversion of note payable | ||||||||||||||||||||||||||||
| Private placement for cash – to be issued | ||||||||||||||||||||||||||||
| Net income/(loss) for the year | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, March 31, 2025 (unaudited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 8 |
Waste Energy Corp.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
As of March 31, 2025 and for the three months ended March 31, 2025 and 2024
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 September 3, 2019, the Company changed its name from “ICOx Innovations Inc.” to “CurrencyWorks Inc.” and a subsidiary of the Company changed its name from “ICOx USA, Inc.” to “CurrencyWorks USA Inc.”.
On June 22, 2021, we incorporated a new Delaware subsidiary, Motoclub LLC, to create a marketplace for digital automotive collectibles. This entity is deemed a discontinued operation.
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. This entity is deemed a discontinued operation.
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”).
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 period ended March 31, 2025 and 2024, 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.
| 9 |
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 if America of (“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.
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. (“EG”) and Enderby Works LLC (“EW”) are wholly owned subsidiaries. EW became
a wholly owned subsidiary in 2023, see Note 7 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. Assets and liabilities of discontinued operations classified as held for sale are presented separately in the consolidated balance sheets, if applicable. If the assets and liabilities associated with the discontinued operation do not meet the held-for-sale criteria, they should not be presented separately on the balance sheet. Instead, they remain within their respective asset and liability categories. The results of operations of the discontinued component are still reported separately in the consolidated statement of operations.
Management evaluates and updates the classification of operations as discontinued when relevant events occur, such as the approval of a sale plan, abandonment, or completion of disposal.
Segment reporting
The Company reports segment information in accordance with ASC 280, Segment Reporting, based on the manner in which the Chief Operating Decision Maker (CODM) allocates resources and assesses performance. The Company’s chief operating decision maker (“CODM”) is the chief executive officer of the Company, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. During the three months ending March 31, 2025 and the year ended December 31, 2024 the Company has identified three reportable operating segments:
| 1. | Administrative Segment – Includes corporate functions such as finance, legal, human resources, and executive management. This segment supports the operations of the other business units and does not generate revenue. |
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Advertising & marketing | ||||||||
| Consulting fees | ||||||||
| Licenses | ||||||||
| Stock based compensation (related and non-related party) | ||||||||
| Rent | ||||||||
| Professional fee | ||||||||
| Accounting | ||||||||
| Other general and administrative | ||||||||
| Operating expense total | ||||||||
| Change in derivative liability | ||||||||
| Loss on indirect write off – note receivable | ||||||||
| Loss from investment write-off | ||||||||
| Interest expense and charges - note payable | ( | ) | ( | ) | ||||
| Gain from debt forgiveness | ||||||||
| Other income (expense) | ( | ) | ( | ) | ||||
| Net loss from continued operations | ( | ) | ( | ) | ||||
| 2. | Renewable Energy Consulting Segment – Engaged in providing advisory and implementation services related to clean energy solutions. Revenue is generated through consulting contracts and project-based services. |
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Consulting services | $ | $ | ||||||
| Total Revenue | ||||||||
| Advertising & marketing | ||||||||
| Consulting fees | ||||||||
| Licenses | ||||||||
| Other general and administrative | ||||||||
| Operating expense total | ||||||||
| Net profit from continued operations | ||||||||
| 3. | Renewable Energy Generation Segment – Comprises assets and operations related to the production of renewable energy, including waste-to-energy. This segment is currently in the development phase. Expenses incurred to date have been primarily capital in nature, and accordingly, there are no material operating expenses reported in the segment results during the reporting period. |
Segment results are reviewed by the CODM primarily on the basis of segment-level expenditures and project progress. Intersegment transactions, if any, are eliminated in consolidation. The accounting policies of the segments are consistent with those described in the consolidated financial statements.
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.
The most significant estimates made by management in the preparation of the financial statements relate to the estimates used to calculate the fair value of certain liabilities, the derivative liability, present value of note payable and note receivable, the valuation of investments and any impairment and the net book value of long-lived assets. Management bases its estimates on historical experience and on other various assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from such estimates under different assumptions and conditions.
Management evaluates the collectability of notes receivable in accordance with the Current Expected Credit Loss (“CECL”) model under ASC 326. This approach requires the Company to estimate expected credit losses over the contractual life of the notes, considering historical loss experience, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is adjusted through earnings and reflects management’s best estimate of losses expected to be incurred. When collection is no longer reasonably assured or the note is deemed uncollectible, it is written down to its estimated recoverable amount. These estimates involve significant judgment and are subject to change as conditions evolve.
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.
| 10 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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 11.
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. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have determined that the Company does not have uncertain tax positions on its tax returns for the years 2023, and prior. Based on the evaluation of the 2024 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, 2024, and 2023 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.
Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our consolidated balance sheets at March 31, 2025 or December 31, 2024, and have not recognized interest and/or penalties in the consolidated statement of operations for the period ended March 31, 2025 or year ended December 31, 2024.
We are subject to taxation in the U.S. and the state of California. The Company’s tax returns for tax years from 2021 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 balances relate to the consulting services business and are reported at their net realizable value. From management’s best estimate, there is no allowance for doubtful accounts on March 31, 2025, and December 31, 2024. 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. Management considers several factors, including the age of the receivables, current economic conditions and other information management obtains regarding the financial condition of customers. The policy for determining the past due status is based on the contractual payment terms of each customer. If conditions are identified that pose significant risk of non-collections the determination to directly write off uncollectible receivables is made.
Equity Investments
The Company accounts for equity investments in accordance with ASC 321. Equity securities without a readily determinable fair value are measured at cost, less impairment, adjusted for observable price changes. Equity securities with a readily determinable fair value are measured at fair value, with changes in fair value recognized in earnings.
Investments
in equity method investees are accounted for under the equity method if the Company has significant influence, generally presumed when
ownership is between
The Company evaluates equity investments for impairment at each reporting date and recognizes a loss in earnings when a qualitative assessment indicates the investment is impaired and the fair value is less than the carrying value.
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. The allowance is measured using a combination of historical loss rates, adjusted for current economic trends and forward-looking factors such as industry outlook and macroeconomic indicators (e.g., unemployment rate, GDP).
Under CECL, the carrying amount of a financial asset (net of the allowance for credit losses) represents the amount the Company expects to collect. This means that when the CECL estimate is appropriately recorded, the net reported balance of financial assets reflects management’s best estimate of collectible cash flows, based on available and supportable information.
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.
| 11 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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 diluted potential common shares outstanding during the period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of warrants or stock options (Note 13 and Note 15 respectively). Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
On
March 31, 2025 the Company had convertible debt outstanding, 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 income statement based on their fair values. The fair value of the options is calculated using the Black Scholes valuation model (Note 15).
The Company has issued stock options to employees and non-employees. Stock options granted to non-employees for services or performance not yet rendered would be expensed over the service period or until the goals have been reached. Stock options granted to employees are expensed over the vesting period of the options. The fair value of stock options is determined on the grant date.
Forfeitures of options are recognized as they occur. Compensation cost previously recognized is reversed on the date of forfeiture for any options that are forfeited prior to the completion of the requisite service period or vesting period.
Cancellation of an award accompanied by the concurrent grant of (or offer to grant) a replacement award of other valuable consideration is accounted for as a modification of the terms of the canceled award. The total compensation cost measured on the date of a cancellation and replacement at the portion of the grant-date fair value of the original award for which the requisite service is expected to be rendered (or has already been rendered) at that date plus the incremental cost resulting from the cancellation and replacement.
A cancellation of an award that is not accompanied by the concurrent grant of (or offer to grant) a replacement award of other valuable consideration is accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation cost is recognized on the cancellation date.
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. As such, fair value of a financial instrument is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or a liability.
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. These assumptions are required to be consistent with market participants assumptions that are reasonably available. |
| 12 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
The Company’s financial instruments consist of equity investments, note receivables, derivative liabilities and notes payable. The Company’s note receivables were indirectly written down to zero due to potential non-collections. The Company’s derivative liabilities have a fair value of zero principally due to a decline in the stock price. These instruments are in level 3 of the fair value hierarchy.
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 of March 31, 2025 and December 31, 2024, the Company did not have any level 1 or 2 financial instruments. On March 31, 2025 and December 31, 2024 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 March 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 | $ | |||||||||||
| Derivative liability | $ | |||||||||||
| Convertible notes 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, 2024.
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||
| Liabilities | ||||||||||||
| Notes payable, net | $ | |||||||||||
| Derivative liability | $ | |||||||||||
| Convertible notes 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.
Derivative liabilities are initially measured at fair value on the issuance date and measured at each reporting period, with changes in fair value recognized in earnings. The fair value of these liabilities is determined by using appropriate valuation models, such as the Black-Scholes or binomial option pricing models, incorporating inputs such as the Company’s stock price, volatility, risk-free interest rate, and the terms of the conversion feature.
Revenue recognition
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the Company satisfies a performance obligation
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.
When determining the transaction price, the Company also considers the effects of all of the following:
| ● | Variable consideration | |
| ● | Constraining estimates of variable consideration | |
| ● | The existence of a significant financing component in the contract | |
| ● | Noncash consideration | |
| ● | Consideration payable to a customer |
During the year ended December 31, 2024 decisions were being made to divert the business’ focus from software development and consulting, and digital asset platforms to Waste Energy, and the Company also changed its name on September 6, 2024 from “Metaworks Platforms, Inc.” to “Waste Energy Corp”. There remain a few customer projects that would continue to generate revenue from previous revenue streams whilst the Company restructures its operations to generate revenues in the waste-to-energy industry.
The Company plans to generate revenues in the waste-to-energy industry and is evaluating various business opportunities to determine which line of business to pursue.
| 13 |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Consulting Services
Consulting service revenue is derived from providing professional knowledge and skills for creation of digital assets platforms and advisory services to third-party customers. The contract and performance obligations are created based on the needs of the customer and the abilities of the Company to provide the required services. The allocation of the transaction price to the individual performance obligations in the contract may be specified by task or by phase depending on the work being done. Revenue is recognized upon completion of the performance obligations. Revenues from ongoing services are recognized ratably over the related period. Revenue is recognized for the creation of software and web-based platforms upon completion and delivery. There are various tasks associated with providing this service for which customers are charged, nevertheless, no single task has a standalone fair value and each is only valuable to the customer when the project’s objective is accomplished. Therefore, consulting services are considered a single revenue stream requiring all related tasks to accomplish a specified customer objective. During 2024 operations ceased due to Management’s decisions to pursue a new line of business in renewable waste energy.
Non-Fungible Token (‘NFT”) Revenue
NFT revenue is derived from the sale of NFTs. These NFTs are created by the Company’s subsidiaries and are sold through an online sales platform or through an auction. Revenue is recognized when the Company transfers the ownership of the NFT to the customer. During 2024 operations ceased due to Management’s decisions to pursue a new line of business in renewable waste energy.
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. Future revenues may be recognized from revenue generated by the purchaser or by additional distribution sales over the term of the movie rights license. 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.
Disaggregated Revenue Disclosure
Principally all customers are located in the USA. During the quarter ended March 31, 2025, the Company’s consulting revenue is from a single source. During the quarter ended March 31, 2024 no revenues were generated.
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. Still in proposal stage (comment period through April 2025).
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.
Tax Credit Investments (ASU 2023-02) - Expands the option to use proportional amortization accounting for more types of tax credit investments, like renewable energy projects. Helps match the recognition of tax benefits with investment costs.
| 14 |
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 period ended March 31, 2025 one customer made up
During
the period ended March 31, 2025, one customer individually made up
4. DISCONTINUED OPERATIONS
During 2024 operations in digital platform consulting, NFT market and movie rights ceased due to Management’s decisions to pursue a new line of business in renewable waste energy.
No asset or liability was held for sale and therefore not disclosed separately. Revenues and costs directly related to the generation of these revenues were separated for discontinued operations disclosure and reporting purposes.
| Discontinued operations - net income (loss) | For
the three months ended March 31, 2025 | For
the year ended December 31, 2024 | ||||||
| Revenue | ||||||||
| Consulting services | $ | $ | ||||||
| NFT revenue | ||||||||
| Movie distribution revenue | ||||||||
| Expenses: | ||||||||
| General and administrative - Other | ||||||||
| General and administrative - Service Costs | ||||||||
| Loss on impairment of software | ||||||||
| Net loss from discontinued operations | $ | $ | ( | ) | ||||
| Discontinued operations - cash flows | ||||||||
| Net loss for the year from discontinued operations | ( | ) | ||||||
| Loss on impairment of software | ||||||||
| Net cash (used in) operating activities from discontinued operations | $ | $ | ||||||
5. ACCOUNTS RECEIVABLE
As
at March 31, 2025, the Company had accounts receivables of $
6. CAPITAL ADVANCE
On February 21, 2025, and March 28, 2025, the Company
made payments of $
As of the reporting date, the asset remains under the control and custody of the vendor and under construction. Accordingly, the asset does not yet meet the criteria for capitalization under ASC 360, Property, Plant, and Equipment. Instead, the payments have been classified as capital advance on the balance sheet, pending its transfer of control and the completion of the asset to be placed in service.
The asset is expected to be completed and custody to be transferred to the Company by November 2025, at which point the Company anticipates reclassifying the capital advance to Construction in Progress and subsequently to Property, Plant, and Equipment upon the asset being placed in service. The Company will begin depreciation in accordance with its fixed asset depreciation policy once the asset is available for its intended use.
7. NOTES RECEIVABLE – RELATED PARTY
| March 31, 2025 | December 31, 2024 | |||||||
| Notes receivable - Enderby – current portion | ||||||||
| Allowance for doubtful accounts, Enderby | ( | ) | ( | ) | ||||
| Notes receivable, Enderby – net | ||||||||
On
May 5, 2021, the Company loaned $
The
allowance for doubtful accounts for the notes receivable converted to shares in the quarter ended June 30, 2024 was recovered resulting
in a gain of $
On
August 20, 2021, the Company loaned an additional $
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
| 15 |
8. LOAN PAYABLES
Notes Payable
On
June 14, 2022, the Company issued a promissory note payable for $
On
November 8, 2022, the Company entered into a promissory note agreement (“Note B”) to raise $
On
April 19, 2023, the Company entered into a promissory note agreement (“Note C”) with one subscriber to raise a net amount
of $
On
September 5, 2023, the Company entered into a promissory note agreement (“Note D”) that was dated September 5, 2023 with
one subscriber (the “Holder”) to raise a net amount of $
| 16 |
8. LOAN PAYABLES (CONT’D)
On
December 5, 2023, the Company entered into a promissory note agreement (“Note E”) with one subscriber (the “Holder”)
to raise a net amount of $
On
April 28, 2023, the company received a $
On
July 2, 2024, the Company closed on a convertible promissory note (the “Promissory Note”) and entered into a securities purchase
agreement dated July 1st, 2024 with one subscriber (the “Holder”) to raise a net amount of $
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. This acquisition also includes a patent-pending IP technology relating to metaverse haptics
that will hold potential for future development and licensing opportunities. Consideration for the acquisition of the assets included:
(i) the issuance of shares of common stock of the Company (each, a “Share”); (ii) the issuance of a convertible
promissory note in the principal amount of $
On
March 4, 2024, the Company officially entered into a promissory note agreement that was dated March 1, 2024 with one subscriber (the
“Holder”) to raise a net amount of $
On
June 11, 2024, the Company entered into a Convertible Loan Agreement (the “Convertible Loan Agreement”) for a total of $
| 17 |
9. DERIVATIVE LIABILITIES
The
Company has various convertible notes outstanding that requires derivative liability considerations for it conversion features. Total
derivative liability on December 31, 2024 was $
For
the year ended December 31, 2024, the Company recorded a loss of $
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:
| Input | Weighted Avg. On March 31, 2025 | Weighted Avg. on December 31, 2024 | ||||||
| Stock price | $ | $ | ||||||
| Exercise price (conversion price) | $ | $ | ||||||
| Risk-free interest rate | ||||||||
| Expected term (years) | ||||||||
| Expected volatility | % | % | ||||||
| Dividend yield | % | % | ||||||
The following table summarizes the changes in derivative liability:
| Description | March 31, 2025 | December 31, 2024 | ||||||
| Derivative Liability beginning balance | $ | $ | ||||||
| Initial recognition of derivatives | ||||||||
| Change in fair value | ||||||||
| Settlements/conversions | ( | ) | ||||||
| Derivative Liability ending balance | $ | |||||||
10. DEFERRED REVENUE
Prior
to December 31, 2024, the Company received $
During
the quarter ended March 31, 2025 the Company received $
See table below for transactions that occurred during the quarter:
| 31-Mar-25 | 31-Dec-24 | |||||||
| Opening | $ | $ | ||||||
| Customer deposits received | ||||||||
| Consulting fee earned | ( | ) | ||||||
| Total deferred revenue | ||||||||
11. COMMITMENTS AND CONTINGENCIES
Contingent Commitments
The
Company entered into a rental agreement with a related party on August 23, 2021, for its corporate office address on 3250 Oakland Hills
Court, Fairfield, California, 94561. The lease expired on August 31,2022; it was originally for one year at a rate of $2,000/month. Since
its expiration there has been no formal agreement written to extend the rent arrangement, but it is informally extended on a month-to-month
basis. During the Quarter ended March 31, 2025 the company has not accrued rent due to charges being waived by the related
party. During 2024, a total of $
On
June 2, 2019, the Company agreed to pledge an uncollected invoice in the amount of $
Litigation
From time to time, the Company may be a defendant in pending or threatened legal proceedings arising in the normal course of its business. Management is not aware of any pending, threatened, or asserted claims, other than the matter disclosed below.
On
July 31, 2024, LarCo Holdings, LLC (“LarCo”) filed a joint complaint against BIG and the Company in the Superior Court of
the State of Arizona, Maricopa County, claiming damages in the amount of $
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 March 31, 2025 and December 31, 2024, 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
Bord of Directors. As of March 31, 2025 and December 31, 2024, the Company had accounts payable and accrued expenses owed to this related
party of $
On
August 1, 2022, the Company appointed Scott Gallagher as President. As of March 31, 2025 and December 31, 2024, the Company had accounts
payable and accrued expenses owing to this related party 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 March 31, 2025 and December 31, 2024, the Company had
On
October 9, 2017, the Company signed an agreement with RTB LLP. a company owned by Swapan Kakumanu to provide accounting services. As
of March 31, 2025 and December 31, 2024, the Company had accounts payable and accrued expenses owed of $
Cameron
Chell “Cameron” founded Business Instincts Group Inc. (“BIG”). BIG is in the business of guiding early-stage
ventures through the critical process of achieving product-market fit. As Co-founder of BIG he advises on operational and marketing strategies
for BIG. BIG was therefore deemed a related party. As of March 31, 2025 and December 31, 2024, the Company had an accounts payable and
accrued expense balance owed to BIG in the amount of $
See Note 11 for commitment, contingencies and litigation involving a related party “BIG”.
See Note 7 for additional Note Receivable related party transactions.
| 18 |
13. WARRANTS
A related party cancelled warrants outstanding during 2024. All warrants outstanding on March 31, 2025 and December 31, 2024, 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:
| 31-Mar-25 | 31-Dec-24 | |||||||
| Outstanding at beginning of year | ||||||||
| Cancellations | ( | |||||||
| Expirations | ( | ) | ||||||
| Outstanding at end of period | ||||||||
| Weighted Average Price | $ | $ | ||||||
| Weighted Average Remaining Years Outstanding | ||||||||
On
January 6, 2024, the Company issued shares of our common stock at a deemed price of $ per share in settlement of amounts
owed for services totaling $
On
March 1, 2024, we issued shares of our common stock at a price of $ per share for aggregate gross proceeds of $
On
March 1, 2024 we converted $
On
March 1, 2024 the Company issued shares of our common stock in payment for a one-year production and media broadcast agreement
valued at $
On
June 7, 2024 the company converted $
On
June 20, 2024 the Company converted $
On
June 27, 2024 the Company converted $
On
July 4, 2024 the Company converted $
On
December 19, 2024 the Company converted $
On
January 2, 2025 the Company converted $
On
February 10, 2025 the Company converted $
On
February 18, 2025 the Company converted $
On
March 4, 2025 the Company converted $
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 $
| 19 |
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.
On February 10, 2021, the Company granted a total of stock options to consultants. The stock options are exercisable at the exercise price of $ per share for a period of ten years from the date of grant. The stock options have a fair value of $ and are exercisable as follows:
(i) 1/3 on the first anniversary date;
(ii) 1/3 on the second anniversary date; and
(iii) 1/3 on the third anniversary date.
On March 19, 2021, the Company granted a total of stock options to a consultant. 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 $ and are exercisable as follows:
(i) 1/3 on the first anniversary date;
(ii) 1/3 on the second anniversary date; and
(iii) 1/3 on the third anniversary date.
On May 5, 2021, the Company granted a total of stock options to a consultant. 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 $ and are exercisable as follows:
(i) 1/3 on the first anniversary date;
(ii) 1/3 on the second anniversary date; and
(iii) 1/3 on the third anniversary date.
On June 15, 2021, the Company granted a total of stock options to a consultant. 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 $ and are exercisable as follows:
(i) 1/3 on the first anniversary date;
(ii) 1/3 on the second anniversary date; and
(iii) 1/3 on the third anniversary date.
On September 6, 2022, stock options held by a consultant were forfeited.
On August 26, 2022, the Company granted a total of stock options to officers and directors 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 $ and are exercisable as follows:
(i) 1/2 the date of the grant; and
(ii) 1/2 on the first anniversary date;
On August 26, 2022, the Company granted a total of stock options to an officer 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 $ and are exercisable as follows:
(i) 1/3 the date of the grant;
(ii) 1/3 on the first anniversary date; and
(iii) 1/3 on the second anniversary date.
On February 22, 2023, the Company granted a total of stock options to an officer 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 $ and are exercisable as follows:
(i) 1/3 the first anniversary date of the grant;
(ii) 1/3 on the second anniversary date; and
(iii) 1/3 on the third anniversary date.
On April 21, 2023, the Company granted a total of stock options to officers and directors 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 $ and are exercisable Immediately at issuance.
On April 21, 2023 the Company granted a total of stock options to 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 $ and are exercisable Immediately at issuance.
(i) 1/3 on the date of the grant;
(ii) 1/3 on the first anniversary date; and
(iii) 1/3 on the second anniversary date.
On April 21, 2023 the Company granted a total of stock options to a consultant 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 $ and are exercisable Immediately at issuance.
(i) on the date of the grant; and
(ii) on the third anniversary date.
| 20 |
15. STOCK-BASED COMPENSATION (CONT’D)
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 ten years 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 period ended March 31, 2025 and year ended December 31, 2024, were $ and $, respectively. Stock options granted are valued using a fair value calculation based on the Black-Scholes valuation model. The weighted average assumptions used in the calculation are as follows:
Year ended
December 31, 2024 | ||||
| Share price | $ | |||
| Exercise price | $ | |||
| Time to maturity (years) | ||||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Dividend per share | $ | |||
| Forfeiture rate | ||||
Number of Options | Weighted Average Grant-Date Fair Value ($) | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Yrs) | |||||||||||||
| Options outstanding, December 31, 2024 | ||||||||||||||||
| Granted | - | |||||||||||||||
| Cancelled | - | |||||||||||||||
| Options outstanding, March 31, 2025 | ||||||||||||||||
| Options exercisable, March 31, 2025 | ||||||||||||||||
| Options exercisable, December 31, 2024 | ||||||||||||||||
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. As at the grant date of the nonvested options, the fair value of the common stock was based upon the issuance of the founder shares at $ per share.
16. INCOME TAXES
For the quarter ended March 31, 2025 and fiscal year ending December 31, 2024, there was provision for income taxes and deferred tax assets have been entirely offset by valuation allowances.
As
of March 31, 2025 and December 31, 2024, the Company had net operating loss carry forwards of approximately $
| For the Three Months Ended | For the Year | |||||||
| March 31, 2025 | December 31, 2024 | |||||||
| Net losses before taxes | ( | ) | ( | ) | ||||
| Adjustments to arrive at taxable income/loss | ||||||||
| Permanent differences: | - | |||||||
| Temporary differences: | ||||||||
| Taxable income (loss) | ( | ) | ||||||
| Current Year 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 | ||||||||
| 21 |
16. INCOME TAXES (CONT’D)
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities. The tax effect of significant components of the Company’s deferred tax assets at March 31, 2025 and December 31, 2024, respectively, are as above.
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:
| March 31, 2025 | December 31, 2024 | |||||||
| Non-controlling interest beginning of the period | $ | ( | ) | ( | ) | |||
| Issuance of shares by EnderbyWorks, LLC | ||||||||
| Net income (loss) | ||||||||
| Acquisition | ||||||||
| Non-controlling interest end of period | $ | ( | ) | ( | ) | |||
18. SUBSEQUENT EVENTS
Management has evaluated subsequent events and transactions through June 6, 2025, the date the consolidated financial statements were issued. Based on this evaluation, management determined that no material subsequent events require disclosure in the financial statements.
| 22 |
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, 2024 (“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. This list highlights some of the risks which may affect future operating results. These are the risks and uncertainties we believe are most important for you to consider. Additional risks and uncertainties, not presently known to us, which we currently deem immaterial, or which are similar to those faced by other companies in our industry or business in general, may also impair our business operations. If any of the following risks or uncertainties actually occur, our business, financial condition and operating results would likely suffer. These risks include, among others, the following:
| ● | 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. |
The material assumptions supporting these forward-looking statements include, among other things:
| ● | our future growth potential, results of operations, future prospects and opportunities; | |
| ● | execution of our business strategy; | |
| ● | there being no material variations in current regulatory environments; | |
| ● | our operating expenses, including general and administrative expenses; | |
| ● | our ability to obtain any necessary financing on acceptable terms; | |
| ● | timing and amount of capital expenditures; | |
| ● | retention of skilled personnel; | |
| ● | continuation of current tax and regulatory regimes; and | |
| ● | general economic and financial market conditions. |
Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including:
| ● | 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; | |
| ● | other risk factors discussed in our annual report on Form 10K filed on May 9, 2025 |
any of which may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Further, although we have attempted to identify factors that could cause actual results, levels of activity, performance or achievements to differ materially from those described in forward-looking statements, there may be other factors that cause results, levels of activity, performance or achievements not to be as anticipated, estimated or intended.
| 23 |
While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect management’s current judgment regarding the direction of our business, actual results may vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Accordingly, readers should not place undue reliance on forward-looking statements. Except as required by applicable law, including the securities laws of the United States and Canada, we do not intend to update any of the forward-looking statements to conform these statements to actual results. All forward-looking statements in this annual report are qualified by this cautionary statement.
Unless otherwise stated, all financial information contained herein is shown in United States dollars. Our financial statements are prepared using the United States’ generally accepted accounting principles. Unless otherwise stated, “$” refers to United States dollars.
In this quarterly report, unless otherwise specified, all references to “shares” refer to shares of common stock in the capital of our company.
As used in this annual report, the terms “we”, “us”, “the Company”, “our” and “Waste Energy” mean Waste Energy Corp. and its wholly-owned subsidiary, 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, 2025 compared to the Three Months Ended March 31, 2024
Revenue
During the three months ended March 31, 2025 we recognized total revenue of $41,667, coming from consulting services. We recognized no revenue for the three months ended March 31, 2024.
Operating Expenses
We incurred general and administrative expenses of $46,858 and $523,192 for the three months ended March 31, 2025 and 2024, respectively, representing a decrease of $476,334 between the two periods. These expenses consisted primarily of stock-based compensation, consulting fees, pre-licensing fees, professional fees, and other general and administrative costs. The decrease in general and administrative expenses was mainly due to the immediate vesting options issued to management in and the board in 2024 that did not reoccur in 2025.
| 24 |
Net Loss from Operations
We incurred net losses from operations of $5,191 and $523,192 for the three months ended March 31, 2025 and 2024, respectively, representing a net change of $518,001, primarily attributable to the factors discussed above under the headings “Revenue” and “Operating Expenses”.
Other Income (Expense)
Other expenses were $17,877 and $16,413 for the three months ended March 31, 2025 and 2024, respectively, consisting of interest expense from the loan payable.
Net Loss from Discontinued Operations
Enderby Works, LLC and MotoClub, LLC were deemed discontinued operations in 2024 due to management’s strategic decision to shift its business focus to the waste-to-energy industry.
Discontinued operations reported no income in 2024, incurred other expenses in the amount of $1,554,250 for the impairment of software.
Net and Comprehensive Loss
Net loss attributable to Waste Energy was $23,068 and $539,605 for the quarter ended March 31, 2025, and 2024, respectively, representing a increase of $516,537. This reduction 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 March 31, 2025 | As at December 31, 2024 | |||||||
| Current Assets | $ | 99,306 | $ | 35,682 | ||||
| Current Liabilities | (3,485,485 | ) | (3,206,371 | ) | ||||
| Working Capital (Deficit) | $ | (3,386,179 | ) | $ | (3,170,689 | ) | ||
Current Assets
Current assets on March 31, 2025, were comprised of only cash and cash equivalents of $64,306 and accounts receivable, net of $35,000.
Current assets on December 31, 2024, were comprised of only cash and cash equivalents of $682 and accounts receivable, net of $35,000.
Current Liabilities
On March 31, 2025, current liabilities were comprised of accounts payable and accrued expenses of $1,506,864 (related and unrelated parties), notes payable, net $167,061, convertible notes payable $1,259,584, derivative liability of $40,941, and deferred revenue of $511,033.
On December 31, 2024, current liabilities were comprised of accounts payable and accrued expenses of $1,611,263 (related and unrelated parties), notes payable, net $183,056, convertible notes payable $1,293,409, derivative liability of $40,941, and deferred revenue of $77,700.
Cash Flow
Our cash flows for the 3 months ended March 31, 2024 and 2024 are as follows:
Three months ended March 31, 2025 | Three months ended March 31, 2024 | |||||||
| Net cash provided from (used in) operating activities | $ | 339,619 | $ | (68,971 | ) | |||
| Net cash used in investing activities | $ | (310,000 | ) | - | ||||
| Net cash provided by financing activities | 34,005 | 72,781 | ||||||
| Net changes in cash and cash equivalents | $ | 63,624 | $ | 3,810 | ||||
Operating Activities
Net cash provided by operating activities was $339,619 for the three-month period ended March 31, 2025, compared to net cash used of $68,971 for the three-month period ended March 31, 2024, representing an increase of $408,590. This increase was primarily due to the receipt of deferred revenue from a contract received offset by the payment to related parties for accounts payable during the first quarter of 2025.
Investing Activities
Net cash used in investing activities was $310,000 for the three-month period ended March 31, 2025, compared to nil for the same period in 2024—an increase of $310,000. This increase was primarily attributable to payments made to acquire waste-to-energy machine. The company has not obtained custody of the machine, it’s construction is not complete neither does the company has control, the amount is therefore held as a deposit made for capital outlay.
Financing Activities
Financing activities provided cash of $34,005 for the three months ended March 31, 2025 and $72,781 for the three months ended March 31, 2024, a decrease of $38,776. The decrease is mainly due to the company receiving proceeds from notes payable during the three-month ended March 31, 2024 but none in the same period in during the March 31,2025 and there was less repayment of notes payable in the period March 31, 2025.
Cash Requirements
We expect that we will require $900,000, including our current working capital, to fund our operating expenditures for the next twelve months. Projected working capital requirements for the next twelve months are as follows:
Our estimated general and administrative expenses for the next 12 months are $900,000 and are comprised of: consulting fees, accounting services, board of directors and our advisory board, investor relations consultants, and to our public relations and marketing consultants; legal and professional fees (including auditing fees); for insurance; marketing and advertising expenses; trade shows; travel expenses; office rent and miscellaneous and 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 opportunity. 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, 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 period ended March 31, 2025 and year ended December 31, 2024, the Company incurred losses of $23,068 and $2,880,147, respectively. On March 31, 2025 and December 31, 2024, the Company has an accumulated deficit of $49,981,485 and $49,958,417, negative working capital of $3,386,179, and $3,170,689, respectively, and cash balances of $64,306 and $682, 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. The ability to continue as a going concern is dependent upon the Company generating profits, adequate cash flows and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from third parties, related party debt and proceeds from the issuance of stock. There are no assurances that the Company will be able to secure funding on terms that are acceptable to the Company or at all.
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.
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.
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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
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Our principal executive officer, who is our president, and our principal financial officer, who is our chief financial officer, are responsible for establishing and maintaining disclosure controls and procedures for our company.
Our management conducted an evaluation, with the participation of our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this quarterly report on Form 10-Q. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that as a result of the material weaknesses in our internal control over financial reporting described in our annual report on Form 10-K for the fiscal year ended December 31, 2024, our disclosure controls and procedures were not effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On July 31, 2024, LarCo Holdings, LLC (“LarCo”) filed a joint complaint against BIG and the Company in the Superior Court of the State of Arizona, Maricopa County, demanding a total settlement of $1,321,382 of which the Company is to pay $752,500 as a partial settlement of this amount. The claim discloses the Company contingent commitment to settle a portion of this loan if a specific customer invoice is collected. The Company intends to file a motion to dismiss this claim against it, as it has never collected on the specified invoice and the Company’s agreement for partial payment of this loan was solely dependent on collecting this customer balance. Management determined with the advice of legal counsel that it is too early to estimate the outcome of this claim.
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 March 31, 2025, 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.
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*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/ Braden Glasbergen | |
| Braden Glasbergen | |
| Chief Financial Officer | |
| (Duly Authorized Officer) | |
| Dated: June 6, 2025 | |
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