{"url_path":"/sec/ceti/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management**’**s Discussion and","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-20","source_url":"https://www.sec.gov/Archives/edgar/data/1935092/0001079973-26-000703-index.html","accession_number":"0001079973-26-000703","cik":"0001935092","ticker":"CETI","issuer_name":"Cyber Enviro-Tech, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1935092/0001079973-26-000703-index.html","primary_entity_key":"0001935092","primary_entity_name":"Cyber Enviro-Tech, Inc."},"word_count":2962,"has_tables":true,"body_markdown":"**Item 7. Management**’**s Discussion and\nAnalysis of Financial Condition and Results of Operations**\n\n \n\nThe following discussion and analysis should be read\nin conjunction with our consolidated financial statements, including the notes thereto, appearing in this Form 10-K and are hereby referenced.\nThe following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could\ndiffer materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences\ninclude, but are not limited to, those discussed below and elsewhere in this report. You should not place undue certainty on these forward-looking\nstatements, which apply only as of the date of this report. We believe it is important to communicate our expectations. However, our\nmanagement disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or\notherwise.\n\n \n\nThese forward-looking statements are based on our\nmanagement’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ\nmaterially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot\nassure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking\nstatement by the use of the forward-terminology, including words such as “may”, “will”, “believes”,\n“anticipates”, “estimates”, “expects”, “continues”, “should”, “seeks”,\n“intends”, “plans”, and/or words of similar import, or the negative of these words and phrases or other variations\nof these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: our sales, results\nof operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative\nexpenses; our ability to maintain and develop relationship with our existing and potential future customers, and, our ability to maintain\na level of investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those\nprojected in these forward-looking statements, including, but not limited to: variability of our revenues and financial performance;\nrisks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption\nof operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic\nevents; general economic conditions, government mandates; and, the continued employment of our key personnel and other risks associated\nwith competition.\n\n \n\n**GENERAL OVERVIEW**\n\n** **\n\n**Business Background**\n\n \n\nCyber Enviro-Tech, Inc. is a publicly held Wyoming\nwater technology Company focusing on the remediation of contaminated industrial wastewater with an initial emphasis on the oil &\ngas industry.\n\n \n\nOur principal executive office is located at Cyber\nEnviro-Tech, Inc., 6991 E. Camelback Road, Suite D-300, Scottsdale, Arizona 85251. Our telephone number is 866 687-6856. We  \nmaintain our statutory registered agent's office at Registered Agents Inc. 30 N Gould St Ste R Sheridan, WY 82801 USA Telephone Number.\n(307) 200-2803\n\n \n\nOn June 12, 2020, the District Court of Laramie County,\nWyoming appointed Benjamin Berry of Synergy Management Group LLC (“Synergy”) as custodian of the Company.\n\n \n\n7 \n\n \n\n \n\nOn September 3, 2020, Synergy and Global Environmental\nTechnologies, Inc. (“Global”), entered into a Securities Purchase Agreement, whereby Synergy sold its one share of Special\nSeries A preferred stock and one-half share of Series C preferred stock to Global Environmental Technologies, Inc.\n\n \n\nOn September 23, 2020, the Company entered into a\nshare exchange agreement with Global Environmental Technologies, Inc., (“Global”) a Wyoming corporation. Per the terms of\nthe agreement, NexGen Holdings Corp exchanged thirty-five shares of common stock for one share of Global.\n\n \n\nOn October 6, 2020, the Company formally changed\nits name with the State of Wyoming from NexGen Holdings Corp to Cyber Enviro-Tech, Inc.\n\n \n\n \n\n**DESCRIPTION OF BUSINESS**\n\nCyber Enviro-Tech, Inc is a water science technology\ncompany focusing on the remediation of contaminated industrial wastewater with an initial emphasis on the oil & gas industry. We\ndo this by integrating technologies to include cyber, aerospace, satellite, industrial and AI engineering telemetry. Our water filtration,\nwastewater and alternative energy systems will have neural sensors, controls and networks - all connected to a cellular device.\n\n \n\nThe Alvey Oil Field was originally acquired by\nCETI as a pilot site to test and refine its proprietary oil production enhancement technologies. Those efforts proved instrumental in demonstrating broader\napplications—extending beyond oil field optimization into large-scale remediation of contaminated oil, sludge, soil, and wastewater.\nAs CETI’s technology and strategy have evolved, the Alvey asset no longer aligned with the Company’s core focus\nOn October 14, 2025, CETI exchanged all assets related to the Alvey oil field operation for 8,600,000 common shares of West Texas\nResources Incorporated, (“WTXR”). By spinning off the Alvey asset, CETI can fully dedicate its resources to advancing\na growing portfolio of domestic and international remediation projects. At the same time, CETI and its shareholders retain the opportunity\nto participate in the future value of the Alvey Oil Field through its continued development by a company with expertise in oil and gas\nproduction—ensuring the asset has a better chance to realize its full potential while CETI concentrates on its primary growth markets.\n\n** **\n\n**GENERAL OVERVIEW**\n\n \n\n**Form and year of organization;**\n\n \n\nCyber Enviro-Tech, Inc., also referred to as “CETI”\nand the “Company”, was founded in the State of Wyoming as Electronic Biotek, Inc in April 1986.\n\n** **\n\n**Bankruptcy, receivership;**\n\n \n\nThe Company has never filed Bankruptcy or been involved in any receiverships\nor similar proceedings.\n\n \n\n**Material reclassification**;\n\n \n\nThe Company has been known by a variety of names\nsince its inception in the State of Wyoming as Electronic Biotek, Inc. In 2020, CETI through its previous name, Globel Technologies,\nInc (“Global”) acquired NexGen Holdings Corp via a reverse merger. Subsequent to the reverse merger, the Company changed\nits name to Cyber Enviro-Tech, Inc. Below lists the names that the Company has been known as since inception as well as the dates those\nnames were active:\n\n \n\nCyber Enviro-Tech, Inc - CURRENT.\n\nNexGen Holdings Corp - Until October 6, 2020\n\nWindPower Innovations, Inc. until January 2014\n\nEducational Services International, Inc. until November 2009\n\nBio-Life Systems, Inc. until November 2001\n\nBiolectronics, Corp. to April 1992\n\nElectronic Biotek, Inc. April 1986 \n\n \n\n**Business of the Cyber Enviro-Tech, Inc.**\n\n** **\n\nCyber Enviro-Tech, Inc is a water science technology\ncompany focusing on the remediation of contaminated industrial wastewater with an initial emphasis on the oil & gas industry. We\ndo this by integrating technologies to include cyber, aerospace, satellite, industrial and AI engineering telemetry. Our water filtration,\nwastewater and alternative energy systems will have neural sensors, controls and networks - all connected to a cellular device.\n\n \n\n \n\n8 \n\n \n\n \n\nOn March 23, 2026 we announced we entered\ninto a manufacturing and distribution agreement with AirPower USA, securing exclusive territory rights to manufacture and distribute\ncompressed-air-powered energy generation systems across key international markets. This agreement provides CETI with a tangible, revenue-oriented\nplatform through the deployment of AirPower's clean energy generation technology. The Company expects initial project activity and potential\ndeployments in the second half of 2026, aligning with CETI's broader strategy to prioritize revenue-producing opportunities and scalable\nenvironmental solutions.\n\n \n\nCETI continues to evaluate its existing\nremediation business while expanding its environmental footprint into complementary sectors, including clean power generation and sustainable\ninfrastructure solutions. The Company intends to leverage its established international relationships to support distribution, project\ndevelopment, and market entry initiatives for AirPower systems.\n\n \n\nBuilding on this momentum, CETI has\nmultiple projects in its development pipeline that are expected to come online during the second half of 2026, positioning the\nCompany for potential revenue growth and expanded commercial traction.\n\n \n\nSales Strategy – CETI’s B2B Sales\nStrategy will include partnering with individuals and companies who have many years of experience and developed relationships within\ntheir respective aforementioned targeted verticals. Prior knowledge of those specific industry issues, water filtration needs, history\nand relationships developed over many years will enable them to shorten the sales cycle for our water filtration system. As of May 19,\n2026, the Company has agreements with several individuals who are pursuing a variety of opportunities but no contracts have been ratified\nso far.\n\n \n\nMarket Demand and Size - CETI’s water\nfiltration system can be modified to address many of the water contamination issues that exist worldwide. The markets envisioned for\nthe CETI water system when funds permit would be both domestic (U.S.) and global.\n\n \n\n \n\n \n\n9 \n\n \n\n \n\n **Results of Operations for the Years Ending\nDecember 31, 2025 and  2024**\n\n** **\n\n****\n\n  \nTwelve Months Ended  \nTwelve Months Ended  \n   \n  \n\n  \nDecember 31, 2025  \nDecember 31, 2024  \n$  \n% \n\nRevenue: \n    \n    \n    \n   \n\nGross sales \n$—  \n$—  \n$—  \n 0.00%\n\nCost of sales \n —  \n —  \n —  \n 0.00%\n\nGross margin \n —  \n —  \n —  \n 0.00%\n\n  \n    \n    \n    \n   \n\nOperating Expenses: \n    \n    \n    \n   \n\nProfessional fees \n 343,498  \n 131,054  \n 212,444  \n 162.1%\n\nGeneral and administrative \n 993,291  \n 1,051,798  \n (58,507) \n -5.6%\n\nConsulting \n 1,779,681  \n 1,666,553  \n 113,128  \n 6.8%\n\nTotal operating expenses \n 3,116,470  \n 2,849,405  \n 267,065  \n 9.4%\n\n  \n    \n    \n    \n   \n\nLoss from continuing operations \n (3,116,470) \n (2,849,405) \n (267,065) \n 9.4%\n\n  \n    \n    \n    \n   \n\nOther Income (Expense): \n    \n    \n    \n   \n\nChange in fair value of derivatives \n (179,252) \n 161,122  \n (340,374) \n -211.3%\n\nLoss on issuance of derivative \n (2,068,536) \n (191,162) \n (1,877,374) \n 1193.5%\n\nGain on extinguishment of derivative liability \n 1,431,541  \n 264,539  \n 1,167,002  \n 441.1%\n\nUnrealized loss on investment WTXR \n (147,435) \n —  \n (147,435) \n 100.0%\n\nChange in fair value of contingent liability \n (47,500) \n (437,500) \n 390,000  \n -89.1%\n\nLoss on impairment of assets \n (579,957) \n (957,377) \n 377,420  \n -39.4%\n\nAmortization of intangible assets \n —  \n (112,850) \n 112,850  \n -100.0%\n\nInterest income \n 12,564  \n 10,768  \n 1,796  \n 16.7%\n\nInterest expense \n (1,464,963) \n (759,013) \n (705,950) \n 93.0%\n\nTotal other income (expense) \n (3,043,538) \n (2,021,473) \n (1,022,065) \n 50.6%\n\n  \n    \n    \n    \n   \n\nLoss from continuing operations \n (6,160,008) \n (4,870,878) \n (1,289,130) \n 26.5%\n\n  \n    \n    \n    \n   \n\nDiscontinued Operations: \n    \n    \n    \n   \n\nLoss from discontinued operations \n (1,462,514) \n (1,495,106) \n 32,592  \n -2.2%\n\nLoss on sale of Axenic \n (18,451) \n —  \n (18,451) \n 100.0%\n\nLoss from discontinued operations \n (1,480,965) \n (1,495,106) \n 14,141  \n -0.9%\n\n  \n    \n    \n    \n   \n\nNet loss \n (7,640,973) \n (6,365,984) \n (1,274,989) \n 20.0%\n\n  \n    \n    \n    \n   \n\n  \n    \n    \n    \n   \n\nNet loss attributable: \n    \n    \n    \n   \n\nNet loss attributable to noncontrolling interest \n (89,057) \n (12,815) \n (76,242) \n 594.9%\n\nNet loss attributable to common stockholders \n (7,551,916) \n (6,353,169) \n (1,198,747) \n 18.9%\n\nNet loss \n$(7,640,973) \n$(6,365,984) \n$(1,274,989) \n 20.0%\n\n** ** \n\n**General and Administrative Expenses**.\nGeneral and administrative expenses for the year ended December 31, 2025 were down by $58,507 or 5.6% vs 2024 largely due to a decrease\nin Meat Packing Testing of $150k and decrease in Advertising & Marketing expenses of $90k which were offset by increase of $61k for\ntravel. The Meat Packing Plant testing fees were paid to Texas Tech to provide independent validation of our process and products in\nthe meat packing industry. The Advertising was from payments to a company to assist in the marketing of CETI stock.\n\n \n\n**Professional fees**. These fees increased\nby $212,444 or 162.1%, due to increased audit and audit-related fees of $44k, legal fees of $156k and professional fees of $15k which\ninclude fees for the S1 preparation and supervision of soil testing. Legal fees include costs related to a lawsuit which arose from the\nCompany’s withdrawal of a project of a salt water disposal facility in Oklahoma and general legal services related to standard\ncorporate compliance.\n\n \n\n**Consulting fees**. The increase of $113,128\nor 6.8% primarily due to consulting fees related to international business efforts offset by the reduction in consulting fees associated\nwith the Alvey oil field efforts. A total of $497k and $238k are from non-cash, stock-based compensation,\nfor the years ended December 31, 2025 and 2024, respectively. This compensation is mostly due to marketing services and the increase\nin 2025 is mostly due to amortization of warrants given for these services (approximately $164K).\n\n \n\n10 \n\n \n\n** **\n\n**Other Income (Expense).** Total decline\nin other income and expense, net increased by $1,022,065 or 50,6%. Other income and expense items are primarily made up of items related\nto interest expense and derivative accounting. For the derivative related accounts, these are driven by loans whereas the lender has a\nconversion component if the loan is not paid off. Historically the Company has always repaid the debt instead of allowing a conversion.\nHowever, for accounting purposes, we must account for the potential conversion. During the year ended December 31, 2025, seven new loans\nwere executed resulting in a $2.1M increase in loss on issuance of derivatives. Additionally, during the twelve months ended December\n31, 2025, three loans were paid off resulting in a $1.4M increase in gain on extinguishment of derivative liability. The decline in amortization\nof intangible assets relates to assets which were acquired in 2023 and fully amortized as of December 31, 2024. Lastly, interest expense\nincreased by $706k due to a larger number of convertible notes with derivative components outstanding during full year 2025 as compared\nto 2024.\n\n \n\nTwo other significant items in this category relate\nto the loss on impairment of assets and the change in fair value of contingent liabilities. There is a loss on impairment of assets of\n$580K in 2025 which is due to the write down to market value of equipment while the 2024 write off of $957k is due to a write off of intangible\nassets due to insolvency of the company from which CETI purchased licensing rights. While the intellectual property acquired by the Company\nstill has value to CETI, it was decided to take the conservative approach and write off the rest of the value of $957,377 as of December\n31, 2024. The change in fair value of contingent liability is largely related to stock guarantees to certain investors and represents\nthe additional stock compensation that would have been due as of December 31, 2025 and 2024, respectively, if the guarantee were valued\nat that time.\n\n \n\n**Discontinued Operations**. Effective\nOctober 14, 2025 the Company completed its spinoff of the Alvey oil field operation to Texas Coastal Energy, Corp. (TCEC).\n\n \n\nThe Alvey oil field was originally acquired by\nCETI as a pilot site to test and refine its proprietary oil production enhancement technologies. Those efforts proved instrumental in\ndemonstrating broader applications—extending beyond oil field optimization into large-scale remediation of contaminated oil, sludge,\nsoil, and wastewater. As CETI’s technology and strategy have evolved, the Alvey asset no longer aligned with the Company’s\ncore focus. By spinning off the Alvey asset, CETI can fully dedicate its resources to advancing a growing portfolio of domestic and international\nremediation projects. At the same time, CETI and its shareholders retain the opportunity to participate in the future value of the Alvey\noil field through its continued development by a company with expertise in oil and gas production—ensuring the asset has a better\nchance to realize its full potential while CETI concentrates on its primary growth markets. \n\n \n\nThe assets, liabilities and results of operations\nrelated to Alvey, previously shown in discontinued operations, have been removed from Cyber Enviro-Tech, Inc. consolidated results of\noperations.\n\n  \n\n**Net Loss.**The above changes resulted\nin a year over year increase in net loss of $1,274,989.\n\n \n\n**Liquidity and Capital Resources** \n\n \n\nOur principal sources of liquidity are cash and cash\nequivalents on hand, cash generated from operations and investors, and available borrowing capacity under our credit facilities. As of\nDecember 31, 2025, we had $50,230 of cash and cash equivalents. These resources are not sufficient to meet our working capital requirements,\ncapital expenditures, contractual obligations, and other cash needs. The Company must continue to raise capital to facilitate our business\noperations for the next 12 months. We believe our ability to achieve commercial success and continued growth will be dependent upon our\ncontinued access to capital either through sale of additional convertible debentures, sale of our equity or cash generated from operations.\nWe will attempt to obtain additional capital through private investors; however, we have no agreements or understandings with third parties\nat this time in regards to investing additional monies.\n\n \n\n11 \n\n \n\n \n\nAs of December 31, 2025, the Company had total\nassets of $1,989,348 including current assets of $738,117. Current liabilities total $2,628,563 which consist of accounts payable of $569,660,\naccrued interest of $309,487, short-term loans of $367,472, convertible notes payable of $1,169,944 net of discount of $263,018 and contingent\nliabilities of $190,000. Long-term liabilities of $2,462,009 include convertible notes of $1,390,065 net of discount of $274,416 and derivative\nliability of $1,071,944.\n\n \n\nNet cash used in operating activities was\n$2.9M for the year ended December 31, 2025, compared to $3.5M for the prior year. The change in operating cash flow was primarily driven\nby loss on issuance of derivatives ($2.1M), loss on sale of Alvey oil field ($1.2M), and amortization of debt discount ($0.9M) offsetting\ngain on extinguishment of derivatives liability ($1.4M) and change in fair value of derivatives ($0.2M). In addition, the net loss for\n2025 was $1.3M greater than 2024.\n\n \n\nNet cash used in investing activities was $1.0M\nfor the year ended December 31, 2025 compared to $308K in the prior year. Investing cash flows primarily consisted of $861K from purchase\nof PPE, $100K for deposit on an asset and $25K cash issued for notes receivable.\n\n \n\nNet cash used in financing activities was $3.9M\nfor the year ended December 31, 2025, compared to $2.5M in the prior year. Financing cash flows primarily consisted of $3.6M in proceeds\nfrom convertible notes.\n\n \n\nThe Company’s consolidated financial\nstatements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge\nits liabilities and commitments in the normal course of business for the foreseeable future. The Company does not yet have sufficient\nrevenue to cover its operating expenses. These factors raise substantial doubt about the Company’s ability to continue as a going\nconcern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or to obtain\nthe necessary financing to meet the Company’s obligations and repay its liabilities arising from normal business operations when\nthey come due. Management intends to finance operating costs over the next twelve months with increased revenue and private placement\nloans or institutional investors. While the Company believes that it will be successful in obtaining the necessary financing and generating\nrevenue to fund the Company’s operations, meet regulatory requirements and achieve commercial goals, there are no assurances that\nsuch additional funding will be achieved and that the Company will succeed in its future operations."}