{"url_path":"/sec/wast/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-07-14","source_url":"https://www.sec.gov/Archives/edgar/data/1515139/0001493152-26-033196-index.html","accession_number":"0001493152-26-033196","cik":"0001515139","ticker":"WAST","issuer_name":"WASTE ENERGY CORP.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1515139/0001493152-26-033196-index.html","primary_entity_key":"0001515139","primary_entity_name":"WASTE ENERGY CORP."},"word_count":1584,"has_tables":true,"body_markdown":"**ITEM\n7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**\n\n \n\nOur\nmanagement’s discussion and analysis provide a narrative about our financial performance and condition that should be read in conjunction\nwith the audited consolidated financial statements and related notes thereto included in this annual report. This discussion contains\nforward-looking statements reflecting our current expectations estimates and assumptions about events and trends that may affect our\nfuture operating results or financial position. Our actual results and the timing of certain events could differ materially from those\ndiscussed in these forward-looking statements due to several factors, including, but not limited to, those outlined in the sections of\nthis annual report titled “Risk Factors” and “Forward-Looking Statements”.\n\n \n\n**Overview**\n\n \n\nBetween June and September 2024, the Company\nshifted its strategic focus to the waste-to-energy industry and began evaluating various business opportunities to determine which specific\narea within the industry to pursue. During 2024, the Company made investments in components for the development of waste-to-energy equipment,\nobtained proposals for equipment design and construction, and engaged in initiatives to assess related technology education platforms\nand associated business opportunities.\n\n \n\n**Former Businesses**\n\n \n\nAs of September 2024, the Company was engaged\nin providing a comprehensive suite of services to assist businesses in developing and integrating blockchain and payment technologies\ninto their operations. Revenue was generated through a fee-for-service model, technology licensing arrangements, and recurring transaction-based\nincome. Additionally, the Company participated in movie licensing and distribution, securing a significant contract for the licensing\nand distribution of a film. This contract remains in effect and continues to generate residual income.\n\n \n\nIn 2024, the Company made a strategic decision\nto discontinue these lines of business and shift its focus exclusively to the waste-to-energy industry. While the Company does not plan\nto pursue new projects or contracts in its former business areas, it may still receive future revenues from existing contractual obligations.\n\n \n\n**Results of Operations**\n\n \n\n**Revenue**\n\n \n\nDuring the year ended December 31, 2025 we recognized\ntotal revenue of $424,167, coming from consulting services and raw material fees. We recognized no revenue for the year ended December\n31, 2024.\n\n \n\n16\n\n \n\n \n\n**Operating Expenses**\n\n \n\nWe incurred general and administrative expenses of $662,621\nand $1,194,309 for the year ended December 31, 2025 and 2024, respectively, representing a decrease of $531,688 between the two periods.\nThese expenses consisted primarily of stock-based compensation, consulting fees, pre-licensing fees, professional fees, and other general\nand administrative costs. The decrease in general and administrative expenses was mainly due to the decrease in platform development and advertising and marketing expenses in 2025.\n\n \n\n*Net Profit (Loss) from Operations*\n\n \n\nWe incurred net loss from operations of $365,988\nand $1,194,309 for the year ended December 31, 2025 and 2024, respectively, representing a net change of $828,321, primarily attributable\nto the factors discussed above under the headings “Revenue” and “Operating Expenses”.\n\n \n\n**Other Income (Expense)**\n\n \n\nOther income (expenses) was\n$(710,819) and ($131,588) for the year ended December 31, 2025 and 2024, respectively, mainly consisting of loss on issuance of\ndebt, interest expense from the loan payable, changes in derivative liability, and gain on debt settlement.\n\n \n\n**Net Loss from Discontinued Operations**\n\n \n\nEnderby Works, LLC and MotoClub, LLC were deemed\ndiscontinued operations in 2024 due to management’s strategic decision to shift its business focus to the waste-to-energy industry.\n\n \n\nDiscontinued operations reported no income in\n2025 and 2024, incurred other expenses in the amount of $1,554,250 for the impairment of software for FY2024 and nil for FY2025.\n\n \n\n**Net and Comprehensive Loss**\n\n \n\nNet profit (loss) attributable to Waste Energy was $(1,076,807)\nand ($2,880,147) for the year ended December 31, 2025, and 2024, respectively, representing a decreased loss of $1,803,340. This change\nis primarily attributable to the factors discussed above under the headings “Operating Expenses” and “Other Income (Expense).\n\n \n\n**Liquidity and Capital Resources**\n\n \n\n**Working Capital**\n\n \n\n  \nAs at\nDecember 31, 2025  \nAs at\nDecember 31, 2024 \n\nCurrent Assets \n$99,744  \n$35,682 \n\nCurrent Liabilities \n 4,597,087  \n 3,206,371 \n\nWorking Capital (Deficit) \n$(4,497,343) \n$(3,170,689)\n\n \n\n**Current Assets**\n\n \n\nCurrent assets on December 31, 2025, were comprised\nof only cash and cash equivalents of $68,244, accounts receivable, net of $7,500, prepaid rent of $12,000 and a security deposit of\n$12,000.\n\n \n\nCurrent assets on December 31, 2024, were comprised\nof only cash and cash equivalents of $682 and accounts receivable, net of $35,000.\n\n \n\n**Current Liabilities**\n\n \n\nOn December 31, 2025, current liabilities were comprised of accounts payable and accrued expenses of $1,497,767\n(related and unrelated parties), notes payable, net $117,000, convertible notes payable $857,353, derivative liability of $1,828,934,\nlease liability of $135,000, deferred revenue of $83,333 and deposits payable of $77,700.\n\n \n\nOn December 31, 2024, current liabilities were\ncomprised of accounts payable and accrued expenses of $1,611,263 (related and unrelated parties), notes payable, net $183,056, convertible\nnotes payable $1,293,409, derivative liability of $40,941, and deferred revenue of $77,700.\n\n \n\n17\n\n \n\n \n\n**Cash Flow**\n\n \n\nOur cash flows for the years ended December 31,\n2025 and December 31, 2024 are as follows:\n\n \n\n  \nYear ended\nDecember 31, 2025  \nYear ended\nDecember 31, 2024 \n\nNet cash (used in) continuing operating activities \n$(390,107) \n$(402,563)\n\nNet cash (used in) discontinued operating activities \n -  \n - \n\nNet cash provided by (used in) investing activities \n (653,250) \n - \n\nNet cash provided by financing activities \n 1,110,919  \n 400,169 \n\nNet changes in cash and cash equivalents \n$67,562  \n$(2,394)\n\n \n\n**Operating Activities**\n\n \n\nNet cash used in operating activities from continued operations was $390,107\nfor the year ended December 31, 2025, as compared to $402,563 for the year ended December 31, 2024, resulting in an increase of $12,456\nin net cash used. The increase in net cash used in continuing operating activities was primarily due to greater operating expenses and\nrepayment of aged payables.\n\n \n\nThere was no net cash used or provided by discontinued\noperations for the year ended December 31, 2025 or 2024.\n\n** **\n\n**Investing Activities**\n\n \n\nNet cash used in investing activities was $653,250\nfor the year ended December 31, 2025, compared to nil for the same period in 2024, an increase of $653,250. This increase was attributable\nto payments made to acquire a waste-to-energy machine. As of December 31, 2025, the company has not obtained custody of the machine, its construction is not complete,\nnor does the company have control, the amount is therefore held as a deposit made for capital advance.\n\n \n\n**Financing Activities**\n\n \n\nFinancing activities provided cash of $1,110,919\nfor the year ended December 31, 2025, and $382,856 for the year ended December 31, 2024, an increase of $728,062. The change was principally\ndue to an increase in cash proceeds from the issuance of convertible notes.\n\n \n\n**Cash Requirements**\n\n \n\nWe expect that we will require $900,000, including\nour current working capital, to fund our operating expenditures for the next twelve months. Projected working capital requirements for\nthe next twelve months are as follows:\n\n \n\nOur estimated general and administrative expenses\nfor the next 12 months are $900,000 and are comprised of: consulting fees, accounting services, board of directors and our advisory board,\ninvestor relations consultants, and to our public relations and marketing consultants; legal and professional fees (including auditing\nfees); for insurance; marketing and advertising expenses; trade shows; travel expenses; office rent and miscellaneous and office expenses.\n\n \n\nWe will require additional cash resources to\nmeet our planned capital expenditures and working capital requirements for the next 12 months. We expect to derive such cash through\nthe sale of equity or debt securities or by obtaining a credit facility. The sale of additional equity securities will result in dilution\nto our stockholders. The incurrence of indebtedness will result in debt service obligations, which could cause additional dilution to\nour stockholders, and could require us to agree to financial covenants that could restrict our operations or modify our plans to source\nnew business opportunity. Financing may not be available for amounts at terms acceptable to us, if at all. Failure to raise additional\nfunds could cause our company to fail.\n\n \n\n18\n\n \n\n \n\n**Going Concern**\n\n \n\nThe accompanying consolidated financial\nstatements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities\nin the normal course of business. On a consolidated basis, the Company has incurred significant operating losses since its inception.\nFor the year ended December 31, 2025 and 2024, the Company incurred a net loss of $1,076,807 and $2,880,147, respectively. On December\n31, 2025 and 2024, the Company has an accumulated deficit of $51,035,224 and $49,958,417, respectively, negative working capital of $4,497,343,\nand $3,170,689, respectively, and cash balances of $68,244 and $682, respectively. Further losses are anticipated as the Company pursues\nbusiness opportunities, raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue\nas a going concern is dependent upon the Company generating profits, adequate cash flows and/or obtaining the necessary financing to meet\nits obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating\ncosts over the next twelve months with existing cash on hand, loans from third parties, related party debt and proceeds from the issuance\nof 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.\n\n \n\nThe financial statements do not include any adjustments\nrelating to the recoverability and classification of assets or the amounts and classifications of liabilities that might be necessary\nshould the Company be unable to continue as a going concern.\n\n \n\n**Off-Balance Sheet Arrangements**\n\n \n\nWe have no off-balance sheet arrangements that\nhave, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues\nor expenses, results of operations, liquidity, capital expenditures or capital resources."}