10-K: Cyber Enviro-Tech, Inc. Reports Full Year 2023 Results, Navigating Development Phase

Cyber Enviro-Tech, Inc. reports a net loss for 2023 as it continues to develop its water filtration technology and oil field operations, while also expanding into new markets.

Summary

• Cyber Enviro-Tech, Inc. (CETI) is a water technology company focused on remediating contaminated industrial wastewater, particularly in the oil and gas industry.
• The company is in the exploration stage with limited revenues and operating history, and its independent auditor has expressed substantial doubt about its ability to continue as a going concern.
• CETI owns mineral rights to a 479-acre oil field in Texas with 33 wells, where it is testing its water filtration system and converting old pumper jack systems to its current system.
• In 2023, CETI purchased licenses to several patents from KAM Biotechnology, Ltd. to enhance its wastewater treatment capabilities.
• The company's focus for the current fiscal year includes expanding water and oil filtration operations in the Middle East and Texas, developing commercial tests with a meat packing client, and further developing oil production at its Texas oil field.
• CETI's revenue decreased by 72% to $23,649 in 2023, compared to $85,356 in 2022, due to its development phase.
• Operating expenses increased significantly, with consulting fees rising by 741% to $3,265,062, largely paid in stock, warrants, and options.
• The company reported a net loss of $4,343,104 in 2023, compared to a net income of $1,479,362 in 2022, primarily due to increased consulting expenses and changes in derivative accounting.
• As of December 31, 2023, CETI had total assets of $5,398,615, including current assets of $558,847, and total liabilities of $3,900,205.
• The company is seeking additional capital through private investors and may also generate cash from operations.

Sentiment

Score: 3

Explanation: The document presents a challenging financial picture with significant losses, declining revenue, and a going concern warning. While there are some positive developments in terms of technology and market expansion, the overall sentiment is negative due to the financial risks and uncertainties.

Positives

• CETI is actively developing its water filtration technology and expanding its operations.
• The company has secured licensing for patents that enhance its wastewater treatment capabilities.
• CETI has preliminary agreements in place to expand its oil water filtration machine to multiple locations.
• The company is exploring opportunities in the Middle East and other verticals such as meat processing.
• CETI has a B2B sales strategy in place with experienced individuals in targeted verticals.

Negatives

• The company is in the exploration stage with limited revenues and operating history.
• CETI's independent auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company experienced a significant decrease in revenue of 72% in 2023.
• Operating expenses, particularly consulting fees, increased substantially.
• CETI reported a net loss of $4,343,104 in 2023.
• The company has a significant amount of debt, including convertible notes payable.

Risks

• CETI's ability to continue as a going concern is dependent on generating profitable operations or obtaining additional financing.
• The company faces risks associated with technological changes and the acceptance of its products in the marketplace.
• CETI's operations are subject to government regulations and economic conditions, including fluctuations in oil prices.
• The company's internal controls over financial reporting were deemed ineffective as of December 31, 2023.
• There is a risk of litigation and potential disputes with the Estate of Danny Hyde.

Future Outlook

The company's focus for the current fiscal year will be on expanding water and oil filtration operations in the Middle East and Texas, developing commercial tests with a meat packing client, and further developing oil production on its 479-acre Pilot Oil Field in Callahan County, Texas. CETI believes its ability to achieve commercial success and continued growth will be dependent upon its continued access to capital either through sale of additional convertible debentures, sale of its equity or cash generated from operations.

Management Comments

• Our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
• We believe it is important to communicate our expectations.
• Management intends to finance operating costs over the next twelve months with increased revenue and private placement loans or institutional investors.

Industry Context

CETI operates in the water technology sector, focusing on industrial wastewater remediation, particularly in the oil and gas industry. This sector is driven by increasing environmental regulations and the need for sustainable water management solutions. The company's focus on integrating cyber, aerospace, satellite, industrial, and AI engineering telemetry aligns with the broader trend of digitalization and automation in industrial processes. The company is also expanding into other verticals such as meat processing, which is a growing market for water treatment solutions.

Comparison to Industry Standards

• CETI's financial performance is significantly below industry standards for established companies, as it is still in the development phase.
• The company's revenue is minimal compared to established water technology companies, which often have revenues in the millions or billions of dollars.
• The high operating expenses, particularly consulting fees, are unusual for a company of this size and stage, and may indicate a need for more efficient cost management.
• The net loss of $4.3 million is substantial for a company with minimal revenue, highlighting the challenges of early-stage development.
• The company's reliance on convertible debt for financing is common for early-stage companies but also carries significant risk.
• The company's focus on a pilot oil field project is unique and not directly comparable to other water technology companies, which typically focus on water treatment solutions for various industries.

Legal Proceedings

• CETI owes $343,500 to EDH but the Company maintains that EDH owes CETI over $400,000 for unreimbursed working interest expenses. No lawsuits have been filed and discussions are ongoing.

Related Party Transactions

• The Company had a convertible note payable for $22,000 with a related party as of December 31, 2023.
• The Company had accounts payable to various related parties for a total of $80,991 as of December 31, 2023.
• A related party loaned $153,989 to CETI in September 2023.
• The Company paid various related parties for consulting services in the amounts of $588,308 during the year ended December 31, 2023.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial losses and going concern warning.
• Employees and consultants may be impacted by the company's financial instability.
• Customers may be affected by the company's ability to deliver its products and services.
• Suppliers and creditors face risk due to the company's financial challenges.
• The company's ability to expand and develop its technology is dependent on securing additional funding.

Next Steps

• Expand water and oil filtration operations in the Middle East and Texas.
• Develop initial commercial tests with at least one significant meat packing client.
• Further develop oil production on the 479-acre Pilot Oil Field in Callahan County, Texas.
• Attempt to obtain additional capital through private investors.
• Evaluate remediation plans for internal control deficiencies.

Key Dates

Keywords

water filtration, oil and gas, wastewater remediation, technology, oil production, patents, convertible notes, consulting, financial results, going concern