10-Q: Waste Energy Corp. Q1 2026 Financial Update

Waste Energy Corp. reports increased net loss and revenue for Q1 2026, driven by waste conversion business development and derivative liability changes.

Summary

• Waste Energy Corp. reported revenues of $83,333 for the three months ended March 31, 2026, an increase from $41,667 in the same period of 2025, primarily from consulting services for its waste conversion business.
• The company incurred a net loss of $2,437,157 for the quarter ended March 31, 2026, a significant increase from a net loss of $23,068 for the same period in 2025.
• General and administrative expenses rose to $365,839 from $46,858, attributed to increased business development costs for the Midland waste conversion facility.
• Other expenses also increased substantially to $2,124,651 from $17,877, largely due to financing activities and changes in the fair value of derivative liabilities.
• The company has a negative working capital of $6,732,197 as of March 31, 2026, and cash and cash equivalents of $67,408.
• Management anticipates needing $750,000 to $900,000 to fund operating expenditures over the next twelve months, with plans to secure financing through equity or debt.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as highly negative due to the significant increase in net loss, widening working capital deficit, and the explicit statement raising substantial doubt about the company's ability to continue as a going concern.

Positives

• Revenue from consulting services for the waste conversion business doubled to $83,333 in Q1 2026 compared to $41,667 in Q1 2025.
• The company secured $372,206 in net cash from financing activities in Q1 2026, an increase from $34,005 in Q1 2025, primarily from convertible notes.

Negatives

• Net loss increased significantly to $2,437,157 in Q1 2026 from $23,068 in Q1 2025.
• General and administrative expenses increased by $318,981 to $365,839 in Q1 2026.
• Other expenses surged by $2,106,774 to $2,124,651 in Q1 2026, driven by financing activities and derivative liabilities.
• The company has a substantial accumulated deficit of $53,472,381 as of March 31, 2026.
• Negative working capital stands at $6,732,197 as of March 31, 2026.
• Cash and cash equivalents are low at $67,408 as of March 31, 2026.
• The company's ability to continue as a going concern is subject to substantial doubt due to ongoing losses and negative working capital.

Risks

• The company's ability to continue as a going concern is subject to substantial doubt due to significant operating losses, accumulated deficit, and negative working capital.
• Failure to raise additional funds through equity or debt could cause the company to fail.
• The company is involved in significant litigation with LarCo Holdings, LLC, which seeks substantial damages and joint and several liability for a prior judgment.
• The company's financial statements indicate ineffective disclosure controls and procedures.
• The company has a substantial derivative liability of $4,045,667 as of March 31, 2026, which is subject to significant fair value fluctuations.
• Notes payable are in default, with a principal balance of $117,000 as of March 31, 2026.

Future Outlook

The company expects to require between $750,000 and $900,000 to fund operating expenditures for the next twelve months, which it plans to obtain through the sale of equity or debt securities or a credit facility. The company acknowledges that financing may not be available on acceptable terms, and failure to raise additional funds could lead to the company's failure.

Management Comments

• Management believes the claims asserted against it in the LarCo litigation are without merit and intends to defend the matter vigorously.
• Management has determined that a loss related to the LarCo litigation is not probable and the amount or range of any reasonably possible loss cannot be estimated at this time.
• Management concluded that disclosure controls and procedures were ineffective as of March 31, 2026.

Industry Context

StockSavvy.ai notes that Waste Energy Corp.'s focus on waste-to-energy solutions aligns with growing global demand for sustainable energy and waste management. However, the company's significant financial challenges, including substantial losses and a going concern warning, indicate a high-risk profile within this developing sector.

Comparison to Industry Standards

• The company's revenue of $83,333 for the quarter is significantly lower than established waste-to-energy companies that often report revenues in the tens or hundreds of millions of dollars.
• The substantial net loss of $2,437,157 for the quarter, compared to a small loss for competitors in early development stages, highlights significant operational and financial inefficiencies.
• The company's negative working capital of $6,732,197 is a critical concern, whereas industry leaders typically maintain positive working capital to fund operations and growth.

Management Changes

Corporate Governance

Legal Proceedings

• LarCo Holdings, LLC filed a complaint alleging breach of contract, fraud, and other claims, seeking $752,500 related to a pledged invoice, joint and several liability for a $1.57 million judgment, and other damages.
• The company disputes the claims and believes it has no independent payment obligation to LarCo, as its commitment was conditional on collecting a specific invoice which has not occurred.
• Management has determined that a loss related to the LarCo litigation is not probable and cannot be estimated at this time.

Related Party Transactions

• Accounts payable and accrued expenses owed to former related parties James Geiskopf ($99,244) and Cameron Chell ($130,032) as of March 31, 2026.
• Aggregate disputed accounts payable and accrued expenses of $672,524 related to Business Instincts Group, Inc. and Cameron Chell, with the company considering potential offsets for failure to identify related-party status earlier.
• Settlement of debt to RTB LLP (owned by former CFO Swapan Kakumanu) through share issuance, resulting in zero balance owed as of March 31, 2026.
• Accounts payable and accrued expenses owing to President Scott Gallagher of $79,402 as of December 31, 2025.

Stakeholder Impact

• Shareholders face potential dilution from future equity or debt financing and continued uncertainty regarding the company's going concern status.
• Creditors may be concerned about the company's ability to meet its obligations, given the negative working capital and default on notes payable.
• Employees may be concerned about job security due to the company's precarious financial situation and the going concern warning.

Next Steps

• Secure additional financing through equity or debt to fund operating expenditures and capital requirements.
• Continue development of the Midland waste conversion business.
• Develop and implement AI-based emissions monitoring, management, and automated carbon credit creation technology.
• Address the ongoing litigation with LarCo Holdings, LLC.
• Improve disclosure controls and procedures.

Key Dates

Recommendation

The company exhibits severe financial distress, including a significant increase in net loss, a widening working capital deficit, and a going concern warning. The substantial derivative liabilities and ongoing litigation further increase risk. Without a clear path to profitability or significant new financing, the outlook is highly unfavorable.

Keywords

Waste Energy Corp, 10-Q Filing, Quarterly Report, Waste-to-Energy, Financial Statements, Net Loss, Derivative Liability, Going Concern