Cyber Enviro-Tech (CETI) flags going concern risk after $2.8M half-year loss
Cyber Enviro-Tech, Inc. reported no revenue for the three and six months ended June 30, 2026, and a net loss of $2,789,925 for the six-month period, compared with $2,131,372 a year earlier. Operating expenses were $737,970 for the first half, while significant non‑operating items included a $1.25M loss on issuance of derivatives and $974,521 of interest expense.
At June 30, 2026, cash was only $6,796, total assets were $3,376,929, and total liabilities were $7,502,868, resulting in a stockholders’ deficit of $(4,125,939). Debt consisted largely of $3,391,374 in convertible notes and other high‑cost borrowings, with a derivative liability of $2,655,735. Management disclosed substantial doubt about the company’s ability to continue as a going concern due to recurring losses, negative cash flows and limited liquidity, and plans to rely on additional equity and debt financings, including a recent S‑1 filing and a $30.0M equity purchase agreement, as well as a manufacturing and distribution agreement with Air Power USA intended to support future revenue.
Positive
- None.
Negative
- Substantial doubt about going concern: CETI states it does not have sufficient revenue to cover operating expenses and discloses substantial doubt about its ability to continue as a going concern.
- Rising losses with no revenue: Net loss for the six months ended June 30, 2026 was $2,789,925, with no gross sales reported for any period presented.
- Severe stockholders’ deficit: At June 30, 2026, total liabilities of $7,502,868 exceeded assets of $3,376,929, producing a stockholders’ deficit of $(4,125,939).
- Minimal liquidity: Cash and cash equivalents were only $6,796 at June 30, 2026, while net cash used in operating activities was $701,828 for the first half of 2026.
- Heavy reliance on high-cost and convertible debt: CETI had $3,391,374 in convertible notes and other borrowings, including defaulted and very high‑interest loans, plus a $2,655,735 derivative liability tied to these financings.
Key Figures
Key Terms
going concern financial
derivative liability financial
embedded derivatives financial
Regulation A offering financial
Equity Purchase Agreement financial
Monte Carlo Simulation Model financial
Earnings Snapshot
FAQ
How did Cyber Enviro-Tech (CETI) perform financially for the six months ended June 30, 2026?
Does Cyber Enviro-Tech (CETI) generate any revenue as of the June 30, 2026 quarter?
What is Cyber Enviro-Tech’s (CETI) liquidity position at June 30, 2026?
How much debt and derivative liability does Cyber Enviro-Tech (CETI) report?
What going concern risks did Cyber Enviro-Tech (CETI) disclose in its June 30, 2026 10-Q?
What equity financing arrangements has Cyber Enviro-Tech (CETI) put in place?
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AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Or
For the transition period from ___________ to ___________
Commission file number:
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(I.R.S. Employer Identification No.) | |
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| (Address of principal executive office) | (Zip Code) |
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Securities registered pursuant to Section 12(b) of the Act: None
Common Stock, par value $0.001 per share
(Title of Class)
Indicate by checkmark whether the registrant has
(1) 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
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Indicate by check mark whether the registrant
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of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit).
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| ☐ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check
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At August 13, 2026 there were
TABLE OF CONTENTS
| PART I. | FINANCIAL INFORMATION | 1 | ||
| Item 1. | Unaudited consolidated financial statements | 1 | ||
| Consolidated Balance Sheets at (unaudited) June 30, 2026 and (audited) December 31, 2025 | 1 | |||
| Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025 | 2 | |||
| Unaudited Consolidated Statements of Changes in Stockholders’ Deficit for the three and six months ended June 30, 2026 and 2025 | 3 | |||
| Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 | 4 | |||
| Notes to Consolidated unaudited financial statements | 5 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 26 | ||
| Item 4. | Controls and Procedures | 26 | ||
| PART II. | OTHER INFORMATION | 27 | ||
| Item 1. | Legal Proceedings | 27 | ||
| Item 1A. | Risk Factors | 27 | ||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 27 | ||
| Item 3. | Defaults Upon Senior Securities | 30 | ||
| Item 4. | Mine Safety Disclosures | 30 | ||
| Item 5. | Other Information | 30 | ||
| Item 6. | Exhibits | 31 | ||
| SIGNATURES | 32 | |||
i
PART I—FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
CYBER ENVIRO-TECH, INC.
CONSOLIDATED BALANCE SHEETS
| June 30, 2026 (Unaudited) | December 31, 2025 (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Loans receivable | ||||||||
| Investment in WTXR | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Long-term deposits | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable – related parties | ||||||||
| Accrued interest | ||||||||
| Notes payable, current maturities | ||||||||
| Notes payable, related party | ||||||||
| Convertible notes payable, net of discount of $ | ||||||||
| Convertible notes payable – related party | ||||||||
| Contingent liabilities | ||||||||
| Total current liabilities | ||||||||
| Notes payable - long term | ||||||||
| Convertible notes payable, net of current maturities, and net of discount of $ $ | ||||||||
| Derivative liability | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 4) | ||||||||
| Stockholders’ Deficit: | ||||||||
| Series A Convertible Preferred Stock, par value $ | ||||||||
| Series B Convertible Preferred Stock, par value $ | ||||||||
| Series C Non-convertible, Preferred Stock, par value $ | ||||||||
| Series D Convertible Preferred Stock, par value $ | ||||||||
| Special 2020 Series A Preferred Stock, par value $ | ||||||||
| Special 2025 Series A Preferred Stock, par value $ | ||||||||
| Common Stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Common stock to be issued, par value $ | ||||||||
| Preferred stock to be issue0, par value $ | ||||||||
| Treasury stock, at cost, par value $ | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 1 |
CYBER ENVIRO-TECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
| Three Months Ending June 30, 2026 | Three Months Ending June 30, 2025 | Six Months Ending June 30, 2026 | Six Months Ending June 30, 2025 | |||||||||||||
| Revenue: | ||||||||||||||||
| Gross sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Consulting | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivatives | ( | ) | ( | ) | ||||||||||||
| Loss on issuance of derivatives | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on extinguishment of derivative liability | ||||||||||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Change in fair value of contingent liabilities | ||||||||||||||||
| Change in fair value of WTXR | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from continuing operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Discontinued Operations: | ||||||||||||||||
| Loss from operations of discontinued operations | ( | ) | ( | ) | ||||||||||||
| Total Discontinued Operations | ( | ) | ( | ) | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net provision for income taxes | ||||||||||||||||
| Less net loss attributable to noncontrolling interest | ||||||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 2 |
CYBER ENVIRO-TECH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
| Preferred | Common Stock | Stock to be Issued* | Accum | Non Controlling | ||||||||||||||||||||||||||||||||||||||||
| Description | Shares | Amt | Shares | Amt | APIC | Shares | Amt | Treasury | Deficit | Interest | Total | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||||||||||
| Shares issued for services | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Shares issued for exercised warrants | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Shares issued for interest | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of convertible notes payable | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||||||||||
| Shares issued for cash | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Shares issued for interest | — | — | ( |
) | ( |
) | — | — | — | |||||||||||||||||||||||||||||||||||
| Shares issued for conversion of convertible notes payable | — | — | ( |
) | ( |
) | — | — | — | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | |||||||||||||||||||||||||||||
| Shares issued for cash | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to manufacturing and distribution agreement | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Common shares exchanged for preferred shares | ( |
) | ( |
) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Shares issued to cover stock price guarantee | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Shares issued for interest | — | — | ( |
) | ( |
) | — | — | — | |||||||||||||||||||||||||||||||||||
| Shares issued for conversion of convertible notes payable | — | — | ( |
) | ( |
) | — | — | — | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | |||||||||||||||||||||||||||||
| Common shares issued for services | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Preferred shares issued for services | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Shares issued pursuant to manufacturing and distribution agreement | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Shares issued for interest | — | — | ( |
) | ( |
) | — | — | — | |||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | — | $ | ( |
) | |||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 3 |
CYBER ENVIRO-TECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(Unaudited)
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
| Change in fair value of derivatives | ||||||||
| Change in fair value of contingent liability | ( | ) | ( | ) | ||||
| Change in fair value of WTXR | ( | ) | ||||||
| Loss on issuance of derivatives | ||||||||
| Gain on extinguishment of derivative liability | ( | ) | ( | ) | ||||
| Loss on extinguishment of debt | ||||||||
| Stock compensation | ||||||||
| Shares issued for exercised warrants | ||||||||
| Amortization of debt discount | ||||||||
| Depreciation and amortization expense | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accounts payable – related parties | ||||||||
| Accrued interest | ||||||||
| Contingent liabilities | ( | ) | ||||||
| Net cash used in operating activities from continuing operations | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Issuance of loan receivable | ( | ) | ||||||
| Net cash from investing activities from continuing operations | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Repayment of convertible notes payable | ( | ) | ( | ) | ||||
| Repayment of convertible notes payable – related parties | ( | ) | ||||||
| Proceeds from convertible notes payable | ||||||||
| Proceeds from convertible notes payable – related parties | ||||||||
| Proceeds from notes payable | ||||||||
| Shares issued for cash | ||||||||
| Repayment of notes payable | ( | ) | ( | ) | ||||
| Net cash from financing activities from continuing operations | ||||||||
| Net change in cash and cash equivalents from continuing operations | ( | ) | ||||||
| Cash flow from discontinued operations: | ||||||||
| Net cash from operating activities from discontinued operations | ||||||||
| Net cash from investing activities from discontinued operations | ||||||||
| Net cash from financing activities from discontinued operations | ||||||||
| Net change in cash and cash equivalents from discontinued operations | ||||||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Shares issued for conversion of convertible notes payable and accrued interest | $ | $ | ||||||
| Shares issued for settlement of contingent liability | ||||||||
| Recognition of debt discount | ||||||||
| Recognition of derivative liability on note issuance | ||||||||
| Shares issued for conversion of accrued interest | ||||||||
| Shares issued for interest | — | |||||||
| Shares issued pursuant to manufacturing and distribution agreement | ||||||||
| Shares issued pursuant to stock price guarantee | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
| 4 |
CYBER ENVIRO-TECH, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Cyber Enviro-Tech, Inc. (CETI) is an environmental technology company focused on sustainable solutions for the remediation of contaminated industrial wastewater, with an initial emphasis on the oil and gas sector. The Company develops and deploys proprietary equipment, biochemical products, and treatment processes to address complex hazardous waste and environmental challenges across global markets.
CETI has entered into a manufacturing and distribution agreement with Air Power USA to commercialize deployable, zero-emission energy systems. Powered by compressed air and designed for off-grid applications, these systems provide scalable, continuous power with no fuel and no emissions. This capability complements CETI’s environmental solutions and strengthens its value proposition to industrial clients.
The Company is headquartered in Scottsdale, Arizona, with additional offices in Istanbul, Turkey, and Dubai, United Arab Emirates.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The unaudited consolidated financial statements and related disclosures as of June 30, 2026, are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In management’s opinion, these unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements of the Company for the years ended December 31, 2025, and 2024 included in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on May 20, 2026. The results of operations for the six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the full year ended December 31, 2026.
Principles of Consolidation
The unaudited consolidated financial statements include the accounts of CETI and CETI Axenic, Inc (“Axenic”). Axenic is a majority owned subsidiary of CETI which discontinued operations on December 31, 2025. All significant intercompany balances and transactions have been eliminated for 2025. As of December 31, 2025, the investment in Axenic has been written off resulting in a nil balance.
Use of estimates
The preparation of unaudited consolidated financial statements in conformity with U.S. 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 unaudited consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition
The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” (“Topic 606”). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Topic 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company expects to recognize revenues as the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied.
Advertising Costs
Advertising costs are accounted for in accordance with Accounting Standards Codification (“ASC”) 720-35, Advertising Costs, which requires that such costs be expensed as incurred unless they meet the criteria for capitalization. Prepaid advertising costs may be recorded as assets if payment is made in advance of the advertisement and the benefit is expected to be realized in a future period.
The Company had no prepaid advertising as
of June 30, 2026 and 2025, respectively. Advertising expense was $
Cash equivalents
The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. There were
| 6 |
| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
Allowance for Credit Losses
The Company evaluates its notes receivable and
related accrued interest receivable for expected credit losses in accordance with ASC 326, Financial Instruments—Credit Losses.
Management estimates expected credit losses based on borrower-specific information, current conditions, and reasonable and supportable
forecasts. An allowance is recorded when management determines that expected credit losses exist. As of June 30, 2026, management determined
that
Investments
The Company accounts for investments in accordance with U.S. GAAP. Equity securities are measured at fair value, with changes in fair value recognized in earnings as a component of other income (expense), net. Equity investments without readily determinable fair values are recorded at cost, less impairment, and adjusted for observable price changes in orderly transactions for identical or similar securities of the same issuer. The Company reviews investments for impairment each reporting period.
The Company determines the fair value of its investments in accordance with ASC 820, Fair Value Measurement. Investments are classified within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. Investments valued using quoted prices in active markets for identical securities are classified as Level 1. Investments valued using observable inputs other than quoted prices in active markets are classified as Level 2. Investments valued using significant unobservable inputs, including management assumptions, discounts for lack of marketability, limited trading volume, restrictions on transfer, or valuation techniques prepared with the assistance of a valuation specialist, are classified as Level 3.
As of June 30, 2026, the Company’s investment
in West Texas Resources, Inc. (“WTXR”) was measured at fair value and classified as a Level 3 investment. Although WTXR’s
common stock is quoted on the OTC market, the stock is thinly traded and the Company’s fair value determination was not based solely
on the quoted market price. The Company considered available market data and other valuation inputs, including the limited trading activity
of WTXR’s common stock and other relevant factors, in determining fair value. As of June 30, 2026 and December 31, 2025, the carrying
value of the Company’s investment in WTXR was $
Property and Equipment
Property and equipment is recorded at cost. Cost of improvements that substantially extend the useful lives of the assets are capitalized. These costs are depreciated starting when the asset is put into service and is depreciated on a straight-line basis over its estimated useful life. Maintenance and repair costs are expensed when incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts.
Discontinued Operations
A component of an entity that is disposed of by sale or abandonment is reported as discontinued operations if the transaction represents a strategic shift that will have a major effect on an entity's operations and financial results. The results of discontinued operations are aggregated and presented separately in the Consolidated Statements of Operations.
Loan Receivable
In November 2023 and March 2024, CETI provided
two Short-Term Capital Bridge Loans totaling $
CETI also provided a Short-Term Capital Bridge
Loan of $
For the two notes above, notes receivable
totaled $
Impairment of Long-Lived Assets
In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in ASC 360, the Company assesses the recoverability of the carrying value of its long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Accounting for Majority-Owned Subsidiary
The Company consolidates the financial statements of majority-owned subsidiaries in accordance with U.S. GAAP. A subsidiary is classified as majority-owned when the Company owns more than 50% of its voting shares, giving it control over the subsidiary's operations and financial policies.
In the unaudited consolidated financial statements,
all intercompany transactions, balances, and unrealized gains and losses on transactions between the Company and its subsidiaries have
been eliminated. The financial position, results of operations, and cash flows of each majority-owned subsidiary are fully consolidated
with the portion attributable to non-controlling interests presented as a separate line item in the equity section of the consolidated
balance sheets and as a separate component of net income in the consolidated statements of operations. For the three and six months ended
June 30, 2025, there was a non-controlling interest loss of $
| 7 |
| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
Stock-based Compensation
The Company applies the fair value method of Financial
Accounting Standards Board (“FASB”) ASC 718, “Share Based Payment”, in accounting for its stock-based compensation.
This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. The Company values stock-based compensation at the market price for the Company’s
common stock and other pertinent factors at the grant date. During the three months and six months ended June 30, 2026 and 2025, the Company
recorded $
Fair Value of Financial Instruments
The Company adopted ASC 820, “Fair Value Measurements.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
| Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3: | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
The Company evaluates convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked to market each consolidated balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the unaudited consolidated statements of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
The following table classifies the Company’s liability measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2026:
| Schedule of derivative liability | ||||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Derivative | $ | $ | $ | $ | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||
The following table classifies the Company’s liability measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2025:
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Derivative | $ | $ | $ | $ | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. The Company’s federal tax return and any state tax returns are not currently under examination.
The Company has adopted ASC 740, “Accounting for Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Net income (loss) per common share
Under the provisions of ASC 260, “Earnings per Share”, basic loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. The following potential common shares were excluded from the calculation of diluted net income (loss) per share available to common stockholders because their effect would have been antidilutive:
| Schedule of diluted net income (loss) per share available to common stockholders | ||||||||
Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Warrants | ||||||||
| Stock options | ||||||||
| Common stock to be issued | ||||||||
| Convertible notes payable | ||||||||
| Embedded derivatives | ||||||||
| Preferred stock | ||||||||
| Total | ||||||||
Concentration of credit risks
The Company maintains accounts with financial institutions. All cash in checking accounts is non-interest bearing and is fully secured by the Federal Deposit Insurance Corporation (“FDIC”). At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts. The Company believes it mitigates its risk by depositing its cash and cash equivalents with major financial institutions.
Segment Reporting
The Company has determined
that it has one
Recently issued accounting pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the unaudited consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
NOTE 3 – GOING CONCERN
The Company’s unaudited consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of business for the foreseeable future. The Company does not yet have sufficient revenue to cover its operating expenses. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or to obtain the necessary financing to meet the Company’s 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 increased revenue and private placement loans or institutional investors. However, the Company filed an S-1 in July 2026 to give it the ability to raise funds through sale of stock. While the Company believes that it will be successful in obtaining the necessary financing and generating revenue to fund the Company’s operations, meet regulatory requirements and achieve commercial goals, there are no assurances that such additional funding will be achieved and that the Company will succeed in its future operations.
The unaudited consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
NOTE 4 – COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of June 30, 2026 and December 31, 2025, the Company is not aware of any contingent liabilities related to potential litigation that should be reflected in the unaudited consolidated financial statements.
In February 2022 and February 2023, CETI entered into agreements with two different investors offering them a stock guarantee on share price within a three-year period of time. The first investor’s shares in February 2022, came due in February 2025 and CETI entered into an agreement to pay $100,000 in cash and shares to satisfy that guarantee. For the second investor, the Company accrued a contingent liability as of December 31, 2025 for the difference between share price on that date and the guaranteed share price. For March 31, 2026, the difference between the guaranteed share price of 80 cents and the high share price during the three year period ending was 6.13 cents so the Company issued additional common stock to cover the difference and there is no longer any contingent liability as of June 30, 2026. The balances were nil and $190,000 as of June 30, 2026 and December 31, 2025, respectively.
On December 9, 2024, CETI entered into an agreement
with a company to provide consulting services to obtain funding of at least $
On December 21, 2024, CETI entered into a Financial
Consulting Engagement Agreement (FCEA) to provide consulting services and identify potential sources of private and/or public financing
of up to
In April 2025, the Company received notice of litigation regarding its potential purchase of a salt water disposal facility in 2024 that it decided not to pursue. The outcome of this litigation is undetermined at this time but the Company believes that its counterclaims will exceed whatever the plaintiff is asking for therefore no accrual has been made as of June 30, 2026.
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
NOTE 5 – PROPERTY AND EQUIPMENT
As of June 30, 2026 and December 31, 2025, property and equipment consisted of the following:
| Schedule of property and equipment | ||||||||||
| June 30, 2026 | December 31, 2025 | Useful Lives | ||||||||
| Equipment | $ | $ | ||||||||
| Equipment – Turkey | ||||||||||
| Vehicles | ||||||||||
| Less accumulated depreciation | ( |
) | ( |
) | — | |||||
| Property and equipment, net | $ | $ | — | |||||||
There was $
NOTE 6 – LONG TERM DEPOSIT
On February 26, 2026 CETI entered into a
NOTE 7 – DEBT
| Schedule of debt | ||||||||
| June 30, 2026 | December 31, 2025 | |||||||
| Notes payable | $ | $ | ||||||
| Note payable – related party | ||||||||
| Convertible notes payable | ||||||||
| Convertible notes payable – related party | ||||||||
| Debt discount | ( | ) | ( | ) | ||||
| Short term | ||||||||
| Long term | ||||||||
| Total | $ | $ | ||||||
The following is a schedule of debt maturity and the years in which the debt is scheduled to mature:
| Schedule of debt maturity | ||||||
| Year | Amount | |||||
| 2026 | $ | |||||
| 2027 | ||||||
| 2028 | |
|||||
| 2029 | ||||||
| 2030 | ||||||
| $ | ||||||
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
Notes payable
In September 2023, a related party issued a loan
to the Company for a total amount of $
In December 2023, the Company borrowed $
In March 2024, the Company had two loans
payable to an individual totaling $
In December 2025, the Company had four loans payable
to four individuals totaling $
The Company had an outstanding balance on its
line of credit of $
In February 2026, the Company took out a payments
rights and purchase and sale agreement of $
In January and February 2026, three notes totaling
$
In March 2026, the Company took out a line of
credit with QuickBooks via WebBank for $
In March 2026, the Company took out a line of
credit of $
On May 6, 2026, the Company
borrowed $
On May 11, 2026, the
Company entered into a Sale of Future Receipts Agreement with Essentia Funding pursuant to which the Company received gross proceeds of
$
On June 9, 2026, the
Company borrowed $
Convertible notes payable
In 2020, the Company executed a convertible
note payable with a related party for $
During 2025, the Company raised a net of $
During 2025, the Company converted $
During the first six months of 2026, the Company
converted $
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
In March 2026, the Company executed three convertible
notes payable totaling $
In April 2026, the Company executed one convertible
note payable for $
On June 29, 2026, the Company entered into a settlement
agreement with a creditor to satisfy an outstanding note payable with a principal balance of $
NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS
Embedded derivatives
The Company’s convertible notes payable gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of June 30, 2026 and December 31, 2025 and the amounts that were reflected in income related to derivatives for the period ended:
| Schedule of derivative liabilities | ||||||||
| June 30, 2026 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Embedded derivatives | $ | |||||||
| Warrant derivatives | ||||||||
| Total | $ | |||||||
| December 31, 2025 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Embedded derivatives | $ | |||||||
| Warrant derivatives | ||||||||
| Total | $ | |||||||
The following table summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivative financial instruments by type of financing for the three and six months ended June 30, 2026 and 2025:
| Schedule of changes in gain loss fair values of the derivative financial instruments | ||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, 2026 | June 30, 2025 | June 30, 2026 | June 30, 2025 | |||||||||||||
| Embedded derivatives | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| Warrant derivatives | — | — | ||||||||||||||
| Loss on issuance of derivative | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on extinguishment of derivative liability | ||||||||||||||||
| Total gain (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. The Company has selected the Monte Carlo Simulation Model, which approximates the Monte Carlo Simulations, a valuation technique to fair value the embedded derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Monte Carlo Simulation Model technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has expired, the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market price on the valuation date and the applicable conversion price.
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
Significant inputs and results arising from the Monte Carlo Simulation process are as follows for the embedded derivatives that have been bifurcated from the convertible notes and classified in liabilities:
| Schedule of embedded derivatives | ||||||||||||||||
Inception
Date Note | Inception
Date Note | Inception Date February 13, 2026 Note | Inception Date March 17, 2026 | |||||||||||||
| Quoted market price on valuation date | $ | $ | $ | $ | ||||||||||||
| Effective contractual conversion rates | $ | $ | $ | $ | ||||||||||||
| Contractual term to maturity | ||||||||||||||||
| Market volatility: | ||||||||||||||||
| Volatility | % | % | % | % | ||||||||||||
| Risk-adjusted interest rate | % | % | % | % | ||||||||||||
Inception Date Note | Inception Date Note | Inception Date Note | Period ended June 30, 2026 | |||||||||||||
| Quoted market price on valuation date | $ | $ | $ | $ | ||||||||||||
| Effective contractual conversion rates | $ | $ | $ | |||||||||||||
| Contractual term to maturity | ||||||||||||||||
| Market volatility: | ||||||||||||||||
| Volatility | % | % | % | % | ||||||||||||
| Risk-adjusted interest rate | % | % | % | 3.70-4.01 | % | |||||||||||
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
The following table reflects the issuances of embedded derivatives and changes in fair value inputs and assumptions related to the embedded derivatives as of June 30, 2026 and December 31, 2025.
| Schedule of fair value assumptions | ||||||||
Period Ended June 30, 2026 | Year Ended December 31, 2025 | |||||||
| Balances at beginning of period | $ | $ | ||||||
| Issuances: | ||||||||
| Embedded derivatives | ||||||||
| Warrant derivatives | ||||||||
| Gain on extinguishment of derivative liability | ( | ) | ( | ) | ||||
| Changes in fair value inputs and assumptions reflected in income | ( | ) | ||||||
| Balances at end of period | $ | $ | ||||||
NOTE 9 – RELATED PARTY TRANSACTIONS
At June 30, 2026 and December 31, 2025, the Company
had a convertible note payable for $
In January and February 2026, three notes totaling
$
At June 30, 2026 and December 31, 2025, the Company
had accounts payable to various related parties for a total of $
In September 2023, a related party loaned
$
During the three and six months ended June
30, 2026 and 2025, the Company paid various related parties for consulting services in the amounts of $
The above transactions and amounts are not necessarily what third parties would have agreed to.
NOTE 10 – PREFERRED STOCK
Series A Convertible Preferred Stock
The Company previously designated
During 2023, the Company changed the terms of
this series of stock whereby one (1) share of Series A Convertible Preferred, after a minimum two-year holding period, can be converted
into three thousand (3,000) shares of the Company’s common stock and has the same equivalent voting rights. In October 2023, the
three top shareholders cancelled
During 2025, the lockup period for this series of stock was extended for four more years, plus optional two-year extension, for any transfer or conversion applicable to all current Series A shareholders as of December 19, 2025. This lockup period would also be applicable to any future holders of this stock.
Series B Convertible Preferred Stock
The Company previously designated
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
Series C Non-Convertible Preferred Stock
The Company previously designated
Series D Convertible Preferred Stock
In 2026, the Company designated
Special 2020 Series A Preferred
The Company has one share of preferred stock designated
as Special 2020 Series A Preferred, par value $
Special 2025 Series A Preferred Stock
In 2026, the Company designated and issued one (1) share with 60 percent of the total voting power of the Company, on all matters, having no conversion rights, no dividends, no liquidation preference, and no economic rights, to be issued to the Chief Executive Officer, Kim D. Southworth, for voting control purposes only. This instrument was issued in lieu of the previously authorized Special 2020 Series A Preferred Stock, which included significant conversion rights. The current structure eliminates potential dilution while preserving voting control for governance purposes.
NOTE 11 – STOCKHOLDERS’ DEFICIT
Stock options were issued in 2023 in connection with a consulting agreement and these options expired in June 2026. The stock option activity for the six months ended June 30, 2026 and the year ended December 31, 2025 is summarized as follows:
| Schedule of stock option activity | ||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||||
| Options outstanding December 31, 2024 | ||||||||||||||
| Issued | — | |||||||||||||
| Exercised | — | |||||||||||||
| Cancelled | — | |||||||||||||
| Options outstanding December 31, 2025 | ||||||||||||||
| Issued | — | |||||||||||||
| Exercised | — | |||||||||||||
| Cancelled/Expired | ( | ) | — | |||||||||||
| Options outstanding June 30, 2026 | — | |||||||||||||
| Options exercisable June 30, 2026 | $ | — | ||||||||||||
In connection with a different consulting agreement
dated March 1, 2023, the Company initially agreed to pay
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
During the periods ended June 30, 2026 and December
31, 2025, the Company issued an aggregate
Significant range of inputs and results arising from the Black-Scholes process are as follows for the warrants:
| Schedule of assumptions | ||||||||||
| Quoted market price on valuation date | $ | |||||||||
| Effective contractual strike price | $ | |||||||||
| Market volatility | % | |||||||||
| Contractual term to maturity | ||||||||||
| Risk-adjusted interest rate | % |
Stock warrant activity for six months ended June 30, 2026 and the year ended December 31, 2025 is summarized as follows:
| Schedule of stock warrant activity | ||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||
| Warrants exercisable December 31, 2024 | $ | |||||||||||
| Issued | — | |||||||||||
| Exercised | ( | ) | — | |||||||||
| Cancelled | — | |||||||||||
| Warrants outstanding December 31, 2025 | ||||||||||||
| Warrants exercisable December 31, 2025 | $ | |||||||||||
| Issued | ||||||||||||
| Warrants issued under full ratchet protection | — | |||||||||||
| Exercised | — | |||||||||||
| Cancelled | ( | ) | — | |||||||||
| Warrants outstanding June 30, 2026 | ||||||||||||
| Warrants exercisable June 30, 2026 | $ | |||||||||||
Common Stock
During the six months ended June 30, 2025, the
Company issued
During the six months ended June 30, 2026, the
Company conducted a Regulation A offering pursuant to Regulation A under the Securities Act of 1933, as amended, through which the Company
offered and sold shares of its common stock to investors. The Company raised $
Also, during the six months ending June 30, 2026,
the Company issued
Equity Purchase Agreement
On March 20, 2026, the Company entered into an
Equity Purchase Agreement with Monroe Street Capital Partners, LP, providing the Company the right to sell up to $
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
NOTE 12 – DISCONTINUED OPERATIONS
Effective October 14, 2025 the Company completed its spinoff of the Alvey oil field operation to Texas Coastal Energy, Corp. (TCEC) in exchange for 8,600,000 shares of West Texas Resources, Inc (OTCID: WTXR). While this transaction was being negotiated, TCEC completed a reverse merger through which it assumed control and operational stewardship of West Texas Resources, Inc. Operating under the WTXR banner, the company has expanded its portfolio of producing oil and gas wells and reinforced its strategy to revitalize legacy oil fields across Texas. The acquisition of the Alvey oil field further accelerates WTXR’s growth trajectory.
The Alvey oil field was originally acquired by CETI as a pilot site to test and refine its proprietary oil production enhancement technologies. Those efforts proved instrumental in demonstrating broader applications—extending beyond oil field optimization into large-scale remediation of contaminated oil, sludge, soil, and wastewater. As CETI’s technology and strategy have evolved, the Alvey asset no longer aligned with the Company’s core focus. By spinning off the Alvey asset, CETI can fully dedicate its resources to advancing a growing portfolio of domestic and international remediation projects. At the same time, CETI and its shareholders retain the opportunity to participate in the future value of the Alvey oil field through its continued development by a company with deep expertise in oil and gas production—ensuring the asset has a better chance to realize its full potential while CETI concentrates on its primary growth markets.
| Schedule of discontinued operations consolidated statement of operations | ||||||||||||||||
Three Months Ended June 30 | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| Total cost of revenue | ( | ) | ( | ) | ||||||||||||
| Gross margin | ||||||||||||||||
| Operating expenses | ( | ) | ( | ) | ||||||||||||
| Loss from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Loss before tax expense | ( | ) | ( | ) | ||||||||||||
| Tax expense | ||||||||||||||||
| Loss from operations of discontinued operations | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Since the Alvey oil field was sold during 2025, there are no assets and liabilities of the discontinued operations at June 30, 2026 and December 31, 2025.
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
Oil and Gas Producing Activities
The Company uses the successful efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly affect the units-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. There were capitalized costs of zero at June 30, 2026 and December 31, 2025.
Unproved oil and gas properties are assessed annually to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved properties expire, the costs thereof, net of any related allowance for impairment, is removed from the accounts and charged to expense. During the three and six months ended June 30, 2026 and 2025, there was no impairment to unproved properties. The sale of a partial interest in an unproved property is accounted for as a recovery of cost when substantial uncertainty exists as to the ultimate recovery of the cost applicable to the interest retained. A gain on the sale is recognized to the extent that the sales price exceeds the carrying amount of the unproved property. A gain or loss is recognized for all other sales of unproved properties. For the six months ending June 30, 2026 and 2025, there was no gain or loss recognized for sales of unproved properties.
Costs associated with development wells that are
unevaluated or are waiting on access to transportation or processing facilities are reclassified into developmental wells-in-progress
("WIP"). These costs are not put into a depletable field basis until the wells are fully evaluated or access is gained to transportation
and processing facilities. Costs associated with WIP are included in the cash flows from investing as part of investment in oil and gas
properties. At June 30, 2026 and December 31, 2025,
Depreciation, depletion and amortization of proved
oil and gas properties is calculated using the units-of-production method based on proved reserves and estimated salvage values. During
the six months ended June 30, 2026 and 2025, the Company recorded
The Company reviews its proved oil and natural
gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may
have occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted
future cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If
the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural
gas properties to fair value. During the six months ended June 30, 2026 and 2025, there was
(2) Texas Railroad Commission Bond and Estimated Asset Retirement Obligation
To cover the estimated future asset retirement
obligations ("ARO") related to its oil and gas properties, the Company maintains a $
Revisions to the liability could occur due to changes in estimated abandonment costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.
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| CYBER ENVIRO-TECH, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 |
NOTE 13 – INCOME TAXES
Deferred taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carryforwards and deferred
tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of
Income taxes consist of the following components as of:
| Schedule of income taxes | ||||||||
| Six months ended June 30, 2026 | Six months ended June 30, 2025 | |||||||
| Federal income tax benefit attributable to: | ||||||||
| Current Operations | $ | $ | ||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net provision for Federal income taxes | $ | — | $ | — | ||||
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the periods ended June 30, 2026 and December 31, 2025, due to the following:
| Schedule of income tax provision | ||||||||
| June 30, 2026 | December 31, 2025 | |||||||
| Deferred tax asset attributable to: | ||||||||
| Net operating loss carryover | $ | $ | ||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | $ | — | $ | — | ||||
At June 30, 2026 and December 31, 2025, the Company
had net operating loss carry forwards of $
Net operating losses generated in tax years beginning after December 31, 2017 may be carried forward indefinitely, subject to applicable limitations, including the limitation that such losses may generally offset no more than 80% of taxable income in future taxable years. No tax benefit has been reported in December 2025 and 2024 unaudited consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Utilization of the Company’s net operating loss carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code if the Company has experienced, or experiences in the future, an ownership change. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.
NOTE 14 – SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date these unaudited consolidated financial statements were issued and has concluded that the following events require disclosure:
| · | Registration Statements. On July 2, 2026, the Company filed a Registration Statement on Form
S-1, which, became effective on July 13, 2026, and itt permits the Company to raise capital through the issuance of common stock. The
Company also filed a Registration Statement on Form S-8 registering |
| · | Debt Settlements. On July 2, 2026, the Company made the final $ |
| · | Subsequent Financing Activities. Between July 1 and July 29, 2026, the Company entered into several
convertible promissory note agreements totaling approximately $ |
| · | Related-Party Transaction. On July 15, 2026, the Company made a $ |
| · | Issuance of common stock. There has been |
| 20 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the Company’s unaudited consolidated financial statements, including the notes thereto, appearing in this Form 10-Q and are hereby referenced. The following discussion contains forward-looking statements that reflect the Company’s plans, estimates and beliefs. The Company’s actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this report. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. The Company believes it is important to communicate its expectations. However, management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
These forward-looking statements are based on management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because the Company cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology, including words such as “may”, “will”, “believes”, “anticipates”, “estimates”, “expects”, “continues”, “should”, “seeks”, “intends”, “plans”, and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; the ability to maintain and develop relationship with its existing and potential future customers, and, the Company’s ability to maintain a level of investment that is required to remain competitive. Many factors could cause actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: variability of revenues and financial performance; risks associated with technological changes; the acceptance of products in the marketplace by existing and potential customers; disruption of operations or increases in expenses due to the Company’s involvement with litigation or caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates; and, the continued employment of the Company’s key personnel and other risks associated with competition.
GENERAL OVERVIEW
Business Background
Cyber Enviro-Tech, Inc. (CETI) is an environmental technology company focused on sustainable solutions for the remediation of contaminated industrial wastewater, with an initial emphasis on the oil and gas sector. The Company develops and deploys proprietary equipment, biochemical products, and treatment processes to address complex hazardous waste and environmental challenges across global markets.
CETI has entered into a manufacturing and distribution agreement with Air Power USA to commercialize deployable, zero-emission energy systems. Powered by compressed air and designed for off-grid applications, these systems provide scalable, continuous power with no fuel and no emissions. This capability complements CETI’s environmental solutions and strengthens its value proposition to industrial clients.
The Company is headquartered in Scottsdale, Arizona, with additional offices in Istanbul, Turkey, and Dubai, United Arab Emirates.
The Company’s principal executive office is located at Cyber Enviro-Tech, Inc., 6991 E. Camelback Road, Suite D-300, Scottsdale, Arizona 85251. The Company’s telephone number is 866 687-6856. The Company’s Internet site is located at: www.cyberenviro.tech. The Company maintains its statutory registered agent's office at Registered Agents Inc. 30 N Gould St Ste R Sheridan, WY 82801 USA Telephone Number. (307) 200-2803.
On June 12, 2020, the District Court of Laramie County, Wyoming appointed Benjamin Berry of Synergy Management Group LLC (“Synergy”) as custodian of the Company.
On September 3, 2020, Synergy and Global Environmental Technologies, Inc. (“Global”), entered into a Securities Purchase Agreement, whereby Synergy sold its one share of Special Series A preferred stock and one-half share of Series C preferred stock to Global Environmental Technologies, Inc.
On September 23, 2020, the Company entered into a share exchange agreement with Global Environmental Technologies, Inc., (“Global”) a Wyoming corporation. Per the terms of the agreement, NexGen Holdings Corp exchanged thirty-five shares of common stock for one share of Global.
On October 6, 2020, the Company formally changed its name with the State of Wyoming from NexGen Holdings Corp to Cyber Enviro-Tech, Inc.
| 21 |
DESCRIPTION OF BUSINESS
Cyber Enviro-Tech, Inc. (CETI) is an environmental technology company focused on sustainable solutions for the remediation of contaminated industrial wastewater, with an initial emphasis on the oil and gas sector. The Company develops and deploys proprietary equipment, biochemical products, and treatment processes to address complex hazardous waste and environmental challenges across global markets.
CETI has entered into a manufacturing and distribution agreement with Air Power USA to commercialize deployable, zero-emission energy systems. Powered by compressed air and designed for off-grid applications, these systems provide scalable, continuous power with no fuel and no emissions. This capability complements CETI’s environmental solutions and strengthens its value proposition to industrial clients.
The Company is headquartered in Scottsdale, Arizona, with leased office space in Istanbul, Turkey, and Dubai, United Arab Emirates.
The Alvey Oil Field was originally acquired by CETI as a pilot site to test and refine its proprietary oil production enhancement technologies. Those efforts proved instrumental in demonstrating broader applications—extending beyond oil field optimization into large-scale remediation of contaminated oil, sludge, soil, and wastewater. As CETI’s technology and strategy have evolved, the Alvey asset no longer aligned with the Company’s core focus On October 14, 2025, CETI exchanged all assets related to the Alvey oil field operation for 8,600,000 common shares of West Texas Resources Incorporated, (“WTXR”). By spinning off the Alvey asset, CETI can fully dedicate its resources to advancing a growing portfolio of domestic and international remediation projects. At the same time, CETI and its shareholders retain the opportunity to participate in the future value of the Alvey Oil Field through its continued development by a company with expertise in oil and gas production—ensuring the asset has a better chance to realize its full potential while CETI concentrates on its primary growth markets.
GENERAL OVERVIEW
Form and year of organization;
Cyber Enviro-Tech, Inc., also referred to as “CETI” and the “Company”, was founded in the State of Wyoming as Electronic Biotek, Inc in April 1986.
Bankruptcy, receivership;
The company has never filed Bankruptcy or been involved in any receiverships or similar proceedings.
Material reclassification;
The Company has been known by a variety of names since its inception in the State of Wyoming as Electronic Biotek, Inc. In 2020, CETI through its previous name, Global Technologies, Inc. (“Global”) acquired NexGen Holdings Corp via a reverse merger. Subsequent to the reverse merger, the Company changed its 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 names were active:
Cyber Enviro-Tech, Inc - CURRENT.
NexGen Holdings Corp - Until October 6, 2020
WindPower Innovations, Inc. until January 2014
Educational Services International, Inc. until November 2009
Bio-Life Systems, Inc. until November 2001
Biolectronics, Corp. to April 1992
Electronic Biotek, Inc April 1986
Business of the Cyber Enviro-Tech, Inc.;
Cyber Enviro-Tech, Inc. (CETI) is an environmental technology company focused on sustainable solutions for the remediation of contaminated industrial wastewater, with an initial emphasis on the oil and gas sector. The Company develops and deploys proprietary equipment, biochemical products, and treatment processes to address complex hazardous waste and environmental challenges across global markets.
On March 23, 2026 the Company announced it entered into a manufacturing and distribution agreement with Air Power USA, securing exclusive territory rights to manufacture and distribute zero-emission energy systems powered by compressed air across key international markets. This agreement provides CETI with a tangible, revenue-oriented platform through the deployment of Air Power's clean energy generation technology. The Company expects initial project activity and potential deployments in the second half of 2026, aligning with CETI's broader strategy to prioritize revenue-producing opportunities and scalable environmental solutions.
CETI continues to evaluate its existing remediation business while expanding its environmental footprint into complementary sectors, including clean power generation and sustainable infrastructure solutions. The Company intends to leverage its established international relationships to support distribution, project development, and market entry initiatives for Air Power systems.
Building on this momentum, CETI has multiple projects in its development pipeline that are expected to come online during the second half of 2026, positioning the Company for potential revenue growth and expanded commercial traction.
Sales Strategy – CETI’s B2B Sales Strategy will include partnering with individuals and companies who have many years of experience and developed relationships within their respective aforementioned targeted verticals. Prior knowledge of those specific industry issues, water filtration needs, history and relationships developed over many years will enable them to shorten the sales cycle for the Company’s water filtration system. As of June 22, 2026, the Company has agreements with several individuals who are pursuing a variety of opportunities but no contracts have been ratified so far.
Market Demand and Size - CETI’s water filtration system can be modified to address many of the water contamination issues that exist worldwide. The markets envisioned for the CETI water system when funds permit would be both domestic (U.S.) and global.
| 22 |
Government Regulation
The Company is subject to government regulations that regulate businesses generally, such as compliance with regulatory requirements of federal, state, and local agencies and authorities, including regulations concerning workplace safety and labor relations. In addition, the operations are affected by federal and state laws relating to marketing practices in the oil industry and/or expansion of operations; a change to or changes to government regulations; a general economic slowdown; a significant decrease in the price of st Texas Intermediate crude. Any change in one or more of these factors could reduce the Company’s ability to earn and grow revenue in future periods.
Research and Development
For the periods ending June 30, 2026 and June 30, 2025, the Company spent approximately nil and $667,000 in research and development on its oil/water filtration products and process, respectively. In addition, from 2021 through December 31, 2024, approximately $3.4 million was invested in the Alvey Ranch Oil field to test new technologies in opening up the downhole fractures and removing contaminants from the reservoir for increased oil production and these expenditures had been capitalized. Effective October 14, 2025, the Alvey oil field was sold to another company as the Company intends to focus its efforts on water and oil/soil remediation as well as clean energy production.
Personnel
As of June 30, 2026, the Company has no employees but the Company does have 7 full-time and part-time consultants.
Results of Operations for the Three Months Ending June 30, 2026 and 2025:
| 2026 | 2025 | $ | % | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional fees | $ | 99,697 | $ | 31,991 | $ | 67,706 | 211.6 | % | ||||||||
| General and administrative | 94,553 | 266,911 | (172,358 | ) | -64.6 | % | ||||||||||
| Consulting | 130,430 | 427,479 | (297,049 | ) | -69.5 | % | ||||||||||
| Total operating expenses | 324,680 | 726,381 | (401,701 | ) | -55.3 | % | ||||||||||
| Loss from operations | (324,680 | ) | (726,381 | ) | (401,701 | ) | -55.3 | % | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivative | 346,646 | 61,318 | 285,328 | 465.3 | % | |||||||||||
| Change in fair value of contingent liability | — | 10,000 | (10,000 | ) | -100.0 | % | ||||||||||
| Change in fair value of WTXR | 184,132 | — | 184,132 | 100.0 | % | |||||||||||
| Loss on issuance of derivative | (159,848 | ) | (57,538 | ) | (102,310 | ) | 177.8 | % | ||||||||
| Gain on extinguishment of derivative liability | 173,430 | 10,601 | 162,829 | 1536.0 | % | |||||||||||
| Loss on extinguishment of debt | (379,644 | ) | — | (379,644 | ) | 100.0 | % | |||||||||
| Interest income | 3,403 | 4,030 | (627 | ) | -15.6 | % | ||||||||||
| Interest expense | (571,624 | ) | (168,001 | ) | (403,623 | ) | 240.3 | % | ||||||||
| Total Other Income (Expense) | (403,505 | ) | (139,590 | ) | (263,915 | ) | 189.1 | % | ||||||||
| Loss from continuing operations | (728,185 | ) | (865,971 | ) | (137,786 | ) | -15.9 | % | ||||||||
| Discontinued operations: | ||||||||||||||||
| Loss from operations of discontinued operations | — | (117,320 | ) | 117,320 | -100.0 | % | ||||||||||
| Net loss | (728,185 | ) | (983,291 | ) | 255,106 | -25.9 | % | |||||||||
| Less net loss attributable to noncontrolling interest | — | (12,559 | ) | 12,559 | -100.0 | % | ||||||||||
| Net loss attributable to common stockholders | $ | (728,185 | ) | $ | (970,732 | ) | $ | 242,547 | -25.0 | % | ||||||
| 23 |
Professional fees. These fees are largely made up of audit and audit-related fees ($87,589 and $31,790 during the periods ending June 30, 2026 and 2025 respectively).
General and administrative Expenses. General and administrative expenses for the three months ended June 30, 2026 were down by -64.6% or $172,358 versus 2025 largely due to decreases in travel expenses of $75,212, office expenses of $82,255 and rent expenses of $17,177 offsetting an increase in advertising and promotion of $19,000. The Company resources were more constrained in 2026 and most of these expenses are related to overseas projects which CETI continues to deemphasize in 2026 as instability continues in the Middle East.
Consulting fees. Decreased by 69.5% or $297,049 due to a number of factors impacting 2025 and not 2026: Three consultants had amortization of their stock compensation finish in 2025 ($45,527), several others were only employed in 2025 ($71,441), there were consulting expenses associated with the pursuit of the Green Bond ($38,000), TJ Agardy, former President was still employed for most of the first half of 2025 ($20,000), and, lastly marketing consulting expenses plus cost of warrants totaled $112,511. These five items account for almost the entire decrease in 2026 vs 2025.
Other income (expense). Net other expense increased by approximately $264,000 during the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily attributable to debt restructuring activities undertaken during the quarter, including losses recognized on debt settlements and non-cash accounting charges associated with the Company's convertible commercial financing arrangements.
While most of the Company's convertible commercial financing was incurred during the first quarter of 2026, the related financing instruments remained outstanding during the second quarter and, under U.S. GAAP, continued to require periodic fair value remeasurement. As a result, the Company recognized significant non-cash charges related to the issuance, amortization, and periodic remeasurement of derivative liabilities and related debt discounts. The Company also recognized a $379,644 loss on the settlement of debt in connection with negotiated agreements to retire or restructure certain commercial financing obligations. These unfavorable items were partially offset by a non-cash unrealized gain of a $184,132 related to the increase in the fair value of the Company's investment in West Texas Resources, Inc. ("WTXR") and $173,430 of gains on the extinguishment of debt.
Management believes these restructuring activities are intended to reduce higher-cost commercial debt and simplify the Company's financing obligations. A substantial portion of the increase in other expense consisted of non-cash fair value adjustments and other accounting entries required under U.S. GAAP, and certain charges were associated with debt restructuring activities during the current quarter that management does not believe are indicative of the Company's ongoing operating results.
Loss from continuing operations. The above changes resulted in net loss of $728,185 in the three months end June 30, 2026 compared to a net loss of $865,971 in 2025. Decreases in operating expenses of $401,701 offset the increase in other expenses as noted above resulting in a smaller loss in current quarter.
Discontinued operations: The Company sold the Alvey oil field in fourth quarter 2025, and this represents the non-capitalized expenses related to the Alvey.
Results of Operations for the Six Months Ending June 30, 2026 and 2025
| 2026 | 2025 | $ | % | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional Fees | $ | 162,610 | $ | 183,111 | $ | (20,501 | ) | -11.2 | % | |||||||
| General and administrative | 268,396 | 485,559 | (217,163 | ) | -44.7 | % | ||||||||||
| Consulting | 306,964 | 942,668 | (635,704 | ) | -67.4 | % | ||||||||||
| Total operating expenses | 737,970 | 1,611,338 | (873,368 | ) | -54.2 | % | ||||||||||
| Operating loss from continuing operations | (737,970 | ) | (1,611,338 | ) | (873,368 | ) | -54.3 | % | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivatives | (19,363 | ) | (141,392 | ) | 122,029 | -86.3 | % | |||||||||
| Loss on issuance of derivatives | (1,246,006 | ) | (75,214 | ) | (1,170,792 | ) | 1556.6 | % | ||||||||
| Gain on extinguishment of derivative liability | 202,003 | 362,572 | (160,569 | ) | -44.3 | % | ||||||||||
| Loss on extinguishment of debt | (379,644 | ) | — | (379,644 | ) | 100.0 | % | |||||||||
| Change in fair value of contingent liabilities | 174,675 | 25,000 | 149,675 | 598.7 | % | |||||||||||
| Change in fair value of WTXR | 184,132 | — | 184,132 | 100.0 | % | |||||||||||
| Interest income | 6,769 | 7,318 | (549 | ) | -7.5 | % | ||||||||||
| Interest expense | (974,521 | ) | (499,724 | ) | (474,797 | ) | 95.0 | % | ||||||||
| Total Other Income (Expense) | (2,051,955 | ) | (321,440 | ) | (1,730,515 | ) | 538.4 | % | ||||||||
| Loss from continuing operations | (2,789,925 | ) | (1,932,778 | ) | (857,147 | ) | 44.3 | % | ||||||||
| Discontinued operations: | ||||||||||||||||
| Loss from operations of discontinued operations | — | (198,594 | ) | 198,594 | -100.0 | % | ||||||||||
| Net Income (Loss) | (2,789,925 | ) | (2,131,372 | ) | (658,553 | ) | 30.9 | % | ||||||||
| Less net loss attributable to noncontrolling interest | — | (17,089 | ) | 17,809 | -100.0 | % | ||||||||||
| Net loss attributable to common stockholders | $ | (2,789,925 | ) | $ | (2,114,283 | ) | $ | (675,642 | ) | 32.0 | % | |||||
| 24 |
Professional fees. These fees are largely made up of audit and audit-related fees ($120,502 and $80,710 during the six months ending June 30, 2026 and 2025 respectively) and legal fees ($41,738 and $84,351 during the six months ending June 30, 2026 and 2025, respectively). The decrease in legal fees from 2025 to 2026, was largely due to a decrease in fees associated with preparation of the S-1 from 2025 to 2026 of $36,844 and a decrease in fees associated with the West Fox lawsuit of $26,269 partially offset by an increase fees associated with the preparation of loan documents in 2026 of $23,000.
General and administrative Expenses. General and administrative expenses for the six months ended June 30, 2026 were down by 44.7% versus 2025 or $217,163 largely due to a decrease in travel expense of $184,007, office expense of $86,370 and rent $23,914 offsetting an increase in water sampling of $73,700. The Company resources were more constrained in 2026 and therefore travel was curtailed. The water sampling was done for a specific client in 2026 that the Company did not have in the first half of 2025.
Consulting fees. Decreased by 67.4% or $635,704 due to a number of factors impacting 2025 and not 2026: Three consultants had amortization of their stock compensation finish in 2025 ($148,837), there were consulting expenses associated with the pursuit of the Green Bond ($106,000), TJ Agardy, former President was still employed for most of the first half of 2025 ($50,000), and, lastly, marketing consulting expenses plus cost of warrants totaled $294,859. These four items account for almost the entire decrease in 2026 vs 2025.
Other income (expense). Net other expense increased by approximately $1.73 million during the six months ended June 30, 2026, compared to the same period in 2025. The increase was driven primarily by financing and debt restructuring activities rather than changes in the Company's operating performance. During the period, the Company increased its use of convertible commercial financing arrangements to support operations and implement its debt restructuring strategy.
As a result of these financing activities, the Company recognized a $1.25 million non-cash loss on the issuance of derivative instruments and an increase in interest expense of approximately $475,000, primarily related to the issuance, amortization, and ongoing accounting for convertible financing arrangements. The Company also recognized a $379,644 loss on the settlement of debt in connection with negotiated agreements to retire or restructure certain commercial financing obligations. In addition, the Company recognized a lower gain on the extinguishment of derivative liabilities compared to the prior-year period, which also contributed to the increase in other expense.
These unfavorable items were partially offset by a non-cash unrealized gain of approximately $184,000 resulting from the increase in the fair value of the Company's investment in West Texas Resources, Inc. ("WTXR") and a $175,000 gain from the change in the fair value of contingent liabilities. Many of these charges and gains result from accounting required under U.S. GAAP for convertible financing instruments and fair value measurements and do not represent current-period cash expenditures.
Management believes these financing and debt restructuring activities are intended to reduce higher-cost commercial debt and simplify the Company's financing obligations. While these activities resulted in a significant increase in other expense during the current period, management does not believe the related non-cash accounting charges are indicative of the Company's ongoing operating performance.
Loss from continuing operations. The above changes resulted in net loss of $2,789,925 in the first six months of 2026 compared to a net loss of $1,932,778 in 2025. Decreases in operating expenses of $873,368 were offset by the increase in other expense as noted above especially the non-cash expenses associated with the derivative accounting.
Discontinued operations: The Company sold the Alvey oil field in fourth quarter 2025, and this represents the non-capitalized expenses related to the Alvey.
Liquidity and Capital Resources
As of June 30, 2026, the Company had total assets of $3,376,929 including current assets of $1,059,540, property and equipment, net of $1,149,889 and long term deposit of $1,167,500. CETI also has current liabilities of $4,661,496 which consist of accounts payable of $511,700, accounts payable related party of $342,766, accrued interest of $538,412, notes payable, current maturities of $268,953, notes payable related party of $153,989, short-term convertible notes payable of $2,761,076, net of discount of $392,798, and convertible notes payable related party of $84,600. The Company also has $2,841,372 of long-term liabilities consisting of convertible notes payable of $99,829, net of discount of $137,671 and a derivative liability of $2,655,735.
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 equity or cash generated from operations. The Company will attempt to obtain additional capital through private investors; however, CETI has no agreements or understandings with third parties at this time in regards to investing additional monies. To help fund operations, the Company filed an S-1 in July 2026 that became effective as of July 7, 2026 to give it the ability to raise funds through sale of stock. While the Company believes that it will be successful in obtaining the necessary financing and generating revenue to fund the Company’s operations, meet regulatory requirements and achieve commercial goals, there are no assurances that such additional funding will be achieved and that the Company will succeed in its future operations. As explained in Note 3, the Company does not yet have sufficient revenue to cover its operating expenses. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
During the six months ended June 30, 2026, net cash provided by financing activities from continuing operations was approximately $658,000. Financing cash inflows primarily consisted of $529,600 in proceeds from convertible notes payable, approximately $212,000 in proceeds from notes payable, and around $137,000 from the issuance of shares for cash. These inflows were partially offset by about $150,000 in repayments of convertible notes payable and approximately $71,000 in repayments of notes payable.
During the same period, continuing operations used close to $702,000 of cash in operating activities, while there were no cash flows from investing activities. Accordingly, around $658,000 of net cash provided by financing activities was not sufficient to fully offset cash used in operations, resulting in a net decrease in cash and cash equivalents from continuing operations of approximately $43,000 during the six months ended June 30, 2026.
S-1 Registration Statements Effective January 2023 and December 2023
The Company filed an S-1 Registration statement in 2022 and it became effective in January 2023. This gives the Company the right to sell 10 million shares of common stock at $0.40 per share and allowed almost seven million shares of stock from debentures converted in 2022 to become free trading shares. As of August 13, 2026, none of the 10 million shares of common stock have been sold.
The Company filed a second S-1 Registration statement in 2023 and it became effective in December 2023. This registration statement registered securities for consultants, who received shares for services, and some investors, who received shares for either cash or on the conversion of convertible debentures.
| 25 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 4. Controls and Procedures.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure.
As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, the Company’s management, with the participation of the Company’s chief executive officer (the Company’s principal executive officer) and the Company’s chief financial officer (the Company’s principal financial officer and principal accounting officer) evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report, being June 30, 2026.
Based on this evaluation, these officers concluded that, as of June 30, 2026 these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by the Company’s company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission. The conclusion that the Company’s disclosure controls and procedures were not effective was due to the Company lacking in pre-planning for expenses and documentation of all transactions.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within the Company’s company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a more than remote possibility that a misstatement of the Company’s annual or interim unaudited consolidated financial statements could occur. In its assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2026, the Company determined that there were control deficiencies that constituted material weaknesses which are indicative of many small companies with small staff, such as:
| (1) |
inadequate segregation of duties and effective risk assessment; and
| |
| (2) | insufficient written policies and procedures for documenting all transactions with vendors. |
The Company’s management is currently evaluating remediation plans for the above deficiencies. During the period covered by this quarterly report on Form 10-Q, the Company has have been able to remediate some of the weaknesses described above. However, we plan to take steps to enhance and improve the design of the Company’s internal control over financial reporting.
| 26 |
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
As noted in the Commitments and Contingencies section, a lawsuit was filed in April 2025 against CETI. CETI believes it will prevail and therefore no accrual for lawsuit liability has been recorded.
Item 1A. Risk Factors.
As a “Smaller Reporting Company,” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
| Date of Transaction | Transaction type (e.g. new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed) | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing | |||||||||||||||
| 2/25/2025 | New | 168,860 | Common | 0.15 | Mark Mitrev | Debt conv | Restricted | |||||||||||||||
| 2/25/2025 | New | 84,804 | Common | 0.25 | Markl Family Living Trust, Barry Markl | Debt conv | Restricted | |||||||||||||||
| 2/25/2025 | New | 1,991,931 | Common | 0.001 | Kaybrook Client Group LLC, Harry Datys | Services | Restricted | |||||||||||||||
| 3/20/2025 | New | 113,317 | Common | 0.1 | Craig Cox | Debt conv | Restricted | |||||||||||||||
| 3/20/2025 | New | 63,295 | Common | 0.2 | Dan’l Mitchell | Debt conv | Restricted | |||||||||||||||
| 3/20/2025 | New | 136,450 | Common | 0.2 | Dr. Sea Sport, Steve Mikulak | Debt conv | Restricted | |||||||||||||||
| 3/20/2025 | New | 218,276 | Common | 0.25 | Nick Frost | Debt conv | Restricted | |||||||||||||||
| 3/20/2025 | New | 269,830 | Common | 0.2 | Jim Wade | Debt conv | Restricted | |||||||||||||||
| 3/20/2025 | New | 130,885 | Common | 0.2 | Robert Romanchek | Debt conv | Restricted | |||||||||||||||
| 4/1/2025 | New | 127,050 | Common | 0 | Cynthia Gosnell | Debt conv | Restricted | |||||||||||||||
| 4/1/2025 | New | 27,905 | Common | 0.2 | Kimberly Dukes | Debt conv | Restricted | |||||||||||||||
| 4/1/2025 | New | 109,488 | Common | 0.25 | Greg Paloolian | Debt conv | Restricted | |||||||||||||||
| 4/1/2025 | New | 173713 | Common | 0.15 | Justin Tripp | Debt conv | Restricted | |||||||||||||||
| 4/1/2025 | New | 449,109 | Common | 0.25 | Jeffrey J. Jorgenson | Debt conv | Restricted | |||||||||||||||
| 4/1/2025 | New | 1,202,716 | Common | 0.1285 | Jeffrey J. Jorgenson | Debt conv | Restricted | |||||||||||||||
| 4/1/2025 | New | 34,693 | Common | 0.15 | Carlos Eduardo Garcia Enriquez | Debt conv | Restricted | |||||||||||||||
| 5/20/2025 | New | 50,537 | Common | 0.20 | Jill Mossman | Debt conv | Restricted | |||||||||||||||
| 5/20/2025 | New | 561044 | Common | 0.1 | Fredric Colman | Debt conv | Restricted | |||||||||||||||
| 5/20/2025 | New | 1,153,696 | Common | 0.10 | Gerald Quave Jr. | Debt conv | Restricted | |||||||||||||||
| 5/20/2025 | New | 138206 | Common | 0.2 | Tahoe Sunrise LLC, Mark Schimpf | Debt conv | Restricted | |||||||||||||||
| 5/20/2025 | New | 138,016 | Common | 0.20 | Tahoe Shores LLC, Mark Schimpf | Debt conv | Restricted | |||||||||||||||
| 5/20/2025 | New | 256,248 | Common | 0.20 | NW Realty Advisors 401K Plan, Michael Dunn | Debt conv | Restricted | |||||||||||||||
| 5/30/2025 | New | 135,546 | Common | 0.20 | JPM Property Holdings, James MacPherson | Debt conv | Restricted | |||||||||||||||
| 5/30/2025 | New | 241,736 | Common | 0.25 | Justin Tripp | Debt conv | Restricted | |||||||||||||||
| 27 |
| Date of Transaction | Transaction type (e.g. new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed) | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing | |||||||||||
| 9/20/2025 | New | 129,125 | Common | 0.20 | Casper-Stone Holdings | Services | Restricted | |||||||||||
| 9/20/2025 | New | 800,000 | Common | 0.20 | David Townley Paton | Cash | Restricted | |||||||||||
| 9/20/2025 | New | 201,928 | Common | 0.25 | Michael & Judith Mendoza Revocable Living Trust dated 8 March 2004, Michael Mendoza, trustee | Debt conv | Restricted | |||||||||||
| 9/20/2025 | New | 201,620 | Common | 0.25 | Jim Wade | Debt conv | Restricted | |||||||||||
| 9/20/2025 | New | 130,177 | Common | 0.20 | Grant Gardner | Debt conv | Restricted | |||||||||||
| 9/20/2025 | New | 130,260 | Common | 0.20 | Ryan Gardner | Debt conv | Restricted | |||||||||||
| 9/26/2025 | New | 292,630 | Common | 0.20 | Scott Jasper | Debt conv | Restricted | |||||||||||
| 9/26/2025 | New | 563,120 | Common | 0.10 | Scott Jasper | Debt conv | Restricted | |||||||||||
| 9/26/2025 | New | 583,549 | Common | 0.0888 | Scott Jasper | Debt conv | Restricted | |||||||||||
| 9/26/2025 | New | 562,680 | Common | 0.10 | Gerald Quave Jr. | Debt conv | Restricted | |||||||||||
| 9/26/2025 | New | 582,809 | Common | 0.0888 | Gerald Quave Jr. | Debt conv | Restricted | |||||||||||
| 9/26/2025 | New | 582,932 | Common | 0.0888 | Joseph Kutilek | Debt conv | Restricted | |||||||||||
| 9/26/2025 | New | 582,932 | Common | 0.0888 | Joseph Seeman | Debt conv | Restricted | |||||||||||
| 9/26/2025 | New | 582,192 | Common | 0.0888 | Larry Grillo | Debt conv | Restricted | |||||||||||
| 9/30/2025 | New | 2,736,585 | Common | 0.001 | Kaybrook Client Group LLC, Harry Datys | Services | Restricted | |||||||||||
| 9/30/2025 | New | 582,932 | Common | 0.0888 | Joel Gale | Debt conv | Restricted | |||||||||||
| 9/30/2025 | New | 100,000 | Common | 0.20 | Eric Ingram | Cash | Restricted | |||||||||||
| 9/30/2025 | New | 582,809 | Common | 0.0888 | Barry Donner | Debt conv | Restricted | |||||||||||
| 9/30/2025 | New | 50,813 | Common | 0.20 | Casper-Stone Holdings | Services | Restricted | |||||||||||
| 9/30/2025 | New | 1,060,000 | Common | 0.20 | Jeff J. Jorgenson | Debt conv | Restricted | |||||||||||
| 9/30/2025 | New | 581,822 | Common | 0.0888 | Charles Merkel | Debt conv | Restricted | |||||||||||
| 12/1/2025 | New | 103,748 | Common | Dick Living Trust, dated 9/4/2003, and fifth amendment and restatement dated 10/20/2023, Cameron Dick, trustee | Debt conv | Restricted | ||||||||||||
| 12/1/2025 | New | 62,739 | Common | 0.20 | Casper-Stone Holdings | Services | Restricted | |||||||||||
| 12/1/2025 | New | 52,500 | Common | 0.20 | Marshall Welch | Services | Restricted | |||||||||||
| 12/1/2025 | New | 750,000 | Common | 0.00 | Gary E Smith TTEE U/A DTD 05/14/93 Gary E Smith Living Trust | Debt conv | Restricted | |||||||||||
| 12/1/2025 | New | 162,500 | Common | 0.20 | Marshall Welch | Services | Restricted | |||||||||||
| 12/31/2025 | New | 11,147,804 | Common | 0.1 | DePrima-Donnelly Family Trust dated July 3rd, 2019, Anthony Deprima, trustee | Debt conv | Restricted | |||||||||||
| 12/31/2025 | New | 30,000 | Common | 0.001 | Louis DeLeon | Interest | Restricted | |||||||||||
| 12/31/2025 | New | 60,000 | Common | 0.001 | DePrima-Donnelly Family Trust dated July 3rd, 2019, Anthony Deprima, trustee | Interest | Restricted | |||||||||||
| 12/31/2025 | New | 30,000 | Common | 0.001 | James P. Wagner | Interest | Restricted | |||||||||||
| 12/31/2025 | New | 60,000 | Common | 0.001 | Neil Superfon | Interest | Restricted | |||||||||||
| 1/14/2026 | New | 7,000,000 | Common | 0.005 | Long Side Ventures LLC, Benny Kaplan | Cash | Restricted | |||||||||||
| 1/29/2026 | New | 7,000,000 | Common | 0.005 | Long Side Ventures LLC, Benny Kaplan | Cash | Restricted | |||||||||||
| 28 |
| Date of Transaction | Transaction type (e.g. new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed) | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing | |||||||||||
| 2/6/2026 | New | 7,000,000 | Common | 0.005 | Long Side Ventures LLC, Benny Kaplan | Cash | Restricted | |||||||||||
| 2/20/2026 | New | 8,047,900 | Common | 0.004 | Long Side Ventures LLC, Benny Kaplan | Cash | Restricted | |||||||||||
| 2/26/2026 | New | 40,000 | Preferred | 15.00 | Air Power USA, Brianna Stoecklein | Services | Restricted | |||||||||||
| 3/11/2026 | New | 1 | Preferred Special 2025 Series “A” | 0.001 | Kim D. Southworth | Services | Restricted | |||||||||||
| 3/19/2026 | New | 200,000 | Common | 0.129 | Monroe Street Capital | Interest | Restricted | |||||||||||
| 3/19/2026 | New | 200,000 | Common | 0.129 | Lambda Ventures | Interest | Restricted | |||||||||||
| 3/31/2026 | New | (9,983,333 | ) | Common | 0.001 | Kim D. Southworth | Conversion to Preferred | Restricted | ||||||||||
| 3/31/2026 | New | (5,372,483 | ) | Common | 0.001 | Chris Ivey | Conversion to Preferred | Restricted | ||||||||||
| 3/31/2026 | New | (4,048,352 | ) | Common | 0.001 | CBI Group, LLC, Dan Leboffe | Conversion to Preferred | Restricted | ||||||||||
| 3/31/2026 | New | 998,333 | Series “D” Convertible Preferred | 0.001 | Kim D. Southworth | Conversion from Common | Restricted | |||||||||||
| 3/31/2026 | New | 537,248 | Series “D” Convertible Preferred | 0.001 | Chris Ivey | Conversion from Common | Restricted | |||||||||||
| 3/31/2026 | New | 404,835 | Series “D” Convertible Preferred | 0.001 | CBI Group, LLC, Dan Leboffe | Conversion from Common | Restricted | |||||||||||
| 4/8/2026 | New | 5,500,000 | Common | 0.085 | Air Power USA | Deposit on dist/mfg agreement | Restricted | |||||||||||
| 6/2/2026 | New | 200,000 | Common | 0.129 | Monroe Street Capital | Interest | Restricted | |||||||||||
| 6/2/2026 | New | 200,000 | Common | 0.129 | Lambda Ventures | Interest | Restricted | |||||||||||
| 6/23/2026 | New | 5,627,250 | Common | 0.06 | Quick Capital, LLC | Debt settlement | Unrestricted | |||||||||||
| 29 |
Securities authorized for issuance under equity compensation plans
The Company also filed a Registration Statement on Form S-8 registering 20,000,000 shares of common stock for issuance under the Cyber Enviro-Tech, Inc. 2026 Omnibus Incentive Compensation Plan. As of the date these financial statements were issued, no shares had been issued under the plan.
The individuals below are consultants and part of their compensation is in stock as follows:
On July 27, 2025 the Company entered into a consulting agreement with Marshall Welch, for professional services wherein the Company paid 50,000 common shares.
On August 23, 2025 the Company entered into a consulting agreement with Deborah Casper-Stone, for professional services wherein the Company paid 50,000 common shares.
On May 22, 2026, the Company paid three consultants a total of 445,000 shares of Series A Preferred Stock.
Item 3. Defaults Upon Senior Securities.
There are three loans to related parties of $22,000, $62,600 and $153,989 that are due and payable and in default.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
During the Company’s quarter ended June
30, 2026, no director or officer
| 30 |
Item 6. Exhibits.
| Incorporated by Reference |
Filed or Furnished | |||||||||
| Exhibit # | Exhibit Description | Form | Date | Number | Herewith | |||||
| 31.1 | Certification of Principal Executive Officer (302) | Filed | ||||||||
| 31.2 | Certification of Principal Financial Officer (302) | Filed | ||||||||
| 32.1 | Certification of Principal Executive and Principal Financial Officers (906) | Furnished* | ||||||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Filed | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed | ||||||||
*This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
| 31 |
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.
| Signature | Title | Date | ||
|
/s/ Kim D. Southworth Kim D. Southworth
/s/ Dan Leboffe Dan Leboffe |
Chief Executive Officer
Chief Financial Officer |
August 13, 2026
August 13, 2026 | ||
| 32 |