Waste Energy Corp. (WAST) Earnings Call Transcript & Summary

Good afternoon, everyone. This is Scott here. Waste Energy Corp. I'm the Chairman and CEO. I appreciate everybody taking some time today to jump on the call with us. I'm kind of going to jump right into it. Today's call is going to focus on 3 primary areas. The first is our SEC reporting status. The second will be the time line for commissioning. And then the last one will be an operational update for the company. Before we start, though, I'd like to begin by reminding everybody that today's call will have -- will include forward-looking statements. Those statements are based on current expectations and estimates and may include -- include comments about forward-looking results that differ materially from those that materialize. We encourage all our shareholders to review our publicly disclosed filings at sec.gov, on our website and our 10-K for a full discussion of the risks involved with the company. That said, let's start with the most important priority of the company right now, which is our SEC reporting status. So first and foremost, the update today on the SEC reporting status is probably the most important on the call. We're currently working with our new audit firm, M&K out of Houston, Texas. I'm going to walk through the reporting process and how it affected the company shortly here, but I do want to report that with consultation of M&K and our team internally here, we do expect to file all of our outstanding SEC documents by July 15. mix up there, but Hopefully, we can hear now and we will restart. I'm just going to jump right into the -- we had the disclaimers. We had started here and settings were wrong. So before we begin, and again, I just want to remind everybody that this is -- in this conference call, we talk about current expectations, future expectations, estimates things like that, that are subject to material change with what happens down the road 1 way or the other. So again, I would encourage everyone to go to sec.gov review all of our financial statements, go to our website, wec.eco, put your information there. So let's get again, try to dip right into this. It is being recorded, so we'll have a replay tomorrow. We're going to start with the SEC reporting status and what has happened here because really since April, we had a problem with our former auditor. We had a very small firm, didn't really Soma was actually because we hadn't had any problems with the firm for the previous 2 years. So it was our third cycle with the same PCOB righter firm. just to save kind of the background, it didn't work out as a small firm. Things got off track. I don't know why. We were -- we had problems with them. They disappeared for long periods of time. And the audits are so central to our company to all public companies, but especially small microcap companies because all of our financings, all of our activities are designed around SEC reporting and our OTC QB listing. And if you don't keep those up to speed, there are consequences and things started to happen at the company. So while that was going, there was almost a full month period, actually, there was a full month period -- but we didn't know what we were -- what was going to happen. We were -- we had given all the information, our 10-K had been done for weeks and weeks. We weren't getting much feedback from the current order and it just broke down and they ended up resigning, and we would have fired them but that we had to start all over again, so we were trying to get this get through it anyway. But the good news is that immediately after that, we took a look at it the very next day, and I've been in touch with other companies prior to the filing it had been taking so long. And we had identified a couple of other firms, and we obviously realized that at this point in our development, being kind of held hostage by a small firm that in 2025, filed 2 audit reports and 1 of them was ours. It's not a way to run company going forward. So we looked around -- we found -- we've interviewed several firms that we landed on M&K CPAs that was used in Texas, and we were lucky enough that they accepted except as a client, we retain them. M&K audits somewhere around 80 publicly traded companies, around 30 of them are NASDAQ companies. They're 1 of the largest in the microcap side really in the country as far as I understand. They also have 60 employees in all but one, as I understand, are all in Texas. Our operations are in Midland. We're in Dallas a lot where our future is going to be in and around Houston for future growth. So it really made a sense. They were based on timing that the first quarter Q season had ended, and they took on the assignment, and we are working very hard to get this all caught up with our with our filings. So as of right now and 1 of the first kind of piece of news I want to relate on this call. is that in consultation with the auditors and our internal team here, we will -- our plan is there's still a few caveats. It's not 100% sure. But we are planning to file all of our filings and become current by July 15. So it's about 3 weeks from now, we should be fully current. Once we are current, we will immediately seek the uplift back to the OTCQB which is where we were before before this started. And then at that point, we're in compliance with all of our contracts and agreements in terms of our reporting obligations and we can focus back on to the commissioning of the rest of the business. So again, kind of being current is not just the compliance side I mean either. It's really the foundation of our company. As we go forward, we've come a long way here in these last couple of years. We've got our machine. We've got our site. These are all -- we've secured major contracts and to have it all at risk from a handful of people was really something that was eye opening for us and it's a lesson that we've learned. We made a mistake rolling on a small firm, and we won't do that again. Again, we're lucky enough to retain M&K, so with MUK, that represents a major upgrade for Waste Energy Corp. in their level of experience, staffing just general knowledge, the fact that they're in Texas are all very important for us as opposed to a 2- or 3-person shop that we had. So we'll never allow ourselves to be held hostage like that again. And we're -- we think that on the other side of this, I mean, the good thing is that while this has been -- has affected our entire business because the reporting functions really cascade down the company, they affect every shareholders, they affect their access to capital. They affect our ability to schedule contractors for the commissioning. So having this result is huge by knowing that we have M&K now as our firm, and that will never be held hosted by a small 1- or 2-person firm again. It's a huge thing that we've addressed. I think 1 of the other things that we're addressing to internally is our systems and processes relative to to reporting and making sure those are very current and in terms of how we exchange information back and forth of the order. Going forward, there's absolutely no reason we shouldn't file a 10-K -- I'm sorry, 10-Q within 30 days after the end of the quarter. We have 45 days under SEC rules that really shouldn't take us more than 30 days. And the same thing with the K a case shouldn't take more than 60 days, even though we have 90. So we shouldn't be late on these types of filings. So that's kind of internally, that's our kind of go-forward as has to make sure that these states are hit and the timely report to our investors as the company continues to grow here. So now let's just kind of -- again, I've got a lot of questions about this, so I'm just going to address it really within the content of the call here is that -- the delays in the audit process are what then trickled down to the commissioning side. So our waste conversion system is on site. The foundation is completed. The unit has been placed on top of the foundations the water systems, the pools, the infrastructure are all done. We have enough feedstock on the site to last us for a full month. So -- and we've got -- we're expecting some very positive news, hopefully, in the next week or 2 on the regulatory side. So we've worked through -- we've made a ton of progress in structuring this business and getting it up and running and getting the feedstock and getting the contracts and getting the systems in place. But the ability to schedule our key engineers, our contractors, all this stuff is -- we're not a huge company. We don't -- we can't just throw another 10, 15 guys at these things. So it created kind of a chain reaction that now it's resolved. So now we're taking a look back at the first trigger is going to be the July 15 date. Whenever we file that that once we file our SEC funds, our past-due filings, our 10-K for 2025 or first quarter Q. At that point, we can start with the commission. Now I've spoke to everybody prior to getting on this call or a key engineer at some of our key contractors. If we file our SEC filings by July 15, we are kind of target a commissioning date of September 15. And -- and I want to be crystal clear on that, when we say commissioning day, we're not -- it's not just it's not a photo of. We're not talking about just something to say, "Oh, we put it in place. And it's not real. When we commission the machine, this company transforms into a development stage company into a real revenue-producing entity. That first machine should generate somewhere around $200,000 a month in revenue, probably within a week of it running again, provided everything goes well. We will send out lab results of the tire drive oil, which is our main product. We'll have steel, we'll have Carbon Black, we'll have other revenue streams as well. But once we get the lab results back and we produce our first batch, and it's approved by our buyer, our offtakers, we will then immediately order the second the second machine and scale to 30 tons. So we hope to have that all done by the end of the year. And if we're successful on that, that really changes everything because the second machine does not require the same amount of expenses. The location is already embedded. We have it first machine is built. The second foundation has already poor recently to put on top, booking up, and we're ready to go. So again, these next really 60 to 90 days are going to be huge in our company's kind of trajectory and getting us fully reporting again uploading to the Q generating revenue, getting the machine commissioned and up and running by September 15. Now that's not a firm date. That's our target provided we filed the SEC filing by July 15. But we're going to really try to keep investors involved in this process relative to the dates and how we work as we go forward once we become fully reporting again. Our goal is obviously to finalize the work properly, safely in a way that allows us to begin processing the tires into a TDO with tire drived oil, which called into other byproducts. The delay has been super frustrating, but we want to make sure we do it right. We do have a very talented and and very strong lead engineer that's very familiar with these types of machines. And this commented that this is a doable goal for us, provided everything because now we've got to go back to them, we've got a line of all the contractors, which we're doing now for these dates tentatively. With that -- so the dates that so kind of halfway to the call here, those are the key dates. The July 15 for the SEC reporting to be current. And then we're looking at September 15 commissioning of the first 15-ton waste conversion site voice conversion tax. So while it's been frustrating, again, the opportunity hasn't changed. The equipment is here. The site is real. The feedstock is real. We have a month's worth now. The market need is real, has -- nothing has changed in terms of the economics of why we got into this business. It's just businesses don't grow on a straight line on any of them. And this was our -- again, we didn't really see this 1 comment. We thought an auditor we've had for the last 2 years, I've been in this business a long time. We never had something like this go down before. But again, as in the past, I think it's probably going to be the best thing that will happen to us because as we start scaling up and we start generating $1 million dollars in top line sales, we need a real audit for him and M&K is exactly that. And our ultimate goal is to list on a national change and they have 30 clients already there, so they're used to the protocols, the systems and all that kind of thing. So -- so at the end, I think this is going to be good. We've had a little pain for a few months, but that's kind of the way it goes. The regulatory track, we're expecting some good news in the future. We've got some of these -- we've got stuff we've working on for over a year, which I'm not prepared to comment on today, but we're -- I think we're getting near some positivity there. Next week, we will start kicking in some new revenue streams I mentioned press release and the beginning of the month, we've taken a look at -- with this delay. There are some other ways we start driving revenue and sorely getting this business up and running off the ground rather than being so reliant on the on the waste conversion deck, even though that's our future, and that's going to be the -- that's the majority revenue generator for our company. But some of that stuff is all starting starting next week. We have a new machine that we purchased that's arriving in Midland I think, the 29th -- actually will just start driving some revenue. So that that's on track. We also have some -- we have other agreements that we've negotiated that are kind of in place that are waiting for this, too, because once we open up some of these agreements, we'll have more feedstock, and we need to make sure we can process it. So once you start that fee stuff flow to the company, that also drives us revenue because, again, 1 of the things I've always said about this business, which is unique in anything I've ever done before us, we get paid on the intake side, too. So everything -- all the tires that we're getting, we're actually getting paid on that. So it is very unique in a business model. So the next piece I want to talk briefly about is going to be we fuel. We feel is our R&D project, which, again, as we've looked at this business, and we go out a year or so from now. There's some potential opportunities that could significantly increase our revenue streams that we already have from the machines. And by the way, our existing sites can host up to 60 tons. And we've looked at -- there's an opportunity to acquire another location directly across Street, which is another almost 10 acres which would scale us up even there. So the company and the locationally selected and having the site and final like we're in a really good position right now to scale this business up once we can get the first machine commission and running. But relative to refuel is what we did there in that project as we decided we wanted to really take a look at how do you get -- how can we take tire-derived oil and turn it into road or the oil that get the sulfur content down to 15 parts per million, so that it's an EPA-approved fuel for diesel vehicles. And that project has gone really well. We've got a very talented lead research and development analyst working on it. We're a little less than halfway through the analysis side of the project to see if what we the way that we think this could happen is viable. And so far it is. So that's encouraging, but that's something we -- again, we'll report on that as it materializes. That's something down the road. But at the end of that, if we're successful there, -- that opens -- that takes that tire drive fuel and essentially doubles the value of it by turning it into roadside fuel or fuel that's used -- can be used on the road and the diesel vehicles. So again, kind of as we move into the second half of which are right here. So again, the SEC side drives everything at this point. We're working around the clock on that. Once that is done and the machine is commissioned, we'll then move to get the next 15 tons in place. So we'll have 30 tons -- so the second half of the year is all about execution. There's not much left to talk about. We've talked -- we put our press release, we've talked to everybody, the longer-term shareholders a couple of years as has been -- this has been a 4, 5-year initiative, even started before I arrived at the company when it was originally they were acquiring whether they could use waste to power a Vicki mining operation. And then it's kind of evolved to where it is now, and now we're about ready to turn this thing on. So we feel super exciting, and that -- we'll have more information on that probably in the second half of the year. But I think also in the second half of the year, it's all about execution driving revenue. deploying the machine, getting this 1 up and running, driving revenue on the second one, getting that up and running. Once the first 1 is in, the second 1 should go much easier, just like anything else. Once you go through the process once it's substantially easier and plus, I guess, I mentioned earlier, the from an expense side, we'll have double the revenue with maybe a 10% to 15% increase in expenses tops. So it's a high-margin piece getting a second machine up and running. All right. So that's kind of -- those are the main things that I wanted to talk about on today's call. I wanted to just give everybody an idea of how this -- how and why this audit issue kind of cascaded down to a delaying or commissioning and everything else because essentially, really in August, we had to kind of hold everything, which is a lot of schedule that goes into the same our main engineers fit all over the country or actually all over the world on the different waste energy projects. So we were that month that we were not getting any feedback and at times a week, we'll go by with no communication at all. Meanwhile, there's no acquisitions of any accounting regularities nothing. There's nothing on the accounting side. that was ever even discussed. So it was a very frustrating time period for us. And the worst part was that I know the shareholders and I know a lot of our funders that that are helping fund this whole project, we're very frustrated because Reg FD and the SEC is very clear on -- I can't selectively call certain people up and telling what's going on. When in reality, I didn't know what was going on because our auditor would literally disappear for 5 days at a time. tell us not answer our questions and was very cryptic. And then ultimately said you did nothing wrong, but we're going to resign anyway, which is this are. But it is what it is. We got through it. Again, we we're already stronger because M&K again, just if you look apples-to-apples, not even contest. And just having that type of a firm in Texas, it's just kind of an added benefit for us because we've already had many talks with companies in Houston, some very large ones in the fuel buying side, which translates into the reason for the refuel side. There's a gigantic market. Obviously, the Permian Basin is not only the largest energy development area in the United States. It's 1 of the top areas in the world. So -- the infrastructure that is there, the engineers, the contractors, the technical expertise, the state's understanding of all this stuff is unlike any other state in the country. It's just this is a we could be at a better place than where we are in Midland, Texas to be running this bot and the fact that we've already partnered with the county of Midland, where a vendor for the county had been for a while. We've got some other potential opportunities. But again, everything triggers on the commissioning of the machine because what we can turn on the faucet for the other -- for the rest of the feedstock, we need to process it. You can only stack so many tires legally. So that's kind of the overview of where we are, what's going on with the company. It's going to be very active for the next month, I would imagine we'll probably have -- we won't put out a press release if we don't have anything. But I would follow our social media sites. We have been doing an every Friday update. We're going to get back to that, probably not tomorrow, unless we have something to update. But I really want to make sure that we get everybody in the loop, know what's going on because we think this next 60 to 90 days are going to be very exciting. We're going to be -- we're going to have the SEC compliance we're going to upgrade those CCB, and we're going to commission our first machine at some point. Now if that September 15 date changes, we will make sure everybody knows about it, and we should know that relatively soon. because if we file -- if we become current by the July 15, we've kind of the first piece that we need to get that September day live. And if there's any way we can do that sooner, we are exploring opportunities to see with our engineers, what kind of kind of preemptive work we can do on our side. But I think at the end of the day, the company is in a much stronger position now. We're very anxious to get this SEC thing and get the reporting process over with and done with you stop talking about it because it's it's expensive and it takes a lot of our time as a small company that we want to focus on the business. So we're not at the finish line, but we're very close to the transition to a revenue-generating substantially substantial revenue-generating company and I want to again thank all the shareholders for your patience. I know this has been a tough time in these last couple of months. I just know that when we're not talking it's because we can't or again, probably, we're never going to have this again because this was a unique situation that really came from that 1 audit firm that we've moved on from. So that's in the rearview mirror. And go to or definitely go to our Facebook, our Instagram and our Twitter X, when we call it, sites that follow us there because we will be putting out updates on a regular basis, like I say, we'll start. Is there something -- something exciting for tomorrow, we'll put it out. Other than that, that we will go on the Friday kind of -- we'll keep the Friday system in place until we achieve that commissioning, and we'll talk about it in the market as we get closer. So again, thanks for all the help. Stay tuned for the next weeks. And if we get close to that time and it looks like it's going to be sooner or later, we will let you know. But in the meantime, again, thanks for supporting the company. We look forward to a very exciting future waste energy and moving into this next revenue generation side of our developments. Everyone, have a good night, and thanks again. Take care.