DERIVATIVE LIABILITIES

9 Months Ended

Sep. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

9. DERIVATIVE LIABILITIES

The Company has various convertible notes outstanding that requires derivative liability considerations for it conversion features. Total derivative liability on December 31, 2024 was $40,941 which was principally related to convertible notes issued in 2024. No derivative liability was accrued in prior years due the note terms and immateriality of the derivative value determined.

For the nine months period ended September 30, 2025, the Company recorded a loss of $1,513,346 related to the change in fair value of the derivative liability. There was a significant change in the weighted average stock price of the Company from $0.006 to $0.05 during the nine months ended September 30, 2025 and in its volatility, in relation to the exercise price, resulting in a material increase in derivative liability to $1,554,288 on September 30, 2025 from $40,943 on December 31, 2024. Derivative liability is recognized as a present obligation determined using valuation techniques that rely on market-based or model-based assumptions, and may not require settlement in the form of cash or transfer of assets. Its actual settlement amount and timing are variable and contingent on underlying factors. For the year ended December 31, 2024, the Company recorded a loss of $40,941 related to the change in fair value of derivative liabilities.

The following table summarizes the weighted average key inputs used in the Black-Scholes model for all outstanding conversion feature derivative liabilities as of the measurement dates:

Input	Weighted Avg. On September 30, 2025			Weighted Avg. on December 31, 2024
Stock price	$	0.050		$	0.006
Exercise price (conversion price)	$	0.0208		$	0.037
Risk-free interest rate		3.68			4.23
Expected term (years)		0.80			0.50
Expected volatility		299	%		82	%
Dividend yield		0	%		0	%

The following table summarizes the changes in derivative liability:

Description	September 30, 2025			December 31, 2024
Derivative Liability beginning balance	$	40,941		$	-
Derivative Liability	$	40,941		$	-

Initial recognition of derivatives		282,914			1,370
Change in fair value		1,836,951			40,941
Settlements/conversions		(606,518	)		(1,370	)
Derivative Liability ending balance		1,554,288		$	40,941
Derivative Liability		1,554,288		$	40,941

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

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+ Details

WASTE ENERGY CORP. 10-Q