UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2008 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 000-52784 WASTE TO ENERGY GROUP INC. (Exact name of registrant as specified in its charter) Nevada N/A (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 4801 Alhambra Circle, Coral Gables, Florida 33146 (Address of principal executive offices) (Zip Code) (305) 529-4888 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has 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 for the past 90 days. [X] YES [ ] NO Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act [ ] YES [X] NO APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [ ] YES [ ] NO APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 50,265,000 shares issued and outstanding as of January 14, 2009 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. 2 Waste to Energy Group Inc. (formerly Your Digital Memories, Inc.) (A Development Stage Company) Balance Sheets (Unaudited) November 30, May 31, 2008 2008 --------- --------- (unaudited) (Audited) ASSETS Current Assets Cash $ 20 $ 688 Total current assets 20 688 --------- --------- Non-current Computer equipment, net of amortization 6,609 5,497 Website, net of amortization 14,000 17,500 --------- --------- Total Non-current 20,609 22,997 --------- --------- Total Assets $ 20,628 $ 23,685 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable and accruals $ 23,888 $ 3,000 Loans Payable 177,454 -- Loans Payable - Related Party 49,114 -- --------- --------- Total Liabilities 250,457 3,000 --------- --------- Stockholders' Equity (Note 4, 5) Preferred Stock, authorized 50,000,000 shares, par value $0.0001 Common Stock, authorized 2,500,000,000 shares, par value $0.0001 Issued and outstanding: 50,265,000 common shares 5,026 22,557 Additional paid-in capital 73,116 55,585 Contributed capital 5,050 -- Deficit accumulated during the development stage (313,020) (57,457) --------- --------- Total Stockholders' Equity (229,828) 20,685 --------- --------- Total Liabilities and Stockholders' Equity $ 20,628 $ 23,685 ========= ========= The accompanying notes are an integral part of these financial statements 3 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Statements of Operations (Unaudited) Period from Three Months Three Months Six Months Six Months Inception Ended Ended Ended Ended (June 27, 2006) to November 30, November 30, November 30, November 30, November 30, 2008 2007 2008 2007 2008 ----------- ----------- ----------- ----------- ----------- REVENUE $ -- $ -- $ 387 $ -- $ 1,548 OPERATING EXPENSES General and Administrative 13,089 1,417 14,832 4,052 21,977 Professional Fees 15,064 1,580 19,247 6,580 54,805 Consulting 32,500 -- 32,500 -- 42,672 Depreciation 2,442 -- 4,692 -- 8,692 Filing Fees 810 400 4,677 1,060 7,044 Impairment of Asset 180,000 -- 180,000 -- 180,000 ----------- ----------- ----------- ----------- ----------- Total Expenses 243,905 3,397 255,949 11,692 315,190 ----------- ----------- ----------- ----------- ----------- Loss from operations $ (243,905) $ (3,397) $ (255,949) $ (11,692) $ (313,642) =========== =========== =========== =========== =========== Interest income -- 245 -- 406 622 Loss before income taxes $ (243,905) $ (3,152) $ (255,561) $ (11,286) $ (313,020) Provision for income taxes -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- Net loss $ (243,905) $ (3,152) $ (255,561) $ (11,286) $ (313,020) =========== =========== =========== =========== =========== Basic and Diluted (Loss) per Share (0.00) (0.00) (0.01) (0.00) (0.01) Weighted Average Number of Shares (Note 4) 50,265,000 6,688,511 50,265,000 6,688,511 50,265,000 =========== =========== =========== =========== =========== The accompanying notes are an integral part of these financial statements 4 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Statement of Stockholders' Equity Common Stock ---------------------- Paid in Subscriptions Contributed Accumulated Total Shares Amount Capital Receivable Capital Deficit Equity ------ ------ ------- ---------- ------- ------- ------ INCEPTION JUNE 27, 2006 -- $ -- $ -- $ -- $ -- $ -- $ -- Common Shares issued to director for cash June 27, 2006 2,500,000 250 (150) 100 Common Shares issued to director for cash September 12, 2006 62,500,000 6,250 (3,750) 2,500 Common Shares issued to director for cash October 31, 2006 125,300,000 12,530 (7,518) 5,012 Private placement closed April 30, 2007 35,265,000 3,527 67,003 70,530 Net loss for the year (28,079) (28,079) ------------ -------- ------- ------- ------- --------- --------- BALANCE, MAY 31, 2007 225,565,000 $ 2,557 $55,585 $ -- $ -- $ (28,079) $ 50,062 Net loss for the year (29,378) (29,378) ------------ -------- ------- ------- ------- --------- --------- BALANCE, MAY 31, 2008 225,565,000 $ 22,557 $55,585 $ -- $ -- $ (57,457) $ 20,684 Net loss for the period (11,657) (11,657) ------------ -------- ------- ------- ------- --------- --------- BALANCE, AUGUST 31, 2008 225,565,000 $ 22,557 $55,585 $ -- $ -- $ (69,114) $ 9,027 Common Shares cancelled to directors September 2, 2008 (175,300,000) (17,530) 17,530 Contributed Capital 5,050 5,050 Net loss for the period (243,905) (243,905) ------------ -------- ------- ------- ------- --------- --------- BALANCE, NOVEMBER 30, 2008 50,265,000 $ 5,027 $73,115 $ -- $ 5,050 $(313,019) $(229,828) ============ ======== ======= ======= ======= ========= ========= * On September 4, 2008 the Company had a 25 new for 1 old forward stock split that has been retroactively applied to the above schedule. The accompanying notes are an integral part of these financial statements 5 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Statements of Cash Flows Period from Six Months Six Months Inception Ended Ended (June 27, 2006) to November 30, November 30, November 30, 2008 2007 2008 --------- --------- --------- Operating Activities Net income (loss) $(255,561) $ (11,285) $(150,520) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 2,388 -- 6,388 Changes in operating assets and liabilities: Accounts payable and accrued liabilities 20,889 -- 41,389 --------- --------- --------- Net Cash (Used) by Operating Activities (232,284) (11,285) (102,743) --------- --------- --------- Financing Activities Proceeds from sale of Common Stock -- -- 78,142 Loans payable 226,568 -- 226,568 Additional paid in capital (4,124) -- (4,124) Contributed capital 5,050 -- 5,050 Proceeds from issuance of capital stock 4,124 -- 4,124 --------- --------- --------- Cash Provided by Financing Activities 231,618 78,142 309,760 --------- --------- --------- Investing Activities Purchase of computer equipment and website -- -- (26,997) --------- --------- --------- Cash used in investing activities -- -- (26,997) --------- --------- --------- (Decrease) Increase in Cash during the period (666) (11,285) 180,020 Cash, Beginning of Period 686 50,062 -- --------- --------- --------- Cash, End of Period $ 20 $ 38,777 180,020 ========= ========= ========= Supplemental disclosure with respect to cash flows: Cash paid for income taxes $ -- $ -- $ -- Cash paid for interest $ -- $ -- $ -- The accompanying notes are an integral part of these financial statements 6 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 1 - GENERAL ORGANIZATION AND BUSINESS Your Digital Memories, Inc. ("the Company") was incorporated in the state of Nevada on June 27, 2006. Waste to Energy Group Inc., a wholly-owned subsidiary of Your Digital Memories Inc., was incorporated in the state of Nevada on August 13, 2008. Waste to Energy Group Inc. and Your Digital Memories Inc. entered into an Agreement and Plan of Merger on August 14, 2008. The board of directors of Waste to Energy Group Inc. and Your Digital Memories Inc. deemed it advisable and in the best interest of their respective companies and shareholders that Waste to Energy be merged with and into Your Digital Memories Inc. with Your Digital Memories Inc. remaining as the surviving corporation under the name Waste to Energy Group Inc. On August 27, 2008 Aaron Bard resigned as President, Secretary, Treasurer and Director of Waste to Energy Group Inc. and Maria C. Maz was appointed President, Secretary, Treasurer and Director of Waste to Energy Group Inc. prior to Mr. Bard's resignation. The company has limited operations and in accordance with SFAS#7 is considered to be in the development stage. On September 4, 2008 the Company entered into a memorandum of understanding with Waste to Energy Group LLC, a Nevada limited liability company, and the shareholders of Waste to Energy Group LLC. Pursuant to the terms of the memorandum of understanding, we agreed to acquire all of the issued and outstanding shares of Waste to Energy Group LLC's common stock in exchange for the transfer of 15,000,000 shares of the Company's common stock to the shareholders of Waste to Energy Group LLC from a shareholder of the Company. It was possible for the shareholders of Waste to Energy Group LLC, by meeting certain performance criteria listed in the memorandum of understanding, to earn a further 8,500,000 shares of the Company from treasury. The Waste to Energy Group LLC is a leading source of waste-to-energy conversion technology. The Waste to Energy Group LLC acts as system integrators with unique processes and technology which convert a waste stream into a variety of revenue producing products and renewable energy. These technologies include biological, chemical, thermal and mechanical. 7 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 1 - GENERAL ORGANIZATION AND BUSINESS - CONT. They are capable of converting post-recycled residual solid waste into useful products and chemicals, algae to biofuel, green fuels such as hydrogen, natural gas, ethanol and biodiesel, as well as, providing a source of clean, renewable energy. The technology is modular and designed for scalability or to add to existing systems and processes. This creates flexibility in deployment for cities and municipalities with environmentally sound solutions. The company's unique systems are an alternative to the current landfill and incineration practices with a 90-99% diversion from landfills and attain a 95-99% recycle rate. They are 100% environmentally safe with no secondary pollutions, well below the KOTO, IPPC and EPA requirements, providing an excellent source of clean, renewable energy to meet the world's problems. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES ACCOUNTING BASIS These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. CASH AND CASH EQUIVALENTS For the purposes of the statement of cash flows, cash flows include all highly liquid investments with a maturity of three months or less. FINANCIAL INSTRUMENT The Company's financial instruments consist of Promissory Notes for loans made to the Company. Some of the amounts due to the note holders are non interest-bearing. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where separately disclosed. 8 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - CONT. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles of the United States 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 financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. LOSS PER SHARE Net income (loss) per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares. Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive. DIVIDENDS The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown. INCOME TAXES The Company provides for income taxes under Statement of Financial Accounting Standards NO. 109, "Accounting for Income Taxes." SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward. 9 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following: Accumulated 11/30/08 05/31/08 Cost Amortization Net Book Value Net Book Value ---- ------------ -------------- -------------- Computer Equipment $ 8,301 $ 1,692 $ 6,609 $ 5,497 Website 21,000 7,000 14,000 17,500 ------- ------- ------- ------- TOTAL $29,301 $ 8,692 $20,609 $22,997 ======= ======= ======= ======= Amortization is taken over 3 years on a straight line basis. The Company is considering selling these assets. NOTE 4 - STOCKHOLDERS' EQUITY Common Shares - Authorized The company has 2,500,000,000 common shares authorized at a par value of $0.0001 per share and 50,000,000 shares of preferred stock, par value $0.0001 per share. All common stock shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all the directors of the Company. Common Shares - Issued and Outstanding On June 27, 2006 (inception), the Company issued 2,500,000 shares of its common stock to a director for cash consideration of $100. On September 13, 2006, the Company issued 62,500,000 shares of its common stock to a director for cash consideration of $2,500. On October 31, 2006, the Company issued 125,300,000 shares of its common stock to a director for cash consideration of $5,012. 10 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 4 - STOCKHOLDERS' EQUITY - CONT. On April 30, 2007, the Company completed a private placement for 35,265,000 common shares at $0.002 per share for total consideration of $70,530. As of May 31, 2008, the Company had 225,565,000 common shares issued and outstanding. During the six months ending November 30, 2008, 175,300,000 shares were voluntarily cancelled. Subsequent to the cancellation there were 225,565,000 common shares of the Company issued and outstanding. Subsequent to the share cancellation the Company authorized to effect a forward split of the Company's stock on a 25 new for 1 old basis, such that its authorized capital shall increase from 100,000,000 shares of common stock with a par value of $0.0001 to 2,500,000,000 shares of common stock with a par value of $0.0001 and, correspondingly, its issued and outstanding shares of common stock shall decrease from 225,565,000 shares of common stock to 50,265,000 shares of common stock. The effective date for the forward stock split was September 3, 2008. The forward split will result in a mandatory exchange of share certificates. NOTE 5 - RELATED PARTY TRANSACTIONS On June 27, 2006 (inception) the Company issued 2,500,000 shares of its common stock to a director for cash. On September 13, 2006, the Company issued 62,500,000 shares of its common stock to its director for cash. On October 31, 2006, the Company issued 125,300,000 shares of its common stock to a director for cash. During the six months ending November, 2008 the accounts payable included expenses of $10,661 and Consulting Fees of $15,000 for a total of $25,661 incurred on behalf of the Company due to the President of the Company through a company controlled by the President. None of the amounts remains outstanding as of November 30, 2008. 11 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 5 - RELATED PARTY TRANSACTIONS - CONT. During the six months ending November 30, 2008 the Company entered into a consulting agreement commencing September 2, 2008 with a company controlled by the President. The terms of the consulting agreement are $5,000 per month payable in consulting fees and reimbursement to the consultant for all reasonable business expenses incurred by it in the performance of its duties. During the six months ending November 30, 2008, Prosper Financial Inc., a company controlled by the President of Waste to Energy Group Inc. advanced to the company $2,500 by way of a direct payment to one of the Company's current accounts payable. A Promissory Note was issued in the amount of $2,500 by the Company to Prosper Financial Inc. This was an interest free loan. During the six months ending November 30, 2008 the Promissory Note of $2,500 was paid by an unrelated party directly to Prosper Financial Inc. on behalf of Waste to Energy Group Inc. On September 22, 2008 Prosper Financial Inc., a company controlled by the President of Waste to Energy Group Inc., advanced Waste to Energy Group LLC $50,000 as part of the payments due to Waste to Energy Group LLC in the Memorandum of Understanding between the two companies. Prosper Financial Inc. was issued a Promissory Note in the amount of $50.000 from the Company on September 22, 2008 paying 8% interest per annum. During the quarter ending November 30, 2008 $1,617 was paid to Prosper Financial, a company controlled by the President of Waste to Energy Group Inc. by an unrelated party directly to Prosper Financial Inc. on behalf of Waste to Energy Group Inc. NOTE 6 - LOANS PAYABLE As of November 30, 2008, the loans payable balance comprised of: a) $44,975 total loans on an interest free basis payable on demand. These loans were provided to the Company by unrelated parties and bear no interest. b) $130,000 was advanced to Waste to Energy Group LLC as part of the payments due to Waste to Energy Group LLC in the Memorandum of Understanding between the two companies. Three Promissory Notes in the amounts of $50,000, $70,000 and $10,000 were issued from the Company on September 4, 2008 paying 8% interest per annum. The total interest accrued on the three Promissory Notes issued by the Company was $2,479. NOTE 7 - LOANS PAYABLE - RELATED PARTY TRANSACTIONS $50,000 was advanced to Waste to Energy Group LLC as part of the payments due to Waste to Energy Group LLC in the Memorandum of Understanding between the two companies by Prosper Financial Inc. a company controlled by the President of Waste to Energy Group Inc. A Promissory Notes in the amounts of $50,000, was issued from the Company on September 22, 2008 paying 8% interest per annum. The total interest accrued on this Promissory Notes issued by the Company was $732. During the quarter ending November 30, 2008 $1,617 was paid to Prosper Financial, a company controlled by the President of Waste to Energy Group Inc. by an unrelated party directly to Prosper Financial Inc. on behalf of Waste to Energy Group Inc. 12 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 8 - GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has net losses for the period of inception to the six months ending November 30, 2008 of $313,020. This condition raises substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required an ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE 9 - INCOME TAXES The Company provides for income taxes under Statement of Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES. SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company's opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is $6,886,440 which is calculated by multiplying a 22% estimated tax rate by the cumulative NOL of $313,020. NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company's financial position, statements of operations, or cash flows at this time. In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB's amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company's financial position, statements of operations, or cash flows at this time. 13 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS - CONT. In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities--an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows. In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of expected term of "plain vanilla" share options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company currently uses the simplified method for "plain vanilla" share options and warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is not believed that this will have an impact on the Company's consolidated financial position, results of operations or cash flows. In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements--an amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. 14 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS - CONT. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This statement improves comparability by eliminating that diversity. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of this statement is the same as that of the related Statement 141 (revised 2007). The Company will adopt this Statement beginning March 1, 2009. It is not believed that this will have an impact on the Company's consolidated financial position, results of operations or cash flows. In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business Combinations.'This Statement replaces FASB Statement No. 141, Business Combinations, but retains the fundamental requirements in Statement 141. This Statement establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The effective date of this statement is the same as that of the related FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. The Company will adopt this statement beginning March 1, 2009. It is not believed that this will have an impact on the Company's consolidated financial position, results of operations or cash flows. 15 Waste to Energy Group Inc. (Formerly Your Digital Memories, Inc.) (A Development Stage Company) Notes to the Interim Financial Statements November 30, 2008 NOTE 10 - RECENT ACCOUNTING PRONOUNCEMENTS - CONT. In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities--Including an Amendment of FASB Statement No. 115. This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. This option is available to all entities. Most of the provisions in FAS 159 are elective; however, an amendment to FAS 115 Accounting for Certain Investments in Debt and Equity Securities applies to all entities with available for sale or trading securities. Some requirements apply differently to entities that do not report net income. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS No. 159 beginning March 1, 2008 and is currently evaluating the potential impact the adoption of this pronouncement will have on its consolidated financial statements. In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this statement does not require any new fair value measurements. However, for some entities, the application of this statement will change current practice. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company will adopt this statement March 1, 2008, and it is not believed that this will have an impact on the Company's consolidated financial position, results of operations or cash flows. NOTE 11 - SUBSEQUENT EVENTS The Company is in negotiations to secure the licensing rights to a set of renewable energy technologies. 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our 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 quarterly report. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "US$" refer to United States dollars and all references to "common shares" refer to the common shares in our capital stock. As used in this quarterly report, the terms "we", "us", "our", "our company" and "Waste to Energy" mean Waste to Energy Group Inc., unless otherwise indicated. GENERAL OVERVIEW We were incorporated on June 27, 2006 under the laws of the state of Nevada under the name "Your Digital Memories Inc.". The address of our principal executive office is 4801 Alhambra Circle, Coral Gables, Florida, 33146. Our telephone number is (305) 529-4888. Our common stock is quoted on the OTC Bulletin Board under the symbol "WTEG". CURRENT OPERATIONS On August 27, 2008, Aaron Bard resigned as President, Secretary, Treasurer and Director of our company and Maria C. Maz was appointed President, Secretary, Treasurer and Director of our company prior to Mr. Bard's resignation. Effective September 3, 2008, we have our name from "Your Digital Memories Inc." to "Waste to Energy Group Inc." by way of a merger with our wholly owned subsidiary Waste to Energy Group Inc., which was formed solely for the change of name. In addition, effective September 3, 2008, we effected a 25 for 1 forward stock split of our authorized issued and outstanding common stock. As a result, our authorized capital increased from 100,000,000 shares of common stock with a par value of $0.0001 to 2,500,000,000 shares of common stock with a par value of $0.0001. Our preferred stock has not increased and shall remain at 50,000,000 shares of preferred stock with a par value of $0.0001. 17 We had 9,022,600 common shares issued and outstanding of which 7,012,000 common shares were cancelled and after the 25 for 1 forward stock split the issued and outstanding common shares increased from 2,010,600 shares of common stock to 50,265,000 shares of common stock. On September 4, 2008 we entered into a memorandum of understanding with Waste to Energy Group LLC, a Nevada limited liability company, and the shareholders of Waste to Energy Group LLC. Pursuant to the terms of the memorandum of understanding, we have agreed to acquire all of the issued and outstanding shares of Waste to Energy Group LLC's common stock in exchange for the transfer of 15,000,000 shares of our company's common stock to the shareholders of Waste to Energy Group LLC from a shareholder of our company. The shareholders of Waste to Energy Group LLC may also earn a further 8,500,000 shares of our company from treasury by meeting certain performance criteria that are listed in the memorandum of understanding. BUSINESS OF WASTE TO ENERGY GROUP LLC Waste to Energy Group, LLC is a leading source of waste-to-energy conversion technology. The company acts as system integrators with unique processes and technology which convert a waste stream into a variety of revenue producing products and renewable energy. These technologies include biological, chemical, thermal and mechanical. They are capable of converting post-recycled residual solid waste into useful products and chemicals, algae to biofuel, green fuels such as hydrogen, natural gas, ethanol and biodiesel, as well as, providing a source of clean, renewable energy. The technology is modular and designed for scalability or to add to existing systems and processes. This creates flexibility in deployment for cities and municipalities with environmentally sound solutions. The company's unique systems are an alternative to the current landfill and incineration practices with a 90-99% diversion from landfills and attain a 95-99% recycle rate. They are 100% environmentally safe with no secondary pollutions, well below the KOTO, IPPC and EPA requirements, providing an excellent source of clean, renewable energy to meet the world's problems. Between September 4, 2008 and the date hereof, we conducted supplemental due diligence and reviewed additional documentation with regard to Waste to Energy Group LLC, including without limitation, * certain publicly available financial and other information, including equity research, and certain other relevant financial and operating data furnished to the Company's by Waste to Energy Group LLC's management; * certain internal financial analyses, reports and other information concerning Waste to Energy Group LLC; * certain financial terms of the merger as compared to the financial terms of certain selected business combinations we deemed relevant; and * such other information, financial studies, analyses and investigations and such other factors that we deemed relevant. From this due diligence our company determined that it would not complete the financing of this project with Waste to Energy Group LLC. RESULTS OF OPERATIONS From the date of our incorporation on June 27, 2006 to November 30, 2008, we have been a start up company that has not generated substantial revenues. 18 THREE MONTHS ENDED NOVEMBER 30, 2008 AND 2007 The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended November 30, 2008 which are included herein. Our operating results for the three months ended November 30, 2008, for the three months ended November 30, 2007 and the changes between those periods for the respective items are summarized as follows: Change Between Three Month Three Months Three Months Period Ended Ended Ended November 30, 2008 November 30, November 30, and November 30, 2008 2007 2007 -------- -------- -------- Revenue $ Nil $ Nil $ Nil General and Administrative 13,089 1,417 11,672 Professional Fees 15,064 1,580 13,484 Consulting 32,500 Nil 32,500 Depreciation 2,442 Nil 2,442 Filing Fees 810 400 410 Impairment of Assets 180,000 Nil 180,000 Net Loss (243,905) (3,397) 240,508 Our financial statements report a net loss of $243,905 for the three month period ended November 30, 2008 compared to a net loss of $3,397 for the three month period ended November 30, 2007. Our losses have increased primarily as a result of an increase in all of our operating expenses. SIX MONTHS ENDED NOVEMBER 30, 2008 AND 2007 Our operating results for the six months ended November 30, 2008, for the six months ended November 30, 2007 and the changes between those periods for the respective items are summarized as follows: Change Between Six Month Six Months Six Months Period Ended Ended Ended November 30, 2008 November 30, November 30, and November 30, 2008 2007 2007 -------- -------- -------- Revenue $ Nil $ Nil $ Nil General and Administrative 14,832 4,052 10,780 Professional Fees 19,247 6,580 12,667 Consulting 32,500 Nil 32,500 Depreciation 4,692 Nil 4,692 Filing Fees 4,667 1,060 3,607 Impairment of Assets 180,000 Nil 180,000 Net Loss (255,561) (11,286) 244,275 Our financial statements report a net loss of $255,561 for the six month period ended November 30, 2008 compared to a net loss of $11,286 for the six month period ended November 30, 2007. Our losses have increased primarily as a result of an increase in all of our operating expenses. 19 As at November 30, 2008, we had $23,888 in current liabilities. Our net cash used in operating activities for the six months ended November 30, 2008 was $232,284 compared to $11,285 used in the six months ended November 30, 2007. Our accumulated losses increased to $313,020 as of November 30, 2008. EQUITY COMPENSATION We currently do not have any stock option or equity compensation plans or arrangements. LIQUIDITY AND FINANCIAL CONDITION WORKING CAPITAL At At November 30, May 31, 2008 2008 -------- -------- Current assets $ 20 $ 688 Current liabilities 23,888 3,000 -------- -------- Working capital $(23,868) $ (2,312) ======== ======== CASH FLOWS Six Months Ended November 30, November 30, 2008 2007 -------- -------- Net cash used in operating activities $232,284 $ 11,285 Net cash provided by financing activities 231,618 78,142 Net cash used in investing activities Nil Nil -------- -------- Net increase (decrease) in cash during period $ (666) $(11,285) ======== ======== As of November 30, 2008, our company had working capital deficiency of $23,868. We have historically incurred losses, and through November 30, 2008 have incurred losses of $313,020 from our inception. Because of these historical losses, we will require additional working capital to develop our business operations. We intend to raise additional working capital through private placements, public offerings, bank financing and/or advances from related parties or shareholder loans. The continuation of our business is dependant upon obtaining further financing and achieving a break even or profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in equity interests of our current and future stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to either (1) achieve a level of revenue adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase our operations. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of assets carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern. 20 FUTURE FINANCINGS We will require additional financing in order to enable us to proceed with our plan of operations and to pay for our ongoing operating expenses. These expenses include audit, legal and office expenses. These cash requirements are in excess of our current cash and working capital resources. Accordingly, we will require additional financing in order to continue operations and to repay our liabilities. There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities. We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities. We presently do not have any arrangements for additional financing for the expansion of our exploration operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations. CONTRACTUAL OBLIGATIONS As a "smaller reporting company", we are not required to provide tabular disclosure obligations. GOING CONCERN We have suffered recurring losses from operations. The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations. Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended May 31, 2008, our independent auditors included an explanatory paragraph regarding the substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. APPLICATION OF CRITICAL ACCOUNTING POLICIES Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials. 21 ITEM 3. QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS. As a "smaller reporting company", we are not required to provide the information required by this Item. ITEM 4T. CONTROLS AND PROCEDURES. An evaluation was performed under the supervision and with the participation of our sole Officer and Director, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on management's evaluation as of the end of the period covered by this quarterly report, our sole Officer and Director concluded that as of the end of the period covered by this report, our disclosure controls and procedures (as defined in rules 13a-15e and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") were effective in ensuring that the information required to be disclosed by us in the reports we file under the Exchange Act is gathered, analyzed and disclosed with adequate timeliness, accuracy and completeness. Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Act of 1934 is accumulated and communicated to management, including our president and chief executive officer and our chief financial officer as appropriate, to allow timely decisions regarding required disclosure. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. ITEM 1A. RISK FACTORS. Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements". Our common shares are considered speculative during the development of our new business operations. Prospective investors should consider carefully the risk factors set out below. RISKS RELATED TO OUR BUSINESS BECAUSE OUR AUDITORS HAVE ISSUED A GOING CONCERN OPINION, THERE IS SUBSTANTIAL UNCERTAINTY WE WILL CONTINUE ACTIVITIES IN WHICH CASE YOU COULD LOSE YOUR INVESTMENT. 22 Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. As such we may have to cease activities and you could lose your investment. WE HAVE HAD LIMITED CASH FLOWS FROM OPERATIONS SINCE INCEPTION. WE WILL REQUIRE SIGNIFICANT ADDITIONAL FINANCING, THE AVAILABILITY OF WHICH CANNOT BE ASSURED, AND IF OUR COMPANY IS UNABLE TO OBTAIN SUCH FINANCING, OUR BUSINESS MAY FAIL. To date, we have had limited cash flows from operations and have depended on sales of our equity securities and debt financing to meet our cash requirements. Our ability to develop and, if warranted, commercialize our technologies, will be dependent upon our ability to raise significant additional financing. If we are unable to obtain such financing, we will not be able to fully develop our business. Specifically, we will need to raise additional funds to: * support our planned growth and carry out our business plan; * continue scientific progress in our research and development programs; * address costs and timing of conducting clinical trials and seek regulatory approvals and patent prosecutions; * address competing technological and market developments; and * establish additional collaborative relationships. We may not be able to obtain additional equity or debt financing on acceptable terms as required. Even if financing is available, it may not be available on terms that are favourable to us or in sufficient amounts to satisfy our requirements. If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies, respond to changing business or economic conditions, withstand adverse operating results and compete effectively. More importantly, if we are unable to raise further financing when required, we may be forced to scale down our operations and our ability to generate revenues may be negatively affected. WE HAVE A HISTORY OF LOSSES AND NOMINAL OPERATING RESULTS, WHICH RAISE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN. Since inception through November 30, 2008, we have incurred a net loss of $313,020. We can offer no assurance that we will operate profitably or that we will generate positive cash flow in the future. In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the level of competition and general economic conditions. Our company's operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. No assurance can be given that we may be able to operate on a profitable basis. Due to the nature of our business and the early stage of our development, our securities must be considered highly speculative. We have not realized a profit from our operations to date and there is little likelihood that we will realize any profits in the short or medium term. Any profitability in the future from our business will be dependent upon the successful commercialization or licensing of our core technology, which itself is subject to numerous risks. We expect to continue to incur development costs and operating costs. Consequently, we expect to incur operating losses and negative cash flows until our technology gains market acceptance sufficient to generate a sustainable level of income from the commercialization or licensing of our technology. 23 OUR INABILITY TO COMPLETE OUR PRODUCT DEVELOPMENT ACTIVITIES SUCCESSFULLY MAY SEVERELY LIMIT OUR ABILITY TO OPERATE AND FINANCE OPERATIONS. Commercialization of our core technology will require significant additional research and development as well as substantial clinical trials. We believe that the United States will be the principal market for our technology, as will any country in the world where the need for waste-to-energy conversion technology exists. We may not be able to successfully complete development of our core technology, or successfully market our technology. We, and any of our potential collaborators, may encounter problems and delays relating to research and development, regulatory approval and intellectual property rights of our technology. Our research and development programs may not be successful. Our core technology may not prove to be safe and efficacious in clinical trials, and we may not obtain the intended regulatory approvals for our core technology. Whether or not any of these events occur, we may not have adequate resources to continue operations for the period required to resolve the issue delaying commercialization and we may not be able to raise capital to finance our continued operation during the period required for resolution of that issue. WE MAY LOSE OUR COMPETITIVENESS IF WE ARE NOT ABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS AGAINST INFRINGEMENT, AND ANY RELATED LITIGATION MAY BE TIME-CONSUMING AND COSTLY. Our success and ability to compete depends to a significant degree on our proprietary technology. If any of our competitors copy or otherwise gain access to our proprietary technology or develop similar technologies independently, we may not be able to compete as effectively. The measures we have implemented to protect our proprietary technology and other intellectual property rights are currently based upon a combination of patents and trade secrets. This, however, may not be adequate to prevent the unauthorized use of our proprietary technology and our other intellectual property rights. Further, the laws of foreign countries may provide inadequate protection of such intellectual property rights. We may need to bring legal claims to enforce or protect such intellectual property rights. Any litigation, whether successful or unsuccessful, may result in substantial costs and a diversion of our company's resources. In addition, notwithstanding our rights to our intellectual property, other persons may bring claims against us alleging that we have infringed on their intellectual property rights or claims that our intellectual property rights are not valid. Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our attention and resources, result in the loss of goodwill associated with our business or require us to make changes to our technology. OUR COMPANY MAY BECOME SUBJECT TO INTELLECTUAL PROPERTY LITIGATION WHICH MAY HARM OUR BUSINESS. Our success depends in part on our ability to develop commercially viable products without infringing the proprietary rights of others. Although we have not been subject to any filed infringement claims, other patents could exist or could be filed which may prohibit or limit our ability to market our products or maintain a competitive position. In the event of an intellectual property dispute, we may be forced to litigate. Intellectual property litigation may divert management's attention from developing our technology and may force us to incur substantial costs regardless of whether we are successful. An adverse outcome could subject us to significant liabilities to third parties, and force us to curtail or cease the development and commercialization of our technology. IF OUR COMPANY COMMERCIALIZES OR TESTS OUR TECHNOLOGY, OUR COMPANY WILL BE SUBJECT TO POTENTIAL PRODUCT LIABILITY CLAIMS WHICH MAY AFFECT OUR EARNINGS AND FINANCIAL CONDITION. We face an inherent business risk of exposure to product liability claims in the event that the use of our core technology during research and development efforts, including clinical trials, or after commercialization, results in adverse affects. As a result, we may incur significant product liability exposure, which may exceed any insurance coverage that we obtain in the future. Even if we elect to purchase such issuance in the future, we may not be able to maintain adequate levels of insurance at reasonable cost and/or reasonable terms. Excessive insurance costs or uninsured claims may increase our operating loss and affect our financial condition. 24 IF WE FAIL TO EFFECTIVELY MANAGE THE GROWTH OF OUR COMPANY AND THE COMMERCIALIZATION OR LICENSING OF OUR TECHNOLOGY, OUR FUTURE BUSINESS RESULTS COULD BE HARMED AND OUR MANAGERIAL AND OPERATIONAL RESOURCES MAY BE STRAINED. As we proceed with the development of our technology and the expansion of our marketing and commercialization efforts, we expect to experience significant growth in the scope and complexity of our business. We will need to add staff to manage operations, handle business development efforts and perform finance and accounting functions. We anticipate that we will be required to hire a broad range of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business, or the failure to manage growth effectively, could have a material adverse effect on our business and financial condition. IF WE DO NOT KEEP PACE WITH OUR COMPETITORS, TECHNOLOGICAL ADVANCEMENTS AND MARKET CHANGES, OUR TECHNOLOGY MAY BECOME OBSOLETE AND OUR BUSINESS MAY SUFFER. The market for our technology is very competitive, is subject to rapid technological changes and varies for different individual products. We believe that there are potentially many competitive approaches being pursued that compete with our technology, including some by private companies for which information is difficult to obtain. Many of our competitors have significantly greater resources and have developed products and processes that directly compete with our technology. Our competitors may develop, or may in the future develop, new technologies that directly compete with our technology or even render our technology obsolete. Our technology is designed to develop a conversion of waste-to-energy. Even if we are able to demonstrate improved or equivalent results from our technology, our technology may suffer a competitive disadvantage. Finally, to the extent that others develop new technologies that address the targeted application for our current technology, our business will suffer. OUR BUSINESS IS SUBJECT TO COMPREHENSIVE GOVERNMENT REGULATION AND ANY CHANGE IN SUCH REGULATION MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR COMPANY. There is no assurance that the laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other jurisdiction, will not be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on our company. Any or all of these situations may have a negative impact on our operations. RISKS RELATED TO OUR COMMON STOCK TRADING IN OUR COMMON SHARES ON THE OTC BULLETIN BOARD IS LIMITED AND SPORADIC MAKING IT DIFFICULT FOR OUR SHAREHOLDERS TO SELL THEIR SHARES OR LIQUIDATE THEIR INVESTMENTS. Our common shares are currently listed for public trading on the OTC Bulletin Board. The trading price of our common shares has been subject to wide fluctuations. Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources. 25 OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK. Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock. THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, OR FINRA, HAS ADOPTED SALES PRACTICE REQUIREMENTS WHICH MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK. In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. None. 26 ITEM 6. EXHIBITS. Exhibits required by Item 601 of Regulation S-K Exhibit Number Description - ------ ----------- (3) (I) ARTICLES OF INCORPORATION; AND (II) BYLAWS 3.1 Articles of Incorporation (Incorporated by reference to the Form SB-2 filed on June 19, 2007) 3.2 Bylaws (Incorporated by reference to the Form SB-2 filed on June 19, 2007) 3.3 Certificate of Change filed with the Secretary of State of Nevada on August 19, 2008 (Incorporated by reference to the Form 8-K filed on September 9, 2008) (10) MATERIAL CONTRACTS 10.1 Memorandum of Understanding dated September 3, 2008 (Incorporated by reference to the Form 8-K filed on September 9, 2008) (31) SECTION 302 CERTIFICATION 31.1* Certification of Principal Executive Officer and Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (32) SECTION 906 CERTIFICATION 32.1* Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - ---------- * Filed herewith 27 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. WASTE TO ENERGY GROUP INC. (Registrant) Dated: January 14, 2009 /s/ Maria C. Maz ------------------------------------------------- Maria C. Maz President, Chief Executive Officer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) 28