Quarterly Report (10-q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to________________

 

Commission file number 333-168895

 

QUEST WATER GLOBAL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		27-1994359
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

Suite 209 – 828 Harbourside Drive North Vancouver, British Columbia, Canada		V7P 3R9
(Address of principal executive offices)		(Zip Code)

 

[phone]

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		None		N/A

 

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. Yes ☐ No ☒

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

As of August 12, 2022, the registrant’s outstanding common stock consisted of 131,903,029 shares.

 

 

 

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Item 3. Quantitative and Qualitative Disclosures about Market Risk	11
Item 4. Controls and Procedures	11
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	12
Item 1A. Risk Factors	12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3. Defaults Upon Senior Securities	12
Item 4. Mine Safety Disclosures	12
Item 5. Other Information	12
Item 6. Exhibits	12

 

2

 

 

Item 1. Financial Statements

 

QUEST WATER GLOBAL, INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(EXPRESSED IN US DOLLARS)

(Unaudited – Prepared by Management)

 

	Index
Condensed Consolidated Interim Balance Sheets	F-1
Condensed Consolidated Interim Statements of Operations and Comprehensive Loss	F-2
Condensed Consolidated Interim Statements of Stockholders’ Deficit	F-3
Condensed Consolidated Interim Statements of Cash Flows	F-4
Notes to the Condensed Consolidated Interim Financial Statements	F-5 to F-7

 

3

 

 

QUEST WATER GLOBAL, INC.

Condensed Consolidated Interim Balance Sheets

(Expressed in US Dollars)

(Unaudited)

 

		June 30,				December 31,
		2022				2021
ASSETS
Current assets
Cash		$	110			$	4,227
Prepaids			5,799				-
			5,909				4,227
Equipment, net (Note 4)			1,417				-
Investment (Note 3)			7,220				7,220
Total assets		$	14,546			$	11,447
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued liabilities		$	19,430			$	15,100
Due to related company (Note 3)			12,606				33,964
Due to related parties (Note 5)			3,940,241				3,632,758
Total liabilities			3,972,277				3,681,822
Stockholders’ deficit
Preferred stock, 5,000,000 shares authorized, $0.000001 par value 2 shares issued and outstanding			1				1
Common stock, 95,000,000 shares authorized, $0.000001 par value 85,164,569 issued and outstanding			85				85
Additional paid-in capital			6,332,748				6,332,748
Deficit			(10,290,565	)			(10,003,209	)
Total stockholders’ deficit			(3,957,731	)			(3,670,375	)
Total liabilities and stockholders’ deficit		$	14,546			$	11,447

 

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

 

F-1

 

 

QUEST WATER GLOBAL, INC.

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

(Expressed in US Dollars)

(Unaudited)

 

		For the three				For the three				For the six				For the six
		months ended				months ended				months ended				months ended
		Jun 30 2022				Jun 30 2021				Jun 30 2022				Jun 30 2021
Sales		$	-			$	-			$	-			$	150,000
Cost of goods sold			-				-				-				112,724
Gross profit			-				-				-				37,276
Expenses
Automotive			2,670				1,743				5,315				4,804
Management fees			112,500				107,500				225,000				215,000
Office and miscellaneous			1,563				1,397				3,253				4,222
Professional fees			13,375				387				27,156				387
Rent			5,539				5,250				10,789				10,500
Telephone			876				833				1,839				1,638
Transfer agent and filing fees			6,198				244				14,004				632
Total expenses			142,721				117,354				287,356				237,183
Net loss and comprehensive loss		$	(142,721	)			(117,354	)		$	(287,356	)			(199,907	)
Net loss per share, basic and diluted		$	(0.002	)		$	(0.001	)		$	(0.003	)		$	(0.002	)
Weighted average number of shares outstanding, basic and diluted			85,164,569				85,164,569				85,164,569				85,164,569

 

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

 

F-2

 

 

QUEST WATER GLOBAL, INC.

Condensed Consolidated Interim Statements of Stockholder’s Deficit

(Expressed in US Dollars)

(Unaudited)

 

																		Additional
		Preferred stock								Common stock								paid-in
						Amount								Amount				capital				Deficit				Total
For Jun 30, 2022		Number				$				Number				$				$				$				$
Balance, December 31, 2021			2				1				85,164,569				85				6,332,748				(10,003,209	)			(3,670,375	)
Net loss for the period			–				–				–				–				–				(144,635	)			(144,635	)
Balance, March 31, 2022			2				1				85,164,569				85				6,332,748				(10,147,844	)			(3,815,010	)
Net loss for the period			-				-				-				-				-				(142,721	)			(142,721	)
Balance, Jun 30 2022			2				1				85,164,569				85				6,332,748				(10,290,565	)			(3,957,731	)

 

																		Additional
		Preferred stock								Common stock								paid-in
						Amount								Amount				capital				Deficit				Total
For Jun 30, 2021		Number				$				Number				$				$				$				$
Balance, December 31, 2020, as restated (Note 6)			2				1				85,164,569				85				6,332,748				(9,741,165	)			(3,408,331	)
Net loss for the period			–				–				–				–				–				(82,553	)			(82,553	)
Balance, March 31, 2021			2				1				85,164,569				85				6,332,748				(9,823,718	)			(3,490,884	)
Net loss for the period			-				-				-				-				-				(117,354	)			(117,354	)
Balance, Jun 30 2021			2				1				85,164,569				85				6,332,748				(9,941,072	)			(3,608,238	)

 

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

 

F-3

 

 

QUEST WATER GLOBAL, INC.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in US Dollars)

(Unaudited)

 

		Six months ended				Six months ended
		June 30,				June 30,
		2022				2021
Operating Activities:
Net loss for the period		$	(287,356	)		$	(199,907	)
Depreciation			83
Changes in operating assets and liabilities:
Prepaids			(5,799	)			-
Unbilled costs			-				112,724
Accounts payable and accrued liabilities			4,330				813
Due to related company			(21,358	)			(150,000	)
Due to related parties			307,483				236,256
Net cash used in operating activities			(2,617	)			(114	)
Cash flows from investing activities:
Equipment purchase			(1,500	)			-
Net cash used in investing activities			(1,500	)			-
Change in cash			(4,117	)			(114	)
Cash, beginning of period			4,227				4,715
Cash, end of period		$	110			$	4,601
Supplemental disclosures:
Interest paid		$	–			$	–
Income tax paid		$	–			$	–

 

(The accompanying notes are an integral part of these condensed consolidated interim financial statements)

 

F-4

 

 

QUEST WATER GLOBAL, INC.

Notes to the Condensed Consolidated Interim Financial Statements

Six Months Ended June 30, 2022

(Expressed in US Dollars)

(Unaudited)

 

1.	Nature of Operations and Continuance of Business

 

Quest Water Global, Inc. (the “Company”) was incorporated on February 25, 2010, under the laws of the State of Delaware. The Company is an innovative water technology company that provides solutions to water scarce regions. The Company’s operations to date have been limited primarily to capital formation, organization, and development of its business plan.

 

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company has not been significant, but management continues to monitor the situation.

 

These consolidated interim financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at June 30, 2022, the Company has a working capital deficiency of $3,966,368 of which $3,940,241 is owed to the two principal shareholders (Note 4), and an accumulated deficit of $10,290,565. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue to develop its business and ultimately on the attainment of profitable operations. The Company has in the past, and is expected to in the future, arrange additional capital financing that may assist in addressing these issues; however, these factors continue to raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2.	Summary of Significant Accounting Policies

 

(a)

Basis of Presentation and Principles of Consolidation

 

These consolidated interim financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in US dollars. These consolidated financial statements include the accounts of the Company; the Company’s wholly-owned subsidiary Quest Water Solutions, Inc., a company incorporated under the laws of the State of Nevada (“Quest Nevada”); AQUAtap Global, Inc., a company incorporated under the laws of the State of Wyoming; and Quest Nevada’s wholly-owned subsidiary, Quest Water Solutions Inc., a company incorporated under the laws of the Province of British Columbia, Canada. All inter-company balances and transactions have been eliminated on consolidation.

 

(b)

Interim Financial Statements

 

The accompanying condensed consolidated interim financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes for the fiscal year ended December 31, 2021. In the opinion of management, the accompanying condensed consolidated interim financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.

 

The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.

 

F-5

 

 

(c)

Foreign Currency Translation

 

The Company’s functional currency is US dollars. Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into US dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.

 

The Company’s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into US dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.

 

(d)

Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

3.	Investment in and Due to Related Company

 

During the year ended December 31, 2019, the Company invested $7,600 in AQUAtap Oasis Partnership S.A.R.L. (“AQUAtap”), a limited liability company domiciled in the Democratic Republic of the Congo, and by doing so obtained 38% of the issued and outstanding shares in AQUAtap. The Company accounts for this investment using the equity method. AQUAtap did not have and income or losses for the period ended June 30, 2022 or in the years ended December 31, 2021 and 2020.

 

As at December 31, 2020, AQUAtap had advanced $183,964 to the Company in order to assist in the financing, for construction and delivery of certain of the Company’s products. The Company received US$150,000 from the Widal Foundation, through AQUAtap, to assist in the payment for construction of an AQUAtap Water Purification and Distribution System. Widal had a contract with the Company and AQUAtap for this system.

 

During the year ended December 31, 2021, the sale was completed and the Company recorded the prepayment as a sale. Accordingly, as at December 31, 2021, the account was reduced by $150,000 to a balance of $33,964. During the period ended June 30, 2022, the Company advanced $21,358 to AQUAtap reducing the balance owing to $12,606. The advances are non-interest bearing and due on demand.

 

4.

Equipment

 

Equipment is amortized over its useful life.

 

						Cost				Depreciation				Net
Computer			3 years			$	1,500			$	83			$	1,417

 

5.	Related Party Transactions

 

	(a)	As at June 30, 2022, a total of $1,885,982 (December 31, 2021 - $1,703,755) was owed to the President of the Company, which is non-interest bearing, unsecured, and due on demand.
	(b)	As at June 30, 2022, a total of $2,054,259 (December 31, 2021 - $1,929,003) was owed to the Vice President of the Company, which is non-interest bearing, unsecured, and due on demand.
	(c)	For the six months ended June 30, 2022, the Company incurred a total of $225,000 (December 31, 2021 - $430,000) in management fees to the President and the Vice President of the Company.
	(d)	For the six months ended June 30, 2022, the Company incurred $10,500 (December 31, 2021 - $21,000) in rent to the Vice President of the Company.

 

F-6

 

 

6.	Correction of Previously Issued Financial Statements

 

During the year ended December 31, 2014, the Company entered into consulting and marketing agreements whereby it committed to issue 500,000 shares of common stock with a fair value of $40,025. The services contemplated under the agreements were never provided or completed and the obligation of the Company to issue the shares should have been reversed in the following year.

 

The following changes reflect the adjustment of $40,025 made retroactively to the prior year’s consolidated financial statements:

 

Consolidated Statement of Stockholders’ Deficit

 

		Common stock issuable				Deficit				Total Stockholder’s Deficit
		$				$				$
Balance, December 31, 2020, as previously stated			40,025				(9,781,190	)			(3,408,331	)
Adjustment			(40,025	)			40,025				–
Balance, December 31, 2020, as restated			–				(9,741,165	)			(3,408,331	)

 

7.	Subsequent Events

 

On July 20, 2022, the Company granted options to purchase 8,500,000 shares of the Company’s common stock to certain consultants and advisory board members, 7,700,000 of which vested immediately and 800,000 of which vest on the six-month anniversary of the date of grant. Each option is exercisable at a price of $0.10 per share for a period of five years.

 

On July 21, 2022, the Company increased its authorized capital from 95,000,000 shares of common stock to 500,000,000 shares of common stock by filing a Certificate of Amendment with the Delaware Secretary of State.

 

On July 22, 2022, the Company entered into debt conversion agreements with the President and Vice President of the Company, pursuant to which a total of $3,038,000 of debt was converted into shares of the Company’s common stock at a price of $0.065 per share for a total of issuance of 46,738,460 shares. As a result of this transaction, the amount due by the Company to related parties decreased from $3,940,241 to $902,241.

 

F-7

 

 

PRESENTATION OF INFORMATION

 

As used in this quarterly report, the terms “we”, “us”, “our” and the “Company” mean Quest Water Global, Inc. and its consolidated subsidiaries, unless otherwise indicated.

 

This quarterly report includes our interim unaudited consolidated financial statements as at and for the period ended June 30, 2022. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”). All financial information in this quarterly report is presented in U.S. dollars, unless otherwise indicated, and should be read in conjunction with the financial statements and the notes thereto included in this quarterly report.

 

As disclosed in our current report on Form 8-K dated January 10, 2012, on January 6, 2012, we completed a share exchange with Quest Water Solutions, Inc. (“Quest NV”), a Nevada corporation that is now our wholly owned subsidiary and operating business (the “Share Exchange”). The Share Exchange was treated as a recapitalization effected through a share exchange, with Quest NV as the accounting acquirer and the Company as the accounting acquiree. Our consolidated financial statements are therefore, in substance, those of Quest NV.

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report, any supplement to this quarterly report, and any documents incorporated by reference in this quarterly report, include “forward-looking statements”. To the extent that the information presented in this quarterly report discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as “intends”, “anticipates”, “believes”, “estimates”, “projects”, “forecasts”, “expects”, “plans” and “proposes”. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

 

The forward-looking statements made in this quarterly report relate only to events or information as of the date on which the statements are made. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this quarterly report and the documents that we reference in this quarterly report and have filed as exhibits with the understanding that our actual future results may be materially different from what we expect. You should not rely upon forward-looking statements as predictions of future events.

 

4

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of our results of operations and financial condition has been derived from and should be read in conjunction with our interim unaudited consolidated financial statements and the related notes thereto that appear elsewhere in this quarterly report, as well as the “Presentation of Information” section that appears at the beginning of this quarterly report.

 

Overview

 

We are an innovative water technology company that provides sustainable and environmentally sound solutions to water-scarce regions. We use proven technologies to create economically viable products that address the critical shortage of clean drinking water in both domestic and foreign emerging markets.

 

Our goal is to address the vital issue of water quality and water supply by providing an alternative, sustainable source of pure water at the smallest possible environmental cost to global areas in need, while becoming a leading company in providing decentralized, turn-key solutions using alternative energy for the purification, desalination and distribution of clean drinking water.

 

To date, we have focused our activities on the formation of safe water partnerships and the sale and installation of our products, with emphasis on our AQUAtap^TM Community Water Purification & Distribution systems throughout North America, Latin America, the Caribbean and Africa, with specific attention to the Democratic Republic of the Congo (the “DRC”) and Angola.

 

Corporate History and Background

 

We were incorporated under the laws of Delaware on February 25, 2010. From our inception until the closing of the Share Exchange, we sought to provide dental and other medical professionals with turn-key marketing solutions to generate referrals from existing clients and new business from the general public through our wholly owned subsidiary RPM Dental Systems, LLC (“RPM Kentucky”). RPM Kentucky was formed on September 15, 2009, under the laws of the Commonwealth of Kentucky, and we acquired RPM Kentucky on March 23, 2010.

 

Prior to the Share Exchange, we had minimal revenue and our operations were limited to capital formation, organization and development of our business plan. As a result of the Share Exchange, we ceased our prior operations and, through Quest NV, we now operate as an innovative water technology company that provides sustainable and environmentally sound solutions to water-scarce regions.

 

Quest NV was incorporated under the laws of Nevada on October 20, 2008 and commenced operations on February 20, 2009. Its operations to date have consisted of business formation, strategic development, marketing, technologies development, negotiations with technologies companies and capital raising activities. Prior to 2021, Quest NV had not generated any revenues since its inception.

 

5

 

 

Acquisition of Quest NV

 

On January 6, 2012, we completed the Share Exchange whereby we acquired all of the issued and outstanding capital stock of Quest NV in exchange for 2,568,493 shares of our common stock (on a pre-forward split basis), or approximately 62.74% of our issued and outstanding common stock as of the consummation of the Share Exchange. Subsequent to the Share Exchange, we completed a 20 for 1 forward split of our common stock (the “Forward Split”) that became effective on March 1, 2012. Pursuant to the Forward Split, the 2,568,493 shares described above increased to 51,369,860 shares.

 

As a result of the Share Exchange, Quest NV became our wholly owned subsidiary and John Balanko and Peter Miele became our principal stockholders. The Share Exchange was treated as a recapitalization effected through a share exchange, with Quest NV as the accounting acquirer and the Company as the accounting acquiree.

 

In connection with and effective upon the closing of the Share Exchange, Josh Morita, our former President, Chief Executive Officer, director and principal stockholder, and Dr. Laura Sloan, our former director, resigned as members of our Board of Directors and Mr. Morita resigned as our sole officer. Also effective upon the closing of the Share Exchange, John Balanko and Peter Miele were appointed to fill the vacancies on our Board of Directors created by the resignations of Mr. Morita and Ms. Sloan. In addition, our Board of Directors appointed Mr. Balanko as our President and Chief Executive Officer and Mr. Miele as our Vice President and Secretary, all effective upon the closing of the Share Exchange. On April 13, 2012, we also appointed Mr. Miele as our Chief Financial Officer.

 

As a result of our acquisition of Quest NV, Quest NV became our wholly owned subsidiary and we assumed the business and operations of Quest NV. We then changed our name from RPM Dental, Inc. to Quest Water Global, Inc. to more accurately reflect our new business operations.

 

AQUAtap Entities

 

In July 2021, we incorporated a new operating subsidiary, AQUAtap Global, Inc., a Wyoming corporation (“AQUAtap Global”). Through this entity, we expect to coordinate, facilitate and manage our current, planned and future safe water partnerships throughout Africa, Latin America and the Caribbean that provide clean water initiatives for underserved communities. AQUAtap Global, together with its strategic global partners, plans to establish subordinate partnerships in various countries and engage experienced local individuals and organizations for operational expertise. We anticipate that this will enable the subordinate partnerships to enter into public-private partnerships (commonly known as PPPs) with NGOs, strategic investors and various levels of government.

 

Quest Water Solutions Inc., a British Columbia, Canada corporation and wholly owned subsidiary of Quest NV (“Quest BC”), will remain as the technology provider to our safe water initiatives. Quest BC is responsible for designing, engineering and manufacturing our range of products, and it also sells these water technology products directly to end users through our corporate sales & marketing divisions and through global distributors and agents.

 

6

 

 

Business Overview

 

We provide sustainable and environmentally sound solutions to water scarce regions. Our goal is to address the vital issue of water quality and water supply by providing an alternative, sustainable source of pure water at the smallest possible environmental cost to global areas in need, while becoming a leading company in providing turn-key solutions using alternative energy for the purification, desalination and distribution of clean drinking water.

 

We have developed a proprietary AQUAtap™ Community Water Purification and Distribution System consisting of a self-contained water purification system using either a reverse osmosis membrane or ultrafiltration membrane, powered by photovoltaic solar panels and hosted in modified shipping containers. Each unit is energy self-sufficient with minimal operational and maintenance costs. We believe that this product represents the first truly environmentally sound solution to drinking water shortages as it is autonomous, decentralized and sustainable, and because each unit is capable of converting brackish, sea or contaminated surface water into high quality drinking water at a rate of up to 100,000 litres per day.

 

In addition to the solar-powered water purification systems, we have also developed a technology known as WEPS^TM that produces potable water from humidity in the atmosphere. WEPS^TM technology works by converting humidity into water, otherwise known as atmospheric water extraction.

 

Results of Operations

 

For the Three Months Ended June 30, 2022

 

Revenue

 

We did not generate any revenue during the three months ended June 30, 2022, or the same period in the prior year. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

 

Expenses

 

During the three months ended June 30, 2022, we incurred $142,721 in total expenses, including $112,500 in management fees, $13,375 in professional fees, $6,198 in transfer agent and filing fees, $5,539 in rent, $2,670 in automotive expenses, $1,563 in office and miscellaneous expenses and $876 in telephone expenses. During the same period in the prior year, we incurred $117,354 in total expenses, including $107,500 in management fees, $5,250 in rent, $1,743 in automotive expenses, $1,397 in office and miscellaneous expenses, $833 in telephone expenses and $244 in transfer agent and filing fees. Except for minor changes in our rent and transfer agent and filing fees, our expenses were relatively consistent between the two periods.

 

Net Loss

 

During the three months ended June 30, 2022, we incurred a net loss of $142,721, whereas we incurred a net loss of $117,354 during the same period in the prior year. Our net loss per share during the three months ended June 30, 2022 and 2021 was $0.002 and $0.001, respectively.

 

7

 

 

For the Six Months Ended June 30, 2022

 

Revenue

 

We did not generate any revenue during the six months ended June 30, 2022, whereas we generated $150,000 in revenue during the same period in the prior year. All of the revenue was attributable to a sales order and advance payment from AQUAtap Oasis Partnership S.A.R.L., and was offset by $112,724 in cost of goods sold, for a gross margin of $37,276. As described above, we anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

 

Expenses

 

During the six months ended June 30, 2022, we incurred $287,356 in total expenses, including $225,000 in management fees, $27,156 in professional fees, $14,004 in transfer agent and filing fees, $10,789 in rent, $5,315 in automotive expenses, $3,253 in office and miscellaneous expenses and $1,839 in telephone expenses. During the same period in the prior year, we incurred $237,183 in total expenses, including $215,000 in management fees, $10,500 in rent, $4,804 in automotive expenses, $4,222 in office and miscellaneous expenses, $1,638 in telephone expenses, $632 in transfer agent and filing fees and $387 in professional fees. Other than the increases in our professional fees and transfer agent and filing fees, both of which were associated with the revocation application in respect of the cease trade order previously in effect against us in the Province of British Columbia, Canada, our expenses were relatively consistent between the two periods.

 

Net Loss

 

During the six months ended June 30, 2022, we incurred a net loss of $287,356 and a net loss per share of $0.003, whereas we incurred a net loss of $199,907 and a net loss per share of $0.002 during the same period in the prior year.

 

Liquidity and Capital Resources

 

As of June 30, 2022 we had $110 in cash, $14,546 in total assets, $3,972,277 in total liabilities and a working capital deficiency of $3,966,368. As of that date, we also had an accumulated deficit of $10,290,565.

 

To date, we have experienced negative cash flows from operations and we have been dependent on sales of our common stock and capital contributions to fund our operations. We expect this situation to continue for the foreseeable future, and we anticipate that we will experience negative cash flows during the year ended December 31, 2022.

 

During the six months ended June 30, 2022, we spent $2,617 in net cash on operating activities, whereas we spent $114 in net cash spending on operating activities during the same period in the prior year. Although our net loss in the current period increased as described above, it was offset by certain changes in our operating assets and liabilities, notably the “due to related company” and “unbilled costs” balances.

 

We spent $1,500 in net cash during the six months ended June 30, 2022, all of which was attributable to equipment purchases. We did not spend or receive any cash in respect of investing activities during the same period in the prior year.

 

We did not spend or receive any cash in respect of financing activities during the six months ended June 30, 2022 or 2021.

 

During the six months ended June 30, 2022, our cash decreased by $4,117 as a result of our operating activities, from $4,227 to $110. As of June 30, 2022, we did not have sufficient cash resources to meet our operating expenses for the next month based on our then-current burn rate.

 

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Plan of Operations

 

Our plan of operations over the next 12 months is to continue to address water quality and supply issues in the DRC through the installation of our AQUAtap^TM Community Water Purification & Distribution systems as well as the employment of our WEPS^TM technology, and we anticipate that we will require a minimum of $946,000 to pursue those plans.

 

As described above, we intend to meet the balance of our cash requirements for the next 12 months through advances from related parties as well as a combination of debt financing and equity financing through private placements as circumstances allow. On July 13, 2022, the British Columbia Securities Commission revoked the cease trade order previously in effect against us in the Province of British Columbia, Canada, and we are presently in the process of contacting broker/dealers in Canada and elsewhere regarding possible financing arrangements. There is no assurance that we will be successful in completing any private placement or other financings. If we are unsuccessful in obtaining sufficient funds through our capital raising efforts, we may review other financing options.

 

During the next 12 months, we estimate that our planned expenditures will include the following:

 

Description		Amount ($)
Equipment purchases			250,000
Management fees			430,000
Consulting fees			120,000
Professional fees			50,000
Rent			21,000
Advertising and promotion expenses			15,000
Travel and automotive expenses			30,000
Other general and administrative expenses			30,000
Total			946,000

 

Going Concern

 

Our financial statements have been prepared on a going concern basis, which implies we will continue to realize our assets and discharge our liabilities in the normal course of business. As at June 30, 2022, we had a working capital deficiency of $3,966,368 and an accumulated deficit of $10,290,565. Our continuation as a going concern is dependent upon the continued financial support from our creditors, our ability to obtain necessary equity financing to continue operations, and ultimately on the attainment of profitable operations. These factors raise substantial doubt regarding our ability to continue as a going concern. Our financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

 

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Off-Balance Sheet Arrangements

 

We do not have any 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 investors.

 

Critical Accounting Policies

 

We have identified certain accounting policies, described below, that are important to the portrayal of our current financial condition and results of operations.

 

Basis of Presentation and Consolidation

 

The Company’s consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. Our consolidated financial statements include the accounts of the Company; the Company’s wholly-owned subsidiaries Quest Water Solutions, Inc., a company incorporated under the laws of the State of Nevada (“Quest Nevada”), and AQUAtap Global, Inc., a company incorporated under the laws of the State of Wyoming; and Quest Nevada’s wholly owned subsidiary, Quest Water Solutions Inc., a company incorporated under the laws of the province of British Columbia, Canada. All inter-company balances and transactions have been eliminated on consolidation.

 

Foreign Currency Translation

 

The Company’s functional currency is US dollars. Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into US dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.

 

The Company’s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into US dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not required.

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

 

As of the end of the period covered by this report, management, with the participation of our Chief Executive and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, management concluded that our disclosure controls and procedures were not effective due to certain deficiencies in our internal control over financial reporting.

 

Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the period ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are currently not involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers or any of our subsidiaries, threatened against or affecting us, our common stock, any of our subsidiaries or our officers or directors of those of our subsidiaries’ in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

The following documents are filed as a part of this quarterly report.

 

Exhibit
Number		Description of Exhibit
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Presentation Linkbase
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: August 12, 2022	QUEST WATER GLOBAL, INC.
	By:	/s/ John Balanko
		John Balanko
		Chairman, President, Chief Executive Officer, Director

 

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