QWTR 10-Q
Quest Water Global, Inc. (QWTR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
or
For the transition period from ______________ to________________
Commission
file number
(Exact name of registrant as specified in its charter)
(State
or other jurisdiction |
(I.R.S.
Employer |
| (Address of principal executive offices) | (Zip Code) |
(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.
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).
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 ☐ |
| 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 ☐
As of July 19, 2023, the registrant’s outstanding common stock consisted of shares.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | F-1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 9 |
| Item 4. | Controls and Procedures | 9 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 10 |
| Item 1A. | Risk Factors | 10 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 10 |
| Item 3. | Defaults Upon Senior Securities | 10 |
| Item 4. | Mine Safety Disclosures | 10 |
| Item 5. | Other Information | 10 |
| Item 6. | Exhibits | 11 |
| 2 |
Item 1. Financial Statements
QUEST WATER GLOBAL, INC.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(EXPRESSED IN US DOLLARS)
| F-1 |
QUEST WATER GLOBAL, INC.
Condensed Consolidated Interim Balance Sheets
(Expressed in US Dollars)
(Unaudited – Prepared by Management)
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Prepaids | $ | $ | ||||||
| Equipment, net (Note 4) | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Investment in partnership, restated (Note 10) | ||||||||
| Due to related company (Note 3) | ||||||||
| Due to related parties (Note 5) | ||||||||
| Total liabilities | ||||||||
| Stockholders’ deficit | ||||||||
| Preferred stock, shares authorized, $ par value shares issued and outstanding | ||||||||
| Common stock, shares authorized, $ par value issued and outstanding (December 31, 2022 – ) | ||||||||
| Additional paid-in capital | ||||||||
| Deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
(The accompanying notes are an integral part of these condensed consolidated financial statements)
| F-2 |
QUEST WATER GLOBAL, INC.
Condensed Consolidated Interim Statements of Operations and Comprehensive Loss
(Expressed in US Dollars)
(Unaudited – Prepared by Management)
For the three months ended June 30, 2023 | For the three months ended June 30, 2022 | For the six months ended June 30, 2023 | For the six months ended June 30, 2022 |
|||||||||||||
| Expenses | ||||||||||||||||
| Automotive | $ | $ | $ | $ | ||||||||||||
| Depreciation | ||||||||||||||||
| Management fees | ||||||||||||||||
| Office and miscellaneous | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Rent | ||||||||||||||||
| Telephone | ||||||||||||||||
| Transfer agent and filing fees | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Loss before other income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Decrease in equity of investment in partnership | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss and comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of shares outstanding, basic and diluted | ||||||||||||||||
(The accompanying notes are an integral part of these condensed consolidated financial statements)
| F-3 |
QUEST WATER GLOBAL, INC.
Condensed Consolidated Interim Statements of Stockholder’s Deficit
(Expressed in US Dollars)
(Unaudited – Prepared by Management)
| Preferred stock | Common stock | Additional paid-in | ||||||||||||||||||||||||||
| Amount | Amount | capital | Deficit | Total | ||||||||||||||||||||||||
| For June 30, 2023 | Number | $ | Number | $ | $ | $ | $ | |||||||||||||||||||||
| Balance, December 31, 2022 | | | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Preferred stock | Common stock | Additional paid-in | ||||||||||||||||||||||||||
| Amount | Amount | capital | Deficit | Total | ||||||||||||||||||||||||
| For June 30, 2022 | Number | $ | Number | $ | $ | $ | $ | |||||||||||||||||||||
| Balance, December 31, 2021 | | | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss for the period | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
(The accompanying notes are an integral part of these condensed consolidated financial statements)
| F-4 |
QUEST WATER GLOBAL, INC.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in US Dollars)
(Unaudited – Prepared by Management)
For the six months ended June 30, 2023 | For the six months ended June 30, 2022 |
|||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | ||
| Decrease in equity of partnership investment | ||||||||
| Depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaids | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Due to related company | ( | ) | ( | ) | ||||
| Due to related parties | ||||||||
| Net cash used in operating activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Equipment purchase | $ | $ | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ||||||
| Change in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Income tax paid | $ | $ | ||||||
(The accompanying notes are an integral part of these condensed consolidated financial statements)
| F-5 |
QUEST WATER GLOBAL, INC.
Notes to the Condensed Consolidated Interim Financial Statements
For the Six Months Ended June 30, 2023
(Expressed in US Dollars)
(Unaudited – Prepared by Management)
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.
These
condensed 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, 2023, the Company has a working
capital deficiency of $
2. Summary of Significant Accounting Policies
(a) Basis of Presentation and Principles of Consolidation
These condensed 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 condensed 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, 2022. 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-6 |
(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 $
4. Equipment
Equipment is amortized over its useful life.
| Cost | Depreciation | Net | ||||||||||||||
| Computer | $ | $ | $ | |||||||||||||
5. Related Party Transactions
| (a) | As at June 30, 2023, a
total of $ | |
| (b) | As at June 30, 2023, a
total of $ | |
| (c) | For the six months ended
June 30, 2023, the Company incurred a total of $ | |
| (d) | For the six months ended
June 30, 2023, the Company incurred $ | |
| (e) | On
July 22, 2022, the Company issued common
shares at a price of $per
share to the President and Vice-President of Company pursuant to debt conversions in the aggregate amount of $ |
| F-7 |
6. Common Shares
On July 21, 2022, the authorized capital of the Company was increased from to shares of common stock with the par value of $.
On
July 22, 2022, the Company converted an aggregate of $
At June 30, 2023, the Company had shares of common stock outstanding. (June 30, 2022 - common shares).
Basic and diluted loss per share
The
calculation of the basic and diluted loss per share for the six months ended June 30, 2023 was based on the loss attributable to common
shareholders of $
At June 30, 2023, there were stock options that were excluded from the diluted weighted average number of common shares calculation as their effect would have been anti-dilutive.
Stock Options
The Company adopted a stock option plan in May 2012 (the “Plan”) under which it is authorized to grant options to directors, officers, employees and consultants enabling them to acquire up to a maximum of % of the issued and outstanding common stock of the Company. The options can be granted for a maximum term of years and vest as determined by the board of directors.
| Number of | Weighted Average | |||||||
| Options | Exercise Price | |||||||
| Balance, December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Rescinded | ( | ) | ||||||
| Exercised | ||||||||
| Balance, December 31, 2022 and June 30, 2023 | $ | |||||||
| Exercisable at June 30, 2023 | $ | |||||||
The options outstanding and exercisable at June 30, 2023 were granted effective July 20, 2022 and have a year period during which they may be exercised. They have an exercise price of $ per share and have a remaining life of years.
8. Operating Segment
The
Company has only
| F-8 |
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, 2023. 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.
| 3 |
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 condensed 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.
We focus on the manufacture and sale of two products: our AQUAtapTM Community Water Purification and Distribution system and our WEPSTM (atmospheric Water Extraction and Purification System). Our AQUAtapTM system is an autonomous, decentralized, self-contained, solar-powered water purification and distribution system, while our WEPSTM is a unique, proprietary water extraction and purification system that produces clean drinking water from humidity in the atmosphere.
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 AQUAtapTM 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. 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. Quest NV has not generated any revenues since its inception.
| 4 |
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, John Balanko and Peter Miele became our directors, officers and principal stockholders, and we assumed the business and operations of Quest NV. 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.
AQUAtap Global
In July 2021, we incorporated a new operating subsidiary, AQUAtap Global, Inc., a Wyoming corporation (“AQUAtap”). 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, 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.
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, 2023 or 2022. 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, 2023, we incurred $151,030 in total expenses, including $123,750 in management fees, $10,594 in professional fees, $6,412 in transfer agent and filing fees, $5,485 in rent, $2,148 in automotive expenses, $1,700 in office and miscellaneous expenses, $816 in telephone expenses and $125 in depreciation. During the same period in the prior year, 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. Apart from a $11,250 increase in management fees, our expenses were relatively consistent between the two periods.
| 5 |
Other Income
During the three months ended June 30, 2023, we experienced a $6,532 decrease in the equity of our investment in the AQUAtapTM Oasis Partnership SARL, a collaborative partnership that Quest NV entered into in 2019 for the purpose of commencing a profitable safe water initiative in the DRC. The equity of that investment did not change during the same period in the prior year.
Net Loss
During the three months ended June 30, 2023, we incurred a net loss of $157,562, whereas we incurred a net loss of $142,721 during the same period in the prior year. Our net loss per share during the three months ended June 30, 2023 and 2022 was $0.001 and $0.002, respectively.
For the Six Months Ended June 30, 2023
Revenue
We did not generate any revenue during the six months ended June 30, 2023 or 2022. 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, 2023, we incurred $293,441 in total expenses, including $247,500 in management fees, $13,563 in professional fees, $11,170 in transfer agent and filing fees, $10,970 in rent, $4,607 in automotive expenses, $3,643 in office and miscellaneous expenses, $1,738 in telephone expenses and $250 in depreciation. During the same period in the prior year, 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. Other than a $22,500 increase in management fees, which was largely offset by a $13,593 decrease in professional fees, our expenses were consistent from period-to-period.
Other Income
During the six months ended June 30, 2023, we experienced a $8,752 decrease in the equity of our investment in the AQUAtapTM Oasis Partnership SARL. During the same period in the prior year, we experienced a $7,716 decrease in the equity of the same investment.
Net Loss
During the six months ended June 30, 2023, we incurred a net loss of $302,193 and a net loss per share of $0.002, whereas we incurred a net loss of $295,072 and a net loss per share of $0.003 during the same period in the prior year.
| 6 |
Liquidity and Capital Resources
As of June 30, 2023 we had $Nil in cash, $5,564 in total assets, $1,580,628 in total liabilities and a working capital deficiency of $1,575,981. As of that date, we also had an accumulated deficit of $11,575,545.
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, 2023.
During the six months ended June 30, 2023, we spent $Nil in net cash on operating activities, compared to $2,617 in net cash spending on operating activities during the same period in the prior year. Although we experienced a net loss in the current period as described above, it was offset by certain changes in our operating assets and liabilities, notably increases in our “accounts payable” and “due to related parties” balances.
We did not spend any net cash on investing activities during the six months ended June 30, 2023, whereas we spent $1,500 in net cash during the same period in the prior year, all of which was attributable to equipment purchases.
We did not spend or receive any cash in respect of financing activities during the six months ended June 30, 2023 or 2022.
During the six months ended June 30, 2023, our cash decreased by $Nil as a result of our operating activities. As of June 30, 2023, we did not have sufficient cash resources to meet our operating expenses for the next month based on our then-current burn rate.
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 AQUAtapTM Community Water Purification & Distribution systems as well as the employment of our WEPSTM technology, and we anticipate that we will require a minimum of $1,011,000 to pursue those plans.
We intend to meet the balance of our cash requirements for the next 12 months through advances from related parties as well as a combination of debt financing and equity financing through private placements as circumstances allow. We are presently in the process of contacting broker/dealers in Canada and elsewhere regarding possible financing arrangements. There is no assurance that we will be successful in completing any private placement or other financings. If we are unsuccessful in obtaining sufficient funds through our capital raising efforts, we may review other financing options.
| 7 |
During the next 12 months, we estimate that our planned expenditures will include the following:
| Description | Amount ($) | |||
| Equipment purchases | 250,000 | |||
| Management fees | 495,000 | |||
| 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 | 1,011,000 | |||
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, 2023, we had a working capital deficiency of $1,575,981 and an accumulated deficit of $11,575,545. 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.
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 condensed 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 condensed 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.
| 8 |
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.
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, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 9 |
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.
| 10 |
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: July 19, 2023 | QUEST WATER GLOBAL, INC. | |
| By: | /s/ John Balanko | |
| John Balanko | ||
| Chairman, President, Chief Executive Officer, Director | ||
| 11 |