UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2013

 

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.)
2030 Marine Drive, Suite 302 North Vancouver, British Columbia, Canada		V7P 1V7
(Address of principal executive offices)		(Zip Code)

 

(604) 986-2219

(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. Yes [  ] No [X]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller 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]

 

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

 

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 ISSURS:

 

As of November 18, 2013, the registrant’s outstanding common stock consisted of 85,182,360 shares.

  

 

 

TABLE OF CONTENTS

 

		Pages
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		13

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Quest Water Global, Inc.

(A Development Stage Company)

Consolidated Financial Statements

September 30, 2013

(Expressed in US dollars)

(unaudited)

 

		Index
Consolidated Balance Sheets		F-1
Consolidated Statements of Operations		F-2
Consolidated Statements of Cash Flows		F-3
Notes to the Consolidated Financial Statements		F-4

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Consolidated Balance Sheets

(Expressed in US dollars)

 

		September 30, 2013				December 31, 2012
		$				$
		(unaudited)
ASSETS
Current assets
Cash			210				1,732
Prepaid expenses and deposits			7,835				7,835
Total current assets			8,045				9,567
Equipment (Note 3)			231,418				275,343
Total assets			239,463				284,910
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable			327,919				259,031
Accrued liabilities			3,608				9,098
Convertible notes payable, net of unamortized discount of $37,891 (2012 - $5,914) (Note 4)			173,929				30,906
Due to related parties (Note 5)			862,137				502,082
Total current liabilities			1,367,593				801,117
Convertible notes payable, net of unamortized discount of $nil (2012 - $79,792) (Note 4)			–				95,208
Total liabilities			1,367,593				896,325
Nature of operations and continuance of business (Note 1)
Commitments (Note 9)
Subsequent event (Note 10)
Stockholders’ deficit
Preferred stock, 5,000,000 shares authorized, $0.000001 par value, 1 share issued and outstanding			1				1
Common stock, 95,000,000 shares authorized, $0.000001 par value, 85,182,360 and 84,833,860 shares issued and outstanding, respectively			5,141				5,139
Additional paid-in capital			4,647,408				4,479,410
Common stock issuable (Note 6)			32,700				168,000
Deficit accumulated during the development stage			(5,813,380	)			(5,263,965	)
Total stockholders’ deficit			(1,128,130	)			(611,415	)
Total liabilities and stockholders’ deficit			239,463				284,910

 

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

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Consolidated Statement of Operations

(Expressed in US dollars)

(unaudited)

 

		Three months ended September 30, 2013				Three months ended September 30, 2012				Nine months ended September 30, 2013				Nine months ended September 30, 2012				Accumulated from February 20, 2009 (date of inception) to September 30, 2013
		$				$				$				$				$
Expenses
Advertising and promotion			261				4,129				28,216				42,742				90,589
Amortization			14,641				8,248				43,925				24,744				118,414
Automotive			5,008				4,140				14,774				34,864				94,504
Consulting fees			3,121				20,628				21,338				908,277				1,108,347
Foreign exchange loss (gain)			5,246				379				(2,783	)			13,233				(112	)
Management fees (Note 6)			75,000				75,000				225,000				2,164,525				3,024,525
Office and miscellaneous			10,257				3,504				21,411				73,266				110,217
Professional fees			12,649				52,651				84,035				240,038				642,482
Rent			3,333				7,630				18,313				22,679				134,693
Telephone			4,116				3,836				12,028				11,946				62,083
Transfer agent and filing fees			1,595				34				2,414				16,474				18,914
Travel			9,673				(242	)			29,501				54,966				190,423
Loss before other income (expense)			(144,900	)			(179,937	)			(498,172	)			(3,607,754	)			(5,595,079	)
Other income (expense)
Accretion of discounts on convertible notes payable			(15,937	)			(14,375	)			(47,815	)			(41,794	)			(217,465	)
Gain on settlement of debt			–				–				–				–				7,723
Interest expense			(1,260	)			–				(3,428	)			–				(9,634	)
Interest income			–				–				–				–				1,075
Total other income (expense)			(17,197	)			(14,375	)			(51,243	)			(41,794	)			(218,301	)
Net loss			(162,097	)			(194,312	)			(549,415	)			(3,649,548	)			(5,813,380	)
Net loss per share, basic and diluted			–				–				(0.01	)			(0.04	)
Weighted average shares outstanding, basic and diluted			85,182,360				84,883,860				85,151,598				83,278,358

 

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

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Consolidated Statement of Cash Flows

(Expressed in US dollars)

(unaudited)

 

		Nine months ended September 30, 2013				Nine months ended September 30, 2012				Accumulated from February 20, 2009 (date of inception) to September 30, 2013
		$				$				$
Operating Activities:
Net loss for the period			(549,415	)			(3,649,548	)			(5,813,380	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discount on convertible note payable			47,815				41,794				217,465
Amortization			43,925				24,744				118,414
Gain on settlement of debt			–				–				(7,902	)
Stock-based compensation			2,700				2,798,458				2,801,155
Changes in operating assets and liabilities:
Prepaid expenses			–				4,594				(7,835	)
Accounts payable			68,888				45,274				343,571
Accrued liabilities			(5,490	)			(29,158	)			4,855
Due to/from related parties			360,055				(16,979	)			861,937
Net cash used in operating activities			(31,522	)			(780,821	)			(1,481,720	)
Investing Activities:
Purchase of property and equipment			–				(14,060	)			(349,832	)
Net cash used in investing activities			–				(14,060	)			(349,832	)
Financing Activities:
Proceeds from convertible notes payable			–				185,000				601,320
Proceeds from loans payable			–				–				208,000
Repayment of loans payable							(200,000	)			(200,000	)
Proceeds from issuance of common stock/ share subscriptions received			30,000				790,000				1,222,442
Net cash provided by financing activities			30,000				775,000				1,831,762
Increase (decrease) in cash			(1,522	)			(19,881	)			210
Cash, beginning of period			1,732				33,060				–
Cash, end of period			210				13,179				210
Non-cash investing and financing activities:
Common stock issued to settle accounts payable			–				–				11,750
Quest notes conversion to common stock prior to recapitalization transaction			–				225,500				325,500
Common stock issued pursuant to the conversion of notes payable			–				64,000				64,000
Common stock issued to settle loans payable			–				–				4,000
Supplemental disclosures:
Interest paid			–				–				1,586
Income tax paid			–				–				–

 

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

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

September 30, 2013

(Expressed in US dollars)

(unaudited)

 

1.	Nature of Operations and Continuance of Business

 

On January 6, 2012, Quest Water Global, Inc. (the “Company”) entered into a series of transactions pursuant to which the Company acquired Quest Water Solutions, Inc. (“Quest”), a Nevada corporation; spun-out its prior operations to the Company’s former principal stockholders, directors and officers; and completed a private offering of the Company’s securities for an aggregate purchase price of approximately $677,000. The following summarizes the foregoing transactions:

 

	●	Acquisition of Quest. The Company acquired all of the outstanding capital stock of Quest in exchange for the issuance of 51,369,860 shares of the Company’s common stock pursuant to a Share Exchange Agreement between the Company, the Company’s former principal stockholder, Quest and the former stockholders of Quest. As a result of this transaction, Quest became the Company’s wholly owned subsidiary and the former shareholders of Quest became the Company’s controlling stockholders. The transaction was accounted for as a reverse takeover/recapitalization effected by a share exchange, wherein Quest is considered the acquirer for accounting and financial reporting purposes. Accordingly, these comparative financial statements, including the disclosures from inception, are those of Quest.
		Two former principal shareholders of Quest each received one share of the Company’s newly designated Series A Voting Preferred Stock. Each share of Series A Voting Preferred Stock entitles the holder thereof to the number of votes equal to the quotient derived by dividing the total number of outstanding shares of Series A Voting Preferred Stock into a number equal to quotient derived by dividing 0.4285 into the total number of votes of the common stock and any other capital stock of the Company.
	●	Spin-Out of RPM Dental Business. Immediately prior to the acquisition of Quest, the Company spun-out RPM Dental Systems, LLC, a limited liability company formed in Kentucky and a wholly owned subsidiary, to the Company’s former officer and director and principal stockholder. As consideration the former director returned 80,000,000 shares of the Company’s common stock held by that person. These shares were cancelled immediately following the acquisition.
	●	Financing Transaction. Immediately following the acquisition of Quest, the Company completed a private offering of units consisting of an aggregate of (i) 2,398,000 shares of common stock and (ii) warrants to purchase 2,398,000 shares of common stock. The warrants have a three-year term and a per share exercise price of $0.50. The aggregate purchase price of the units was $599,500.

 

On the closing of the above transactions, the Company entered into lock-up agreements with each of the former Quest shareholders who received common stock of the Company in the share exchange, agreeing not to transfer any of the common stock of the Company for a one year period after the closing. In addition, the Company entered into lock-up/leak-out agreements with the two officers of the Company, agreeing not to transfer any of the common stock of the Company for a one year period after the closing and for the six months thereafter to limit any transfers to 0.5% up to a maximum of 100,000 shares of common stock on any single day.

 

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. As such, the Company is a development stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities”.

 

These consolidated 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 September 30, 2013, the Company has a working capital deficiency of $1,359,548 of which $862,137 is owed to the two principal shareholders, and an accumulated deficit of $5,813,380. 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 is in the process of arranging 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.

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

September 30, 2013

(Expressed in US dollars)

(unaudited)

 

2.	Summary of Significant Accounting Policies

 

(a)

Basic of Presentation and Consolidation

 

These consolidated 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, its wholly-owned subsidiary, Quest; Quest’s wholly owned subsidiary, Quest Water Solutions Inc., a company incorporated under the laws of the province of British Columbia, Canada; and its 88% owned inactive subsidiaries Agua Cuilo Lda., Cuilo Embalnages, Lda., and Cuilo Comercial, Lda. All inter-company balances and transactions have been eliminated on consolidation. The Company’s fiscal year-end is December 31.

 

(b)

Interim Financial Statements

 

These interim consolidated financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

 

(c)

Use of Estimates

 

The preparation of these consolidated financial statements in conformity with US GAAP 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 reporting period. Actual results could differ from those estimates. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, fair value of convertible notes payable, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

(d)

Equipment

 

Equipment is stated at cost. The Company amortizes the cost of equipment over its estimated useful life at the following annual rates:

 

	Computer equipment	45%	declining balance basis
	Demonstration equipment	20%	declining balance basis
	Furniture and equipment	20%	declining balance basis

 

(e)

Long-lived Assets

 

In accordance with ASC 360, “Property, Plant, and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount exceeds fair value.

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

September 30, 2013

(Expressed in US dollars)

(unaudited)

 

2.	Summary of Significant Accounting Policies (continued)

 

(f)

Financial Instruments and Fair Value Measures

 

ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1

 

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2

 

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3

 

Level 3 applies to assets or liabilities for which there are no observable inputs to the valuation methodology that are relevant to the measurement of the fair value of the assets or liabilities.

 

The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, convertible notes payable, loan payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

 

(g)

Loss Per Share

 

The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

 

(h)

Comprehensive Loss

 

ASC 220, “Comprehensive Income”, establishes standards for the reporting and presentation of comprehensive income (loss) and its components in the financial statements. As at September 30, 2013, and December 31, 2012, the Company had no items representing comprehensive income or loss.

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

September 30, 2013

(Expressed in US dollars)

(unaudited)

 

2.	Summary of Significant Accounting Policies (continued)

 

(i)

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.

 

(j)

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. As of September 30, 2013 and December 31, 2012, the Company did not have any amounts recorded pertaining to uncertain tax positions.

 

The Company is required to file federal and provincial income tax returns in Canada and federal, state and local income tax returns in the US, as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and US income tax returns, the open taxation year is 2009. In certain circumstances, the US federal statute of limitations can reach beyond the standard three year period. US state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and US have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation year noted above.

 

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During the periods ended September 30, 2013 and 2012, there were no charges or provisions for interest or penalties.

 

(k)

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.

Equipment

 

		Cost				Accumulated Amortization				Net Carrying Value September 30, 2013				Net Carrying Value December 31, 2012
		$				$				$				$
Computer equipment			25,971				16,702				9,269				13,991
Demonstration equipment			314,762				96,410				218,352				256,885
Furniture and equipment			7,426				3,629				3,797				4,467
			348,159				116,741				231,418				275,343

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

September 30, 2013

(Expressed in US dollars)

(unaudited)

 

4.	Convertible Notes Payable

 

(a)

On May 9, 2012, the Company received proceeds of $150,000 and issued a convertible note which is non-interest bearing, unsecured, and due on May 9, 2014. The unpaid amount can be converted at any time at the holder’s option at $0.50 per share of common stock, which must not be less than $25,000 of unpaid principal. In accordance with ASC 470-20, “Debt with Conversion and Other Options” (“ASC 470-20”), the Company recognized the intrinsic value of the embedded beneficial conversion feature of $90,000 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note up to its face value of $150,000. For the nine months ended September 30, 2013, $33,750 (2012 - $18,750) had been accreted, increasing the carrying value to $123,750 (December 31, 2012 - $90,000).

 

(b)

On July 30, 2012, the Company received proceeds of $25,000 and issued a convertible note which is non-interest bearing, unsecured, and due on July 30, 2014. The unpaid amount can be converted at any time at the holder’s option at $0.50 per share of common stock. In accordance with ASC 470-20, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $25,000 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note up to its face value of $25,000. For the nine months ended September 30, 2013, $9,375 (2012 - $3,125) had been accreted, increasing the carrying value to $14,583 (December 31, 2012 - $5,208).

 

(c)

On December 11, 2012, the Company received proceeds of $25,000 and issued a convertible note which bears interest at 10% per annum, is unsecured, and due on December 11, 2013. The unpaid amount can be converted six months after the date of issuance at the holder’s option at $0.40 per share of common stock. In accordance with ASC 470-20, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $6,250 as additional paid-in capital and an equivalent discount which will be charged to operations over the term of the convertible note up to its face value of $25,000. For the nine months ended September 30, 2013, $4,690 (2012 - $nil) had been accreted, increasing the carrying value to $23,776 (December 31, 2012 - $19,086).

 

(d)

On December 18, 2012, the Company received proceeds of $11,820 and issued a convertible note which bears interest at 10% per annum, is unsecured, and due on December 11, 2013. The unpaid amount can be converted six months after the date of issuance at the holder’s option at $0.40 per share of common stock. In accordance with ASC 470-20, the Company determined there was no embedded beneficial conversion feature.

 

5.	Related Party Transactions

 

(a)

As at September 30, 2013, a total of $344,871 (December 31, 2012 - $182,191) is owed to the President of the Company, which is non-interest bearing, unsecured, and due on demand.

 

(b)

As at September 30, 2013, a total of $517,266 (December 31, 2012 - $319,891) is owed to the Vice President of the Company, which is non-interest bearing, unsecured, and due on demand.

 

(c)

For the nine months ended September 30, 2013, the Company incurred a total of $225,000 (2012 - $225,000) in management fees to the President and the Vice President of the Company. For the nine months ended September 30, 2012, the Company also incurred stock-based compensation of $1,939,525 for stock options granted to the President and the Vice President of the Company which is included in management fees.

 

6.	Common Stock

 

(a)

On January 18, 2013, the Company issued 286,000 units at a price of $0.50 per unit for proceeds of $143,000, which was included in common stock issuable as at December 31, 2012. Each unit consisted of one share of common stock and one share purchase warrant exercisable at $0.75 per share expiring on July 15, 2015.

 

(b)

On February 21, 2013, the Company issued 62,500 units at a price of $0.40 per unit for proceeds of $25,000, which was included in common stock issuable as at December 31, 2012. Each unit consisted of one share of common stock and one share purchase warrant exercisable at $0.65 per share expiring on October 15, 2015.

 

(c)

On September 19, 2013, the Company agreed to issue 30,000 shares of common stock pursuant to a consulting agreement with a fair value of $2,700. Refer to Note 9(d).

 

(d)

As at September 30, 2013, the Company had received share subscriptions of $25,000 for 250,000 shares of common stock at a price of $0.10 per share.

 

(e)

As at September 30, 2013, the Company had received share subscriptions of $5,000 for 83,334 shares of common stock at a price of $0.06 per share.

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

September 30, 2013

(Expressed in US dollars)

(unaudited)

 

7.	Share Purchase Warrants

 

The following table summarizes the continuity of share purchase warrants:

 

		Number of warrants				Weighted average exercise price $
Balance, December 31, 2012			2,708,000				0.50
Issued			348,500				0.73
Balance, September 30, 2013			3,056,500				0.53

 

As at September 30, 2013, the following share purchase warrants were outstanding:

 

	Number of warrants outstanding		Exercise price $				Expiry date
	2,398,000			0.50				January 6, 2015
	310,000			0.50				February 10, 2015
	286,000			0.75				July 15, 2015
	62,500			0.65				October 15, 2015
	3,056,500

 

8.	Stock Options

 

			Number of options				Weighted average exercise price $
	Outstanding, December 31, 2012 and September 30, 2013			5,050,000				0.90

 

Additional information regarding stock options outstanding as at September 30, 2013 is as follows:

 

			Outstanding and exercisable
	Range of exercise prices $		Number of shares				Weighted average remaining contractual life (years)				Weighted average exercise price $
	0.90			5,050,000				1.7				0.90

 

As at September 30, 2013, the aggregate intrinsic value of stock options outstanding is $nil.

 

 

QUEST WATER GLOBAL, INC.

(A Development Stage Company)

Notes to the Consolidated Financial Statements

September 30, 2013

(Expressed in US dollars)

(unaudited)

 

9.	Commitments

 

(a)

In January 2011, the Company signed a lease for office premises and agreed to pay annual basic rent of $12,024 plus taxes up to January 2014.

 

	(b)	On November 1, 2011, the Company entered into a management agreement with the President of the Company whereby it is obligated to pay $12,500 per month starting on October 3, 2011 to November 1, 2016.
		The agreement may be terminated by written notice. Upon termination, the President shall receive a termination fee equal to the sum of:

 

(i)

Buy-out of any outstanding stock options for a price equal to the fair market value of the Company’s common stock multiplied by the number of shares under options and less the exercise price; plus

 

(ii)

The greater of:

 

●

The aggregate remaining fees for the unexpired remainder of the term; or

 

●

One annual fee plus one month fee for each year served after November 1, 2011.

 

	(c)	On November 1, 2011, the Company entered into a management agreement with the Vice-President of the Company whereby it is obligated to pay $12,500 per month starting on October 3, 2011 to November 1, 2016.
		The agreement may be terminated by written notice. Upon termination, the Vice-President shall receive a termination fee equal to the sum of:

 

(i)

Buy-out of any outstanding stock options for a price equal to the fair market value of the Company’s common stock multiplied by the number of shares under options and less the exercise price; plus

 

(ii)

The greater of:

 

●

The aggregate remaining fees for the unexpired remainder of the term; or

 

●

One annual fee plus one month fee for each year served after November 1, 2011.

 

(d)

On September 19, 2013, the Company entered into a three month agreement with a non-related party for consulting services whereby the Company agreed to issue 30,000 shares of common stock. Refer to Notes 6(c) and 10.

 

10.	Subsequent Event

 

On October 3, 2013, the Company issued 30,000 shares of common stock pursuant to a consulting agreement. Refer to Note 9(d).

 

 

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 September 30, 2013. 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”), 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 as the accounting acquirer and the Company as the accounting acquiree. Our consolidated financial statements are therefore, in substance, those of Quest.

 

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.

 

 

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.

 

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, we now operate as an innovative water technology company that provides sustainable and environmentally sound solutions to water-scarce regions.

 

Quest 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 has not generated any revenues since its inception.

 

Acquisition of Quest

 

On January 6, 2012, we completed the Share Exchange whereby we acquired all of the issued and outstanding capital stock of Quest 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 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 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, Quest became our wholly owned subsidiary and we assumed the business and operations of Quest. We then changed our name from RPM Dental, Inc. to Quest Water Global, Inc. to more accurately reflect our new business operations.

 

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 community drinking water station consisting of a self-contained water purification system using either a reverse osmosis membrane or ultra filtration membrane, powered by photovoltaic solar panels and hosted in modified shipping containers. Each AQUAtap^TM 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 20,000 litres of high quality drinking water each day, suitable for 1,000 people.

 

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

 

To date, we have focused our activities on the fifteen countries of the Southern African Development Community (“SADC”), with specific attention to Angola. There is a vast and increasing demand for a sustainable, cost-effective and decentralized continuous supply of clean drinking water in most areas of the SADC. We provide clean drinking water to end-users utilizing various formats of our water purification and distribution systems that include inexpensive bulk drinking water and government-subsidized community level drinking water. Applications of our systems include rural and urban community water supply, water supply for household needs, remote work site camps and water supply for disaster relief.

 

We are in the process of negotiating a formal agreement with the Ministry of Industry and Ministry of Energy & Water regarding becoming an official registered supplier for the government of Angola’s $650 million “Water for All” program and for the construction of a facility to assemble the AQUAtap™ stations in that country . In June 2012, our management met with the African Development (“AfDB”) to discuss financing the proposed AQUAtap™ assembly plant(s) to be built in Angola and the level of funding required to carry out such an undertaking. These discussions established that we would require between $5.5-6 million per facility, including construction, inventory and working capital. As a result of the meetings, we received a non-binding letter of intent from the AfDB regarding the funding of the proposed project and the Angolan government indicated that once an agreement had been consummated, they would in turn submit a request for funding to the AfDB on our behalf.

 

Our operations to date have consisted of business formation, strategic development, marketing, technologies development, negotiations with technology companies and capital raising activities.

 

 

Results of Operations

 

For the Three Months Ended September 30, 2013 and from February 20, 2009 (Date of Inception) to September 30, 2013

 

Revenue

 

We have not generated any revenues since our inception. 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 September 30, 2013, we incurred $144,900 in total expenses, including $75,000 in management fees, $12,649 in professional fees, $3,121 in consulting fees, $14,641 in amortization, $3,333 in rent, $9,673 in travel expenses $5,008 in automotive expenses, $261 in advertising and promotion expenses, $4,116 in telephone expenses, $10,257 in office and miscellaneous expenses, $5,246 in foreign exchange loss and $1,595 in transfer agent and filing fees. During the same period in the prior year, we incurred $179,937 in total expenses, including $75,000 in management fees, $52,651 in professional fees, $20,628 in consulting fees, $8,248 in amortization, $7,630 in rent, $4,140 in automotive expenses, $4,129 in advertising and promotion expenses, $3,836 in telephone expenses, $3,504 in office and miscellaneous expenses, $379 in foreign exchange loss and $34 in transfer agent and filing fees, as offset by a $242 reversal in our travel expenses. The decrease of approximately 20% in our total expenses during the most recent period resulted from decreases in our expenses in several major categories, including our professional fees and consulting fees, which were attributable to the closing of the Share Exchange and the costs associated with becoming a public company.

 

From our inception on February 20, 2009 to September 30, 2013, we incurred $5,595,079 in total expenses, including $3,024,525 in management fees, $1,108,347 in consulting fees, $642,482 in professional fees, $190,423 in travel expenses, $134,693 in rent, $118,414 in amortization, $110,217 in office and miscellaneous expenses, $94,504 in automotive expenses, $90,589 in advertising and promotion expenses, $62,083 in telephone expenses, and $18,914 in transfer agent and filing fees, as offset by $112 in foreign exchange gain. Importantly, a significant portion of the management fees and consulting fees represent stock-based compensation expense of $1,939,525 and $858,933, respectively, that we incurred during the three months ended June 30, 2012.

 

Net Loss

 

During the three months ended September 30, 2013, we incurred a loss before other expense of $144,900 and a net loss of $162,097, whereas we incurred a loss before other expense of $179,937 and a net loss of $194,312 during the same period in the prior year. We did not experience any net loss per share during either of those two periods.

 

 

From our inception on February 20, 2009 to September 30, 2013, we incurred a loss before other expense of $5,595,079 and a net loss of $5,813,380. The majority of our other expense during each of the periods referenced above was related to the accretion of discount on our convertible notes payable.

 

For the Nine Months Ended September 30, 2013

 

Expenses

 

During the nine months ended September 30, 2013, we incurred $498,172 in total expenses, including $225,000 in management fees, $84,035 in professional fees, $43,925 in amortization, $29,501 in travel expenses, $28,216 in advertising and promotion expenses,$21,411 in office and miscellaneous expenses, $21,338 in consulting fees, $18,313 in rent, $14,774 in automotive expenses, $12,028 in telephone expenses and $2,414 in transfer agent and filing fees, as offset by $2,783 in foreign exchange gain. During the same period in the prior year, we incurred $3,607,754 in total expenses, including $2,614,525 in management fees, $240,038 in professional fees, $24,744 in amortization, $54,966 in travel expenses, $42,742 in advertising and promotion expenses, $73,266 in office and miscellaneous expenses, $908,277 in consulting fees, $22,679 in rent, $34,864 in automotive expenses, $11,946 in telephone expenses, $16,474 in transfer agent and filing fees and $13,233 in foreign exchange loss. The decrease of approximately 86% in our total expenses during the most recent period resulted from decreases in our expenses in nearly every major category, many of which were in turn attributable to the closing of the Share Exchange and the costs associated with becoming a public company. In addition, the management fee and consulting fee increases due to the stock-based compensation expense described above accounted for a significant portion of the over all decrease.

 

Net Loss

 

During the nine months ended September 30, 2013, we incurred a loss before other expense of $489,172 and a net loss of $549,415, whereas we incurred a loss before other expense of $3,607,754 and a net loss of $3,649,548 during the same period in the prior year. Our net loss per share during the two periods was $0.01 and $0.04, respectively.

 

Liquidity and Capital Resources

 

As of September 30, 2013, we had $210 in cash, $239,463 in total assets, $1,367,593 in total liabilities and a working capital deficit of $1,359,548. As of September 30, 2013 we had an accumulated deficit of $5,813,380.

 

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, 2013.

 

During the nine months ended September 30, 2013, we spent $31,522 in cash on operating activities, compared to $780,821 in cash spending on operating activities during the same period in the prior year. The 96% decrease in our cash spending on operating activities during the nine months ended September 30, 2013 was primarily attributable to the decrease in our net loss as described above, as well as changes in our operating assets and liabilities, and in particular an increase in amounts due to related parties. From our inception on February 20, 2009 to September 30, 2013 we spent $1,481,720 in cash on operating activities.

 

 

During the nine months ended September 30, 2013, we we did not spend any cash on investing activities, whereas we spent $14,060 in cash on investing activities during the same period in the prior year, all of which was in the form of equipment purchases. Our investing activities decreased between the 2012 and 2013 periods largely because we are currently in the process of negotiating a formal agreement with the Government of Angola that we expect will require us to purchase additional equipment. From our inception on February 20, 2009 to September 30, 2013, we spent $349,832 in cash on the purchase of equipment, our only investing activities to date.

 

We received $30,000 in cash from financing activities during the nine months ended September 30, 2013, all of which was in the form of proceeds from the issuance of our common stock. During the nine months ended September 30, 2012, we received $775,000 in cash from financing activities consisting of $790,000 in proceeds from the issuance of our common stock and share subscriptions received and $185,000 in proceeds from convertible notes payable, as offset by the repayment of $200,000 in loans payable. From our inception on February 20, 2009 to September 30, 2013 we received $1,831,762 in cash from financing activities, including the following proceeds: $1,222,442 from the issuance of our common stock, $601,320 from convertible notes payable and $208,000 from loans payable, as offset by a loan repayment of $200,000.

 

During the nine months ended September 30, 2013, our cash decreased by $1,522 as a result of our operating, investing and financing activities, from $1,732 to $210. As of September 30, 2013, we did not have sufficient cash resources to meet our operating expenses for the next month based on our 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 Angola through the installation of our AQUAtap^TM community drinking water stations as well as the employment of our WEPS^TM technology, and we anticipate that we will require a minimum of $745,000 to pursue those plans. However, as described above, we are currently in the process of negotiating a formal agreement with the Angolan Ministry of Industry and Ministry of Energy & Water regarding becoming an official registered supplier for the “Water for All” program and for the construction of a facility to assemble our AQUAtap™ stations. Our cash requirements will change substantially if we are able to successfully enter into such an agreement, but we expect that the AfDB will fund a large portion of the construction, inventory and working capital costs of the proposed project in those circumstances.

 

We intend to meet the balance of our cash requirements for the next 12 months through a combination of debt financing and equity financing through private placements. Currently we are active in contacting broker/dealers in Canada and elsewhere regarding possible financing arrangements. However, we do not currently have any arrangements in place to complete any further private placement financings and there is no assurance that we will be successful in completing any such 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 be as follows:

 

Description		Amount ($)
Equipment purchases			10,000
Rent			30,000
Management fees			300,000
Consulting fees			150,000
Professional fees			130,000
Advertising and promotion expenses			15,000
Travel and automotive expenses			60,000
General and administrative expenses			50,000
Total			745,000

 

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 September 30, 2013, we had a working capital deficit of $1,359,548 and an accumulated deficit of $5,813,380. Our continuation as a going concern is dependent upon the continued financial support from our shareholders, our ability to obtain necessary equity financing to continue operations, and 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

 

Our 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, its wholly-owned subsidiary, Quest; Quest’s wholly owned subsidiary, Quest Water Solutions Inc., a company incorporated under the laws of the province of British Columbia, Canada; and its 88% owned inactive subsidiaries Agua Cuilo Lda., Cuilo Embalnages, Lda., and Cuilo Comercial, Lda. All inter-company balances and transactions have been eliminated on consolidation. Our fiscal year-end is December 31.

 

 

Foreign Currency Translation

 

Our 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.

 

Our integrated foreign subsidiaries are financially or operationally dependent on us. We use the temporal method to translate the accounts of our 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 September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

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
2.1		Share Exchange Agreement dated January 6, 2012 with Josh Morita, Quest Water Solutions, Inc. and the shareholders of Quest Water Solutions, Inc. (1)
3.1		Articles of Incorporation (2)
3.2		Bylaws (2)
3.3		Certificate of Designation for Series A Voting Preferred Stock (1)
3.4		Certificate of Amendment filed with the Delaware Secretary of State on February 21, 2012 (3)
10.1		Agreement of Sale dated January 6, 2012 with Josh Morita (1)
10.2		Subscription Agreement dated January 6, 2012 (1)
10.3		Form of Warrant dated January 6, 2012 (1)
10.4		Registration Rights Agreement dated January 6, 2012 (1)
10.5		Form of Lock-Up Agreement dated January 6, 2012 (1)
10.6(a)		Lock-Up/Leak Out Agreement with John Balanko dated January 6, 2012 (1)
10.6(b)		Lock-Up/Leak Out Agreement with Peter Miele dated January 6, 2012 (1)
10.7		Management Agreement with John Balanko dated November 1, 2011 (1)
10.8		Management Agreement with Peter Miele dated November 1, 2011 (1)
10.9		Global Cooperation Partner Agreement between Quest Water Solutions, Inc. and Trunz Water Systems AG, dated June 29, 2011 (1)
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*
99.1		Audit Committee Charter (4)
101.INS		XBRL Instance Document**
101.SCH		XBRL Taxonomy Extension Schema**
101.CAL		XBRL Taxonomy Extension Calculation Linkbase**
101.DEF		XBRL Taxonomy Extension Definition Linkbase**
101.LAB		XBRL Taxonomy Extension Label Linkbase**
101.PRE		XBRL Taxonomy Presentation Linkbase**

 

(1)

Incorporated by reference from our Current Report on Form 8-K filed with the SEC on January 10, 2012.

 

(2)

Incorporated by reference from our Registration Statement on Form S-1 filed with the SEC on August 17, 2010.

 

(3)

Incorporated by reference from our Current Report on Form 8-K filed with the SEC on March 7, 2012.

 

(4)

Incorporated by reference from our Annual Report on Form 10-K filed with the SEC on April 16, 2012.

 

*

Filed Herewith.

 

**

In accordance with Regulation S-T, the XBRL related information on Exhibit No. 101 to this Quarterly Report on Form 10-Q shall be deemed “furnished” herewith not “filed”.

 

 

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: November 18, 2013	QUEST WATER GLOBAL, INC.
	By:	/s/ John Balanko
		John Balanko
		Chairman, President, Chief Executive Officer, Director