The information in this preliminary prospectus is not complete and may be changed. WeThese securities may not sell these securitiesbe sold until the registration statement filed with the Securities and Exchange Commission becomesis effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offersnor does it seek an offer to buy these securities in any statejurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION ON JUNE 28, 2022
ENERGY AND WATER DEVELOPMENT CORP.
55,000,000 SHARES OF COMMON STOCK
EUROSPORT ACTIVE WORLD CORPORATION
PROSPECTUS
21,747,348 SharesThis prospectus relates to the offer and sale of Common Stock
The selling security holders named in this prospectus are offering all of theup to 30,000,000 shares of common stock offered through this prospectus. The common stock to be sold by the selling shareholders as provided in the “Selling Security Holders” section is common stock that are shares that have already been issued and are currently outstanding. We will not receive any proceeds from the sale of the common stock covered by this prospectus.We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.
The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The common stock to be sold by the selling shareholders as provided in the “Selling Shareholders” section is shares of our common stock, par value $0.001 per share (the “Common Stock”by Energy and Water Development Corp., a Florida corporation (“EAWD,” “the Company,” “we,” “us,” and “our,”), that have already been issuedon a “best efforts” basis and are currently outstanding. We will not receive any proceeds from the saleoffer and resale of up to 25,000,000 shares of our common stock by Tysadco Partners, LLC (“Tysadco Partners” or the Common Stock covered by this prospectus.“Selling Stockholder”).
Our common stock is currently quoted on the OTC Pink Market maintainedOTCQB market, operated by OTC Markets Group, Inc. under the symbol “EAWD“EAWD.”; however, On June 27, 2022, the last quoted price of our securities arecommon stock as reported on the OTCQB was $0.19 per share. There is a limited public trading market for our common stock. It is currently highly illiquid,estimated that our offering price will be between $0.19 and subject$0.62 per share. The final public offering price will be determined by the Company in its sole discretion and the recent market price used throughout this prospectus may not be indicative of the final offering price. In addition, the final offering price may be at a discount to large swings inthe trading price and are only tradedof our common stock on a sporadic and limited basis. As a result, you should not expectthe OTCQB.
The shares of common stock being offered by the Selling Stockholder may be issued pursuant to that certain purchase agreement dated January 26, 2022, which is an equity line transaction we refer to in this prospectus as the “Tysadco Purchase Agreement.” The shares registered hereunder to be ableoffered for sale by the Selling Stockholder do not include the 500,000 Commitment Shares issued to resell yourthe Selling Stock as consideration for its commitment to purchase shares of common stock regardless of how we perform and, if you are ablepursuant to sell your common stock, you may receive less than your purchase price.
Commonthe Tysadco Purchase Agreement or the 2,000,000 shares purchased by the Selling Stock being registeredpursuant to the Tysadco SPA, both as more fully described in this registration statement may be sold by Selling Security Holders atstatement. Please refer to the fixed pricesection of one dollar ($1.00) per share through the durationthis prospectus entitled "Tysadco Partners Transaction" for a description of the offering or privately negotiatedTysadco Purchase Agreement and the section entitled "Selling Stockholder" for additional information regarding Tysadco Partners. The prices at which Tysadco Partners may sell the shares will be determined by the prevailing market price for the shares or in transactions that are notnegotiated transactions.
The Selling Stockholder may sell or otherwise dispose of the shares of common stock covered by this prospectus in a number of different ways and at varying prices. We provide more information about how the Selling Stockholder may sell or otherwise dispose of their shares of common stock in the public market.section entitled "Plan of Distribution." The Selling shareholders may be deemed underwriters as defined underStockholder will pay all brokerage fees and commissions and similar expenses. We will pay all expenses (except brokerage fees and commissions and similar expenses) relating to the registration of the shares with the Securities and Exchange Commission.
The Selling Stockholder is an "underwriter" within the meaning of the Securities Act of 1933. The Company has no present plans to be acquired or to merge with another company nor does the Company, or any of its shareholders, have plans to enter into a change of control or similar transaction. On February 11, 2016, the closing price of our Common Stock was $1.38 per share1933, as reported on the OTC Pink Marketplace.amended.
We are an emerging“emerging growth companycompany” as that term is used indefined by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”) and are subjector the JOBS Act. As such, we have elected to comply with certain reduced public company reporting requirements. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”
We will receive proceeds from the sale of the shares being registered in this offering. See “Use of Proceeds” for more information about how we will use the proceeds from this offering.
InvestingAn investment in our Common Stockcommon stock is speculative and involves a high degree of risk. Before buying any shares, youInvestors should carefully readconsider the discussion of material risks of investingrisk factors and other uncertainties described in this prospectus before purchasing our Common Stock in “Risk Factors”common stock. See “Risk Factors” beginning on page4 of this prospectus. 13.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL, ACCURATE, OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
| Per Share | Total | |||||||
| Public offering price | $ | 0.62 | $ | 18,600,000 | ||||
| Underwriting discounts and commissions(1) | $ | — | $ | — | ||||
| Proceeds, before expenses, to us | $ | 0.62 | $ | 18,600,000 | ||||
| (1) | The Company does not currently intend to use commissioned sales agents or underwriters. In the event it uses commissioned sales agents or underwriters, it will file an amendment to the Registration Statement of which this Prospectus forms a part. |
We anticipate that delivery of the shares will be made on or about July, 2022.
The date of this prospectus is February 11, 2016June [•], 2022.
Please read this prospectus carefully. It describes our business, our financial condition and results of operations. We have prepared this prospectus so that you will have the information necessary to make an informed investment decision.
You should rely only
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ABOUT THIS PROSPECTUS
This prospectus constitutes a part of a registration statement on Form S-1 (together with all amendments and exhibits thereto, the “Registration Statement”) filed by us with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”). As permitted by the rules and regulations of the SEC, this prospectus omits certain information contained in this prospectus. We have notthe Registration Statement, and reference is made to the Registration Statement and related exhibits for further information with respect to EAWD and the securities offered hereby. With regard to any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the SEC, in each instance reference is made to the copy of such document so filed. Each such statement is qualified in its entirety by such reference.
Neither we nor the Selling Stockholder has authorized any other personanyone to provide you with different information.information or make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by or on behalf of us or to which we have referred you. Neither we nor the Selling Stockholder take any responsibility for, and provide no assurance as to the reliability of, any other information that others may give you. This prospectus is not an offer to sell noronly the shares offered hereby, and only under circumstances and in jurisdictions where it is it seeking an offerlawful to buy, these securities in any state wheredo so. You should assume that the offer or sale is not permitted. The information appearing in this prospectus is complete and accurate as of the date on the front cover but the informationof this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date.
PROSPECTUS SUMMARYFor investors outside the United States: neither we nor the Selling Stockholder has done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.
INDUSTRY AND MARKET DATA
We are responsible for the disclosure in this Prospectus. However, this Prospectus includes industry data that we obtained from internal surveys, market research, and publicly available information and industry publications. The market research, publicly available information and industry publications that we use generally state that the information contained therein has been obtained from sources believed to be reliable. The information therein represents the most recently available data from the relevant sources and publications, and we believe remains reliable. We did not fund and are not otherwise affiliated with any of the sources cited in this Prospectus. Forward-looking information obtained from these sources is subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this Prospectus.
TRADEMARKS
We own or have rights to use various trademarks, service marks, and trade names that we use in connection with the operation of our business. We use our “EAWD” trademark and related design marks in this prospectus. This prospectus may also contain trademarks, service marks, and tradenames of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names, or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks, and trade names referred to in this prospectus may appear without the ®,TM, or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable owner of these trademarks, service marks and trade names.
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PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this prospectus. ThisBecause this is only a summary, it does not contain all of the information that youmay be important to you. You should read this entire prospectus and should consider, before investing inamong other things, the Common Stock. You should carefully read the entire prospectus, including “Risk Factors”matters set forth under “Risk Factors, “Management’s” “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations” and the Financial Statements,our consolidated financial statements and related notes thereto appearing elsewhere in this prospectus before making anyour investment decision. This prospectus contains forward-looking statements and information relating to EAWD. See “Cautionary Note Regarding Forward-Looking Statements” on page 26.
In this Prospectus, the terms “EAWC,“EAWD,” “EAWC Technologies,” “Eurosport Active,” “Eurosport”the “Company,” “we,” “us” and“us,” “our” or “ours” refer to Eurosport Active World Corporation or any ofEnergy and Water Development Corp. and its wholly owned subsidiaries.
Company Overview
The Company focuses on green sustainable solutions to generateEnergy and purify water,Water Development Corp. (the “Company” or “EAWD”) was registered as well asa Florida corporation under the production and reproduction of energy. EAWC is already engaged in the promotion, development and commercialization of green technologies, mainly in Mexico & the State of California. The strong increased demand for water and energy around the world, the Company and its partners develop, manufacture, distribute and operate water generation, water purification, and green energy production (Waste to Energy) technologies.http://www.eawctechnologies.com
.
Company History
Eurosport Active World Corporation (the “Company”) (formerlyname Eagle International Holdings Group Inc. or “EIH”), was incorporated underon December 12, 2007 and, on March 10, 2008, the laws of the State of Florida on August 23, 2000. EIH was a shell entity that was in the marketCompany changed its name to merge with an operating company.Eurosport Active World Corporation.
On March 17, 2008, EIHthe Company entered into an Agreement and Plan of Acquisition (the “Merger“Acquisition Agreement”) with Inko Sport America, LLC (“ISA”), a privately-held Florida privately-held limited liability company. In connection with the closing of the Merger AcquisitionAgreement, ISA merged withthe Company adopted ISA’s business plan and into EIH effective May 7, 2008, with the filing of the Merger Agreement with the Florida Secretary of State.
PursuantCompany’s current officers and directors were elected to the terms and conditions of the Merger Agreement:
their positions. This transaction was accounted for as a recapitalization effected by a share exchange, wherein ISA was considered the acquirer for accounting and financial reporting purposes. ISA was administratively dissolved in September 2010.
ISA was a development stage company, incorporated on February 24, 2005. Through December 31, 2012,In September 2019, the Company had been primarily engagedchanged its name to Energy and Water Development Corp. to more accurately reflect the Company’s purpose and business sector.
On November 9, 2021, the Company established an official subsidiary of EAWD in Germany called Energy And Water Development Deutschland GmbH (“EAWD Deutschland”) to ensure the promotion, developmentCompany is positioned to service its growing business in one of the EU’s most environmentally progressive countries.
The Business
We are an engineering services company formed as an outsourcing green tech platform, focused on sustainable water and commercialization of green technologies. energy solutions.
| · | EAWD builds water and energy systems out of already-existing, proven technologies, utilizing our technical know-how to customize solutions to our clients’ needs. |
| · | EAWD commercializes proven technologies for the sustainable generation of energy and water. |
| · | EAWD offers design, construction, maintenance and specialty consulting services to private companies, government entities and non-government organizations (NGOs). |
In view of the increased world-wide demand offor water and energy, the Company began to focusour business goals are focused on water generation water purification, and green energy production (Wasteproduction. To accomplish this, we set out to Energy); acquiringestablish an outsourcing green tech platform, providing engineering and licensingtechnical consultation services to design the rightsmost sustainable technological solutions that can provide water and energy. We also intend to sell and produce related technologies and securing through collaboration with Green Tech research and developments centers in Europe, the research and development,secure all required technical, maintenance, education, and training related to the technology.identified technology solutions. To this end the Company has sought potential collaboration with green tech research and development centers in Europe and has established its operating subsidiary, EAWD Deutschland, in Hamburg Germany, where we have started to assemble our patent-pending innovative Self Sufficient Power Supply Atmosphere Water Generation Systems (eAWGs). EAWD Deutschland operates in in Hamburg, Germany to meet the increasing demands of water and energy generation projects in Germany as well as to operate the solar powered e-truck charging stations, EAWD’s newest product.
The green tech industry is constantly evolving due to ongoing and increasing water scarcity as well as increased energy needs in the world. Therefore, we believe that by designing sustainable and renewable solutions to these problems, EAWD will become an essential component of a rapidly growing industry with many new markets.
Where You Can Find UsThe green tech industry is complex because it still requires much promotion and information about its potential. Furthermore, regulations in each country are different and, in many cases, several segments are regulated by both national and local (state, provincial, municipal) governments. EAWD’s approach seeks to assist businesses with the growth and development of their general operations by ensuring the efficient, profitable, and sustainable supply/generation of water and energy allowing our potential customers to focus on their business while adopting strategies of sustainability. Using our own eAWGs, the solar powered e-truck charging stations, and other identified technology, products, and services licensed or purchased from third party sources, we are delivering and installing a product set that suits the green technology water and/or energy needs of our customers. By using the state-of-the art technological solutions and technologies identified, designed, and provided by EAWD and its collaborators, we believe that our potential clients will be free to focus on the performance of their operations as well as with the water and energy consumption or generation regulations within their industry. Our clients may be businesses seeking to upgrade their business processes, non-governmental organizations (NGOs) or governmental entities seeking to apply green technology solutions for the water and energy they supply to their constituencies.
We continue to be a development stage company. The Company presently assembles its eAWGs at its workshop in Germany and outsources most of its engineering and technical services as well as services relating to the promotion, selling, and distribution of its products. We presently have only six employees: Mr. Hofmeier, our President, Chief Executive Officer, Chairman of the Board, and a significant stockholder, Ms. Velazquez, our Chief Operating Officer, Vice-Chairman, and a significant stockholder, two engineers and two technicians.
We seek to focus on three main aspects of the water and energy business: (1) generation, (2) supply, and (3) maintenance. We seek to assist private companies, government entities and municipalities, and NGOs to build profitable and sustainable supplies/generation capabilities of water and energy as required by selling them the required technology or technical service to enhance their productivity/operability. With its outsourced technical arm and its commission-based global network of distributors, the Company expects to create sustainable added value to each project it takes on while generating revenue from its engineering, technical consultancy, and project management services, the sale of our eAWGs, solar-powered energy generation systems, energy management systems, solar powered e-truck charging stations, royalties from the commercialization of energy and water in certain cases, and the licensing of our innovated technologies.
The following table depicts the Company’s service and product offerings to its clients.
We provide customized technology solutions and technical services, based upon client need and preference, which may include any or all of the following:
| · | Water and energy generation |
| · | e-truck chargingstations |
| · | technical assistance |
| · | strategic and financial partnering |
| · | project management |
The Company also focuses on addressing areas of the industry which concentrate on new technological and engineering concepts relating to water and energy generation and those related components that assist in advancing the green tech industry. These include:
| · | advancement of eAWGs |
| · | development of techniques to attain self-sufficient supply of energy |
| · | advancement of new ideas on energy generation, storage and management implementation |
| · | designing, prototyping, and arranging the manufacture of new water and energy generation systems |
| · | designing and prototyping solar powered charging stations for e-trucks |
Our principal executive officesVision
The size of the global market for atmospheric water generators was estimated at USD 959.85 million in 2020, reached USD 1,074.01 million in 2021, and at a compound annual growth rate (CAGR) of 14.75%, is expected to reach USD 2,515.19 million by 2027.
The main market dynamics to consider are the growing numbers of AWGs across various end-use verticals and versus the high energy consumption, production cost, and high carbon foot print of such technology. Our research and development activities in AWG technology have lead us to develop novel technologies that overcome these negative dynamics (such as our eAWG).
The mission of EAWD is to provide sustainable water generation systems based on high efficiency, renewable sources and to provide energy management solutions. Through a combination of the best design and configuration of state-of-the-art technology-assisted solutions, EAWD has created a completely self-sufficient energy generation and water production system, which can be simultaneously used to meet potable water requirements and the electrical energy needs of the industrial sector.
EAWD promotes and commercializes its green technology solutions via commission-based distributers and agents worldwide.
Through our BlueTech Alliance for Water Generation, established in December 2020, we have state-of-the-art technology partners, technology transfer agreements, and technology representation agreements in place relating to aspects of renewable energy and water supply. These unique key relationships offer important selling features and capabilities that differentiated EAWD from its competitors.
The Company plans to generate revenue from its engineering, technical consultancy, and project management services, the sale of our eAWGs, solar-powered energy generation systems, energy management systems, solar powered e-truck charging stations, royalties from the commercialization of energy and water in certain cases, and the licensing of our innovated technologies.
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Our Products
The technological solutions offered by our Company are the following:
Self Sufficient Power Supply Atmosphere Water Generation System (eAWGs)
Today, atmosphere water generators (AWGs) are standard equipment in many places; however, operating AWGs requires high amounts of energy that is often not available in the places where they are needed most, making the price for the generated water very high. Our innovative eAWGs are designed to have an internal power supply and ability to generate power. Our eAWG system produces sufficient quantities of potable water even in very dry and hot climate conditions and can be scaled to almost any size, community, and/or population. Presently, AWGs are largely used in Asian and African countries. The majority of manufacturers of AWGs, which rely on dehumidifying, are located at 2000 Ponce de Leon Blvd., 6th Floor, Miami, Florida 33134. Our telephone numberin China. Almost every U.S. based AWG brand is 305-517-7330.also supplied by manufacturers in China.
By contrast, EAWD uses a proven German technology for condensate water from the air based on A/C technology. We believe that this method allows higher, more efficient, sustainable performance and a larger quantity of water generation because of its internal power supply and because it does not require high humidity to function. EAWD has licensed the rights to use this German AWG technology for ninety-nine years; however, thanks to our continued research and development efforts, the Company has designed a new and innovative configuration that allows the substantial amount of energy required to operate the equipment to be supplied by the equipment itself. Our eAWGs line is different in size from the standard AWG water generator line. Our eAWGs are energy self-sufficient and can condense large amounts of water out of the atmosphere and we believe they could be a solution in countries around the world that deal with issues of water scarcity.
Our eAWG with an internal power supply works by first “inhaling” large volumes of air, then cooling the air down to the dew point, and finally collecting, filtering, and mineralizing the resulting condensed water. Through this process, pure drinking water is created that meets the quality standards of the World Health Organization (WHO). In regions with high temperatures and high humidity levels, a single system can generate up to 50,000 liters or, approximately, 15,000 gallons of water per day. Our eAWGs line starts at 2,640 gallons/day and can expand the water supply to one acre-feet/day, which we believe, in effect, is essentially the ability to produce an unlimited supply of water. As a certified vendor of the United Nations (UN) Global Marketplace, EAWD is introducing the eAWGs to the UN with the hopes of initially supplying the equipment to large refugee camps around the world in need of fresh water.
Solar/Wind Powered Water Purification Systems
EAWD also seeks to respond to the growing need for drinking water by proposing a water purification solution utilizing solar, photovoltaic energy and, when applicable, a mini-windmill or other alternate source of renewable energy. The design of the system is ready to be built and delivered on demand.
Generally, drinking water is produced by passing sea water, lake water, river water, or stagnant water through several stages of purification and treatment until it is rendered drinkable in accordance with WHO standards. In the case of sea or stagnant water, we recommend a treatment via reverse osmosis membranes, which permits the retention of dissolved solids and results in obtaining water of drinking quality. If the water being treated emanates from lakes or rivers, we recommend treatment via an ultrafiltration membrane which functions by retaining suspended materials such as colloids, viruses and bacteria. The systems proposed by EAWD are containerized and contain all the equipment necessary to function autonomously, in part due to an automatic cleansing system that can be accessed remotely via satellite or the internet. Moreover, the machines use available renewable energy sources such as solar or wind to function.
Self Sufficient Energy Supplied Heavy Duty EV Charging Stations
There is increasing consensus among European truck manufacturers and industry stakeholders that battery electric trucks (BETs) will play a dominant role in the decarbonization of the road freight sector. Most truck makers including Daimler, MAN, Scania and Volvo are now focusing on bringing BETs to the mass market for all vehicle segments, including long-haul, starting from 2024. For this, a network of public high-power and overnight charging points needs to be rolled out across Europe no later than 2024.
Based on our patent-pending Self-Sufficient Energy Supply System; EAWD has developed an innovative design and configuration of a self-sufficient mobile charging stations for e-trucks in Germany. Our product is the first solution available in Europe for charging the electric trucks that are currently on the roads of Europe. EAWD plans to establish up to 1,700 charging stations throughout Germany starting with 40 locations scheduled to be installed starting in the third quarter of 2022.
Solar Power Systems
This product portfolio includes systems and complete services for solar power generation in the building envelope. A high-quality frameless glass solar panel with a super-matte surface, which secures a high-performance energy source.
In contrast to classic solar systems on the roof, EAWD combines the highest standards of aesthetics with high efficiency energy generation. With these solutions, EAWD supports its customers on their way to CO2 neutrality and the search for alternative renewable energies.
Off Grid Energy Management Solutions
Today, batteries for stationary storage have become a commodity, but in order to reduce the duration, complexity and cost of the installation, and to increase its capacity or relocate a system over time as well as to reduce its carbon footprint and environmental impact, we offer a complete electrical energy storage system (EESS) and energy management systems (EMS) for a wide range of customers and applications, including microgrids and EV fast charging stations. A highly capable energy management system which secures the efficient energy supply and storage of energy. Example: with elements such as software and Battery Management System (BMS) our systems can allow controlled and optimized battery cell management.
Worldwide Business Relationships
EAWD has commission-based independent agents and distributors strategically placed around the world in Germany, Mexico, United States, India, Canada, Australia, Colombia, Nepal, Kenya, Morocco, and Thailand. In total, we work with 34 commission-based independent agents and distributors to promote and sell EAWD’s technology solutions.
We believe that this worldwide presence through our agents and distributors will provide us access to the most important markets in need of water, energy, and energy management solutions.
JOBS Act and the Implications of Being an Emerging Growth Company
We qualify as an emerging growth company as that term is used inThe United States Congress passed the JOBS Act. An emerging growth company may take advantageJumpstart Our Business Startups Act of specified reduced2012 (the “JOBS Act”), which provides for certain exemptions from various reporting and other burdensrequirements applicable to public companies that are otherwise applicable generally to publicreporting companies and are “emerging growth companies. These provisions include:
” We have already taken advantage of these reduced reporting burdens in this prospectus, which are also available to us as a smaller reporting companyan “emerging growth company” as defined under Rule 12b-2in Section 3(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (as amended by the JOBS Act, enacted on April 5, 2012), and we will continue to qualify as an “emerging growth company” until the earliest to occur of: (a) the last day of the fiscal year during which we have total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five years by the SEC) or more; (b) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act; (c) the date on which we have, during the previous three-year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer,” as defined in Exchange Act Rule 12b–2. Therefore, we expect to continue to be an emerging growth company for the foreseeable future.
Generally, a registrant that registers any class of its securities under Section 12 of the Exchange Act is required to include in the second and all subsequent annual reports filed by it under the Exchange Act a management report on internal control over financial reporting and, subject to an exemption available to registrants that meet the definition of a “smaller reporting company” in Exchange Act Rule 12b-2, an auditor attestation report on management’s assessment of internal control over financial reporting. However, for so long as we continue to qualify as an emerging growth company, we will be exempt from the requirement to include an auditor attestation report in our annual reports filed under the Exchange Act, even if we do not qualify as a “smaller reporting company.” In addition, as an emerging growth company, we are able to avail ourselves to the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and to not present to our stockholders a nonbinding advisory vote on executive compensation, obtain approval of any golden parachute payments not previously approved or present the relationship between executive compensation actually paid and our financial performance.
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Current Projects
EAWC Tecnologias Verdes, S.A.P.I. de CV Purchase – EAWC-TV functions as a distributor of EAWD products and engineering services. EAWC-TV placed a USD $550,000 initial order for a solar powered eAWG which was built in Germany and delivered to the customer ex-works in 2020. The customer has expressed interest in purchasing three additional units.
A solar powered eAWG has been built in Hamburg to be used as the showcase for the water generation at the larger project in Gruneheide Germany, where it is expected to produce up to 6 million gallons of water per day.
The Company has also recently completed the manufacture and installation of the first of forty planned solar powered charging stations for electric long-haut trucks in Hamburg, Germany. This charging station is the first mobile self-sufficient energy supplied charging station available for these e-trucks in Europe and the Company plans to contract with companies that own these electric long-haul trucks to provide fleet charging as well as to install in public places for per-use fees.
COVID-19 is an incomparable global public health emergency that has affected almost every industry and has caused the worst global economic contraction of the past 80 years (IMF). Concerted global efforts achieved the development of vaccines that have helped to reduce a person´s risk of contracting the virus. However, the current war in Ukraine lead us as well to considering the changes in consumer behavior and demand, purchasing patterns, re-routing of the supply chain, dynamics of current market forces, and the significant interventions of governments; As a consequence of the foregoing, the following projects have been delayed but the Company continues to make progress on their fulfillment.
His Will Innovations (South Africa) Contract – On May 8, 2019, the Company signed a sales contract for the sale of a Solar Powered Atmosphere Water Generation System (“SPAWG”) to a South African customer for a purchase price of $2,800,000. The build out of the equipment began in the fourth quarter of 2019, however because of delays due to COVID-19, the expected completion date has been pushed to late 2022. The foregoing description of the purchase contract does not purport to be complete and is qualified in its entirety by reference to the copy of such contract filed as Exhibit 10.8 to this registration statement.
Contract Award From Arriyadh Development Authority Of Saudia Arabia – On November 1, 2017, the Company received a contract award with a value of USD$10,640,000 from the Arriyadh Development Authority of Saudia Arabia to provide 100 units of 5000LPD eAWG systems. In the first quarter of 2020, a meeting took place between the parties regarding the project delivery schedule; however, because of the COVID-19 pandemic and the current situation of the War in Ukraine, the project has temporarily been put on hold until new, reliable advice regarding COVID-19 and the consequential challenges of the War Ukraine is available. The foregoing description of the contract award does not purport to be complete and is qualified in its entirety by reference to the copy of such award filed as Exhibit10.7 to this registration statement
Contract Award from the Iraqi Project and Contracting Office – On March 26, 2020, the Company received a contract award with a value of USD$14,650,640 from the Iraqi Project and Contracting Office to supply 20 self-sufficient energy supply atmosphere water generation systems to various Iraqi projects. EAWD management must travel to Iraq to sign several documents in order to receive payment. COVID-19 and the War in Ukraine have delayed this travel, however, management plans travel to Iraq as soon as travel is allowed, and the pandemic has been brought better under control in Iraq. The foregoing description of the contract award does not purport to be complete and is qualified in its entirety by reference to the copy of such award filed as Exhibit10.15 to this registration statement
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SummaryRisk Factors
Investing in our securities involves risks. You should carefully consider the risks described in the “Risk Factors” section beginning on page 13 before making a decision to invest in our securities. If any of these risks actually occur, our business, financial condition and/or results of operations would likely be materially adversely affected. In each case, the trading price of our securities would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks we face:
| · | Risks Related to Our Business, Operations and Financial Condition |
| o | Our Ability To Continue As A Going Concern Is In Substantial Doubt Absent Obtaining Adequate New Debt Or Equity Financings |
| o | We Need Additional Capital To Fund Our Growing Operations, And We May Not Be Able To Obtain Sufficient Capital And May Be Forced To Limit The Scope Of Our Operations Or Cease Operations Altogether. |
| o | Loss Of Key Personnel Critical For Management Decisions Would Have An Adverse Impact On Our Business. |
| o | We Expect Significant Competition For Our Products And Services. |
| o | The Requirements Of Being A Public Company May Strain Our Resources And Distract Our Management. |
| o | International Regulation May Adversely Affect Our Planned Product Sales. |
| o | Product Liability Associated With The Production, Marketing And Sale Of Our Products, And/Or The Expense Of Defending Against Claims Of Product Liability, Could Materially Deplete Our Assets And Generate Negative Publicity Which Could Impair Our Reputation. |
| o | Product Defects Could Result In Costly Fixes, Litigation And Damages. |
| o | We Have Concluded That We Have Not Maintained Effective Internal Control Over Financial Reporting Through The Years Ended December 31, 2021 And December 31, 2020. Significant Deficiencies And Material Weaknesses In Our Internal Control Could Have Material Adverse Effects On Us. |
| o | We Currently Have Identified Significant Deficiencies In Our Internal Control Over Financial Reporting That, If Not Corrected, Could Result In Material Misstatements Of Our Financial Statements. |
| o | If We Fail To Maintain An Effective System Of Internal Control Over Financial Reporting, We May Not Be Able To Accurately Report Our Financial Results. As A Result, Current And Potential Shareholders Could Lose Confidence In Our Financial Reporting, Which Would Harm Our Business And The Trading Price Of Our Stock. |
| · | Risks Related to Intellectual Property |
| o | In The Conduct Of Our Business, We Will Rely Upon The Use Of Patents And Intellectual Property Owned By Other Entities, Which Are Non-Exclusive. |
| o | We May Not Be Able To Obtain Patents Or Other Intellectual Property Rights Necessary To Protect Our Proprietary Technology And Business. |
| o | Our Business May Suffer If It Is Alleged Or Determined That Our Technology Or Another Aspect Of Our Business Infringes The Intellectual Property Of Others. |
| · | Risks Related to Our Common Stock |
| o | Our Stock Price May Be Volatile, And You May Not Be Able To Sell Your Shares For More Than What You Paid Or At All. |
| o | The Offering Price Of The Shares Was Arbitrarily Determined, And Therefore Should Not Be Used As An Indicator Of The Future Market Price Of The Shares. Therefore, The Offering Price Bears No Relationship To The Actual Value Of The Company, And May Make Our Shares Difficult To Sell. |
| o | We Will Be Subject To The “Penny Stock” Rules Which Will Adversely Affect The Liquidity Of Our Common Stock. |
| o | Our Securities Are Traded on the OTCQB May Not Provide As Much Liquidity For Our Investors As More Recognized Senior Exchanges Such As The Nasdaq Stock Market Or Other National Or Regional Exchanges. |
| o | Financial Industry Regulatory Authority (“FINRA”) Sales Practice Requirements May Also Limit A Stockholder’s Ability To Buy And Sell Our Common Stock, Which Could Depress The Price Of Our Common Stock |
| o | An Investment In The Company’s Common Stock Is Extremely Speculative And There Can Be No Assurance Of Any Return On Any Such Investment. |
| o | The Exercise Or Conversion Of Currently Outstanding Securities Or Issuance Of Additional Share Of Our Common Stock Or Preferred Stock Would Further Dilute Holders Of Our Common Stock. |
| · | Risks Related to the Company |
| o | Our Executive Officers And Directors Collectively Have The Power To Control Our Management And Operations And Have A Significant Majority In Voting Power On All Matters Submitted To The Stockholders Of The Company. |
| o | We Have No Intention Of Declaring Dividends On Our Common Stock In The Foreseeable Future. |
| o | The Lack Of Public Company Experience Of Our Management Team Could Adversely Impact Our Ability To Comply With The Reporting Requirements Of U.S. Securities Laws. |
| o | EAWD is an “emerging growth company” under the Jumpstart Our Business Startups Act. We cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our shares of common stock less attractive to investors. |
| · | Risks Related to COVID-19, Acts of God, and Cyber Security |
| o | Unpredictable Events, Such As The COVID-19 Outbreak, And Associated Business Disruptions Could Seriously Harm Our Future Revenues And Financial Condition, Delay Our Operations, Increase Our Costs And Expenses, And Affect Our Ability To Raise Capital. |
| o | Our Business Has Been Impacted By The Supply Chain Delays caused by the COVID-19 Pandemic |
| o | Our Business Could Be Negatively Affected By Security Threats, Including Cybersecurity Threats, And Other Disruptions. |
| · | Risks Related to This Offering |
| o | We may not be able to access the full amounts available under the Purchase Agreement, which could prevent us from accessing the capital we need to continue our operations, which could have an adverse effect on our business. |
| o | The sale or issuance of our common stock to Selling Stockholder may cause dilution and the sale of the shares of common stock acquired by Selling Stockholder, or the perception that such sales may occur, could cause the price of our common stock to fall. |
| o | It is not possible to predict the actual number of shares we will sell under the Purchase Agreement to the Selling Stockholder, or the actual gross proceeds resulting from those sales. |
| o | Investors who buy shares at different times will likely pay different prices. |
| o | Our Management Will Have Broad Discretion As To The Use Of Proceeds From This Offering, And We May Not Use The Proceeds Effectively. |
Corporate Information
We were incorporated in Florida in 2008 with operations based in Hamburg, Germany.
Our website is www.energy-water.com. Our website and the information contained therein, or connected thereto, are not intended to be incorporated into this Registration Statement on Form S-1.
Our principal executive offices are located at 7901 4th Street N STE #4174, St Petersburg, Florida. Our telephone number is 727-677-9408, and our website is www.energy-water.com. Our operations in Germany are located at the office address Ballindamm 3, 20095 Hamburg. Our Telephone number is +49 40 809 08 1354.
The transfer agent for our common stock is Worldwide Stock Transfer, LLC, located at One University Plaza, Suite 505, Hackensack, NJ 07601, Phone: (201) 820-2008, Fax: (201) 820-2010.
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JOBS Act and the Implications of Being an Emerging Growth Company
The United States Congress passed the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which provides for certain exemptions from various reporting requirements applicable to public companies that are reporting companies and are “emerging growth companies.” We are an “emerging growth company” as defined in Section 3(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (as amended by the JOBS Act, enacted on April 5, 2012), and we will continue to qualify as an “emerging growth company” until the earliest to occur of: (a) the last day of the fiscal year during which we have total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five years by the SEC) or more; (b) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act; (c) the date on which we have, during the previous three-year period, issued more than $1,000,000,000 in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer,” as defined in Exchange Act Rule 12b–2. Therefore, we expect to continue to be an emerging growth company for the foreseeable future.
Generally, a registrant that registers any class of its securities under Section 12 of the Exchange Act is required to include in the second and all subsequent annual reports filed by it under the Exchange Act a management report on internal control over financial reporting and, subject to an exemption available to registrants that meet the definition of a “smaller reporting company” in Exchange Act Rule 12b-2, an auditor attestation report on management’s assessment of internal control over financial reporting. However, for so long as we continue to qualify as an emerging growth company, we will be exempt from the requirement to include an auditor attestation report in our annual reports filed under the Exchange Act, even if we do not qualify as a “smaller reporting company.” In addition, as an emerging growth company, we are able to avail ourselves to the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and to not present to our stockholders a nonbinding advisory vote on executive compensation, obtain approval of any golden parachute payments not previously approved or present the relationship between executive compensation actually paid and our financial performance. We have irrevocably elected to comply with new or revised accounting standards even though we are an emerging growth company.
COVID-19 Pandemic Update and the War in Ukraine
The ongoing outbreak of Coronavirus (COVID-19) has caused significant disruptions to national and global economies and government activities. However, during this time, we have continued to conduct our operations to the fullest extent possible, while responding to the outbreak with actions that include:
| ● | coordinating closely with our suppliers and customers; |
| ● | instituting various aspects of our business continuity programs; and |
| ● | planning for and working aggressively to mitigate disruptions that may occur. |
COVID-19 is an incomparable global public health emergency that has affected almost every industry and has caused the worst global economic contraction of the past 80 years (IMF). The concerted global efforts achieved the development of vaccines that have helped to reduce a person´s risk of contracting the virus. However, the current war in Ukraine leads us to also consider the changes in consumer behavior and demand, purchasing patterns, re-routing of the supply chain, dynamics of current market forces, and the significant interventions of governments; Disruptive activities could include the temporary closure of our manufacturing facilities and those used in our supply chain processes, restrictions on the export or shipment of our products, significant cutback of ocean container delivery from Germany, business closures in impacted areas, and restrictions on our employees’ and consultants’ ability to travel and to meet with customers. The extent to which COVID-19 impacts our results will depend on future developments, which still uncertain and cannot be predicted, including new information which may emerge concerning the severity of the current conflict as well as virus variants and the actions to contain it or treat its impact, among others. COVID-19 and the war in Ukraine could also continue to result in social, economic and labor instability in the countries in which we or our customers and suppliers operate.
If workers at one or more of our offices or the offices of our suppliers or manufacturers become ill or are quarantined and in either or both events are therefore unable to work, our operations could be subject to disruption. Further, if our manufacturers become unable to obtain necessary raw materials or components, we may incur higher supply costs or our manufacturers may be required to reduce production levels, either of which may negatively affect our financial condition or results of operations.
In light of these challenges, the Company is focusing its efforts on supporting key areas of our business that will help us to stabilize in the new environment and strategize for what comes next. Those key areas are: crisis management and response, workforce, operation and supply chain, finance and liquidity, tax, trade and regulatory, as well as strategy and brand.
THE OFFERING
| Common Stock Being Offered by EAWD | 30,000,000 shares of our common stock |
| Common Stock Being Offered by the Selling Stockholder | Up to 25,000,000 shares of common stock that may be issued and sold to Tysadco Partners pursuant to the Tysadco Purchase Agreement described below |
| Shares of Common Stock Outstanding Prior to the Offering | 173,019,421 shares of our common stock (as of June 27, 2022). |
| Shares of Common Stock Outstanding Immediately Following this Offering | 228,019,421 shares of our common stock (assuming the issuance after the date of this prospectus of all shares of common stock offered by the Company hereunder and the issuance to Tysadco Partners pursuant to the Tysadco Purchase Agreement described below of all of the shares that are being offered by this prospectus) |
| Use of Proceeds | Based on an assumed offering price of $0.62, we estimate our net proceeds from this Offering, after deducting expenses payable by us at closing of approximately $100,000, will be approximately $18,500,000. We intend to use the net proceeds from this Offering (i) in connection with the manufacture, assembly, and commercialization of Self Sufficient Energy Supplied Atmosphere Water Generators (AWGs), EV Charging Stations Materials and Waste to Energy technological solutions; (ii) for general corporate purposes, including, without limitation, for working capital purposes, hiring of technical and administrative personnel, enhancing marketing & acquiring IT equipment, making payments of accounts payable and pre-payments within our supply chain; (iii) to finance capital expenditures, including without limitation the expansion of premises, acquisition of equipment and transportation, (iv) the payment of indebtedness, and (v) to otherwise improve our financial position to pursue an up-listing to NASDAQ. |
In addition, while we have not entered into any agreements, commitments or understandings relating to any significant transaction as of the date of this prospectus, we may use a portion of the net proceeds to pursue acquisitions, joint ventures and other strategic transactions. See the section titled “Use of Proceeds” for additional information. Tysadco Partners will receive all of the proceeds from the sale of the shares offered for sale by it under this prospectus. We will not receive proceeds from the sale of the shares by the Selling Stockholder. However, we may receive in the aggregate gross proceeds of up to $5 million from the sale of our common stock to Tysadco Partners pursuant to the Tysadco Purchase Agreement described below. Any proceeds from Tysadco Partners that we receive under the Tysadco Purchase Agreement are expected to be used as described above. | |
| Quotation of Common Stock | We are currently listed on the OTCQB market, under the symbol “EAWD” and expects to continue to have its common stock quoted on the OTCQB following effectiveness of the registration statement. |
| Risk Factors | An investment in our common stock is highly speculative and involves a high degree of risk. See “Risk Factors” starting on page 13 and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock. |
| Dividend Policy | We do not currently anticipate paying dividends on our common stock. Any declaration and payment of future dividends to holders of our common stock will be at the sole discretion of our board of directors (the “Board”) and will depend on many factors, including our financial condition, earnings, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends, and other considerations that our Board deems relevant. See “Dividend Policy.” |
| Voting Rights | Shares of our Common Stock are entitled to one vote per share. Shares of our Series A Preferred Stock are entitled to five votes per share |
On January 26, 2022, we entered into a purchase agreement (the “Tysadco Purchase Agreement”) and a registration rights agreement (the "Registration Rights Agreement") with Tysadco Partners. Under the Tysadco Purchase Agreement, we have the right to sell to Tysadco Partners up to $5,000,000 in shares of common stock, subject to certain limitations and conditions set forth in the Tysadco Purchase Agreement. As consideration for Tysadco Partner's commitment to purchase shares of common stock pursuant to the Tysadco Purchase Agreement, we issued to Tysadco Partners 500,000 shares of common stock, or the Commitment Shares. We did not receive any cash proceeds from the issuance of such shares. See "The Tysadco Purchase Agreement" for additional information regarding the terms of the Tysadco Purchase Agreement and Registration Rights Agreement that we entered into with Tysadco Partners.
We do not know what the purchase price for our common stock will be and therefore cannot be certain as to the number of shares we might issue to Tysadco Partners under the Tysadco Purchase Agreement after the date of this prospectus.
| 12 |
RISK FACTORS
An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occurs, our business, financial condition, or results of operations could suffer. In that case, the trading price of our shares of Common Stock could decline and you may lose all or part of your investment. See “Cautionary Statement Regarding Forward-Looking Statements” above for a discussion of forward-looking statements and the significance of such statements in the context of this prospectus.
Risks Related to Our Business, Operations and Financial Condition
Our Ability To Continue As A Going Concern Is In Substantial Doubt Absent Obtaining Adequate New Debt Or Equity Financings.
Our continued existence is dependent upon us obtaining adequate working capital to fund all of our planned operations. Working capital limitations continue to impinge on our day-to-day operations, thus contributing to continued operating losses. Thus, if we are unable to raise funds to fund the assembling and commercialization of our technological solutions, we may not be able to continue as a going concern and you will lose your investment. We have incurred accumulated operating losses since inception and have working capital deficits at the end of March 2022. If the Company is able to raise the necessary funds to execute its business plan or if the Company earns any revenues from its business operations, some of these funds will have to be used to pay off the outstanding judgments against the Company which are discussed under the heading “Legal Proceedings” herein.
Our independent accounting firm has included in its report the qualification that these conditions raise a substantial doubt about the Company’s ability to continue as a going concern. The report also states that the financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We Need Additional Capital To Fund Our Growing Operations, And We May Not Be Able To Obtain Sufficient Capital And May Be Forced To Limit The Scope Of Our Operations Or Cease Operations Altogether.
We need additional capital to fund our operations and we may not be able to obtain such capital, which would cause us to limit or cease our operations entirely. The conditions of the global credit markets may adversely affect our ability to raise capital in the future. If adequate additional financing is not available on reasonable terms or at all, we may not be able to execute our business plans and may have to modify them accordingly or even suspend them.
Even if we do find a source of additional capital, we may not be able to negotiate favorable terms and conditions for receiving the additional capital. Any future capital investments will dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our Common Stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.
Loss Of Key Personnel Critical For Management Decisions Would Have An Adverse Impact On Our Business.
Our success depends upon the continued contributions of our executive officers and/or key employees, particularly with respect to providing the critical management decisions and contacts necessary to manage product development, marketing, and growth within our industry. Competition for qualified personnel can be intense and there are a limited number of people with the requisite knowledge and experience. The loss of the services of any of our executive officers or other key employees for any reason could have a material adverse effect on our business, operating results, financial condition, and cash flows.
| 13 |
We Expect Significant Competition For Our Products And Services.
Some of our competitors and potential competitors are well established and have substantially greater financial, research and development, technical, manufacturing and marketing resources than we have today. If these larger competitors decide to focus on the development of Self Sufficient Energy Supplied Atmosphere Water Generators (AWGs), Water Purification products or Waste to Energy technological solutions, they could have the manufacturing, marketing and sales capabilities to complete research, development and commercialization of these products more quickly and effectively than we can. As of today, there can also be no assurance that current and future competitors will not develop new or enhanced technical services technologies or more cost-effective systems.
The Requirements Of Being A Public Company May Strain Our Resources And Distract Our Management.
We are required to comply with various regulatory and reporting requirements, including those required by the Securities and Exchange Commission. Complying with these reporting and other regulatory requirements is time-consuming and may result in increased costs to us and could have a negative effect on our business, results of operations and financial condition.
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and requirements of the Sarbanes-Oxley Act of 2002, as amended, or SOX. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. SOX requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.
These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our business and results of operations.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
International Regulation May Adversely Affect Our Planned Product Sales.
As a part of our marketing strategy, we plan to market and sell our technical services and technological solutions internationally. In addition to regulation by the U.S. government, our technological solutions will be subject to environmental and safety regulations in each country in which we market and sell. While we have already received regulatory approval in some countries, including Mexico and India, we anticipate that regulations will vary from country to country and will vary from those of the United States. The difference in regulations and the laws of foreign countries may be significant and, in order to comply with the laws of these foreign countries, our suppliersmay have to implement manufacturing changes or alter product design, or we may need to modify our marketing efforts. Any changes in our business practices or products will require response to the laws of foreign countries and may result in additional expense to the Company and either reduce or delay product sales.
| 14 |
Product Liability Associated With The Production, Marketing And Sale Of Our Products, And/Or The Expense Of Defending Against Claims Of Product Liability, Could Materially Deplete Our Assets And Generate Negative Publicity Which Could Impair Our Reputation.
The production, marketing and sale of our products have inherent risks of liability in the event of product failure or claim of harm caused by product operation. Furthermore, even meritless claims of product liability may be costly to defend against. We do not currently have product liability insurance for our products. We may not be able to obtain this insurance on acceptable terms or at all. Because we may not be able to obtain insurance that provides us with adequate protection against all or even some potential product liability claims, a successful claim against us could materially deplete our assets. Moreover, even if we are able to obtain adequate insurance, if a successful claim in excess of our insurance coverage is made, then we may have make such payments that could materially deplete our assets and any claim against us could generate negative publicity, which could impair our reputation and adversely affect the demand for our products, our ability to generate sales and our profitability.
Product Defects Could Result In Costly Fixes, Litigation And Damages.
Our business exposes us to potential product liability risks that are inherent in the design, manufacture and sale of our products. If there are claims related to defective products (under warranty or otherwise), particularly in a product recall situation, we could be faced with significant expenses in replacing or repairing the product. For example, our products combine raw materials, machined parts and other product components from suppliers who provide certifications of quality on which we rely. Should these product components be defective and pass undetected into finished products, or should a finished product contain a defect, we could incur significant costs for repairs, re-work and/or removal and replacement of the defective product. In addition, if a dispute over product claims cannot be settled, arbitration or litigation may result, requiring us to incur attorneys’ fees and exposing us to the potential of damage awards against us.
We Have Concluded That We Have Not Maintained Effective Internal Control Over Financial Reporting Through The Years Ended December 31, 2021 And December 31, 2020. Significant Deficiencies And Material Weaknesses In Our Internal Control Could Have Material Adverse Effects On Us.
It is important for us to maintain effective internal control over financial reporting, which is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
A material weakness in our internal control over financial reporting could adversely impact our ability to provide timely and accurate financial information. If we are unsuccessful in implementing or following our remediation plan, we may not be able to timely or accurately report our financial condition, results of operations or cash flows or maintain effective disclosure controls and procedures. If we are unable to report financial information timely and accurately or to maintain effective disclosure controls and procedures, we could be subject to, among other things, regulatory or enforcement actions by the SEC, any one of which could adversely affect our business prospects.
We Currently Have Identified Significant Deficiencies In Our Internal Control Over Financial Reporting That, If Not Corrected, Could Result In Material Misstatements Of Our Financial Statements.
In connection with the audit of our financial statements as of and for the years ended December 31, 2021 and 2020, we identified significant deficiencies in our internal control over financial reporting and a general understanding of U.S. GAAP. As such, there is a reasonable possibility that a misstatement of our financial statements will not be prevented or detected on a timely basis.
As we have thus far not needed to comply with Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes Oxley Act” or “SOX”), neither we nor our independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. In light of the deficiency, we believe that it is possible that certain control deficiencies may have been identified if such an evaluation had been performed.
We are working to remediate the deficiencies or material weaknesses. We have taken steps to enhance our internal control environment and plan to take additional steps to remediate the material weaknesses. For a discussion of our remediation plan, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Control over Financial Reporting” in our Annual Report on Form 10-K for the year ended December 31, 2021.
Although we plan to complete this remediation process as quickly as possible, we are unable, at this time to estimate how long it will take; and our efforts may not be successful in remediating the deficiencies or material weaknesses.
If We Fail To Maintain An Effective System Of Internal Control Over Financial Reporting, We May Not Be Able To Accurately Report Our Financial Results. As A Result, Current And Potential Shareholders Could Lose Confidence In Our Financial Reporting, Which Would Harm Our Business And The Trading Price Of Our Stock.
Members of our Board of Directors are inexperienced with U.S. GAAP and the related internal control procedures required of U.S. public companies. Management has determined that our internal audit function is also significantly deficient due to insufficient qualified resources to perform internal audit functions.
We are a smaller reporting company with limited resources. Therefore, we cannot assure investors that we will be able to maintain effective internal controls over financial reporting based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The Company has deficiencies over financial statements recording in areas of recording revenue and expenses in proper cut off as well as proper classification of accounts. For these reasons, we are considering the costs and benefits associated with improving and documenting our disclosure controls and procedures and internal controls and procedures, which includes (i) hiring additional personnel with sufficient U.S. GAAP experience and (ii) implementing ongoing training in U.S. GAAP requirements for our CFO and accounting and other finance personnel. If the result of these efforts are not successful, or if material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation.
| 16 |
Risks Related to Intellectual Property
In The Conduct Of Our Business, We Will Rely Upon The Use Of Patents And Intellectual Property Owned By Other Entities, Which Are Non-Exclusive.
Our business utilizes various technologies that are the subject of patents owned by other entities or for which we do not have exclusive ownership or licenses. The use of such patented technologies is dependent upon the cooperation of those entities and our agreements with them. There can be no assurances that any of our agreements will be extended beyond their current term or that such cooperation with the entities that control the patents will continue in the future. Our success depends on our ability to continue to use the patented technologies identified in our recommended technical solutions and water or energy plant designs and the ability of the patent owners to maintain patent protection for their products in the United States and in other countries and to enforce such patents. There can be no assurance that any of the patents relating to the technologies that we use will be deemed valid and enforceable against third-party infringement or that our products will not infringe any third-party patent or intellectual property. Moreover, any patent claims relating to our technologies may not be sufficiently broad to protect our solutions. In addition, issued patent claims may be challenged, potentially invalidated or potentially circumvented. Our rights to use the intellectual property of others may not afford us protection against competitors with similar technologies or permit the commercialization of the products and/or solutions incorporating these technologies without infringing third-party patents or other intellectual property rights.
We May Not Be Able To Obtain Patents Or Other Intellectual Property Rights Necessary To Protect Our Proprietary Technology And Business.
Our commercial success depends to a significant degree upon our ability to develop new or improved technologies and products, and to obtain patents or other intellectual property rights or statutory protection for these technologies and products in the United States and other countries. We will seek to patent concepts, components, processes, designs and methods, and other inventions and technologies that we consider have commercial value or that will likely give us a technological advantage. Despite devoting resources to the research and development of proprietary technology, we may not be able to develop technology that is patentable or protectable. Patents may not be issued in connection with pending patent applications, and claims allowed may not be sufficient to allow us to use the inventions that they create exclusively. Furthermore, any patents issued could be challenged, re-examined, held invalid or unenforceable or circumvented and may not provide sufficient protection or a competitive advantage. In addition, despite efforts to protect and maintain patents, competitors and other third parties may be able to design around our patents or develop products similar to our products that are not within the scope of their patents.
Finally, patents provide certain statutory protection only for a limited period of time that varies depending on the jurisdiction and type of patent. The statutory protection term of certain patents may expire and, thereafter, the underlying technology of such patents can be used by any third-party including competitors.
Prosecution and protection of the rights sought in patent applications and patents can be costly and uncertain, often involve complex legal and factual issues and consume significant time and resources. In addition, the breadth of claims allowed in our patents, their enforceability and our ability to protect and maintain them cannot be predicted with any certainty. The laws of certain countries may not protect intellectual property rights to the same extent as the laws of the United States. Even if our patents are held to be valid and enforceable in a certain jurisdiction, any legal proceedings that we may initiate against third parties to enforce such patents will likely be expensive, take significant time and divert management's attention from other business matters. We cannot assure that any of the issued patents or pending patent applications will provide any protectable, maintainable or enforceable rights or competitive advantages to us.
In addition to patents, we will rely on a combination of copyrights, trademarks, trade secrets and other related laws and confidentiality procedures and contractual provisions to protect, maintain and enforce our proprietary technology and intellectual property rights. However, our ability to protect our brands by registering certain trademarks may be limited. In addition, while we will generally enter into confidentiality and nondisclosure agreements with our employees, consultants, contract manufacturers, distributors and resellers and with others to attempt to limit access to and distribution of our proprietary and confidential information, it is possible that:
| · | misappropriation of our proprietary and confidential information, including technology, will nevertheless occur; |
| · | our confidentiality agreements will not be honored or may be rendered unenforceable; |
| · | third parties will independently develop equivalent, superior or competitive technology or products; |
| · | disputes will arise with our current or future strategic licensees, customers or others concerning the ownership, validity, enforceability, use, patentability or registrability of intellectual property; or |
| · | unauthorized disclosure of our know-how, trade secrets or other proprietary or confidential information will occur. |
We cannot assure that we will be successful in protecting, maintaining, or enforcing our intellectual property rights. If we are unsuccessful in protecting, maintaining, or enforcing our intellectual property rights, then our business, operating results and financial condition could be materially adversely affected, which could:
| · | adversely affect our relationships with current or future distributors and resellers of our products; |
| · | adversely affect our reputation with customers; |
| · | be time-consuming and expensive to evaluate and defend; |
| · | cause product shipment delays or stoppages; |
| · | divert management’s attention and resources; |
| · | subject us to significant liabilities and damages; |
| · | require us to enter into royalty or licensing agreements; or |
| · | require us to cease certain activities, including the sale of products. |
If it is determined that we have infringed, violated or are infringing or violating a patent or other intellectual property right of any other person or if we are found liable in respect of any other related claim, then, in addition to being liable for potentially substantial damages, we may be prohibited from developing, using, distributing, selling or commercializing certain of our technologies and products unless we obtain a license from the holder of the patent or other intellectual property right. We cannot assure that we will be able to obtain any such license on a timely basis or on commercially favorable terms, or that any such licenses will be available, or that workarounds will be feasible and cost-efficient. If we do not obtain such a license or find a cost-efficient workaround, our business, operating results and financial condition could be materially adversely affected, and we could be required to cease related business operations in some markets and restructure our business to focus on our continuing operations in other markets.
Our Business May Suffer If It Is Alleged Or Determined That Our Technology Or Another Aspect Of Our Business Infringes The Intellectual Property Of Others.
The markets in which we will compete are characterized by the existence of a large number of patents and trade secrets and also by litigation based on allegations of infringement or other violations of intellectual property rights. Moreover, in recent years, individuals and groups have purchased patents and other intellectual property assets for the purpose of making claims of infringement to extract settlements from companies like ours. Also, third parties may make infringement claims against us that relate to technology developed and owned by one of our suppliers for which our suppliers may or may not indemnify us. Even if we are indemnified against such costs, the indemnifying party may be unable to uphold its contractual obligations and determining the extent such of such obligations could require additional litigation. Claims of intellectual property infringement against us or our suppliers might require us to redesign our products, enter into costly settlements or license agreements, pay costly damage awards or face a temporary or permanent injunction prohibiting us from marketing or selling our products or services. If we cannot or do not license the infringed intellectual property on reasonable terms or at all, or substitute similar intellectual property from another source, our revenue and operating results could be adversely impacted. Additionally, our customers and distributors may not purchase our products if they are concerned that they may infringe third party intellectual property rights. Responding to such claims, regardless of their merit, can be time consuming, costly to defend in litigation, divert management's attention and resources, damage our reputation and cause us to incur significant expenses. The occurrence of any of these events may have a material adverse effect on our business, financial condition and operating results.
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Risks Related to Our Common Stock
The Offering Price Of The Shares Was Arbitrarily Determined, And Therefore Should Not Be Used As An Indicator Of The Future Market Price Of The Shares. Therefore, The Offering Price Bears No Relationship To The Actual Value Of The Company, And May Make Our Shares Difficult To Sell.
Since our shares are thinly traded on the OTCQB, the offering price of per share for the shares of Common Stock was arbitrarily selected by the Company’s management. The offering price bears no relationship to the book value, assets or earnings of the Company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the Shares.
Our Stock Price May Be Volatile, And You May Not Be Able To Sell Your Shares For More Than What You Paid Or At All.
Our stock price may be subject to significant volatility, and you may not be able to sell shares of Common Stock at or above the price you paid for them or at all. The trading price of our Common Stock may be subject to fluctuations in in response to various factors.
We Will Be Subject To The “Penny Stock” Rules Which Will Adversely Affect The Liquidity Of Our Common Stock.
The Securities and Exchange Commission (the “SEC"), has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. We expect the market price of our Common Stock will be less than $5.00 per share and therefore we will be considered a “penny stock” according to SEC rules. This designation requires any broker-dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker-dealers to solicit purchases of our Common Stock and therefore reduce the liquidity of the public market for our shares should one develop.
Our Securities Are Traded on the OTCQB, Which May Not Provide As Much Liquidity For Our Investors As More Recognized Senior Exchanges Such As The Nasdaq Stock Market Or Other National Or Regional Exchanges.
Our Common Stock is currently quoted on OTCQB under the symbol “EAWD”. The OTC Markets are inter-dealer, over-the-counter markets that provide significantly less liquidity than the NASDAQ Stock Market or other national or regional exchanges. Securities traded on the OTC Markets are usually thinly traded, highly volatile, have fewer market makers and are not followed by analysts. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC Markets. Quotes for stocks included on the OTC Markets are not listed in newspapers. Therefore, prices for securities traded solely on the OTC Markets may be difficult to obtain and holders of our securities may be unable to resell their securities at or near their original acquisition price, or at any price.
Financial Industry Regulatory Authority (“FINRA”) Sales Practice Requirements May Also Limit A Stockholder’s Ability To Buy And Sell Our Common Stock, Which Could Depress The Price Of Our Common Stock.
FINRA has adopted rules that require a broker-dealer to have reasonable grounds for believing that the investment is suitable for that customer before recommending an investment to a customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may limit your ability to buy and sell our shares of Common Stock, have an adverse effect on the market for our shares of Common Stock, and thereby depress our price per share of Common Stock.
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An Investment In The Company’s Common Stock Is Extremely Speculative And There Can Be No Assurance Of Any Return On Any Such Investment.
Our Common Stock is currently quoted on the OTCQB maintained by OTC Markets Group, Inc. under the symbol “EAWD”; however, an investment in the Company’s Common Stock is extremely speculative and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment. The market price of our Common Stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market and other factors, many of which we have little or no control over. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our Common Stock, regardless of our actual or projected performance.
The Exercise Or Conversion Of Currently Outstanding Securities Or Issuance Of Additional Share Of Our Common Stock Or Preferred Stock Would Further Dilute Holders Of Our Common Stock.
We currently have outstanding securities that convert into shares of our common stock, including preferred stock that converts into shares of our common stock and debt that converts into shares of our common stock. Our Series A Preferred Stock converts at a rate of 5 shares common stock for 1 share of Series A Preferred. Our Board of Directors has authority, without action or vote of our shareholders, to issue shares of common and preferred stock. We may issue shares of our common stock or preferred stock to complete a business combination or to raise capital. Such stock issuances could be made at a price that reflects a discount from the then-current trading price of our common stock. These conversions and issuances would dilute our stockholders' ownership interest, which among other things would have the effect of reducing their influence on matters on which our stockholders vote. In addition, our stockholders and prospective investors may incur additional dilution if holders of warrants, whether currently outstanding or subsequently granted, exercise their warrants to purchase shares of our common stock or if our convertible debt holders convert their debt.
Risks Related to the Company
Our Executive Officers And Directors Collectively Have The Power To Control Our Management And Operations And Have A Significant Majority In Voting Power On All Matters Submitted To The Stockholders Of The Company.
The directors and officers of EAWD beneficially own approximately 49% of our outstanding Common Stock. Due to such significant ownership position held by our insiders, new investors may not be able to effect a change in our business or management, and therefore, shareholders would have no recourse as a result of decisions made by management. Mr. Hofmeier, our President, Chief Executive Officer and Chairman of the Board, and Irma Velazquez, our Chief Operating Officer and Vice-Chairman, who are married to each other, together own 50.68% of the outstanding Common Stock and after a fully subscribed offering will still own over 50% of the outstanding shares of our common stock. Accordingly, these individuals have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets. They also have the power to prevent or cause a change in control. The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Our shareholders are not entitled to cumulative voting rights. Consequently, the election of directors and all other matters requiring shareholder approval will be decided by majority vote. Management currently beneficially owns a majority of our outstanding common stock. Consequently, management has the ability to influence control of the operations of the Company and, acting together, will have the ability to influence or control substantially all matters submitted to stockholders for approval, including: Election of our board of directors; Removal of directors; Amendment to the Company’s Articles of Incorporation or Bylaws; and adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination
These stockholders have complete control over our affairs. Accordingly, this concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for the common stock.
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We Have No Intention Of Declaring Dividends On Our Common Stock In The Foreseeable Future.
We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future, as we intend to use any excess cash to fund our operations. The decision to pay cash dividends on our common stock rests with our board of directors and will depend on our earnings, unencumbered cash, capital requirements and financial condition. Investors in our common stock should not expect to receive dividend income on their investment, and investors will be dependent on the appreciation of our common stock to earn a return on their investment.
The Lack Of Public Company Experience Of Our Management Team Could Adversely Impact Our Ability To Comply With The Reporting Requirements Of U.S. Securities Laws.
Ourmanagement team lacks public company experience, which could impair our ability to comply with legal and regulatory requirements. Our senior management has never had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply with the reporting requirements of the Exchange Act, which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in the Company.
EAWD is an “emerging growth company” under the Jumpstart Our Business Startups Act. We cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our shares of common stock less attractive to investors.
EAWD is and will remain an “emerging growth company” until the earliest to occur of (a) the last day of the fiscal year during which its total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (b) the last day of the fiscal year following the fifth anniversary of its initial public offering, (c) the date on which the Company has, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (d) the date on which the Company is deemed a “large accelerated filer” (with at least $700 million in public float) under the Exchange Act.”).
For so long as EAWD remains an “emerging growth company” as defined in the JOBS Act, it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” as described in further detail in the risk factors below. We cannot predict if investors will find its shares of common stock less attractive because we will rely on some or all of these exemptions. If some investors find the Company’s shares of common stock less attractive as a result, there may be a less active trading market for its shares of common stock and its stock price may be more volatile.
If the Company avails itself of certain exemptions from various reporting requirements, its reduced disclosure may make it more difficult for investors and securities analysts to evaluate the Company and may result in less investor confidence.
The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies”. EAWD meets the definition of an “emerging growth company” and so long as it qualifies as an “emerging growth company,” it will not be required to:
| · | have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; |
| · | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
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| · | submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and |
| · | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also provides that an emerging“emerging growth companycompany” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. WeIn other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have electeda public float of less than $250 million or annual revenues of less than $100 million during the most recently completed fiscal year.
However, similar to use“emerging growth companies,” “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the extended transition period provided aboveprovisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and therefore ourfrequency votes; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.
Risks Related to COVID-19, Acts of God, and Cyber Security
Unpredictable Events, Such As The COVID-19 Outbreak, And Associated Business Disruptions Could Seriously Harm Our Future Revenues And Financial Condition, Delay Our Operations, Increase Our Costs And Expenses, And Affect Our Ability To Raise Capital.
The outbreak of COVID-19 originating in Wuhan, China, sometime around December 2019, has since rapidly increased its exposure globally. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. The pandemic has impacted and may further impact the United States and the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates and interest rates. Due to the speed with which the situation is developing, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration, ultimate impact and the timing of recovery. Therefore, the pandemic could lead to an extended disruption of economic activity and the impact on our consolidated results of operations, financial position, and cash flows could be material.
As a result of the adverse impact that the COVID-19 pandemic is having on our economy and the economies of the countries in which we plan to do business, the pandemic may affect our operations, including our supply chain distribution systems, production levels and research and development activities. In addition, any preventive or protective actions that governments implement or that we adopt in response to the COVID-19 pandemic, such as travel restrictions, quarantines, and limited operations of governmental agencies, may interfere with the ability of our employees, vendors, and suppliers to perform their respective responsibilities and obligations relative to the conduct of our business. Additionally, government regulations that have been imposed in response to the COVID-19 pandemic may cause delays our freight processes, which would result in higher shipping costs. In addition, social distancing guidelines could have an adverse impact on our research and development activities as our laboratories are not operating at full capacity.
The impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity. Further, the resulting global economic downturn has negatively impacted the ability of certain of our customers to make payments on a timely basis, adversely impacting our cash flows from operations. We do not yet know the full extent of the impact of the COVID-19 pandemic or its resulting economic impact, which could have a material adverse effect on our liquidity, capital resources, operations, and business.
We are also monitoring the impact of COVID-19 on our talent recruitment and retention efforts. If members of our management and other key personnel in critical functions across our organization are unable to perform their duties or have limited availability due to COVID-19, we may not be comparableable to companiesexecute on our business strategy and/or our operations may be negatively impacted. The loss or limited availability of the services of one or more of our executive officers or other key personnel, or our inability to recruit and retain qualified executive officers or other key personnel in the future could, at least temporarily, have a material adverse effect on our business, financial condition, and results of operations. Qualified individuals are in high demand, and we may incur significant costs to attract them, particularly at the executive level. We may face difficulty in attracting and retaining key talent for a number of reasons, including delays in the recruiting and hiring process as a result of the COVID-19 pandemic.
Our business, financial condition, and results of operations could be materially adversely affected by unfavorable results in future employment litigation matters as a result of COVID-19. Our employees may sue us due to possible exposure to COVID-19 while working at one of our facilities or sites. In addition, employees may challenge decisions to implement protective measures such as contact tracing on the basis of local privacy laws due to the increased collection of employee medical information. Litigation matters, regardless of their merits or their ultimate outcomes, are costly, divert management’s attention and may materially adversely affect our reputation and demand for our products. We cannot predict with certainty the eventual outcome of litigation matters. An adverse outcome of litigation or legal matters could result in us being responsible for paying significant damages.
Any of these negative effects resulting from litigation matters could materially adversely affect our business, financial condition or results of operations. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described herein.
The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions taken to contain it or treat its impact.
Additionally, COVID-19 has caused significant disruptions to the global financial markets, which could impact our ability to raise additional capital. There is also a risk that complyother countries or regions may be less effective at containing COVID-19, or it may be more difficult to contain if the outbreak reaches a larger population or broader geography, in which case the risks described herein could be elevated significantly.
Our Business Has Been Impacted By The Supply Chain Delays caused by the COVID-19 Pandemic
With the global spread of the ongoing novel coronavirus ("COVID-19") pandemic in 2020, we have implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on our employees and business. We have experienced supply chain delays, including delays in shipments from abroad. In addition, we could experience payment delays from customers if they are negatively impacted by the pandemic. The business of our suppliers and other commercial partners, our corporate development objectives and the value of and market for our common stock, will depend on future developments that are highly uncertain and cannot be predicted with public company effective dates.confidence at this time, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the United States and other countries, and the effectiveness of actions taken globally to contain and treat the disease. The global economic slowdown and the other risks and uncertainties associated with the pandemic could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties which we face.
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Our Business Could Be Negatively Affected By Security Threats, Including Cybersecurity Threats, And Other Disruptions.
We, or third parties with whom we do business, may become the target of cyberattacks or information security breaches that could result in the unauthorized release, misuse, loss or destruction of proprietary and other information, or other disruption of business operations that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data. We face various security threats, including cybersecurity threats to gain unauthorized access to sensitive information or to render data or systems unusable; threats to the security of our facilities and infrastructure or third party facilities and infrastructure, such as processing plants and pipelines; and threats from terrorist acts. The potential for such security threats has subjected our operations to increased risks that could have a material adverse effect on our business. In particular, our implementation of various procedures and controls to monitor and mitigate security threats and to increase security for our information, facilities and infrastructure may result in increased capital and operating costs. Moreover, there can be no assurance that such procedures and controls will be sufficient to prevent security breaches from occurring. If any of these security breaches were to occur, they could lead to losses of sensitive information, critical infrastructure or capabilities essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations or cash flows. Cybersecurity attacks in particular are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data. These events could lead to financial losses from remedial actions, loss of business or potential liability.
Risks Related to This Offering
We may not be able to access the full amounts available under the Purchase Agreement, which could prevent us from accessing the capital we need to continue our operations, which could have an adverse effect on our business.
We could remain an emerging growth companyintend to rely on the Tysadco Purchase Agreement for our near-term capital needs. We may direct Selling Stockholder to purchase up to five years,$5.0 million of shares of our common stock over a 24-month period, commencing upon the satisfaction of certain conditions, including that the registration statement of which this prospectus is a part is declared effective by the SEC. Thereafter, on any trading day selected by us, we may sell shares of common stock to Selling Stockholder in an amount equal to the lesser of $1,000,000 or until the earliest of (i) the last day500% of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii)average shares traded for the 10 days prior to the Closing Request Date, with a minimum request of $25,000. The purchase price shall be 85% of the two lowest individual daily VWAP during the five (5) trading days immediately prior to the date the Request Notice is delivered (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction that we becomeoccurs on or after the date of this Agreement).
In addition, Selling Stockholder will not be required to purchase any shares of our common stock if such sale would result in its beneficial ownership exceeding 9.99% of the then outstanding shares of our common stock. Our inability to access a “large accelerated filer” as defined in Rule 12b-2portion or the full amount available under the Exchange Act, which wouldPurchase Agreement, in the absence of any other financing sources, could have a material adverse effect on our business.
The sale or issuance of our common stock to Selling Stockholder may cause dilution and the sale of the shares of common stock acquired by Selling Stockholder, or the perception that such sales may occur, ifcould cause the market valueprice of our common stock to fall.
Upon the execution of the Purchase Agreement, we issued 500,000 Commitment Shares to Selling Stockholder in consideration for its commitment to purchase shares of our common stock under the Purchase Agreement. The remaining shares of our common stock that may be issued under the Purchase Agreement may be sold by us to Selling Stockholder at our discretion from time to time over a 24-month period commencing after the satisfaction of certain conditions set forth in the Purchase Agreement, including that the SEC has declared effective the registration statement of which this prospectus is helda part and that such registration statement remains effective. The purchase price for the shares that we may sell to Selling Stockholder under the Purchase Agreement will fluctuate based on the price of our common stock. Depending on market liquidity at the time, sales of such shares may cause the trading price of our common stock to fall.
We generally have the right to control the timing and amount of any future sales of our shares to Selling Stockholder. Additional sales of our common stock, if any, to Selling Stockholder will depend upon market conditions and other factors to be determined by non-affiliates exceeds $700 million asus. We may ultimately decide to sell to Selling Stockholder all, some, or none of the last business dayadditional shares of our most recently completed second fiscal quarter,common stock that may be available for us to sell pursuant to the Purchase Agreement. If and when we do sell shares to Selling Stockholder, after Selling Stockholder has acquired the shares, Selling Stockholder may resell all or (iii)some of those shares at any time or from time to time in its discretion. Therefore, sales to Selling Stockholder by us could result in substantial dilution to the date on whichinterests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to Selling Stockholder, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
It is not possible to predict the actual number of shares we will sell under the Purchase Agreement to the Selling Stockholder, or the actual gross proceeds resulting from those sales.
Subject to certain limitations in the Purchase Agreement and compliance with applicable law, we have issued more than $1 billion in non-convertible debtthe discretion to deliver notices to the Selling Stockholder at any time throughout the term of the Purchase Agreement. The actual number of shares that are sold to the Selling Stockholder may depend based on a number of factors, including the market price of the common stock during the preceding three yearsales period. Actual gross proceeds may be less than $5.0 million, which may impact our future liquidity. Because the price per share of each share sold to the Selling Stockholder will fluctuate during the sales period, it is not currently possible to predict the number of shares that will be sold or the actual gross proceeds to be raised in connection with those sales.
For more details regardingInvestors who buy shares at different times will likely pay different prices.
Investors who purchase shares in this exemption, see “Management’s Discussionoffering at different times will likely pay different prices, and Analysisso may experience different levels of Financial Conditiondilution and Resultsdifferent outcomes in their investment results. In connection with the sale of Operations – Critical Accounting Policies.”
our common stock pursuant to the terms of the Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold to the Selling Stockholder. Similarly, the Selling Stockholder may sell such shares at different times and at different prices. Investors may experience a decline in the value of the shares they purchase from the Selling Stockholder in this offering as a result of sales made by us in future transactions to Selling Stockholder at prices lower than the prices they paid.
Our Management Will Have Broad Discretion As To The Use Of Proceeds From This Offering, And We May Not Use The Proceeds Effectively.
Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. You will not have the opportunity, as part of your investment decision, to assess whether these proceeds are being used appropriately. Our failure to apply these funds effectively could have a material adverse effect on our business and cause the price of our common stock to decline.
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THE OFFERING
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(1) Based on 87,201,863 shares of Common Stock outstanding as of February 10, 2016.
(2) Does not include Common Stock underlying 2,200,000 options granted pursuant to stock plan that can be dilutive.ENERGY AND WATER DEVELOPMENT CORP.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSINFORMATION
The informationCertain statements contained in this prospectus including inmay contain "forward-looking statements" within the documents incorporated by reference into this prospectus, includes some statements that are not purely historicalmeaning of Section 27A of the Securities Act of 1933 and that are “forward-looking statements.”Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, statements regarding our Company and management’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including our financial condition and results of operations, and the expected impact of the offering on the parties’ individual and combined financial performance.operations. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Other important factors that we think could cause our actual results to differ materially from expected results are summarized below, including the ongoing impact of the current outbreak of the novel coronavirus ("COVID-19"), on the U.S., regional and global economies, the U.S. sustainable energy market, and the broader financial markets. The forward-looking statements containedcurrent outbreak of COVID-19 has also impacted, and is likely to continue to impact, directly or indirectly, many of the other important factors below and the risks described in this prospectus are basedForm S-1 and in our filings under the Exchange Act. Other factors besides those listed could also adversely affect us. In addition, we cannot assess the impact of each factor on current expectations and beliefs concerning future developments andour business or the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These forward-looking statements involve a numberextent to which any factor, or combination of risks, uncertainties (some of which are beyond the parties’ control) or other assumptions thatfactors, may cause actual results or performance to bediffer materially different from those expressed or implied by thesecontained in any forward-looking statements.
RISK FACTORSCOVID-19 at this time due to, among other factors, uncertainty regarding the severity and duration of the outbreak domestically and internationally, uncertainty regarding the effectiveness of federal, state and local governments’ efforts to contain the spread of COVID-19 and respond to its direct and indirect impact on the global economy and economic activity, including the timing of the successful distribution of an effective vaccine.
The shares of our Common Stock being offeredStatements regarding the following subjects, among others, may be forward-looking:
| · | negative impacts from a continued spread of COVID-19, including on the U.S. or global economy or on our business, financial position, or results of operations; |
| · | market trends in our industry, energy markets, commodity prices, interest rates, the debt and lending markets, or the general economy; |
| · | our plans and expectations regarding future financial results, expected operating results; |
| · | the sufficiency of our cash and our liquidity; |
| · | development of new products and improvements to our existing products; |
| · | our manufacturing capacity and manufacturing costs; |
| · | the adequacy of our agreements with our suppliers; |
| · | our ability to obtain financing, our ability to comply with debt covenants or cure any defaults; |
| · | availability of opportunities to participate in climate solutions including energy efficiency and renewable energy projects and our ability to complete potential new opportunities in our pipeline; |
| · | actions and initiatives of federal, state and local governments and changes to federal, state and local government policies, regulations, tax laws and rates and the execution and impact of these actions, initiatives and policies; |
| · | our ability to obtain and maintain financing arrangements on favorable terms, including securitizations; |
| · | general volatility of the securities markets in which we participate; |
| · | the impact of weather conditions, natural disasters, accidents or equipment failures, or other events that disrupt our operations or negatively impact the value of our assets; |
| · | availability of and our ability to attract and retain qualified personnel; and |
| · | our understanding of our competition. |
Forward-looking statements are highly speculative in nature, involve a high degree of riskbased on beliefs, assumptions and should be purchased only by persons who can afford to lose the entire amount invested in the Common Stock. Before purchasing anyexpectations as of the sharesdate of Common Stock, you should carefully consider the following factors relating to our business and prospects. If anythis prospectus. Any forward-looking statement speaks only as of the followingdate on which it is made. New risks actually occurs, our business, financial conditionand uncertainties arise over time, and it is not possible for us to predict those events or operating results could be materially adversely affected. In such case, youhow they may lose all or part of your investment. You should carefully consider the risks described below and the other information in this process before investing in our Common Stock.
Ricks Related to Our Business
OUR ABILITY TO CONTINUE, AS A GOING CONCERN, IS IN SUBSTANTIAL DOUBT ABSENT OBTAINING ADEQUATE NEW DEBT OR EQUITY FINANCINGS.
Our continued existence is dependent upon us obtaining adequate working capital to fund all of our operations. Working capital limitations continue to impinge on our day-to-day operations, thus contributing to continued operating losses. Thus, ifaffect us. Except as required by law, we are unablenot obligated to, raise fundsand do not intend to, fundupdate or revise any forward-looking statements after the research and developmentdate of our products, we may not be able to continuethis prospectus, whether as a going concern and you will lose your investment. We have incurred accumulated operating losses since inception, have incurred operating losses in 2014 and 2013 and have working capital deficits at the endresult of 2014 and 2013, respectively. Our independent accounting firm has included in its report the qualification that these conditions raise a substantial doubt about the Company's ability to continue as a going concern. The report also states that the consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
IF WE NEED ADDITIONAL CAPITAL TO FUND OUR GROWING OPERATIONS, WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT THE SCOPE OF OUR OPERATIONS.new information, future events or otherwise.
The severe recession, freezingrisks included here are not exhaustive. Other sections of the global credit marketsthis registration statement may include additional factors that could adversely affect our abilitybusiness and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to raise capital in the future. If adequate additional financingtime and it is not availablepossible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on reasonable terms or at all, we may not be able to undertake expansion, we may have to modify our business plans accordingly.or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
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THE TYSADCO TRANSACTION
Even ifGeneral
On January 26, 2022, we do find a source of additional capital, we may not be ableentered into the Tysadco Purchase Agreement with Tysadco Partners, pursuant to negotiate favorably terms and conditions for receiving the additional capital. Any future capital investments will dilute or otherwise materially and adversely affect the holdings or rightswhich Tysadco Partners agreed to purchase from us up to $5 million of our existing shareholders.common stock (subject to certain limitations) from time to time during the term of the Tysadco Purchase Agreement. Additionally, on January 26, 2022, we entered into the Registration Rights Agreement, pursuant to which we have filed with the SEC the registration statement of which this prospectus is a part to register for resale under the Securities Act of the shares that may be issued to Tysadco Partners under the Tysadco Purchase Agreement. Pursuant to the terms of the Tysadco Purchase Agreement, we issued 500,000 commitment shares (the “Commitment Shares”) to Tysadco Partners as consideration for its commitment to purchase shares of our common stock under the Tysadco Purchase Agreement. In addition, new equity or debton January 26, 2022, we entered into a securities issued by us to obtain financing could have rights, preferences and privileges senior topurchase agreement (the "Tysadco SPA") with Tysadco Partners for the purchase of 3,000,000 shares of our common stock. We cannot give you any assurance that any additional financing will be availablestock at an aggregate purchase price of $450,000, or $0.15 per share, of which 2,000,000 have been issued as of the date of this prospectus. Neither the Commitment Shares nor the shares issued under the Tysadco SPA are being registered for resale pursuant to us, or if available, will be on terms favorable to us.
OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICES OF RALPH HOFMEIER AND IRMA VELAZQUEZ. WITHOUT THEIR CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS.the registration statement of which this prospectus is a part.
We are presently dependentmay, from time to a great extenttime and at our sole discretion, direct Tysadco Partners to purchase shares of our common stock upon the experience, abilities and continued servicessatisfaction of Ralph Hofmeier, our President and Chief Executive Officer Irma Velazquez, our COO.
WE EXPECT SIGNIFICANT COMPETITION FOR OUR PRODUCTS AND SERVICES.
Many of our competitors and potential competitors are well established and have substantially greater financial, research and development, technical, manufacturing and marketing resources than we have today. If these larger competitors decide to focus on the development of distributed power or cogeneration, they have the manufacturing, marketing and sales capabilities to complete research, development and commercialization of these products more quickly and effectively than we can. There can also be no assurance that current and future competitors will not develop new or enhanced technologies or more cost-effective systems, and therefore, there can be no assurance that we will be successful in this competitive environment.
INTERNATIONAL REGULATION MAY ADVERSELY AFFECT OUR PLANNED PRODUCT SALES.
As a part of our marketing strategy, we plan to market and sell our products internationally. In addition to regulation by the U.S. government, those products will be subject to environmental and safety regulations in each country in which we market and sell. While we have already received regulatory approval in some countries including Mexico and India, we anticipate that regulations will vary from country to country and will vary from those of the United States. The difference in regulations and the laws of foreign countries may be significant and, in order to comply with the laws of these foreign countries, we may have to implement manufacturing changes or alter product design or marketing efforts. Any changes in our business practices or products will require response to the laws of foreign countries and will result in additional expense to the Company and either reduce or delay product sales.
IN THE CONDUCT OF OURbusiness, we sometimes rely upon the use of patents OWNED by other entities or which are not exclusively owned by our company.
Our business utilizes various technologies that are the subject of patents owned by other entities or for which we do not have exclusive ownership. The use of such patented technologies is dependent upon the cooperation of such companies and our agreements with them. There can be no assurances that any of our agreements will be extended beyond their current term or that such cooperation with entities that control the patents will continuecertain conditions set forth in the foreseeable future. Our success depends on our ability to continue to use the patented technology identified in this prospectus and the ability of our business colleagues to maintain patent protection for their products in the United States and in other countries and to enforce such patents. There can be no assurance that any of the patents relating to the technology that we use will be deemed valid and enforceable against third-party infringement or that our products will not infringe any third-party patent or intellectual property. Moreover, any patent claims relating to our technologies may not be sufficiently broad to protect our products. In addition, issued patent claims may be challenged, potentially invalidated or potentially circumvented. Our patent claims may not afford us protection against competitors with similar technology or permit the commercialization of our products without infringing third-party patents or other intellectual property rights.
THE OFFERING PRICE OF THE SHARES WAS ARBITRARILY DETERMINED, AND THEREFORE SHOULD NOT BE USED AS AN INDICATOR OF THE FUTURE MARKET PRICE OF THE SECURITIES. THEREFORE, THE OFFERING PRICE BEARS NO RELATIONSHIP TO THE ACTUAL VALUE OF THE COMPANY, AND MAY MAKE OUR SHARES DIFFICULT TO SELL.
Since our shares are thinly traded on the OTC Pink Markets, the offeringTysadco Purchase Agreement at a purchase price of $1.00 per share for the shares of common stock was arbitrarily determined. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. The offering price bears no relationshipbased on a discount to the book value; assets or earnings of our company or any other recognized criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities.
Risks Related to Our Common Stock
WE WILL BE SUBJECT TO THE “PENNY STOCK” RULES WHICH WILL ADVERSELY AFFECT THE LIQUIDITY OF OUR COMMON STOCK.
The Securities and Exchange Commission, or the SEC, has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. We expect the market price of our common stock will be less than $5.00 per shareat the time of sale as computed under the Tysadco Purchase Agreement. Tysadco Partners may not assign or transfer its rights and therefore we will be considered a “penny stock” according to SEC rules. This designation requires any broker-dealer selling these securities to disclose certain information concerningobligations under the transaction, obtain a written agreementTysadco Purchase Agreement.
The Tysadco Purchase Agreement prohibits us from the purchaser and determine that the purchaser is reasonably suitabledirecting Tysadco Partners to purchase the securities. These rules limit the ability of broker-dealers to solicit purchasesany shares of our common stock if those shares, when aggregated with all other shares of our common stock then beneficially owned by Tysadco Partners, would result in Tysadco Partners and therefore reduceits affiliates exceeding 9.99% of our then outstanding equity.
Purchase of Shares under the liquidityTysadco Purchase Agreement
Under the Tysadco Purchase Agreement, on any business day selected by us, we may direct Tysadco Partners to purchase the lesser of $1,000,000 or 500% of the public marketaverage shares traded for our shares should one develop.the 10 days prior to the closing request date, with a minimum request of $25,000. The per share purchase price will be a equal to 85% of the two lowest individual daily VWAP during the five (5) trading days immediately prior to the date the Request Notice is delivered (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse split or other similar transaction that occurs on or after the date of the Tysadco Purchase Agreement).
BECAUSE DIRECTORS AND OFFICERS CURRENTLY AND FOR THE FORESEEABLE FUTURE WILL CONTINUE TO CONTROL EAWC, IT IS NOT LIKELY THAT YOU WILL BE ABLE TO ELECT DIRECTORS OR HAVE ANY SAY IN THE POLICIES OF EAWC.Other than as described above, there are no trading volume requirements or restrictions under the Tysadco Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Tysadco Partners.
Conditions to Obligations To Purchase
Tysadco Partners obligation to buy the shares of common stock is subject to certain conditions being met which include, among others, the following:
| · | The Commitment Shares having been issued; |
| · | This registration statement having been declared effective; |
| · | No Event of Default having occurred; |
| · | The representations and warranties in the transaction documents being true and correct in all material respects. |
Our shareholders are not entitledTermination Rights
We have the unconditional right, at any time following the Commencement Date (as defined in the Tysadco Purchase Agreement), for any reason and without any payment or liability to cumulative voting rights. Consequently,us, to give notice to Tysadco Partners to terminate the electionTysadco Purchase Agreement.
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No Short-Selling or Hedging by Tysadco Partners
Tysadco Partners has agreed that neither it nor any of directors and all other matters requiring shareholder approval will be decided by majority vote. The directors and officers of EAWC beneficially own approximately 57.34%its affiliates shall engage in any direct or indirect short-selling or hedging of our outstanding common stock. Duestock during any time prior to such significant ownership position held by our insiders, new investors may not be able to effect a change in our business or management, and therefore, shareholders would have no recourse as a resultthe termination of decisions made by management.the Tysadco Purchase Agreement.
In addition, salesThe foregoing description of the Tysadco Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the copy of such agreement filed as Exhibit10.14 to this registration statement.
Effect of Performance of the Tysadco Purchase Agreement on our Stockholders
All shares registered in this offering that have been or may be issued or sold by us to Tysadco Partners under the Tysadco Purchase Agreement are expected to be freely tradable. Shares registered in this offering may be sold by us to Tysadco Partners over a period of up to 24 months commencing on the date of this registration statement of which this prospectus is a part becomes effective. The resale by Tysadco Partners of a significant amountsamount of shares held by our officer and directors,registered in this offering at any given time, or the prospect ofperception that these sales may occur, could adversely affectcause the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.
SINCE WE INTEND TO RETAIN ANY EARNINGS FOR DEVELOPMENT OF OUR BUSINESS FOR THE FORESEEABLE FUTURE, YOU WILL LIKELY NOT RECEIVE ANY DIVIDENDS FOR THE FORESEEABLE FUTURE.
We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings to support operationsdecline and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
A SIGNIFICANT NUMBER OF OUR SHARES WILL BE ELIGIBLE FOR SALE AND THEIR SALE OR POTENTIAL SALE MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.
be highly volatile. Sales of a significant number of shares of our common stock into Tysadco Partners, if any, will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Tysadco Partners all, some or none of the public market could harm the market price of our common stock. This prospectus relates to 21,747,348 shares of our common stock, which represents approximately [25%] of our current issued and outstanding shares of our common stock. As additional shares of our common stock becomethat may be available for resale in the public marketus to sell pursuant to this offering,the Tysadco Purchase Agreement. If and otherwise,when we do sell shares to Tysadco Partners, after Tysadco Partners has acquired the supplyshares, Tysadco Partners may resell all, some or none of those shares at any time or from time to time in its discretion. Therefore, sales to Tysadco Partners by us under the Tysadco Purchase Agreement in addition to the issuance of the 500,000 Commitment Shares and 3,000,000 shares of common stock issuable pursuant the Tysadco SPA, may result in substantial dilution to the interests of other holders of our common stock will increase, which could decrease its price.
WE MAY INCUR SIGNIFICANT COSTS TO BE A PUBLIC COMPANY TO ENSURE COMPLIANCE WITH UNITED STATES CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS AND WE MAY NOT BE ABLE TO ABSORB SUCH COSTS.
We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirementsshares to Tysadco Partners under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We alsoTysadco Purchase Agreement, or if investors expect that these applicable rules and regulationswe will do so, the actual sales of shares or the mere existence of our arrangement with Tysadco Partners may make it more difficult and more expensive for us to obtain directorsell equity or equity-related securities in the future at a time and officer liability insuranceat a price that we might otherwise wish to effect such sales.
However, we have the right to control the timing and amount of any additional sales of our shares to Tysadco Partners and the Tysadco Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.
Pursuant to the terms of the Tysadco Purchase Agreement, we have the right, but not the obligation and subject to certain limitations, to direct Tysadco Partners to purchase up to $5.0 million of our common stock. We are registering what could be all the shares issuable under the Tysadco Purchase Agreement; however, since the number of shares we may sell cannot be requireddetermined at this time, we may have registered only a portion of the shares issuable under the Tysadco Purchase Agreement and, therefore, we may seek to accept reduced policy limitsissue and coverage or incur substantially higher costssell to obtainTysadco Partners under the sameTysadco Purchase Agreement more shares of our common stock than are offered under this prospectus. If we choose to do so, we must first register for resale under the Securities Act any such additional shares, which could cause additional substantial dilution to our stockholders. The number of shares ultimately offered for resale under this prospectus is dependent upon the number of shares we direct Tysadco Partners to purchase under the Tysadco Purchase Agreement.
Registration Rights
Pursuant to the terms of a Registration Rights Agreement entered into between us and the Selling Stockholder dated as of January 26, 2022, which was entered into in connection with the Tysadco Purchase Agreement, we agreed to file a registration statement for the resale of the shares of Common Stock within 45 days of filing the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
We will pay all reasonable expenses incurred in connection with the registrations described above. However, we will not be responsible for any broker or similar coverage. As a result, itconcessions or any legal fees or other costs of the Selling Stockholders.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the copy of such agreement filed as Exhibit4.1 to this registration statement
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SELLING STOCKHOLDER
This prospectus relates to the possible resale by the Selling Stockholder, Tysadco Partners, of shares of common stock that may be more difficult for usissued to attract and retain qualified individualsTysadco Partners pursuant to serve on our board of directors or as executive officers.the Tysadco Purchase Agreement. We are currently evaluating and monitoring developmentsfiling the registration statement of which this prospectus forms a part pursuant to the provisions of the Registration Rights Agreement, which we entered into with Tysadco Partners on January 26, 2022 concurrently with our execution of the Tysadco Purchase Agreement, in which we agreed to provide certain registration rights with respect to these newly applicable rules,sales by Tysadco Partners of the shares of common stock that may be issued to Tysadco Partners under the Tysadco Purchase Agreement.
Tysadco Partners, as the Selling Stockholder, may, from time to time, offer and sell pursuant to this prospectus any or all of the shares that we may sell to Tysadco Partners under the Tysadco Purchase Agreement. The Selling Stockholder may sell some, all or none of its shares. We do not know how long the Selling Stockholder will hold the shares before selling them, and we cannot predictcurrently have no agreements, arrangements or estimateunderstandings with the amountSelling Stockholder regarding the sale of additional costs we may incur orany of the timing of such costs. In addition, we may not be able to absorb these costs of being a public company, which will negatively affect our business operations.shares.
THE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM COULD ADVERSELY IMPACT OUR ABILITY TO COMPLY WITH THE REPORTING REQUIREMENTS OF U.S. SECURITIES LAWS.The shares beneficially owned after the offering assumes the sale of all of the shares offered by the Selling Stockholder pursuant to this prospectus. However, because the Selling Stockholder may sell all or some or none of the shares under this prospectus or another permitted manner, we cannot assure you that the actual number of shares that will be sold by the Selling Stockholder or that will be held by the Selling Stockholder after completion of any sales. We do not know how long the Selling Stockholder will hold the shares before selling them.
The Selling Stockholder may sell all, some or none of the shares in this offering. See "Plan of Distribution."
The following table presents information regarding the Selling Stockholder and the shares that it may offer and sell from time to time under this prospectus. The table is prepared based on information supplied to us by the Selling Stockholder and reflects its holdings as of June 27, 2022. Neither Tysadco Partners nor any of its affiliates has held a position or office, or had any other material relationship, with us or any of our predecessors or affiliates other than, the Tysadco Purchase Agreement and related Registration Rights Agreement and the Tysadco SPA, pursuant to which we agreed to issue Tysadco Partners 2,000,000 shares of common stock that are set forth below and not being registered pursuant to this Registration Statement and a Corporate Development Advisory Agreement with ClearThink Capital LLC (“ClearThink”), an affiliate of Tysadco Partners, pursuant to which ClearThink provides consulting services to the Company in exchange for a monthly cash and equity fee. Beneficial ownership is determined in accordance with Section 13(d) of the Exchange Act and Rule 13d-3 thereunder.
| Selling Stockholder | Shares Beneficially Owned Before this Offering | Percentage of Outstanding | Shares to be Sold in this Offering Assuming The Company issues the Maximum Number of Shares Under the Purchase Agreement | Percentage of Outstanding | |||||||
| Tysadco Partners, LLC(1) | 2,520,000(2) | 1.5% (3) | 25,000,000 | 12.1% (4) (5) |
| (1) | Jeffrey Hart, the Managing Members of Tysadco Partners, LLC, is deemed to be beneficial owner of all of the shares of common stock owned by Tysadco Partners, LLC. Mr. Hart has sole voting and investment power over the shares being offered under the prospectus filed with the SEC in connection with the transactions contemplated under the Tysadco Purchase Agreement. Tysadco Partners is not a licensed broker-dealer or an affiliate of a licensed broker-dealer. The address of Tysadco Partners is 210 West 77th Street, New York, New York 10024. |
| (2) | Represents (a) 500,000 shares issued to Tysadco Partners as Commitment Shares under the Tysadco Purchase Agreement; (b) 2,000,000 shares of common stock issued to Tysadco Partners pursuant to the terms of the Tysadco SPA; and (c) 20,000 shares of common stock issued in which Tysadco Partners was a beneficial owner |
| (3) | Based on 173,019,421 outstanding shares of our common stock issued and outstanding as of June 27, 2022. |
| (4) | Although the Tysadco Purchase Agreement provides that we may sell up to $5,000,000 of our common stock to Tysadco Partners in addition to the 500,000 Commitment Shares issued to Tysadco Partners, only 25,000,000 shares of our common stock are being offered under this prospectus that have been or may be sold by us to Tysadco Partners at our discretion from time to time over a 24-month period commencing after the satisfaction of certain conditions set forth in the Tysadco Purchase Agreement, including that the SEC has declared effective the registration statement that includes this prospectus. Depending on the price per share at which we sell our common stock to Tysadco Partners pursuant to the Tysadco Purchase Agreement, we may need to sell to Tysadco Partners under the Tysadco Purchase Agreement more shares of our common stock than are offered under this prospectus in order to receive aggregate gross proceeds equal to the $5,000,000 total commitment available to us under the Tysadco Purchase Agreement. If we choose to do so, we must first register for resale under the Securities Act such additional shares. The number of shares ultimately offered for resale by Tysadco Partners is dependent upon the number of shares we sell to Tysadco Partners under the Tysadco Purchase Agreement. |
| (5) | Sale of the full 25,000,000 shares would exceed the limit in the Tysadco Purchase Agreement. |
| (6) | Calculated assuming a numerator of (a) 2,520,000 shares beneficially owned before the offering and (b) 25,000,000 shares sold to Tysadco assuming maximum issuance of shares in the offering, and a denominator of (c) 228,019,421 assuming maximum issuance of shares in the offering. |
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PLAN OF DISTRIBUTION
Shares Offered by the Company will be Sold by Ourmanagement team lacks Officers and Directors
This is a self-underwritten ("best-efforts") offering. This prospectus permits our officers and directors to sell the shares being offered by the Company directly to the public, company experience, which could impair our abilitywith no commission or other remuneration payable to complythem for any shares they may sell. There are no plans or arrangements to enter into any contracts or agreements to sell the shares with legala broker or dealer. Our officers and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Our senior management has never had responsibility for managing a publicly traded company. Such responsibilities include complying with federaldirectors intend to offer the shares to friends, family members and business acquaintances. In offering the securities laws and making required disclosures on a timely basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance and reporting requirements, including the establishing and maintaining internal controls over financial reporting. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our ability to comply withbehalf, our officers and directors will rely on the reporting requirements ofsafe harbor from broker dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934 which is necessary to maintain our public company status. If we were to fail to fulfill those obligations, our ability to continue as a U.S. public company would be in jeopardy in which event you could lose your entire investment in our company. (the "Exchange Act").
WE ARE NOT REQUIRED TO FILE PROXY STATEMENTS PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, WHICH MAY IMPEDE YOUR ABILITY TO OBTAIN INFORMATION ABOUT OUR BUSINESS AND OPERATIONS.
Upon effectiveness of this registration statement weThe officers and directors will be subjectnot register as broker-dealers pursuant to Section 15(d)15 of the Exchange Act, unless we filein reliance upon Rule 3a4-1, which sets forth those conditions under which a Form 8A to register our common stock under Section 12person associated with an issuer may participate in the offering of the Securities Exchange Act of 1934. Pursuantissuer's securities and not be deemed to section 15(d) we are not required to file proxy statements. Proxy statements may be useful to investors in assessing corporate business decisions such as how management is paid and potential conflict-of-interest issues with auditors. Proxy statements may include but are not limited to:a broker-dealer.
| b. | Our officers and directors will not be compensated in connection with their participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; and | |
| d. | Our officers and director meet the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that they (A) primarily perform, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of our Company, other than in connection with transactions in securities; and (B) is not a broker or dealer, or been an associated person of a broker or dealer, within the |
We are subject to section 15(d)Our officers, director, control persons and affiliates of the Exchange Act. We may never file a Form 8A to register our common stock under Section 12 of the Securities Exchange Act of 1934. If wesame do not file a Form 8A, we are not requiredintend to file proxy statements and it may impede your ability to obtain information about our business and operations which may have a negative effect on your investment.purchase any shares in this offering.
We will not receive any proceeds from the sale of Common Stock by the selling shareholders. All of the net proceeds from the sale of our Common Stock will go to the selling shareholders as described below in the sections entitled “Selling Security Holders” and “Plan of Distribution”. We have agreed to bear the expenses relating to the registration of the Common Stock for the selling shareholders.
DETERMINATION OF OFFERING PRICE
The offering priceshares are being offered by the Company on a “best efforts” basis and there can be no assurance that all or any of the shares offered will be subscribed or sold. There is no minimum offering required for this offering to close. All funds received as a result of our Common Stock does not necessarily bear any relationshipthis offering will be immediately available to our book value, assets, past operating results, financial conditionus for use as set forth in the “Use of Proceeds” contained elsewhere in this prospectus or, any other established criteria of value. The facts considered in determiningif sold by the Selling Stockholder, for their personal use based on their sole discretion. We have the right to terminate the offering price wereat any time in our financial condition and prospects,sole discretion, even before we have sold the entire 30,000,000 shares. There are no specific events which might trigger our limited operating history anddecision to terminate the general condition of the securities market.offering.
The selling stockholders will offer common stock at the prevailing market prices or privately negotiated price. The offering priceSale of Shares by Selling Stockholder
An aggregate of up to 25,000,000 shares of our common stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. Our common stock may not trade at market prices in excess of the offering price as prices for common stock in any public market will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity.
The shares of Common Stock to be sold by the selling shareholders as provided in the “Selling Security Holders” section are shares of Common Stock that are currently issued. Accordingly, there will be no dilution to our existing shareholders.
The shares of Common Stock being offered for resale by the selling shareholders consist of 21,747,348 shares.
The following table sets forth the names of the selling shareholders, the number of shares of Common Stock beneficially owned by each of the selling shareholders as of October 7, 2015 and the number of shares of Common Stock being offered by the selling shareholders. The selling shareholders received their shares of common stock from the Companythis prospectus by purchasing such shares at various times or such shares were issued in exchange for assets acquired by the Company or services renderedTysadco Partners pursuant to the Company. The issuance of all shares of common stock identified in the registration statement occurred pursuant to Section 4(a)(2) of the Securities Act of 1933. All shareholders were deemed by Company principals to be “sophisticated investors” or “qualified institutional investors” at the time such shares of common stock were issued. The shares being offered hereby are being registered to permit public secondary trading, and the selling shareholders may offer all or part of the shares for resale from time to time. However, the selling shareholders are under no obligation to sell all or any portion of such shares nor are the selling shareholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling shareholders.
| NAME | SHARES BENEFICIALLY OWNED PRIOR TO OFFERING | SHARES TO BE OFFERED | AMOUNT BENEFICIALLY OWNED AFTER OFFERING | PERCENT BENEFICIALLY OWNED AFTER OFFERING | POSITION OFFICE OR OTHER MATERIAL RELATIONSHIP TO THE COMPANY WITHIN LAST THREE YEARS | |||||||||||||
| Linda Anderson | 187,857 | 187,857 | 0 | 0 | % | Outsider investor | ||||||||||||
| Archstone Capital (1) | 2,500,000 | 2,500,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Adam Brinckman | 8,000 | 8,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Philip Carson | 2,500 | 2,500 | 0 | 0 | % | Outsider investor | ||||||||||||
| David Chambovey | 76,924 | 76,924 | 0 | 0 | % | Outsider investor | ||||||||||||
| Ashley Chipman | 30,000 | 30,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Tiffany Chipman | 30,000 | 30,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Joseph Dedek | 12,500 | 12,500 | 0 | 0 | % | Outsider investor | ||||||||||||
| Albert Dossa | 4,975 | 4,975 | 0 | 0 | % | Outsider investor | ||||||||||||
| Roland Feger | 268,246 | 268,246 | 0 | 0 | % | Outsider investor | ||||||||||||
| Douglas Flaute | 20,000 | 20,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Kathleen Forrester | 1,334 | 1,334 | 0 | 0 | % | Outsider investor | ||||||||||||
| Rick Fuerstenau | 4,000 | 4,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Mark George | 232,500 | 232,500 | 0 | 0 | % | Outsider investor | ||||||||||||
| Hans V. Glattli | 240,000 | 240,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Green Dimension Ltd. (2) | 221,667 | 221,667 | 0 | 0 | % | Outsider investor | ||||||||||||
| Julian Hamburger | 1,500 | 1,500 | 0 | 0 | % | Outsider investor | ||||||||||||
| Qaiser Hassan | 5,000 | 5,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| David Hawkins | 30,683 | 30,683 | 0 | 0 | % | Outsider investor | ||||||||||||
| Thomas Hewitt | 20,000 | 20,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Eugene Hunt | 16,000 | 16,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Mark Johnson | 20,000 | 20,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| George Jordan | 8,000 | 8,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Avi Keinan | 50,000 | 50,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Keystone Ventures (3) | 466,783 | 466,783 | 0 | 0 | % | Outsider investor | ||||||||||||
| Jeffrey Lagrew | 10,000 | 10,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Christian Lherisson | 1,236,669 | 1,236,669 | 0 | 0 | % | Outsider investor | ||||||||||||
| Timothy Meisner | 25,000 | 25,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Mayan Metzler Leicht | 23,333 | 23,333 | 0 | 0 | % | Outsider investor | ||||||||||||
| Guy Merezky | 5,000 | 5,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Dominique Morand | 42,345 | 42,345 | 0 | 0 | % | Outsider investor | ||||||||||||
| Ilona Muenzer | 23,530 | 23,530 | 0 | 0 | % | Outsider investor | ||||||||||||
| Li San Ong | 366,782 | 366,782 | 0 | 0 | % | Outsider investor | ||||||||||||
| Ana Beatrice Oregano | 19,141 | 19,141 | 0 | 0 | % | Service Provider | ||||||||||||
| Clyde Parks | 300,000 | 300,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Frank Petrusnek | 7,500 | 7,500 | 0 | 0 | % | Outsider investor | ||||||||||||
| Jaqueline Richardson | 2,500 | 2,500 | 0 | 0 | % | Outsider investor | ||||||||||||
| Laurent Roten | 60,000 | 60,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Frederieke Shoute | 15,000 | 15,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| William Schrader | 5,000 | 5,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Lloyd Telfort | 25,000 | 25,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Michael Thieren | 11,000 | 11,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Jean Luis Toffel | 80,000 | 80,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| John Vandenberghe | 300,000 | 300,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Yaron Weinberg | 20,000 | 20,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Paul Westhof | 50,000 | 50,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Tigertail Real Estate (4) | 20,000 | 20,000 | 0 | 0 | % | Outsider investor | ||||||||||||
| Lherisson Viridiana/ AGI Funding | 5,084,468 | 5,084,468 | 0 | 0 | % | Outsider investor | ||||||||||||
| Andrea Hofmeier | 8,000,000 | 8,000,000 | 0 | 0 | % | Ralph Hofmeier’s Divorced Wife | ||||||||||||
| Patricia Elias | 20,000 | 20,000 | 0 | 0 | % | Service Supplier | ||||||||||||
| Pierre Alain Frey | 14,050 | 14,050 | 0 | 0 | % | Service Supplier | ||||||||||||
| Ana Beatrice Dominguez | 18,561 | 18,561 | 0 | 0 | % | Service Supplier | ||||||||||||
| Corey Hoffman | 415,000 | 415,000 | 0 | 0 | % | Corporate Legal Counsel | ||||||||||||
| Chris Jessenberger | 108,000 | 108,000 | 0 | 0 | % | Service Supplier | ||||||||||||
| Diego Andres Lherisson | 10,000 | 10,000 | 0 | 0 | % | Service Supplier | ||||||||||||
| Leticia V. de Meerettig | 50,000 | 50,000 | 0 | 0 | % | Service Supplier | ||||||||||||
| Mike & Leticia Meerettig | 25,000 | 25,000 | 0 | 0 | % | Service Supplier | ||||||||||||
| ORMA, S.A. Switzerland (6) | 150,000 | 150,000 | 0 | 0 | % | Equipment Supplier | ||||||||||||
| Pillow Hog Ventures (7) | 510,000 | 510,000 | 0 | 0 | % | Service Supplier | ||||||||||||
| Andreas Rassmussen | 76,000 | 76,000 | 0 | 0 | % | Service Supplier | ||||||||||||
| Tina Reine | 60,000 | 60,000 | 0 | 0 | % | Service Supplier | ||||||||||||
| Svein Viland | 100,000 | 100,000 | 0 | 0 | % | License Vendor |
This prospectus is to be used by the Selling Security Holders in connection with a potential resale by certain Seller Security Holders of up to an aggregate of 21,747,348 shares of the registrant’s Common Stock.
Tysadco Purchase Agreement. The common stock held by the selling stockholders may be sold or distributed from time to time by the selling stockholdersTysadco Partners directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed on any stock exchange, market or trading facility on which the shares are traded or in private transactions.changed. The sale of the selling stockholders’ common stock offered by this prospectus maycould be affected in one or more of the following methods:
| ordinary | ||
| · | transactions involving cross or block trades; |
| at the market" into an existing market for the common stock; |
| · | in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through |
| · | in privately negotiated transactions; or |
| · | ||
The selling shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
In addition, the selling shareholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales were permitted, of shares in the course of hedging the positions they assumeorder to comply with the selling shareholders. The selling shareholders may also enter into option or other transactions with broker-dealers that requiresecurities laws of certain states, if applicable, the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus. None ofsold only through registered or licensed brokers or dealers. In addition, in certain states, the selling shareholders are broker-dealersshares may not be sold unless they have been registered or affiliates of broker dealers. We will advise the selling shareholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of sharesqualified for sale in the marketstate or an exemption from the state's registration or qualification requirement is available and to the activities of the selling shareholders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling shareholders for the purpose of satisfying the prospectus delivery requirements of the Securities Actcomplied with.
The selling shareholders may indemnify any broker-dealer that participates in transactions involvingTysadco Partners is an "underwriter" within the salemeaning of the shares against certain liabilities, including liabilities arising underSection 2(a)(11) of the Securities Act.
Tysadco Partners has informed us that it intends to use an unaffiliated broker-dealer to effectuate all sales, if any, of the common stock that it may purchase from us pursuant to the Tysadco Purchase Agreement. Such sales will be made at prices and at terms then prevailing or at prices related to the then current market price. Each such unaffiliated broker-dealer will be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. Tysadco Partners has informed us that each such broker-dealer will receive commissions from Tysadco Partners that will not exceed customary brokerage commissions.
Brokers, dealers, underwriters or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or concessions or commissions from the selling shareholdersTysadco Partners and/or the purchasers of sharesthe common stock for whom suchthe broker-dealers may act as agent or to whom they may sell as principal, or both (whichagent. The compensation aspaid to a particular broker-dealer may be less than or in excess of customary commissions).commissions. Neither the selling shareholderswe nor weTysadco Partners can presently estimate the amount of such compensation.compensation that any agent will receive. We know of no existing arrangements between the selling shareholders andTysadco Partners or any other stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares. shares offered by this prospectus. At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth the names of any agents, underwriters or dealers and any compensation from Tysadco Partners and any other required information.
We will pay the expenses incident to the registration, offering, and sale of the shares to Tysadco Partners. We have agreed to indemnify Tysadco Partners and certain other persons against certain liabilities in connection with the offering of shares of common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Tysadco Partners has agreed to indemnify us against liabilities under the Securities Act that may arise from certain written information furnished to us by Tysadco Partners specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities.
Tysadco Partners has represented to us that at no time prior to the Tysadco Purchase Agreement has it or its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of our common stock or any hedging transaction, which establishes a net short position with respect to our common stock. Tysadco Partners has agreed that during the term of the Tysadco Purchase Agreement, it, its agents, representatives or affiliates will not enter into or effect, directly or indirectly, any of the foregoing transactions.
We have advised Tysadco Partners that it is required to comply with Regulation M promulgated under the Exchange Act. With certain exceptions, Regulation M precludes Tysadco Partners, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the securities offered by this prospectus.
| 34 |
DIVIDEND POLICY
We have never declared nor paid any cash dividends on our C-Corporation common stock, and currently intend to retain all of our cash and any earnings for use in our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends on our common stock will be at the discretion of the Board of Directors and will be dependent upon our consolidated financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.
USE OF PROCEEDS
We expect to receive net proceeds from this offering of approximately $18,500,000, based upon an assumed initial public offering price of $0.62 per share, after deducting estimated offering expenses by us of $100,000. We may also receive up to $5.0 million in gross proceeds if we issue to Tysadco Partners all of the shares issuable pursuant to the Tysadco Purchase Agreement.
We will have broad discretion over how to use the net proceeds to us from this offering. We intend to use the net proceeds that we will receive from this offering for general corporate purposes, which may include, among other things, capital expenditures, additions to working capital, investments in our subsidiaries, repayment of indebtedness and acquisitions. We may use a portion of the net proceeds to acquire complementary businesses, products, services, or technologies. However, we do not have agreements or commitments to enter into any acquisitions or repay any indebtedness at this time. Pending use of the proceeds from this offering, we intend to invest the proceeds in a variety of capital preservation investments, including short-term, investment-grade and interest-bearing instruments.
After the issuance of any of the shares issuable under the Tysadco Purchase Agreement, we would not receive any proceeds from the saleresale of those shares by Tysadco Partners because those shares will be sold for the sharesaccount of the selling shareholders pursuant to this prospectus.Tysadco Partners. We have agreed towill, however, bear the expensescosts associated with the sale of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $50,000.
Notwithstanding anything set forth herein, no FINRA member will charge commissions that exceed 8% of the total proceeds of the offering.
Authorized Capital and Preferred Stock
Our authorized capital stock consists of 1,000,000,000 shares of common stock par value $0.001 per shareby the Selling Stockholder, other than underwriting discounts and 500,000,000 shares preferred stock, par value $0.001 per share.commissions.
Percentage of Offering Sold
| Estimated Offering Expense (1) | $ | 100,000 | |||||||||||||
| Manufacture, assembly, and commercialization of Self Sufficient Energy Supplied Atmosphere Water Generators (eAWGs) and EV Charging Stations for eTrucks | 40% | Of total amount of proceeds | |||||||||||||
| Working Capital | 10% | Of total amount of proceeds | |||||||||||||
| Payments of accounts payable and pre-payments within our supply chain | 20% | Of total amount of proceeds | |||||||||||||
| Enhancing Marketing | |||||||||||||||
| Hiring of technical and administrative personnel | 10% | Of total amount of proceeds | |||||||||||||
| Financing of capital expenditures (including without limitation the expansion of premises, acquisition of equipment, and transportation) and Capital to pursue an up-listing to NASDAQ | 20% | Of total amount of proceeds | |||||||||||||
| Total Net Proceeds (1) | |||||||||||||||
———————
| (1) | In the event that our estimated offering expenses are less than the amounts indicated above, any such excess funds shall be applied toward our working capital and other corporate purposes. |
The expected use of net proceeds from this Offering represents our intentions based on our current plans and business conditions, which could change in the future as our plans and business conditions evolve and change. As of February 11, 2016, there were 87,201,863the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds we will have upon completion of this Offering or the order of priority in which we may use such proceeds. Circumstances that may cause us to alter our anticipated uses and allocations of proceeds from this Offering include (i) the size of the Offering and, (ii) our cash flow from operations during fiscal year 2022. Accordingly, we will retain broad discretion over the use of these proceeds and the Company reserves the right to change the above use of proceeds if management believes it is in the best interests of the Company. In addition, while we have not entered into any agreements, commitments or understandings relating to any significant transaction as of the date of this prospectus supplement, we may use a portion of the net proceeds to pursue acquisitions, joint ventures and other strategic transactions.
MARKET PRICE FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) Market Information.
Our shares of common stock outstanding.
Common Stockare not traded on a national exchange; rather, they are traded on the OTCQB marketplace under the symbol “EAWD.” On June 27, 2022, the closing bid price for one share of common stock was $0.19.
The following is a summary of the material rights and restrictions associated with our common stock.
Each share of Common Stock shall have one (1) vote per share for all purposes. Our Common Stock does not provide preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Holders of shares of Common Stock are not entitled cumulative voting for electing members of the Board. Please refer to the Company’s Articles of Incorporation, Bylaws and the applicable statutes of the State of Florida for a more complete description of the rights and liabilities of holders of the Company’s securities.
Preferred Stock
Of the 500,000,000 shares of preferred stock authorized, there are no shares issued or outstanding.
Dividends
We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our Board and depends upon our earnings, if any, our capital requirements and financial position, and general economic conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Warrants
The Company does not currently have any warrants issued or outstanding.
Options
On January 2, 2012, the Company’s Board of Directors approved the creation of the 2012 Non-Qualified Stock Option Plan (the “2012 Plan”). The 2012 Plan providestable sets forth for the issuance of incentive stock options to designated employees, certain key advisorsindicated periods the high and non-employees members of the Board of Directors with the opportunity to receive grant awards to acquire, in the aggregate, up to 5,000,000 shares of the Company’s common stock.
A summary of information regarding the Company’s common stock options outstanding is as follows:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | ||||||||||
| Outstanding at December 31,2012 | 2,200,000 | $ | 0.10 | 8 | ||||||||
| Issued | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Outstanding at December 31, 2013 | 2,200,000 | 0.10 | 7 | |||||||||
| Issued | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Outstanding at December 31, 2014 | 2,200,000 | $ | 0.10 | 6 | ||||||||
| Issued | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
Outstanding at September 30, 2015 | 2,200,000 | $ | 0.10 | 5.3 | ||||||||
The above outstanding options were granted to a former Company executive. Of these options, 1,240,000 shares were vested and exercisable at December 31, 2012. During the years ended December 31, 2014 and 2013 and the nine months ended September 30, 2015, the Company recognized stock-based compensation expense of approximately $12,000, $12,000 and $9,000, respectively, related to stock options. The weighted-average grant date fair value of each option was estimated to approximate $.05 using the Black Scholes valuation methodology. As of December 31, 2014 and September 30, 2015, there was approximately $24,000 and $15,000, of total unrecognized compensation costs related to non-vested stock options, which is to be recognized over the next 1.5 years.
The fair value of stock options granted of $0.05 per share was calculated using the Black-Scholes option pricing model based on the following assumptions; risk free interest rate of 1.89%, expected volatility of 317.38%, expected option terms of 9.08 years and no expected dividend yield.
Expected volatility is based on historical volatility of the Company and other comparable companies. Short Term U.S. Treasury rates were utilized. The expected term of the options was calculated using the alternative simplified method permitted by SAB 107, which defines the expected life as the average of the contractual term of the options and the weighted average vesting period for all option tranches.
The following table summarizes the activity of non-vested employee stock options:
| Number of Non-Vested Shares | Weighted- Average Grant Date Fair Value | |||||||
| Outstanding at December 31, 2012 | 960,000 | $ | 48,000 | |||||
| Granted | - | - | ||||||
| Vested | 240,000 | 12,000 | ||||||
| Forfeited | - | - | ||||||
| Outstanding at December 31, 2013 | 720,000 | 36,000 | ||||||
| Granted | - | - | ||||||
| Vested | 240,000 | 12,000 | ||||||
| Forfeited | - | - | ||||||
| Outstanding at December 31, 2014 | 480,000 | $ | 24,000 | |||||
| Granted | - | - | ||||||
| Vested | 180,000 | 9,000 | ||||||
| Forfeited | - | - | ||||||
| Outstanding at September 30, 2015 | 300,000 | $ | 15,000 | |||||
Worldwide Stock Transfer, LLC, One University Plaza, Suite 505, Hackensack, NJ 07601, Phone: (201) 820-2008, Fax: (201) 820-2010.
Listing
Our common stock is currently quoted on the OTC Pink Market under the symbol “EAWD”; however, our securities are currently highly illiquid, and subject to large swings in trading price, and are only traded on a sporadic and limited basis.On February 11, 2016, the last reported salelow intra-day sales price per share for our common stock for the four quarters of 2020, the four quarters of 2021 and as reported was $1.38.of June 27, 2022.
| High | Low | |||||||
| 2020: First Quarter | $ | 0.22 | $ | 0.07 | ||||
| 2020: Second Quarter | $ | 0.18 | $ | 0.05 | ||||
| 2020: Third Quarter | $ | 1.60 | $ | 0.09 | ||||
| 2020: Fourth Quarter | $ | 0.19 | $ | 0.09 | ||||
| 2021: First Quarter | $ | 0.76 | $ | 0.15 | ||||
| 2021: Second Quarter | $ | 0.45 | $ | 0.17 | ||||
| 2021: Third Quarter | $ | 0.59 | $ | 0.05 | ||||
| 2021: Fourth Quarter* | $ | 1.00 | $ | 0.0001 | ||||
| 2022: First Quarter | $ | 0.45 | $ | 0.15 | ||||
| 2022: Second Quarter to date | $ | 0.25 | $ | 0.16 | ||||
________________
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity*From September 28, 2021 to October 27, 2021, public quotes of the securities being registered or upon other legal matters in connection withCompany’s stock were temporarily removed from the registration or offering ofOTC marketplace due to the Common Stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or anyCompany’s late filing of its parents or subsidiaries. Nor was any such person connected withAnnual Report on Form 10-K for the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
The financial statements as ofyear-ended December 31, 2014 and 2013 and each of the years then ended included in this prospectus2020 and the registration statementQuarterly Reports on Form 10-Q for the subsequent two quarters in accordance with Exchange Act Rule 15c-211. During that period, there was no public trading market for the Company’s shares and several anomalous “trades” for $0.0001 that were likely the result of privately negotiated transactions occurred. These prices do not have been audited by Mallah Furmanany relation to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
The validity of the issuance of the Common Stock hereby will be passed upon for us by Law Office of Clifford J. Hunt, P.A. 8200 Seminole Boulevard Seminole, Florida 33772. Neither Mr. Hunt nor his law firm has any direct or indirect ownership interest in anymarket value of the shares of capital stock of our Company.and do not reflect a “trading price” as the term is commonly used and therefore such amounts have been excluded from this table.
Overview
The Company focuses on green sustainable solutions to generate and purify water, as well as the production and reproduction of energy. EAWC is primarily engaged in the promotion, development and commercialization of green technologies. In light of the increased demand for water and energy around the world, the Company and its partners develop, manufacture, distribute and operate water generation, water purification, and green energy production (Waste to Energy) technologies.http://www.eawctechnologies.com
Company History
Merger Agreement
Eurosport Active World Corporation (the “Company”) (formerly Eagle International Holdings Group Inc. or “EIH”), was incorporated under the laws of the State of Florida on August 23, 2000. EIH was a shell entity that was in the market to merge with an operating company.
On March 17, 2008, EIH entered into an Agreement and Plan of Acquisition (the “Merger Agreement”) with Inko Sport America, LLC (“ISA”), a Florida privately held Limited Liability Company. In connection with the closing of the Merger Agreement, ISA merged with and into EIH effective May 07, 2008, with the filing of the Merger Agreement with the Florida Secretary of State.
Pursuant to the terms and conditions of the Merger Agreement:
This transaction was accounted for as a recapitalization effected by a share exchange, wherein ISA was considered the acquirer for accounting and financial reporting purposes.
ISA was a development stage company, incorporated on February 24, 2005 in the State of Florida. Through December 31, 2012, the Company had been primarily engaged in the promotion, development and commercialization of green technologies. In view of the increased demand of water and energy, the Company began to focus its business goals on water generation, water purification, and green energy production (Waste to Energy); acquiring and licensing the rights to sell and produce related technologies and securing through collaboration with Green Tech research and developments centers in Europe, the research and development, technical maintenance, education and training related to the technology.
We were formed as a Green tech platform of renewable technologies industry. The Green Tech industry is subject to constant evolving due to ongoing water scarcity as well as energy increased need, thereby making it a rapidly growing up market. The Green tech industry is complex, because still require much promotion and information about its potential to be known furthermore regulations in each country are different in a way that several segments are regulated by both federal and state governments. EAWC’s approach assists general business operations with the growth and development of their business, by ensuring the efficient, profitable and sustainable supply/generation of water and energy as required; allowing our potential customers to focus on the business while been sustainable on its development. By using the technologies/services provided by EAWC, our clients are free to focus on compliance with performance of their operations as well as with the water and energy consumption or generation regulations within their industry, and to complete their primary business goals.
We continue to be a development stage company. We have not yet generated any revenue from our operations. We presently have only two employees, our Chief Executive Officer, Ralph Hofmeier and our Chief Operating Officer, Irma Velasquez. We presently rely on third parties to manufacture our products, sell and distribute them.
EUROSPORT ACTIVE WORLD CORP focuses on four main aspects of the Water and Energy business: Generation, Supply, Commercialization and Waste to Energy. Assisting business owners and/or municipalities to build profitable and sustainable supply/generation of water and energy as required; by selling them the required technology or technical service to enhance its productivity/operability. With its technical arm (Swiss Water Tech R&D) and it global network of vendors, the company would add sustainable added value to each of the projects.
Our programs will be tailored to meet the needs and requests of our clients. We will assist our clients with growth by increasing their customer base and assisting their operations and growth management in new markets.
We will provide customized technologies and technical services, based upon client preference, which may include any or all of the following:
| ||
The company has consulted on a number of projects on a pro-bono basis to establish a strong corporate history toward obtaining a strong sales client base. The cost of our technologies and/or for our services will be dependent upon particularities of the needs of supplying/generation water or energy of each project/client company and the complexity of the client/project company business. EAWC Technical consulting fees will be negotiated and established based upon factors such as the level of services requested by the client.
Thus far we have marketed our technologies and services primarily to the private sector and some municipalities of the states of California, Nevada, Florida and Alaska in the United States of America (the “U.S.”) as well in other countries of the American Continent such as Mexico, Puerto Rico and Chile, to mention some of them and other countries of the African Continent such as South Africa and Kenya and India in the Asian Continent. EAWC has been doing business development since its reactivation in April 2012. Ralph Hofmeier, our president has been involved in the company since inception and is the founder, as well as Ms. Irma Velazquez our COO. We focus on geographic areas, projects and budget levels where we believe there are significant demand for our technologies & services and the potential for attractive returns to our company and investors. We do not consider our company to be a “blank check company” as such term is defined in Securities and Exchange Commission Rule 419; however, we are a company with minimal revenues and limited operations and our auditor has expressed substantial doubt about our ability to continue as a going concern. The company has no present plans to be acquired or to merge with another company nor does the company, nor any of its shareholders, have plans to enter into a change of control or similar transaction The company does now and will continue to operate as a Green Tech commercial company, on an income-based sales and technical services through our agreements with the Swiss Water Tech R&D Centre, for independent clients requiring our technologies, expertise, experience and international contact networks. Any acquisitions that the company may make in the future, would be of companies similar in nature to our own, operating in similar or complementary industry segments or geographic location; that would provide EAWC with new growth opportunities or competitive advantage. However, even though our business plan does contemplate potential growth through the acquisition of specialty service providers and other independent consulting services companies that would complement our business plan we are first and foremost a Green Tech companyEAWC anticipates growth through the consolidation of sales of technologies and consulting service providers.
We believe that our conduct to date evidences significant, bona fide business operations and a scenario that is wholly inapposite to any attempt to create the mere appearance of a specific business plan and effort to avoid the application of Rule 419.
The Company is focused on addressing areas of business, which concentrate on new technological and engineering concepts relating to Water and Energy generation as well as Waste to Energy development and those related components that assist in advancing the Green Tech industry. These include:
The founders of Eurosport Active World Corp have extensive experience in both the technical development and operation processes aspects associated with this industry, and for this reason, we intend to enhance the collaboration with its today technical provider the Research & Development Centre (SWATE) to ensure the provision of the technical advice services and expended when required on a contractual basis, to project owners that acquire the EAWC Technologies.
Agreements with Swiss Water Tech Research and Development S.A.
Effective February 1, 2013, and as amended on June 29, 2015, the Company entered into an exclusive Technology Transfer Agreement and License Agreement (the "Technology Transfer and License Agreement") for a period of ten years with Swiss Water Tech Research & Development S.A. (“SWATE”), an entity owned and controlled by the Company's Chief Executive Officer and Chief Operating Officer who are the primary beneficiaries. Under the terms of the agreement, SWATE: (a) will transfer to the Company the license to manufacture products developed by SWATE; (b) all know-how and technical assistance necessary for the exploitation of their licensed patents and the manufacture of certain products; and (c) will grant the Company the use of certain related trademarks. If the Company generates as a result of the products and licenses related to the Technology Transfer and License Agreement, the Company is to pay to SWATE a minimum annual royalty fee stipulated in the agreement plus five percent of revenue generated. Since the Company has not generated revenues, during 2013 the Company accrued the minimum fee of approximately $542,000 in accordance with the terms of the agreement. On April 15, 2015, SWATE agreed to waive licenses fees for 2014 and 2015.
As part of the exclusive Technology Transfer and License Agreement, on February 1, 2013, the Company was required to pay a non-refundable front-end fee of $6 million in exchange for the use of newly developed systems, concepts and license of patent and trademark. The Company satisfied the required payment through the issuance of 6 million shares of its common stock, valued at $1.00 per share. During 2013, the Company recognized amortization expense in the amount of $550,000. On December 31, 2013 the Company evaluated the unamortized asset for impairment and determined that due to its inability to secure revenue generating commercial contracts, the recoverability of this asset in future periods was doubtful. Accordingly, the Company fully impaired the remaining unamortized value of the front-end fee of $5,450,000. Our transactions with related parties were valued at zero dollars ($0.00) and values ascribed to securities utilized in such transactions were determined arbitrarily and have no relationship to book value or any traditional market values.
Effective February 1, 2013, the Company also entered into an International Service Contract with SWATE (the "SWATE Service Contract"). Under this agreement, SWATE will provide operations management, engineering and technical services to the Company. These services include:
Financial and Accounting Matters– SWATE shall maintain the Company’s general ledger, accounts receivable and accounts payable records, and fixed asset records and provide billing and collection services. SWATE shall also provide, or cause to be provided to client, payroll services, including assistance with regulatory compliance matters.
Insurance Matters – SWATE shall provide or cause to be provided to the Company, insurance with the coverage, insurers and maximum deductibles as will be requested by the Company via a written notice. All such insurance policies shall add the Company as an additional named insured, and such insurers shall be required to provide the Company with no less than 30 days’ prior written notice of any change or cancellation of any such insurance. In the event of any such potential change that may have a materially adverse effect on the Company, or in the event of potential cancellation, Company shall be entitled to secure replacement insurance at its own cost.
IT Services – SWATE shall provide certain general information technology services and infrastructure including assistance with installation, and maintenance of telephonic and computer equipment. SWATE shall also provide the Company with the use of SWATE’s existing and future telephone automatic call distribution networks and systems and email systems. SWATE shall provide such technical support and maintenance as the Company reasonably requests for the Company and its clients.
Web Hosting and Maintenance of Client Web Site – SWATE will provide Web hosting and maintenance services for the Company website. In consideration of hosting and maintaining the Company website, Company transfers to SWATE the right to use the Company website has its own website in its efforts to sell the Company’s products.
Customer Support – SWATE shall provide and perform such services related to technical assistance to the Company’s and user customers and distributors, customer training and any other tasks relating to servicing the Company’s customers and distributors.
Supply Chain Management – SWATE shall provide and perform such services related to the delivery of physical Company packages to the Company’s distributors or end-user customers; provided that the cost of these services to the Company will equal Administrative Services compensation plus other direct costs and expenses related to packaging and shipping.
Development Support – SWATE shall perform such specific consulting projects and research projects for the Company business development, from time to time, as requested by the Company and upon such terms as may be agreed upon between the Company and SWATE; provided that the cost of the services will equal SWATE’s salary and benefits costs for the employee-developers and other direct costs and expenses, plus fifteen percent (15%).
Other Services Provided– SWATE shall provide and perform such other services, as shall be requested by the Company and agreed upon between the Company and SWATE, from time to time, at such price and upon such terms as agreed.
The SWATE Service Contract has a term of five years, and provides for a monthly service fee of $35,000 plus out-of-pocket expenses.
SWATE is a Swiss research and development company with access to patent and certain scientific and technical resources. As a result of the above agreements, the Company has a variable implicit interest in SWATE, however it is not its primary beneficiary, does not provide any explicit or implied financial support and therefore does not consolidate SWATE's financial statements in its consolidated financial statements.
Other Acquisitions
During 2012, the Company agreed to issue an aggregate of 25,300,000 shares of common stock in connection with its acquisitions of Powermax Energy & Business Solution, Inc. (“Powermax Energy”), Powermax Green Technologies, LLC (“Powermax Green Technologies”), Green Environmental Management LLC (“GEM”); Swiss Green Solutions, Srl (“Swiss Green Solutions”) and International Supply & Support-African Sunlight-Solstrom (“African Sunlight”). The latter entities were inactive and except for “African Sunlight” were acquired from current officers and directors of the Company; consequently, the equity interest issued were recorded at an amount equal to the carrying amount of the net assets related to the latter entities.
During 2013, the Company issued common stock pursuant to its 2012 acquisition of Swiss Green Solutions, a corporation originally organized in Switzerland. In connection with this acquisition the Company acquired all of the ownership interest in Swiss Green Solutions in exchange for 8,000,000 shares of the Company's common stock valued at par. The Company acquired Swiss Green Solutions to secure design patent No. 138,065 for the Solar Power Water Purification System and all related technical designs and materials.
During 2013, the Company issued common stock pursuant to its 2012 acquisition of African Sunlight, a corporation originally organized in Norway. In connection with this acquisition the Company acquired all of the ownership interest in African Sunlight in exchange for 50,000 shares of the Company's common stock valued at $1 per share. The Company acquired African Sunlight to secure a vendor accreditation that allows the Company to supply green technologies to the United Nations members.
Powermax Energy & Business Solution, Inc. is 100% owned by Ralph Hofmeier, the CEO of EAWC. The Company secured the licensee rights for the core technologies for water and energy products from the patent owners of the technologies, AQUA SOCIETY GmbH, Germany. With the license, EAWC has the right to sell, manufacture and develop the core technologies of water and energy equipment for ninety-nine years across the world. In certain countries like Mexico, Latin America and the United Sates, EAWC was granted exclusive rights from Powermax. With the acquisition of Swiss Green Solution, a Swiss entity owned by Irma Velazquez, the COO of EAWC, EAWC will complete the water equipment technologies with a Swiss water purification concept based on Swiss Solar technology. Swiss Green Solution already has a stronghold in Mexico and has become the Exclusive Regional distributer of EAWC in Latin America.
The acquisition of Powermax Green Technologies LLC gave EAWC access to a strong sales force and agents in around the globe. With distribution and agents in more than 30 countries, EAWC has the ability to sell and distribute its products around the world. To date, this sales network already brought in five projects, with a value of more than $170 million. These five projects are in the early stages of development, while the Company conducts feasibility studies and seeks financing approval.
With the 50% acquisition of Green Environmental Management (GEM) from Texas, EAWC has direct access to several Swiss and US Universities for environmental studies and support. GEM was owned to 50% from Irma Velazquez. EAWC was already a 50% owner of GEM and just took over 100% of GEM.
Our Vision
The mission of EAWC is to provide sustainable energy systems based on high efficiency and renewable sources as well as smart grid and storage solutions. Through a combination of the AquaTech, EnergyTech and Waste management assisted technologies, we believe that it is possible to create a completely self-sufficient energy generation and water production system, which can be used at the same time to meet the potable water requirements as well as the electrical energy needs of businesses, communities and entire States like California. We have not yet realized any of the above results from the operations of our business.
EAWC is promoting green technology solution through its large network of distributers and agents worldwide. EAWC engages in patented German, Swiss & US technologies such as: Atmosphere Water Generators (AWGs), CO2-free energy production (Steam Energy Generators), Plasma-assisted gasification & sterilizations systems, Solar-powered Water Purification Systems, as well in solar and wind energy solutions (own developments).
Today EAWC has a network of proprietary technology, technology transfer agreements and technology representation agreements that cover nearly every aspect of renewable energy and water supply.
The Company maintains a partnership with a Swiss Water Tech Research & Development Centre to be the technical arm and provide technical services to the Company and it clients and distributors. The post-sales technical assistance, maintenance, training and education are delivered in a synergistic package that is enhanced by this relationship.
One of the key unique selling features and capabilities of the Company is the combination of the different disciplines of water, energy and waste management. EAWC Technologies offers closed loop elemental recycling systems that safely destroy waste and produces commodity products.
The EAWC- WtE system achieves this without producing harmful, noxious or dangerous by-products, effluents or emissions. The materials fed into the process are in actual feed -stocks, once regarded as waste. The departments of our Company are broken down below:
Atmosphere Water Generators (AWGs) & Aqua Mission Systems
The AWGs produce pure potable water from the air´s humidity. The system produces sufficient quantities of portable water even in very dry and hot climate conditions. AWG plants can be scaled to almost any size, community and/or population. Atmosphere Water Generators are largely used in Asia and African countries. The main producers for AWGs, which are based on dehumidifying, come from China. Almost every US based AWG brand is supplied by manufacturers in China. EAWC uses 80 year proven German technology for condensate water from the air based on A/C technology. This concept allows a higher performance and larger quantity of water because of the use of high amounts of air. With the tech-agreement with Swiss Water Tech, S.A. (SWATE), a company 100% owned by Irma Velazquez and Ralph Hofmeier, SWATE developed specially for the California market the OCTAGON AWG system. This system is based on the German patent for AWG Tech from AQUA SOCIETY GmbH, Germany. EAWC has the rights for ninety-nine years to use the German technology. The developed OCTAGON model line is different in size from the standard AM water generator line. The OCTAGON is energy self-sufficient and can condense unlimited amounts of water out of the atmosphere. SWATE allowed EAWC the use of this development, which can be used in many other countries around the world that deal with issues of water scarcity. EAWC plans to introduce the OCTAGON to the U.N. in the last fiscal quarter of 2016, with the hopes of supplying it to large refugee camps around the world in need of fresh water. The first deployment of the OCTAGON will be at the second fiscal quarter of 2016 in California to supply the water needed to farmers.
The AWGs work by first inhaling large volumes of air, then cooling the air down to the dew point, and finally collecting, filtering and mineralizing the resulting condensed water. Through this process, pure drinking water is created that meets the quality standards of the World Health Organization (WHO). In regions with high temperatures and high humidity levels, a single machine can generate up to 50,000 liters or 15,000 gallons of water per day. The OCTAGON line starts at 150,000 gallons and can expanded the water supply to ONE acre-feet/day.
Solar Power Water Purification Systems
EAWC Technologies was created to respond to the growing need of drinking water and proposes a water purification solution utilizing solar, photovoltaic energy and, when applicable, a mini- windmill or an alternate source of renewable energy. The system is ready to be built from SWATE and delivered on demand. The first unit will be placed in California as part of a pilot program, along with the AWG model lines, OCTAGON & AM.
Seawater, lake water, river water or stagnant water is passed through several stages of purification and treatment until it is rendered drinkable as per World Health Organization standards. In the case of sea or stagnant water, we recommend a treatment via reverse osmosis membranes, which permits the retention of dissolved solids and results in obtaining water of drinking quality. If the water being treated emanates from lakes or rivers, we recommend treatment via an ultrafiltration membrane which functions by retaining suspended materials such as colloids, viruses and bacteria. The systems proposed by EAWC Technologies are containerized and contain all equipment necessary to function in a perfectly autonomous fashion, notably due to a system of automatic cleansing, which can be accessed from a distance via satellite or Internet. Moreover, the machines also use available, renewable energy sources such as solar or wind. The system is proven from SWATE and certified, ready to be deployed on demand.
Steam Energy Generators
In a world where the goal of zero carbon factories, cities and economies is a priority for individuals, corporations and governments, the Energy Module offers zero carbon power generation in a simple, economical and reliable system.
The waste heat given off in industrial processes in the low-temperature range (up to 100°C) constitutes an energy potential in all industrialized countries that is substantially untapped. EAWC Technologies offers a novel process for generating electric current from low-temperature heat, thereby capturing the potential from this lost heat produced in many industrial processes to be capitalized. In addition to its potential using wasted heat sources, the process can also utilize heat from other sources for the generation of electricity, including solar energy, geothermal heat, or technically conditioned waste heat flows from power stations and combined heat and power (CHP) plants. Through the specific utilization of low-temperature heat for the generation of electricity, a major worldwide contribution can be made in reducing the consumption of fossil energy resources and cutting CO2 emissions. The system is patented and owned from AQUA SOCIETY GmbH, Germany. EAWC has the rights, worldwide, to sell the proven technology. On sale already for over five years in Germany,EAWC’s exclusive distributor is in the process of obtaining $16 million of financing necessary to build a prototype installation, which is scheduled to become operational in early 2016. The facility will not only be used to demo the technology to potential suppliers but will also generate revenue through the sale of generated electricity.
Plasma Converter System (PCS)
One of the primary strengths and capabilities of the Company is the synergistic combination of the complimenting disciplines of water, energy and waste management. EAWC Technologies offers a closed-loop elemental recycling system that safely destroys waste and produces commodity products. The EAWC WtE system achieves this without producing harmful, noxious or dangerous by-products, effluents or emissions. The materials fed into the process are actual feed stocks, once regarded as wastes.
The PCS is a gas converter ionizes to become an effective electrical conductor and produces a lightning-like arc of electricity that is the source of intense energy transferred to the waste material as radiant energy. The arc in the plasma plume within the vessel can be as high as 30,000°F or 16,650°C.
The PCS is an electrochemical system powered by electricity that causes the dissociation (breaking apart) of the molecular bonds of solid, liquid and gaseous compounds or materials of both hazardous and nonhazardous wastes (feedstock) organic and inorganic. Within the PCS, the molecules of the waste material are separated into their elemental components (atoms), and then reformed into recoverable nonhazardous commodity products ready for commercial use.
The PCS process is not a burning operation within incinerator. The PCS is igniting ionized gas from electric spark like in a neon light bulb. Patent the first time in 1804 in Germany, the gasification system was widely used in Europe till the mid- 1940s. The “Synthetic Gas” produced out of the organic/carbon based material can be used to power an internal combustion engine or a turbine to run an electrical generator. Today, over 400 gasification plants to process wastes are in use. Mostly in Europe, the gas is used to produce electricity or clean fuel. (www.gasification.org)
The Plasma Converter is computer controlled and easy to use. It operates at normal atmospheric pressure, safely by quietly generating sustainable power. Significant valuable resources can be created from the use of the Plasma Converter. For example, 1,000 tons-per-day of waste that is processed by a typical large municipality can be harnessed emission free and converted safely into syngas. The operation’s daily output of syngas can be used to produce millions of cubic feet of valuable hydrogen gas. In a typical 1000 tons-per-day operation, the 7.8 million Plasma Converter could theoretically pay for itself in well under two years. Here’s how: Landfill usage “Tipping Fees” run from an average $35 to over $100 per ton in high population areas. These costs, along with hauling fees, could be reduced by up to $75 per-ton / per-day by Plasma-Converting the waste and selling the electric, water, gas, and solid by-products, instead of paying the costs of a landfill.
Plasma Assisted Sterilization Process
The Plasma Arc Flow™ is a patented technology that converts most liquid waste into a clean fuel called Syngas. It works by moving the target liquid waste through a submerged electric arc between two electrodes. The arc decomposes the liquid molecules into atoms and forms a plasma around the tips of the electrodes. At about 10,000°F / 5,500 °C the plasma arc flow moves the plasma away from the electrodes and controls the formation of “Syngas” that rises to the surface for collection. This US certified and Patent technology intended solely to sterilize target liquid wastes such as sewage, agricultural wastes or any effluent where eliminating bacteriological activity is beneficial to convert the waste liquid into a fertilizer and/or irrigation water. These results of processing toxic liquid are completely sterilized (US Lab proven). EAWC has the sole rights granted to sell the technology in Mexico.
Worldwide Partnerships and Business opportunities
EAWC already has agents and dealers strategically placed around the world. The Company has sales agents in Switzerland, Mexico and Miami. The Company also has dealers located in Las Vegas Nevada, India, Pakistan, Canada, Australia, Colombia, Nepal and Kenya. In total, we work with 34 agents and distributers to promote and sell EAWC technologies. Their compensation is commission-based.
With agents located around the world, the Company intends to have a presence in all the most important markets in the world in need of Energy, Fresh water and Waste to Energy Solutions.
Competition
The atmospheric water generator and water purification and bottled water industries are highly competitive. Our main competitors at this time are Ambient Water (AWGI), Quest Water (QWTR) and Westinghouse Plasma Technology. This market segment includes numerous manufacturers, distributors, marketers, and retailers that actively compete for the business of consumers both in the United States and abroad. In addition, the market is highly sensitive to the introduction of new products and technologies that may rapidly capture a significant share of the market. As a result, our ability to remain competitive depends in part upon its successful introduction and consumer acceptance of new products. Although our products bear our own exclusive branding, we expect that the competition will intensify in the future, since our competitors can and may duplicate similar products or services to those offered by us.
Government Regulation
The manufacturing, processing, testing, packaging, labeling and advertising of the products that we sell may be subject to regulation by one or more U.S. federal agencies, including the Food and Drug Administration, the Federal Trade Commission, the Community Supported Agriculture in North America, the United States Department of Agriculture, the Environmental Protection Agency, the standards provided by the United States Public Health Authority and the World Health Organization for drinking water. These activities may also be regulated by various agencies of the states, localities and foreign countries in which consumers reside. Currently, the Company’s products are not subject to any governmental regulation although it is possible that the FDA may choose to regulate the quality of water produced from atmospheric water generating machines.
Since the Company may be subject to a wide range of regulation covering every aspect of our business as mentioned above, it cannot predict the nature of any future U.S. laws, regulations, interpretations or applications, nor can it determine what effect additional governmental regulations or administrative orders, when and if promulgated, would have on the business in the future. Although the regulation of water is less restrictive than that of drugs and food additives, we cannot offer assurance that the current statutory scheme and regulations applicable to water will remain less restrictive. Further, we cannot assure you that, under existing laws and regulations, or if more stringent statutes are enacted, regulations are promulgated or enforcement policies are adopted, we are or will be in compliance with these existing or new statutes, regulations or enforcement policies without incurring material expenses or adjusting our business strategy. Any laws, regulations, enforcement policies, interpretations or applications applicable to our business could require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not capable of reformulation, additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling or scientific substantiation.
Employees
As of October 15, 2015, we currently have 2 full time employees. Over time, we may be required to hire employees or engage independent contractors in order to execute various projects necessary to grow and develop the business. These decisions will be made by our officers and directors, if and when appropriate. We work with approximately 34 agents and brokers around the world to promote the Company and sell our technologies. These agents and brokers are independent contractors and are compensated solely based on commission.
Our principal executive office is located at 2000 Ponce de Leon Blvd., 6th Floor, Miami, Florida 33134. Our telephone number is (305) 517-7330.
We are currently not involved in any litigation that we believe could have a material 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 the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our Common Stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Price Range of Common Stock
Our common stock is currently quoted on the OTC Pink Market maintained by OTC Markets Group, Inc. under the symbol “EAWD”. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.
On February 11 2016, the closing price of our Common Stock was $1.38 per share as reported on the OTC Pink Marketplace.
Penny Stock
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholdersshareholders may have difficulty selling our securities.
As of February 10, 2016 we had 610June 24, 2022, there were 846 record holders of 173,019,421 shares of the Company’s common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. The transfer agent of our common stock holding 87,201,863 shares of common stock.is Worldwide Stock Transfer, LLC.
We have notnever declared nor paid any cash dividends on our C-Corporation common stock, and currently intend to our shareholders. The declaration of any future cash dividends is at the discretionretain all of our Boardcash and depends uponany earnings for use in our earnings, if any, our capital requirementsbusiness and, financial position, and general economic conditions. It is our present intentiontherefore, do not to payanticipate paying any cash dividends in the foreseeable future. Any future but ratherdetermination to reinvest earnings, if any, inpay cash dividends on our business operations.common stock will be at the discretion of the Board of Directors and will be dependent upon our consolidated financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.
(d) Securities authorized for issuance under equity compensation plansplans.
Not applicable.None.
FINANCIAL STATEMENTS
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CAPITALIZATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following table sets forth our actual cash and cash equivalents and our capitalization as of March 31, 2022, and as adjusted to give effect to the sale of the shares offered hereby and the use of proceeds, as described in the section titled “Use of Proceeds” above, and additionally the expected proceeds of $5,000,000 from the 25,000,00 shares pursuant to the Tysadco Purchase Agreement.
The following discussionpro forma information set forth in the table below is illustrative only and analysiswill be adjusted based on the assumed public offering price and other terms of the results of operations and financial condition for the nine months ended September 30, 2015 and 2014 and the fiscal years ended December 31, 2014 and 2013this offering determined at pricing.
You should be read this information in conjunction with “Managements’ Discussion and Analysis of Financial Condition and Results of Operations” and our consolidatedunaudited financial statements and related notes appearing in our Quarterly Report on Form 10-Q for the notes to those consolidated financial statements that are included elsewhereperiod ended March 31, 2022.
| As of March 31, 2022 | ||||||||||
| Actual (Unaudited) | Pro forma | |||||||||
| CASH | $ | 412,051 | $ | 23,912,051 | ||||||
| STOCKHOLDERS’ EQUITY: | ||||||||||
| Preferred stock, par value $.001 per share; 500,000,000 shares authorized, 9,780,976 shares issued and outstanding at March 31, 2022 | 9,781 | 9,781 | ||||||||
| Common stock, par value $0.001 per share, 500,000,000 shares authorized, 162,389,201 and shares issued and outstanding as of March 31, 2022 and 217,389,201 shares issued and outstanding as adjusted. | 162,389 | 217,389 | ||||||||
| Additional paid-in capital | 22,034,831 | 45,479,831 | ||||||||
| Common stock subscriptions; 10,324,000 shares | 722,445 | 722,445 | ||||||||
| Accumulated deficit | (22,754,103 | ) | (22,754,103 | ) | ||||||
| Accumulated other comprehensive loss | (28,474 | ) | (28,474 | ) | ||||||
| Total stockholders’ equity | $ | 146,869 | 23,646,869 | |||||||
| Total capitalization | $ | 146,869 | 23,646,869 | |||||||
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DILUTION
If you purchase shares in this Registration Statement.offering, your ownership interest in our Common Stock will be diluted immediately, to the extent of the difference between the price to the public charged for each share in this offering and the net tangible book value per share of our Common Stock after this offering.
The net tangible book value of our Company as of March 31, 2022 was $146,869 or approximately negative $0.00 per share of common stock (based upon 162,389,201 shares of common stock outstanding). Net tangible book value per share is determined by dividing the net tangible book value of our Company (total tangible assets less total liabilities) by the number of outstanding shares of our common stock.
The following table illustrates the per share dilution to new investors, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares offered for sale in this offering (after deducting estimated offering expenses of $100,000 for each investment level):
| Percentage of shares offered that are sold | 100% | 75% | 50% | 25% | ||||||||||||
| Price to the public charged for each share in this offering | $ | 0.62 | $ | 0.62 | $ | 0.62 | $ | 0.62 | ||||||||
| Net tangible book value per share as of March 31, 2022 (1) | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| Increase in net tangible book value per share attributable to new investors in this offering | $ | 0.11 | $ | 0.09 | $ | 0.06 | $ | 0.03 | ||||||||
| Net tangible book value per share, after this offering | $ | 0.11 | $ | 0.09 | $ | 0.06 | $ | 0.03 | ||||||||
| Dilution per share to new investors | $ | 0.51 | $ | 0.53 | $ | 0.56 | $ | 0.59 | ||||||||
———————
| (1) | Based on net tangible book value as of March 31, 2022 of 146,869 and 162,389,201 outstanding shares of Common Stock as of March 31, 2022. |
The number of shares of our common stock that will be issued and outstanding immediately after this offering as shown above is based on 162,389,201 shares outstanding as of March 31, 2022.
If you purchase securities in this offering, your interest will be immediately and substantially diluted to the extent of the difference between the public offering price per share of our common stock and the as adjusted net tangible book value per share of our common stock after giving effect to this offering.
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DESCRIPTION OF THE BUSINESS
Company Overview
Energy and Water Development Corp. (the “Company” or “EAWD”) was registered as a Florida corporation under the name Eagle International Holdings Group Inc. on December 12, 2007 and, on March 10, 2008, the Company changed its name to Eurosport Active World Corporation.
On March 17, 2008, the Company entered into an Agreement and Plan of Acquisition (the “Acquisition Agreement”) with Inko Sport America, LLC (“ISA”), a privately-held Florida limited liability company. In connection with the closing of the AcquisitionAgreement, the Company adopted ISA’s business plan and the Company’s current officers and directors were elected to their positions. This transaction was accounted for as a recapitalization effected by a share exchange, wherein ISA was considered the acquirer for accounting and financial reporting purposes. ISA was administratively dissolved in September 2010.
In September 2019, the Company changed its name to Energy and Water Development Corp. to more accurately reflect the Company’s purpose and business sector.
On November 9, 2021, the Company established an official subsidiary of EAWD in Germany called Energy And Water Development Deutschland GmbH (“EAWD Deutschland”) to ensure the Company is positioned to service its growing business in one of the EU’s most environmentally progressive countries.
The Business
We are an engineering services company formed as an outsourcing green tech platform, focused on sustainable water and energy solutions.
| · | EAWD builds water and energy systems out of already-existing, proven technologies, utilizing our technical know-how to customize solutions to our clients’ needs. |
| · | EAWD commercializes proven technologies for the sustainable generation of energy and water. |
| · | EAWD offers design, construction, maintenance and specialty consulting services to private companies, government entities and non-government organizations (NGOs). |
In view of the increased world-wide demand for water and energy, our business goals are focused on water generation and green energy production. To accomplish this, we set out to establish an outsourcing green tech platform, providing engineering and technical consultation services to design the most sustainable technological solutions that can provide water and energy. We also intend to secure all required technical, maintenance, education, and training related to the identified technology solutions. To this end the Company has sought potential collaboration with green tech research and development centers in Europe and has established its operating subsidiary, EAWD Deutschland, in Hamburg Germany, where we have started to assemble our patent-pending innovative Self Sufficient Power Supply Atmosphere Water Generation Systems (eAWGs). EAWD Deutschland operates in Hamburg, Germany to meet the increasing demands of water and energy generation projects in Germany as well as to operate the solar powered e-truck charging stations, EAWD’s newest product.
The green tech industry is constantly evolving due to ongoing and increasing water scarcity as well as increased energy needs in the world. Therefore, we believe that by designing sustainable and renewable solutions to these problems, EAWD will become an essential component of a rapidly growing industry with many new markets.
The green tech industry is complex because it still requires much promotion and information about its potential. Furthermore, regulations in each country are different and, in many cases, several segments are regulated by both national and local (state, provincial, municipal) governments. EAWD’s approach seeks to assist businesses with the growth and development of their general operations by ensuring the efficient, profitable, and sustainable supply/generation of water and energy allowing our potential customers to focus on their business while adopting strategies of sustainability. Using our own eAWGs, the solar powered e-truck charging stations, and other identified technology, products, and services licensed or purchased from third party sources, we are delivering and installing a product set that suits the green technology water and/or energy needs of our customers. By using the state-of-the art technological solutions and technologies identified, designed, and provided by EAWD and its collaborators, we believe that our potential clients will be free to focus on the performance of their operations as well as with the water and energy consumption or generation regulations within their industry. Our discussion includes forward-looking statementsclients may be businesses seeking to upgrade their business processes, non-governmental organizations (NGOs) or governmental entities seeking to apply green technology solutions for the water and energy they supply to their constituencies.
We continue to be a development stage company. The Company presently assembles its eAWGs at its workshop in Germany and outsources most of its engineering and technical services as well as services relating to the promotion, selling, and distribution of its products. We presently have only six employees: Mr. Hofmeier, our President, Chief Executive Officer, Chairman of the Board, and a significant stockholder, Ms. Velazquez, our Chief Operating Officer, Vice-Chairman, and a significant stockholder, two engineers and two technicians.
We seek to focus on three main aspects of the water and energy business: (1) generation, (2) supply, and (3) maintenance. We seek to assist private companies, government entities and municipalities, and NGOs to build profitable and sustainable supplies/generation capabilities of water and energy as required by selling them the required technology or technical service to enhance their productivity/operability. With its outsourced technical arm and its commission-based global network of distributors, the Company expects to create sustainable added value to each project it takes on while generating revenue from its engineering, technical consultancy, and project management services, the sale of our eAWGs, solar-powered energy generation systems, energy management systems, solar powered e-truck charging stations, royalties from the commercialization of energy and water in certain cases, and the licensing of our innovated technologies.
The following table depicts the Company’s service and product offerings to its clients.
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We provide customized technology solutions and technical services, based upon current expectationsclient need and preference, which may include any or all of the following:
| · | Water and energy generation |
| · | e-truck charging stations |
| · | technical assistance |
| · | strategic and financial partnering |
| · | project management |
The Company also focuses on addressing areas of the industry which concentrate on new technological and engineering concepts relating to water and energy generation and those related components that involve risksassist in advancing the green tech industry. These include:
| · | advancement of eAWGs |
| · | development of techniques to attain self-sufficient supply of energy |
| · | advancement of new ideas on energy generation, storage and management implementation |
| · | designing, prototyping, and arranging the manufacture of new water and energy generation systems |
| · | designing and prototyping solar powered charging stations for e-trucks |
Our Vision
The size of the global market for atmospheric water generators was estimated at USD 959.85 million in 2020, reached USD 1,074.01 million in 2021, and uncertainties,at a compound annual growth rate (CAGR) of 14.75%, is expected to reach USD 2,515.19 million by 2027.
The main market dynamics to consider are the growing numbers of AWGs across various end-use verticals and versus the high energy consumption, production cost, and high carbon foot print of such technology. Our research and development activities in AWG technology have led us to develop novel technologies that overcome these negative dynamics (such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Forward-Looking Statements.”
OvervieweAWG).
The mission of EAWCEAWD is to provide sustainable energywater generation systems based on high efficiency, and renewable sources as well as smart grid and storageto provide energy management solutions. Through a combination of the AquaTech, EnergyTechbest design and Waste management assisted technologies, we believe it is possible to createconfiguration of state-of-the-art technology-assisted solutions, EAWD has created a completely self-sufficient energy generation and water production system, which can be simultaneously used at the same time to meet the potable water requirements as well asand the electrical energy needs of communities.the industrial sector.
EAWC plans to promote, develop, manufactureEAWD promotes and commercializecommercializes its green technologies. EAWC engages in patented technologies such as: Atmosphere Water Generators (AWGs), CO2-free energy production (Steam Energy Generators), Plasma-assisted gasification & sterilizations systems, Solar-powered Water Purification Systems, as well as solartechnology solutions via commission-based distributers and wind energy solutions.agents worldwide.
12 Month Growth StrategyThrough our BlueTech Alliance for Water Generation, established in December 2020, we have state-of-the-art technology partners, technology transfer agreements, and Milestones
While a strategic and wisely executed sales marketing campaign is key to expanding our customer base; providing new, cutting-edge, innovative technologies developed and implemented for our clients, will provide a solid platform upon which our operations will continue to grow and deliver long-term success.
Note: The following milestones are based on the company's business development strategy, which will require capital to execute.
0-3 Months
$500,000
Provided by operations and or equity/debt offering
Establish a bigger officetechnology representation agreements in Miami.
Supplemental technical and admin resources and personnel.
Travel to ongoing projects (Mexico, India & Switzerland)
4-6 Months
$400,000
Provided by operations and or equity/debt offering
Defining technical and engineering requirements to enhance technical services.
Continue marketing of those sectors and industries to which EAWC anticipates providing its Technologies and technical services.
Web site development and promotional events.
Travel to relevant industry association events and trade shows.
7-12 Months
$2,500,000
Provided by operations and or equity/debt offering
Discussions with interested companies (Green Tech development institutions, companies and manufacturers) to begin establishing joint research and development projects.
Acquisition of new equipment to increase the company's core capabilities and to enable it to provide its clients with value added technical contract.
New clients will be brought in along with a growing staff to accommodate the growing demand accordingly.
R&D institutions will then be approached for larger possible joint ventures which will see a separate revenue income.
We therefore EAWC expect to incur the above costs in the next 12 months in connection with our ongoing business operations. We expect to generate income from the sales of our Distributors as identified bellow. We also will most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(2) of the Securities Act of 1933.
Revenue Generation:
Critical Accounting Policies and Estimates
Our consolidated financial statements included elsewhere in this prospectus are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the following critical accounting policies involve a greater degree of judgment and complexity than our other accounting policies. Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations.
Use of Estimates
The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Estimates which are particularly significant to the consolidated financial statements include estimatesplace relating to the determinationaspects of impairment of assets, the useful life of propertyrenewable energy and equipment, the determination of the fair value of stock-based payments,water supply. These unique key relationships offer important selling features and the recoverability of deferred income tax assets.
Income taxes
We record our provision for income taxes in our consolidated statements of operations by estimating our taxes in each of the jurisdictions in which we operate. We estimate our actual current tax exposure together with assessing temporary differences arisingcapabilities that differentiated EAWD from differing treatment of items recognized for financial reporting versus tax return purposes. These differences result in deferred tax assets, which are included in our consolidated balance sheets. In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in our consolidated statements of operations become deductible expenses under applicable income tax laws, or loss or credit carry forwards are utilized. Valuation allowances are recorded when necessary to reduce deferred tax assets to the amount expected to be realized.
Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We make these estimates and judgments about our future taxable income that are based on assumptions that are consistent with our future plans. As of September 30, 2015, we had recorded a full valuation allowance on our U.S. net deferred tax assets because we expect that it is more likely than not that our deferred tax assets will not be realized in the foreseeable future. Should the actual amounts differ from our estimates, the amount of our valuation allowance could be materially impacted.
Stock-Based Payments
The Company applies the fair value method of ASC 718, “Share Based Payment” in accounting for its stock based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock based compensation at the markets price for the Company’s common stock and other pertinent factors at the grant date.competitors.
The Company accounts for transactionsplans to generate revenue from its engineering, technical consultancy, and project management services, the sale of our eAWGs, solar-powered energy generation systems, energy management systems, solar powered e-truck charging stations, royalties from the commercialization of energy and water in which services are received in exchange for stock based oncertain cases, and the fair valuelicensing of such services received from non-employees, in accordance with ASC 505-50, “Equity Based Payments to Non-employees.”
The Company measures the fair value of the equity instruments issued based on the market price of the Company’s stock at the time services or goods are provided.
Recent Accounting Pronouncements
Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Company’s future consolidated financial statements. The following are a summary of recent accounting developments.
In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810)—Amendments to the Consolidation Analysis (“ASU 2015-02”)”, which provides guidance on evaluating whether a reporting entity should consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. Further, the amendments eliminate the presumption that a general partner should consolidate a limited partnership, as well as affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. A reporting entity may apply the amendments using a modified retrospective approach or a full retrospective application. The Company is currently evaluating the impact, if any, that adopting ASU 2015-02 will have on its consolidated financial statements.our innovated technologies.
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In May 2014,Our Products
The technological solutions offered by our Company are the FASB issued ASU 2014-09, “Revenuefollowing:
Self Sufficient Power Supply Atmosphere Water Generation System (eAWGs)
Today, atmosphere water generators (AWGs) are standard equipment in many places; however, operating AWGs requires high amounts of energy that is often not available in the places where they are needed most, making the price for the generated water very high. Our innovative eAWGs are designed to have an internal power supply and ability to generate power. Our eAWG system produces sufficient quantities of potable water even in very dry and hot climate conditions and can be scaled to almost any size, community, and/or population. Presently, AWGs are largely used in Asian and African countries. The majority of manufacturers of AWGs, which rely on dehumidifying, are located in China. Almost every U.S. based AWG brand is also supplied by manufacturers in China.
By contrast, EAWD uses a proven German technology for condensate water from Contracts with Customers (“ASU 2014-09”)”. The core principlethe air based on A/C technology. We believe that this method allows higher, more efficient, sustainable performance and a larger quantity of ASU 2014-09 iswater generation because of its internal power supply and because it does not require high humidity to function. EAWD has licensed the rights to use this German AWG technology for ninety-nine years; however, thanks to our continued research and development efforts, the Company has designed a new and innovative configuration that an entity should recognize revenueallows the substantial amount of energy required to depictoperate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expectsequipment to be entitledsupplied by the equipment itself. Our eAWGs line is different in exchange for those goods or services. To achievesize from the standard AWG water generator line. Our eAWGs are energy self-sufficient and can condense large amounts of water out of the atmosphere and we believe they could be a solution in countries around the world that core principle,deal with issues of water scarcity.
Our eAWG with an entity should applyinternal power supply works by first “inhaling” large volumes of air, then cooling the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction priceair down to the performance obligations indew point, and finally collecting, filtering, and mineralizing the contract; and recognize revenue when (or as)resulting condensed water. Through this process, pure drinking water is created that meets the entity satisfies a performance obligation. ASU 2014-09 supersedes the revenue-recognition requirements in ASC Topic 605, “Revenue Recognition”, and most industry-specific guidance throughout the industry topicsquality standards of the accounting standards codification. ASU 2014-09World Health Organization (WHO). In regions with high temperatures and high humidity levels, a single system can generate up to 50,000 liters or, approximately, 15,000 gallons of water per day. Our eAWGs line starts at 2,640 gallons/day and can expand the water supply to one acre-feet/day, which we believe, in effect, is effectiveessentially the ability to produce an unlimited supply of water. As a certified vendor of the United Nations (UN) Global Marketplace, EAWD is introducing the eAWGs to the UN with the hopes of initially supplying the equipment to large refugee camps around the world in need of fresh water.
Solar/Wind Powered Water Purification Systems
EAWD also seeks to respond to the growing need for interimdrinking water by proposing a water purification solution utilizing solar, photovoltaic energy and, annual reporting periods beginning after December 15, 2017. Early adoptionwhen applicable, a mini-windmill or other alternate source of renewable energy. The design of the system is permitted. Companies mayready to be built and delivered on demand.
Generally, drinking water is produced by passing sea water, lake water, river water, or stagnant water through several stages of purification and treatment until it is rendered drinkable in accordance with WHO standards. In the case of sea or stagnant water, we recommend a treatment via reverse osmosis membranes, which permits the retention of dissolved solids and results in obtaining water of drinking quality. If the water being treated emanates from lakes or rivers, we recommend treatment via an ultrafiltration membrane which functions by retaining suspended materials such as colloids, viruses and bacteria. The systems proposed by EAWD are containerized and contain all the equipment necessary to function autonomously, in part due to an automatic cleansing system that can be accessed remotely via satellite or the internet. Moreover, the machines use either a full retrospectiveavailable renewable energy sources such as solar or a modified retrospective approachwind to adopt ASU 2014-09. The Company is currently evaluating the approach for implementation and the potential impact of adopting this guidance on its consolidated financial statements.function.
Self Sufficient Energy Supplied Heavy Duty EV Charging Stations
There wereis increasing consensus among European truck manufacturers and industry stakeholders that battery electric trucks (BETs) will play a dominant role in the decarbonization of the road freight sector. Most truck makers including Daimler, MAN, Scania and Volvo are now focusing on bringing BETs to the mass market for all vehicle segments, including long-haul, starting from 2024. For this, a network of public high-power and overnight charging points needs to be rolled out across Europe no later than 2024.
Based on our patent-pending Self Sufficient Energy Supply System; EAWD has developed an innovative design and configuration of a self-sufficient mobile charging stations for e-trucks in Germany. Our product is the first solution available in Europe for charging the electric trucks that are currently on the roads of Europe. EAWD plans to establish up to 1,700 charging stations throughout Germany starting with 40 locations scheduled to be installed starting in the third quarter of 2022.
Solar Power Systems
This product portfolio includes systems and complete services for solar power generation in the building envelope. A high-quality frameless glass solar panel with a super-matte surface, which secures a high-performance energy source. In contrast to classic solar systems on the roof, EAWD combines the highest standards of aesthetics with high efficiency energy generation. With these solutions, EAWD supports its customers on their way to CO2 neutrality and the search for alternative renewable energies.
Off Grid Energy Management Solutions
Today, batteries for stationary storage have become a commodity, but in order to reduce the duration, complexity and cost of the installation, and to increase its capacity or relocate a system over time as well as to reduce its carbon footprint and environmental impact, we offer a complete electrical energy storage system (EESS) and energy management systems (EMS) for a wide range of customers and applications, including microgrids and EV fast charging stations. A highly capable energy management system which secures the efficient energy supply and storage of energy. Example: with elements such as software and Battery Management System (BMS) our systems can allow controlled and optimized battery cell management.
Worldwide Business Relationships
EAWD has commission-based independent agents and distributors strategically placed around the world in Germany, Mexico, United States, India, Canada, Australia, Colombia, Nepal, Kenya, Morocco, and Thailand. In total, we work with 34 commission-based independent agents and distributors to promote and sell EAWD’s technology solutions.
We believe that this worldwide presence through our agents and distributors will provide us access to the most important markets in need of water, energy, and energy management solutions.
Current Projects
EAWC Tecnologias Verdes, S.A.P.I. de CV Purchase – EAWC-TV functions as a distributor of EAWD products and engineering services. EAWC-TV placed a USD $550,000 initial order for a solar powered eAWG which was built in Germany and delivered to the customer ex-works in 2020. The customer has expressed interest in purchasing three additional units.
A solar powered eAWG has been built in Hamburg to be used as the showcase for the water generation at the larger project in Gruneheide Germany, where it is expected to produce up to 6 million gallons of water per day.
The Company has also recently completed the manufacture and installation of the first of forty planned solar powered charging stations for electric long-haut trucks in Hamburg, Germany. This charging station is the first mobile self-sufficient energy supplied charging station available for these e-trucks in Europe and the Company plans to contract with companies that own these electric long-haul trucks to provide fleet charging as well as to install in public places for per-use fees.
COVID-19 is an incomparable global public health emergency that has affected almost every industry and has caused the worst global economic contraction of the past 80 years (IMF). Concerted global efforts achieved the development of vaccines that have helped to reduce a person´s risk of contracting the virus. However, the current war in Ukraine lead us as well to considering the changes in consumer behavior and demand, purchasing patterns, re-routing of the supply chain, dynamics of current market forces, and the significant interventions of governments; As a consequence of the foregoing, the following projects have been delayed but the Company continues to make progress on their fulfillment.
His Will Innovations (South Africa) Contract – On May 8, 2019, the Company signed a sales contract for the sale of a Solar Powered Atmosphere Water Generation System (“SPAWG”) to a South African customer for a purchase price of $2,800,000. The build out of the equipment began in the fourth quarter of 2019, however because of delays due to COVID-19, the expected completion date has been pushed to late 2022. The foregoing description of the purchase contract does not purport to be complete and is qualified in its entirety by reference to the copy of such contract filed as Exhibit 10.8 to this registration statement.
Contract Award From Arriyadh Development Authority Of Saudia Arabia – On November 1, 2017, the Company received a contract award with a value of USD$10,640,000 from the Arriyadh Development Authority of Saudia Arabia to provide 100 units of 5000LPD eAWG systems. In the first quarter of 2020, a meeting took place between the parties regarding the project delivery schedule; however, because of the COVID-19 pandemic and the current situation of the War in Ukraine, the project has temporarily been put on hold until new, reliable advice regarding COVID-19 and the consequential challenges of the War Ukraine is available. The foregoing description of the contract award does not purport to be complete and is qualified in its entirety by reference to the copy of such award filed as Exhibit10.7 to this registration statement
Contract Award from the Iraqi Project and Contracting Office – On March 26, 2020, the Company received a contract award with a value of USD$14,650,640 from the Iraqi Project and Contracting Office to supply 20 self-sufficient energy supply atmosphere water generation systems to various other accountingIraqi projects. EAWD management must travel to Iraq to sign several documents in order to receive payment. COVID-19 and the War in Ukraine have delayed this travel, however, management plans travel to Iraq as soon as travel is allowed, and the pandemic has been brought better under control in Iraq. The foregoing description of the contract award does not purport to be complete and is qualified in its entirety by reference to the copy of such award filed as Exhibit10.15 to this registration statement
Patent, Trademark, License and Franchise Restrictions and Contractual Obligations and Concessions
The Company has filed application to register its name and logo as trademarks with the United States Patent and Trademark Office (USPTO) to secure its corporate identity.
The Company has filed an application to patent its eAWG with the World Intellectual Property Organization (WIPO) and the USPTO.
Competition
The market witnesses the presence of a diversified array of large and small scale manufacturers resulting in a significant level of competition in the global market. The competition in the market, both in the residential and commercial sectors, is projected to grow in intensity and is characterized by the demand for advanced and reliable atmospheric water generator units. Rising demand for industrial-size eAWGs, particularly in regions facing water shortages, is expected to create opportunities for new market players such as EAWD through 2027. Moreover, current research that is focused on increasing overall product efficiency in the industry is anticipated to open new avenues for market players over the coming years. According to an atmospheric water generator market size report [published by Grand View Research in 2020], some of the prominent players in the atmospheric water generator (AWG) market include: Akvo Atmospheric Water Systems Pvt. Ltd., Dew Point Manufacturing, Saisons Trade & Industry Private Limited, Water Maker India Pvt. Ltd., Planets Water, Water Technologies International, Inc. (WTII), SkyWater Air Water Machines, Drinkable Air, Hendrx Water, Atlantis Solar, GENAQ Technologies S.L., Air2Water LLC, EcoloBlue, Inc and Watergen. On some level, each of these companies faces the two main industry challenges: carbon footprint and high-power requirement.
We compete by providing innovative systems assembled with state of the art technologies and that contain self-sufficient power supplies, which make them more sustainable and profitable than the traditional solutions. We also set ourselves apart by providing services that are valued by our customers such as reliable sales relationships, product innovations, and responses to changing market/business needs.
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Government Regulation
The manufacturing, processing, testing, packaging, labeling, and advertising of the technologies that we sell may be subject to regulation by one or more U.S. federal agencies, including the Food and Drug Administration, the Federal Trade Commission, the U.S. Department of Agriculture, the Environmental Protection Agency, and by the standards provided by the U.S. Department of Health and Human Services and the World Health Organization for drinking water. Our operations may also be regulated by various agencies of states, localities, and foreign countries in which consumers reside. Currently, the technologies we intend to use in our solutions and our services are not subject to any governmental regulation in the United States although it is possible that the FDA may choose to regulate the quality of water produced from atmospheric water generating machines in the near future.
Since the Company may be subject to a wide range of regulation covering every aspect of our business as mentioned above, we cannot predict the nature of any future U.S. laws, regulations, interpretations issuedor applications, nor can we determine what effect additional governmental regulations or administrative orders, when and if promulgated, would have on the business in 2014, nonethe future. Although the regulation of water is less restrictive than that of drugs and food additives, we cannot offer assurance that the current statutory scheme and regulations applicable to water will remain less restrictive. Further, we cannot assure you that, under existing laws and regulations, or if more stringent statutes are enacted, regulations are promulgated, or enforcement policies are adopted, we are or will be in compliance with these new statutes, regulations or enforcement policies without incurring material expenses or adjusting our business strategy. Any laws, regulations, enforcement policies, interpretations or applications applicable to our business could require the reformulation of products, all of which are expectedsupplied by third parties, to meet new standards or the recall or discontinuance of certain products not capable of reformulation, additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling or scientific substantiation.
Employees
As of March 31, 2022, we had six full-time employees. Over time, we will be required to hire employees or continue to engage independent contractors in order to execute the projects necessary to grow and develop the business. These decisions will be made by our officers and directors, if and when appropriate. We work with 34 commission-based agents and distributors to promote and sell the Company’s technology solutions. These agents and distributors are independent contractors with whom we have contractual relationships and are compensated solely based on commission.
Legal Proceedings
Due to the nature of the Company's business, the Company may at times be subject to claims and legal actions. The Company accrues liabilities when it is probable that future costs will be incurred, and such costs can be reasonably estimated. Such accruals are based on developments to date and the Company’s estimates of the outcomes of these matters. Other than litigation that may arise in the usual course of business, the Company is currently involved in the following legal proceedings:
EAWD vs Packard and Co-Defendant Nick Norwood - Case number 18-031011 CA-01 Miami-Dade County Circuit Court. The Company is requesting the proof of payment for shares issued in 2008.
Reports to Securities Holders
We provide an annual report that includes audited financial information to our shareholders. We make our financial information equally available to any interested parties or investors through compliance with the disclosure rules for a material impactsmall business issuer under the Exchange Act. We are subject to disclosure filing requirements including filing Form 10-K annually and Form 10-Q quarterly. In addition, we will file Form 8-K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC 20549.
The public may obtain information on the Company’s financial position, operations or cash flows.operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
INTRODUCTORY STATEMENT
Results of Operations
The following discussion should be read in conjunction with the consolidatedour audited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this Registration Statement. prospectus and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or our behalf. We disclaim any obligation to update forward-looking statements.
ComparisonNarrative Description of the fiscal year ended December 31, 2014 and December 31, 2013
RevenueBusiness
For the fiscal years 2014We are an engineering services company formed as an outsourcing green tech platform, focused on sustainable water and 2013, we generated no revenue.energy solutions.
Addressing challenges post-COVID-19 and current war in Ukraine.
COVID-19 is an incomparable global public health emergency that has affected almost every industry and has caused the worst global economic contraction of the past 80 years (IMF). The concerted global efforts achieved the development of vaccines that have helped to reduce a person´s risk of contracting the virus. However, the current war in Ukraine lead us as well to considering the changes in consumer behavior and demand, purchasing patterns, re-routing of the supply chain, dynamics of current market forces, and the significant interventions of governments; Disruptive activities could include the temporary closure of our manufacturing facilities and those used in our supply chain processes, restrictions on the export or shipment of our products, significant cutback of ocean container delivery from Germany, business closures in impacted areas, and restrictions on our employees’ and consultants’ ability to travel and to meet with customers. The extent to which COVID-19 impacts our results will depend on future developments, which still uncertain and cannot be predicted, including new information which may emerge concerning the severity of the current conflict as well as virus variants and the actions to contain it or treat its impact, among others. COVID-19 and the war in Ukraine could also continue to result in social, economic and labor instability in the countries in which we or our customers and suppliers operate.
If workers at one or more of our offices or the offices of our suppliers or manufacturers become ill or are quarantined and in either or both events are therefore unable to work, our operations could be subject to disruption. Further, if our manufacturers become unable to obtain necessary raw materials or components, we may incur higher supply costs or our manufacturers may be required to reduce production levels, either of which may negatively affect our financial condition or results of operations.
In light of these challenges, the Company is focusing its efforts on supporting key areas of our business that will help us to stabilize in the new environment and strategize for what comes next. Those key areas are: crisis and management response, workforce, operation and supply chain, finance and liquidity, tax, trade and regulatory, as well as strategy and brand.
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Results of Operations
Results of Operations for the Three Months ended March 31, 2022 Compared to the three Months ended March 31, 2021
Revenue
The Company recognized no revenue during the three months ended March 31, 2022 and 2021.
Cost of equipment sold
The Company recognized no cost of equipment sold during the three months ended March 31, 2022 and 2021.
General and AdministrationAdministrative Expense
General and Administrationadministrative expense decreased $6,546,198 (84.7%)increased by $137,630 to $1,185,318$443,112 for the yearthree months ended DecemberMarch 31, 20142022 from $7,731,516$305,482 for the yearthree months ended DecemberMarch 31, 2013. This decrease was attributable to the following:2021.
There were decreases in the following items:
Which were partially offset by increase in the following items:
Interest Expense and other expenses
Interest expense and other expenses increased $2,747 (51.9%) to $8,096 for the year ended December 31, 2014 from $5,349 for the year ended December 31, 2013, which is considered negligible.
Net loss
Net Loss decreased $6,543,451 (84.7%) to $1,193,414 for the year ended December 31, 2014 from $7,736,865 for the year ended December 31, 2013. This decrease was attributable to the decrease in general and administrative expenses was primarily due to an increase in professional fees of $44,896, officer’s salaries of $38,237, and other general and administrative expenses by $114,363, offset by a decrease in marketing fees of $71,941.
Other Income (Expense)
The Company had other income of $84,402 for the three months ended March 31, 2022 compared to other expense of $128,570 for the three months ended March 31, 2021. The increase in income is primarily the result of a reduction in interest expense of $314,472 offset by a decrease in the gain on derivative liability of $66,695 and increase in other expense of $34,805.
Net Loss
Net loss decreased by $75,342 to $358,710 for the three months ended March 31, 2022 from $434,052 for the three months ended March 31, 2021. This increase was attributable to the net increases and decreases as discussed above.
LiquidityLIQUIDITY and Capital ResourcesCAPITAL RESOURCES
We had $412,051 cash and cash equivalents of $0 and working capital deficit of $2,061,033$70,491 at DecemberMarch 31, 2014.2022. Our operating and capital requirements in connection with supporting our operations will continue to be significant to us.significant. Since inception, our losses from operations and working capital requirement wererequirements have been satisfied through the deferral of payment for services performed by our founders and related party’sparties discussed more fully below.
We have sustained operationaloperating losses since our inception.operations began. At DecemberMarch 31, 2014,2022, we had an accumulated deficit of $12,359,323.$22,754,103. The Company cannot predict how long it will continue to incur further losses or whether it will ever become profitable as this is dependent upon the reduction of certain expenses and success in obtaining more project contracts, among other things. These conditions raise substantial doubt about the entity’s ability to continue as a going concern.
We alsohave satisfied our cash and working capital requirements in 2014 and 2013, primarilythe three months ended March 31, 2022, through the sale of common stock.
The estimated cash requirement for the next 12 months is as follows:
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$570,000 – Officers’ salaries (includes partial paymentComparison of prior accrued balance)
$440,000 – Staff salaries (new staff)
$710,000 – For license and management fees (includes partial payment of prior accrued balance)
$690,000 – For G&A expenses
$ 50,000 – For prior balances owed
$540,000 – Increased working capital
Cash Flows for the YearThree Months Ended DecemberMarch 31, 20142022 (2022) and March 31, 2021 (2021)
Cash Flows from Operating ActivitiesNet cash used in operating activities
OperatingWe used $598,244 of cash in our operating activities in 2022 compared to $338,311 used netin 2021. The increase in cash for the year ended December 31, 2014used of $506,285. Our net loss, when adjusted by various items which impact net loss but do not impact cash during the period, such as issuance of warrants or stock for services and for depreciation and amortization, resulted in$259,933 includes a net loss adjusted by noncash items of $939,460 which was partially$358,710, offset by changesnon-cash expenses of $90,884 principally related to amortization of debt discount and deferred financing costs of $63,296, depreciation expense of $873, and common stock issued for services of $88,600, offset by a change in operating assets and liabilities which providedfair value of derivative liability of $243,653, as well as cash of $433,175 as follows:
Cash Flows used in Investing Activities
Our investing activities used $80,958working capital items in net cash during the year ended December 31, 2014 as a resultamount of advances$148,650 principally related to the Mexican project.
Cash Flows from Financing Activities
Our financing activities provided $579,125an increase in net cash as a resultinventory of the following:
Financial Position
Total Assets – Our total assets decreased $23,211 or 35.1% from $66,154 as of December 31, 2013 to $42,943 as of December 31, 2014. $4,996 of the decrease is the result of depreciation of fixed assets. $10,000 of the decrease is the result of amortization of other assets. The remaining decrease is associated with current assets and is discussed as follows.
Current Assets – The net decrease in current assets of $8,215 was primarily associated with$256,999, a decrease in cashaccounts payable and accrued expenses of $8,118 as a result of the net use of cash for operational activities$30,003, and a $97decrease in due to officers of $4,558, offset by a decrease in prepaid expenses and other current assets which is negligible.of $142,910.
Material CommitmentsCash Flows from Investing Activities
Technology TransferThe Company used $34,525 in cash from financing activities to purchase property and License Agreement with SWATEequipment.
Effective February 1, 2013,Cash Flows from Financing Activities
We received $426,000 (2022) and $434,021 (2021) in cash provided from financing activities. The net decrease of $8,021 is due primarily to a $369,500 decrease in financing through issuance of convertible loans, a $54,500 increase in payments of convertible loans payable, and a $24,000 decrease due to costs associated entering the equity line of credit, offset by an increase of $439,979 from proceeds from the sale of stock and subscriptions.
Financial Position
Total Assets – At March 31, 2022 the Company entered intohad $1,267,052 representing $412,051 in cash, $55,112 in accounts receivable, $445,977 in inventory, $277,534 in prepaid expenses and other current assets, $37,392 in property and equipment, and $38,986 in operating lease right-of-use asset.
PLAN OF OPERATION AND FUNDING
We expect to generate more revenues which should, grow in time and lead to a ten year Technology Transferpositive cash flow. In the near future, we expect that working capital requirements will continue to be funded through lines of credit, loans and/or further issuances of other securities in sufficient quantities that we will be able to meet our working capital requirement from these possible sources. Additional issuances of equity or convertible debt will result in dilution to our current shareholders.
We seek to focus on three main aspects of the water and License Agreement with SWATE. In accordance withenergy business: (1) generation, (2) supply, and (3) maintenance. We seek to assist private companies, government entities and NGO’s to build profitable and sustainable supplies/generation capabilities of water and energy as required, by selling them the Technology Transferrequired technology or technical service to enhance their productivity/operability. With its outsourced technical arm and License Agreement, ifits commission-based global network of vendors, the Company generatesexpects to create sustainable added value to each project it takes on while generating revenue as a resultfrom its engineering and technical consultancy services, project management, sale of our patent-pending self-sufficient power supplied eAWG, Solar Energy Generation Systems, EV Charging Stations and Energy Management Systems, royalties from the productscommercialization of energy and licenses related towater in certain cases, and revenues from the agreement, the Company is to pay SWATE an annual fee stipulated in the agreement plus 5% of revenue generated. If revenue is not generated, future minimum royalty fees are as follows: during the first year: $542,000; during the second year: $1,000,000; and during the third and succeeding years: $2,000,000. On April 15, 2015, SWATE agreed to waive licenses fees for 2014 and 2015.licensed innovated technologies.
Through our BlueTech Alliance for Water Generation established in December 2020, we have state-of the art technology partners, technology transfer agreements, and technology representation agreements in place relating to aspects of renewable energy and water supply. These unique key relationships offer important selling features and capabilities that differentiated EAWD from its competitors.
The Company plans to generate revenue from its engineering and technical consultancy services, project management, sale of our patent-pending self-sufficient power supplied eAWGs, Solar Energy Generation Systems, and Energy Management Systems, royalties from the commercialization of energy and water in certain cases, and revenues from the licensed innovated technologies.
MATERIAL COMMITMENTS
Employment Agreements
The Company entered into employment agreements with each of Mr. Hofmeier, its President, Chief Executive Officer Mr. Ralph Hofmeier, and Chairman of the Board, and Ms. Velazquez, its Chief Operating Officer Ms. Irma Velazquez (collectivelyand Vice-Chairman (together, the “Employment Agreements”), effective January 1, 2012. Under the Employment Agreements, the Company willagreed to pay each of Mr. Hofmeier and Ms. Velazquez an annual base salary of $125,000 during the first year and $150,000 during the second year and forward. Any increase to the annual base salary after the second year is subject to approval by the Company’scompany’s Board of Directors. TheEach Employment Agreements eachAgreement has an initial termsterm of ten (10) years and is automatically renewed for successive one-year terms unless either party delivers timely notice of its intention not to renew. The Company also entered into employment agreement with 4 other employees, effective on the 3rd quarter of 2021.
Related Party TransactionsOFF-BALANCE SHEET ARRANGEMENTS
Due to officersWe have no off-balance sheet arrangements.
Amounts due to officers as ofGOING CONCERN
During the year ended December 31, 2014 and 2013 are comprised2021, pursuant to an equipment sale agreement, the Company recognized revenue of $550,000 for a sale of equipment, along with $350,000 for the cost of construction, earning $200,000 gross profit. The next operational step to accomplish is to achieve sufficient sales volume to yield positive a net income. Due to the timing of the following:
| 2014 | 2013 | |||||||
| Ralph Hofmeier: | ||||||||
| Unsecured advances due to officer | $ | 24,161 | $ | 40,280 | ||||
| Accrued salaries | 425,000 | 275,000 | ||||||
| Total due to Ralph Hofmeier | 449,161 | 315,280 | ||||||
| Irma Velazquez: | ||||||||
| Unsecured advances due to officer | 40,109 | 43,707 | ||||||
| Accrued salaries | 425,000 | 275,000 | ||||||
| Total due to Irma Velazquez | 465,109 | 318,707 | ||||||
| $ | 914,270 | $ | 633,987 | |||||
Unsecured advances due to officers represent unreimbursed Company expenses paid by the officers on behalf of the Company. These net advances are non-interest bearing and are due on demand.
Accrued salaries represent amounts accrued in accordance with the employment agreements for the Company’s Chief Executive Officer and Chief Operating Officer.
Due to affiliate
Due to affiliate is comprised of the following as of December 31, 2014 and 2013:
| 2014 | 2013 | |||||||
| Swiss Water Tech Research and Development, S.A.: | ||||||||
| Royalty fees under Technology Transfer and License Agreement | $ | - | $ | 136,278 | ||||
| International Service Contract fees | 529,436 | 385,000 | ||||||
| $ | 529,436 | $ | 521,278 | |||||
Effective February 1, 2013, and as amended on June 29, 2015, the Company entered into an exclusive Technology Transfer Agreement and License Agreement (the “Technology Transfer and License Agreement”) for a period of ten years with Swiss Water Tech Research & Development S.A. (SWATE), an entity owned and controlled by the Company’s Chief Executive Officer and Chief Operating Officer who are the primary beneficiaries. Under the terms of the agreement, SWATE: (a) will transfer to the Company the license to manufacture products developed by SWATE; (b) all know-how and technical assistance necessary for the exploitation of their licensed patents and the manufacture of certain products; and (c) will grant the Company the use of certain related trademarks. If the Company generates revenue as a result of the products and licenses related to the Technology Transfer and License Agreement, the Company is to pay to SWATE a minimum annual royalty fee stipulated in the agreement plus five percent of revenue generated. Sinceproject build out, the Company has not generated revenues, during 2013currently recorded any revenue and consequently has incurred operating losses since it began operations (December 2012) totaling $22,754,103 at March 31, 2022. During the three months ended March 31, 2022, the Corporation incurred net losses of $358,710. The Company accruedalso had a working capital of $70,491 at March 31, 2022.
The Company’s ability to transition to profitable operations is dependent upon achieving a level of revenue adequate to support its cost structure. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the minimum feeanticipated growth of approximately $542,000our business and availability to sufficient resources.
At the filling date of this report, management plans to conclude the sales in accordance with the termsGermany and in other regions of the agreement. On April 15, 2015, SWATE agreedworld further the received approved proposals, which would bring a growing revenue. Managements plans to waive licenses fees for 2014 and 2015.
As partexpand the sales operations by greater market penetration of the exclusive Technology TransferAgriculture, Industrial and License Agreement, on February 1, 2013, the Company was requiredCommunity development market with its water and energy generation, innovative solution, this to pay a non-refundable front-end fee of $6 million in exchange for the use of newly developed systems, concepts and license of patent and trademark. The Company satisfied the required paymentmake sales operations to continue to expand. Management also plans to raise additional funds during 2022; through the issuance of 6 million sharesequity securities and from deposits related to purchases orders on proposals pending customer acceptance as well, if necessary, loans from management and third-party lender. Management also plans to defer expenses by centralizing assembling, logistic and administration operations expenses. By doing so, the company would identify a bigger place to use as self-sufficient energy supply warehouse to be able to centralize the storage of supplies, while securing its common stock, valued at $1.00 per share. The valueinventory, this would reduce the costs of the licensed technology rights acquired was recordedassembling and the administrative operations, the company would acquire its own electrical trucks as an intangible asset and scheduled for amortization over the ten year lifewell, to reduce cost of transportation of supplies.
The ability of the Technology Transfer and License Agreement. During 2013, the Company recognized amortization expense in the amount of $550,000. On December 31, 2013 the Company evaluated the unamortized asset for impairment and determined that due to its inability to secure revenue generating commercial contracts, the recoverability of this asset in future periods was doubtful. Accordingly, the Company fully impaired the remaining unamortized value of the front-end fee of $5,450,000.
Effective February 1, 2013, the Company also entered into an International Service Contract with SWATE (the “SWATE Service Contract”). Under this agreement, SWATE will provide operations management, engineering and technical services to the Company. The SWATE Service Contract has a term of five years, and provides for a monthly service fee of $35,000, plus out-of-pocket expenses. During 2014 and 2013, the Company has accrued $420,000 and $385,000, respectively, pursuant to this agreement.
On April 1, 2013, the Company signed an agreement with SWATE, which authorizes SWATE to collect on behalf of the Company, payments made by investors on sales of Company stock. According to the agreement, the proceeds collected by SWATE can be used by SWATE to pay down amounts due from the Company for royalties and or service fees pursuant to the above agreements. During the years ended December 31, 2014 and 2013, SWATE collected and applied against amounts due from the Company approximately $120,400 and $305,600 respectively from amounts received from investors.
SWATE is a Swiss research and development company with access to patent and certain scientific and technical resources. As a result of the above agreements, the Company has a variable implicit interest in SWATE, however it is not its primary beneficiary, does not provide any explicit or implied financial support and therefore does not consolidate SWATE’s financial statements in its consolidated financial statements.
Due from affiliate
During 2014, the Company advanced funds to its affiliate, EAWC Tecnologias Verdes, S.A. The amounts advanced of $80,758, including interest, have been offset by an allowance for doubtful collection since the affiliate does not currently have the ability to generate revenues or repay the Company.
Going Concern Qualification
We have incurred significant losses and cash used in operations, and such losses and use of cash are expected to continue. Our Independent Registered Public Accounting Firm has included a "Going Concern Qualification" in their report for the fiscal years ended December 31, 2014 and 2013. In addition, we have negative working capital. The foregoing raises substantial doubt about our ability to continue as a going concern. Management's plans include seekingconcern depends upon its ability to generate sales or obtain additional capital or debt financing. Therefunding to finance operating losses until the Corporation is no guarantee that additional capital or debt financing will be available when and to the extent required, or that if available, it will be on terms acceptable to us. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The "Going Concern Qualification" might make it substantially more difficult to raise capital.profitable.
Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Registration Statement.
Comparison of the nine months ended September 30, 2015 and September 30, 2014
Revenue
For the nine months ended September 30, 2015 and 2014, we generated no revenue, as the Company was primarily engaged in research and development efforts during this period. In addition, we were completing the registration and testing of our combination of technologies and arranging customer-financing packages to facilitate the commercialization and purchase of our product.
General and Administration Expense
General and Administration expense increased $988,627 (107.9%) to $1,904,526 for the nine months ended September 30, 2015 from $915,899 for the nine months ended September 30, 2014. This increase was attributable to the following:
There were increases in the following items:
Which were partially offset by decreases in the following items:
Interest Expense/Income
Interest expense decreased $5,763 (111.0%) to $569 income for the nine months ended September 30, 2015 from $5,194 expense for the nine months ended September 30, 2014, which is considered a negligible amount.
Net loss
Net Loss increased $982,864 (106.7%) to $1,903,957 for the nine months ended September 30, 2015 from $921,093 for the nine months ended September 30, 2014. This decrease is considered nominal overall but was attributable to the decrease in general and administrative expenses, as discussed above.
Liquidity and Capital Resources
We had cash and cash equivalents of $12,461 and working capital deficit of $1,765,566 at September 30, 2015. Our operating and capital requirements in connection with supporting our operations will continue to be significant to us. Since inception, our losses from operations and working capital requirement were satisfied through the deferral of payment for services performed by our founders and related party’s discussed more fully below.
We have sustained operational losses since our inception. At September 30, 2015, we had an accumulated deficit of $14,263,280. The Company cannot predict how long it will continue to incur further losses or whether it will ever become profitable as this is dependent upon the reduction of certain expenses, success in obtaining project contracts among other things. These conditions raise substantial doubt about the entity’s ability to continue as a going concern.
Historically, we have satisfied our cash and working capital requirements in 2015 and 2014, primarily through the sale of our common stock, however, in July 2015, our exclusive Mexican distributor EAWC Tecnologias Verdes SA de CV., engaged in a project to create a prototype Waste to Energy prototype plant (12Mw/h Power Generation Plant in the State of Chiapas. Mexico The project is in its final stage of obtaining the necessary financing. Once completed, the prototype plant will be used to demonstrate the technology in an effort to sell additional projects and to generate positive cash flow from sale of generated electricity.
Cash Flows for the Nine Months Ended September 30, 2015
Cash Flows from Operating Activities
Operating activities used net cash for the nine months ended September 30, 2015 of $281,088. Our net loss, when adjusted by various items which impact net loss but do not impact cash during the period, such as issuance of warrants or stock for services and for depreciation and amortization, resulted in a net loss adjusted by noncash items of $782,362 which was partially offset by changes in operating assets and liabilities which provided cash of $501,274 as follows:
Cash Flows used in Investing Activities
Our investing activities used $56,134 in net cash for advances to affiliates.
Cash Flows from Financing ActivitiesCRITICAL ACCOUNTING POLICIES
Our financing activities provided $349,683critical accounting policies are set forth in net cash as a result of the following:
Financial Position
Total Assets – Our total assets increased $131,661 or 306.6% from $42,943 as of December 31, 2014 to $174,604 as of September 30, 2015. As part of the overall increase in total assets,
Current Assets – The net increase in current assets of $143,112 was primarily associated with the full prepayment in common stock issued for a $255,000 performance based service agreement, net of amortization along with an increase in cash of $12,461 as a result of the sale of securities and increased available credit from vendors and associates.
Material Commitments
Technology Transfer and License Agreement with SWATE
Effective February 1, 2013, the Company entered into a ten year Technology Transfer and License Agreement with SWATE. In accordance with the Technology Transfer and License Agreement, if the Company generates revenue as a result of the products and licenses relatedNote 2 to the agreement, the Company is to pay SWATE an annual fee stipulated in the agreement plus 5% of revenue generated. If revenue is not generated, future minimum royalty fees are as follows: during the first year: $542,000; during the second year: $1,000,000; and during the third and succeeding years: $2,000,000. On April 15, 2015, SWATE agreed to waive licenses fees for 2014 and 2015.
Employment Agreements
The Company entered into employment agreements with its Chief Executive Officer, Mr. Ralph Hofmeier, and its Chief Operating Officer, Ms. Irma Velazquez (collectively the “Employment Agreements”), effective January 1, 2012. Under the Employment Agreements, the Company will pay each of Mr. Hofmeier and Ms. Velazquez an annual base salary of $125,000 during the first year and $150,000 during the second year and forward. Any increase to the annual base salary after the second year is subject to approval by the Company’s Board of Directors. The Employment Agreements each has initial terms of ten (10) years and is automatically renewed for successive one-year terms unless either party delivers timely notice of its intention not to renew.
Related Party Transactions
Due to officers
Amounts due to officers as of September 30, 2015 and December 31, 2014 are comprised of the following:
| 2015 | 2014 | |||||||
| Ralph Hofmeier: | ||||||||
| Unsecured advances due to officer | $ | 8,411 | $ | 24,161 | ||||
| Accrued salaries | 537,500 | 425,000 | ||||||
| Total due to Ralph Hofmeier | 545,911 | 449,161 | ||||||
| Irma Velazquez: | ||||||||
| Unsecured advances due to officer | 41,767 | 40,109 | ||||||
| Accrued salaries | 537,500 | 425,000 | ||||||
| Total due to Irma Velazquez | 579,267 | 465,109 | ||||||
| $ | 1,125,178 | $ | 914,270 | |||||
Unsecured advances due to officers represent unreimbursed Company expenses paid by the officers on behalf of the Company, ended September 30, 2015, the Company made unsecured advances to Ralph Hofmeier and Irma Velazquez of $0 and $545,780, respectively and received repayments of $ 12,350 and $48,621 respectively. These net advances are non-interest bearing and are due on demand.
Accrued salaries represent amounts accrued in accordance with the employment agreements for the Company’s Chief Executive Officer and Chief Operating Officer.
In addition to the direct unsecured advances and accrued salaries due to officers, the Company’s officers are also the primary beneficiaries of transactions due to and from affiliates as discussed further below.
Due to affiliate
Due to affiliate is comprised of the following as of September 30, 2015 and December 31, 2014:
| 2015 | 2014 | |||||||
| Swiss Water Tech Research and Development, S.A. | ||||||||
| Royalty fees under Technology Transfer and License Agreement | $ | - | $ | - | ||||
| International Service Contract fees | 192,000 | 529,436 | ||||||
| $ | 192,000 | $ | 529,436 | |||||
Effective February 1, 2013, and as amended on June 29, 2015, the Company entered into an exclusive Technology Transfer Agreement and License Agreement (the “Technology Transfer and License Agreement”) for a period of ten years with Swiss Water Tech Research & Development S.A. (SWATE), an entity owned and controlled by the Company’s Chief Executive Officer and Chief Operating Officer who are the primary beneficiaries. Under the terms of the agreement, SWATE: (a) will transfer to the Company the license to manufacture products developed by SWATE; (b) all know-how and technical assistance necessary for the exploitation of their licensed patents and the manufacture of certain products; and (c) will grant the Company the use of certain related trademarks. If the Company generates revenue as a result of the products and licenses related to the Technology Transfer and License Agreement, the Company is to pay to SWATE a minimum annual royalty fee stipulated in the agreement plus five percent of revenue generated. On April 15, 2015, SWATE agreed to waive licenses fees for 2014 and 2015.
Effective February 1, 2013, the Company also entered into an International Service Contract with SWATE (the “SWATE Service Contract”). Under this agreement, SWATE will provide operations management, engineering and technical services to the Company. The SWATE Service Contract has a term of five years, and provides for a monthly service fee of $35,000, plus out-of-pocket expenses. During the nine months ended September 30, 2015 and 2014, the Company accrued $315,000 and $315,000, respectively.
On April 1, 2013, the Company signed an agreement with SWATE, which authorizes SWATE to collect on behalf of the Company, payments made by investors on sales of Company stock. According to the agreement, the proceeds collected by SWATE can be used by SWATE to pay down amounts due from the Company for royalties and or service fees pursuant to the above agreements. During the nine months ended September 30, 2015 and the year ended year ended December 31, 2014, SWATE collected and applied against amounts due from the Company approximately $0 and $120,400 respectively from amounts received from investors.
SWATE is a Swiss research and development company with access to patents and certain scientific and technical resources. As a result of the above agreements, the Company has a variable implicit interest in SWATE, however it is not its primary beneficiary, does not provide any explicit or implicit financial support and therefore does not consolidate SWATE’s financial statements in its condensed consolidated financial statements.
Due from affiliate
During the nine months ended September 30, 2015 and the year ended December 31, 2014, the Company advanced funds to its affiliate, EAWC Tecnologias Verdes, S.A de C V, an entity owned and controlled by the Company’s Chief Executive Officer and Chief Operating Officer who are the primary beneficiaries. The amounts advanced of $56,134 and $80,758, respectively, have been offset by an allowance for doubtful collection since the affiliate does not currently have the ability to generate revenues or repay the Company. However, in July 2015, the Mexican exclusive distributor EAWC Tecnologias Verdes SA de CV., engaged in a project to create a prototype Waste to Energy prototype plant (12Mw/h Power Generation Plant in the State of Chiapas in Mexico. The project is in a final stage of obtaining the necessary financing. Once completed, the prototype plant will be used to demonstrate the technology in an effort to sell additional projects and to generate positive cash flow from sale of generated electricity.RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Changes In and Disagreements with AccountantsWe do not expect the adoption of recently issued accounting pronouncements as discussed in Note 3 to have a significant impact on Accounting and Financial Disclosureour results of operations, financial position or cash flow.
There have been no changes in or disagreements with accountants on accounting or financial disclosure matters.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
OurThe following table presents information with respect to our officers, directors executive officers and keysignificant employees are listed below. The number of directors is determined by our board of directors. All directors hold office until the next annual meetingas of the board or until their successors have been duly elected and qualified. Officers are elected by the boarddate of directors and their terms of office are, except to the extent governed by employment contract, at the discretion of the board of directors.this prospectus:
| Name | Age | Principal Positions | ||
| Mr. Ralph Hofmeier | President, Chief Executive Officer, and Chairman of the Board of Directors | |||
| Ms. Irma Velazquez | Chief Operating Officer and Vice-Chairman of the Board of Directors | |||
| Gary Rodney | 72 | Chief Financial Officer |
Set forth below is a brief description of the background and business experience of our directordirectors and executive officer for the past five years.officers.
Mr. Ralph Hofmeier 54, has a Mechanicalmechanical engineering background, during the past five years,background. He has worked in companies such as Powermax Energy & Business Solutions Inc;Inc., where from 2003 to 2008 performedhe served as President. Since the position of President of the Incorporation. Further merger of thethat company with Eurosport Active World Corp; fromEAWD in 2008, to up today he has performed the role ofserved as President, Chief Executive Officer and Chairman of Eurosport Active World Cop.the Board of Directors of EAWD. Mr. Hofmeier speaks German and English.English.
Over the last 20 years, Mr. Hofmeier has established and developed several multinational companies in green tech distribution and commercialization.commercialization, such as Powermax LLC, Powermax Inc and Powermax GmbH. With a solid track record of investment and financial joint ventures Mr. Hofmeier brings a clear vision of Business development, Investor relations and joint ventures to the Company. His vasthis prior multicultural experience throughout the European and the American Continents provides EAWC withmarkets, we believe that Mr. Hofmeier brings our Board and our Company a strong homologationclear vision of synergiesbusiness development, investor relations and a solid portfolio of green technologies.joint ventures.
Ms. Irma Velazquez 49, brings to the Company her certified expertise of sustainable development and emerging technologies, along with her extensive experience and managerial skills on large-scale project management. Ms. Velazquez workworked from 1997 to 2010 in United Nations performingagencies such as the World Health Organization, Farmaciens Sans Frontieres, Red Cross and Crescent Societies (IFRC) where she served in the positions of Information Technology Manager, Sustainable Development Manager and Programme Manager, leading the strategic development and execution of corporate vision for operations, communications, and marketing. From 2010 to 2012 worked for the International Federation of the Red Cross and Crescent Societies (IFRC)marketing, as well as a Disaster & Crisis Management Coordinator, where Sheshe demonstrated the ability to govern complex programs and organizations, which drove development and implementation of business plans, operational structures, processes, and procedures. From 2012 to up todaythe present, Ms. Velazquez has performed the role ofacted as Chief Operations Officer and Vice-Chairman of Eurosport Active World Corp. She hasthe Board of Directors of EAWD. The Board believes that Ms. Velazquez is a valuable director in light of her extensive employment history as described above, and her solid track record of driving improvements in finance, operations, and HRhuman resources processes, resulting in greater efficiency and cost control. Ms. Velazquez withhas a Master in Sciences is an expertfrom the Erasmus University of Rotterdamand has experience in diplomatic negotiations and proven experience on building positive relationships with government entities, agencies, and private sector partners. Ms. Velazquez speaks French, English and Spanish.
Mr. Gary Rodney served as President of InfoQuest Technologies Inc. prior to taking this position with the Company where he has provided financial consulting services to start-up and emerging growth companies since 1995. He has provided outside financial consulting services to the Company since 2014 and has diverse experience in technology, accounting, finance, corporate planning, management, and executive leadership.
Family Relationships
Mr. Hofmeier and Ms. Velazquez are married.
Each director serves until our next annual meeting of the stockholders or unless he or she resign earlier and serves until his or her successor is elected and qualified. At the present time, members of the Board of Directors are not compensated for their services to the board.
Each of our officers is elected by the Board of Directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office.
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Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or officers, during the past ten years:years has:
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| · | ||
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which |
| · | ||
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, |
| · | ||
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| · | ||
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Except as set forth in our discussion below in “Certain Relationships and Related Transactions,”this Prospectus, to the Company’s knowledge, none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
Term of OfficeBoard Committees and Corporate Governance
Our directors hold office until a successor is elected and qualified or until earlierboard of resignation, removal from office or death
Board Committees
Our Board of Directorsdirectors has no separate committees, and our Boardboard of Directorsdirectors acts as the audit committee and the compensation committee. The functions of those committees are being undertaken by our Board. Because we do not have any independent directors, our Board believes that the establishment of committees of our Board would not provide any benefits to our Company and could be considered more form than substance. We do not have yet, an audit committee financial expert serving on our Boardboard of Directors.
Shareholder Communicationsdirectors.
Shareholder Communications
Although we do not have a formal policy regarding communications with the Board, shareholders may communicate with the Board by writing to us at 2000 Ponce de Leon Blvd., 6th Floor, Miami,7901 4th Street N STE #4174, St Petersburg, Florida, 33134,33702 Attention: Corporate Secretary or by facsimile (305) 443-6624. email to investor.relations@energy-water.com.
Shareholders who would like their submission directed to a member of the Boardboard may so specify, and the communication will be forwarded, as appropriate.
EXECUTIVE COMPENSATIONOversight of Risk Management
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including economic risks, financial risks, legal and regulatory risks and others, such as the impact of competition. Management is responsible for the day-to-day management of the risks that we face, while our Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our Board of Directors is responsible for satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed. Our Board of Directors assesses major risks facing our Company and options for their mitigation in order to promote our stockholders’ interests in the long-term health of our Company and our overall success and financial strength. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for us. The involvement of our full Board of Directors in the risk oversight process allows our Board of Directors to assess management’s appetite for risk and also determine what constitutes an appropriate level of risk for our Company. Our Board of Directors regularly includes agenda items at its meetings relating to its risk oversight role and meets with various members of management on a range of topics, including corporate governance and regulatory obligations, operations and significant transactions, risk management, insurance, pending and threatened litigation and significant commercial disputes.
Code of Business Conduct and Ethics
Our Board of Directors has adopted a code of ethical conduct that applies to our principal executive officer, principal financial officer and senior financial management. This code of ethical conduct is embodied within our Code of Business Conduct and Ethics, which applies to all persons associated with our Company, including our directors, officers and employees (including our principal executive officer, principal financial officer, principal accounting officer and controller). In order to satisfy our disclosure requirements under Item 5.05 of Form 8-K, we will disclose amendments to, or waivers of, certain provisions of our Code of Business Conduct and Ethics relating to our chief executive officer, chief financial officer, chief accounting officer, controller or persons performing similar functions on our website promptly following the adoption of any such amendment or waiver.
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EXECUTIVE COMPENSATION
Compensation of Officers
The following summary compensation table sets forth information concerning compensation for services rendered in all capacities during years ended 2020 and 2019 awarded to, earned by or paid to our executive officers.
Summary Compensation Table
The following table sets forth the compensation paid or accruedearned by us to our President and Chief Executive Officer and our Chief Operating Officer, and each of our otheronly officers, for the years ended December 31, 20142020 and 2013.2019.
| Name and Principal Position | Year | Salary ($) | All Other Compensation ($) | Total ($) | Year | Salary ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||||
| Ralph Hofmeier | 2014 | 150,000 | - | 150,000 | 2021 | 150,000 | — | 150,000 | ||||||||||||||||||||||||
| Chief Executive Officer | 2013 | 150,000 | - | 150,000 | ||||||||||||||||||||||||||||
| Irma Velazquez (2) (3) | 2014 | 150,000 | - | 150,000 | ||||||||||||||||||||||||||||
| President and Chief Executive Officer | 2020 | 150,000 | 2,850,000 | 3,000,000 | ||||||||||||||||||||||||||||
| Irma Velazquez (2)(3)(4) | 2021 | 150,000 | — | 150,000 | ||||||||||||||||||||||||||||
| Chief Operating Officer | 2013 | 150,000 | - | 150,000 | 2020 | 150,000 | 2,850,000 | 3,000,000 | ||||||||||||||||||||||||
| Gary Rodney | 2021 | 49,000 | — | 49,000 | ||||||||||||||||||||||||||||
| Chief Financial Offiicer | 2022 | — | — | — | ||||||||||||||||||||||||||||
———————
| (1) | Pursuant to an employment agreement dated January 1, 2012. |
| (2) | Pursuant to an employment agreement dated January 1, 2012. |
| (3) | On |
| (4) | On December 18, 2020, accrued salaries totaling $300,000, ($150,000 to Hofmeier and $150,000 Velazquez) were paid with the issuance of 600,000 shares of Series A Preferred Shares (300,000 shares each to Hofmeier and Velazquez). An additional 5,400,000 shares of Series A Preferred Shares (2,700,000 shares each to Hofmeier and Velazquez), which had an aggregate fair value of $1,350,000 each to Hofmeier and Velazquez were issued as a bonus payment. An additional 20,000,000 shares of Common Shares (10,000,000 shares each to Hofmeier and Velazquez), which had an aggregate fair value of $1,500,000 each to Hofmeier and Velazquez were also issued as a bonus payment. All shares were issued in December 2020, except for Hofmeier’s 10,000,000 Common Shares issued as a bonus payment, were issued in January 2021. |
Outstanding Equity Awards at Fiscal Year-End Table
There are no outstanding equity awards.
CompensationAs discussed above, on December 18, 2020, Ralph Hofmeier was awarded 10,000,000 Common Shares valued at $1,500,000 as part of Directorsa bonus award. The bonus award was recorded in December 2020 when it was granted and the Common Shares were issued in January 2021.
Directors are permitted to receive fixed fees and other compensation for their services as directors. The Boardboard of Directorsdirectors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
Employment Agreements
The company entered into employment agreements with Mr. Hofmeier, its President and Chief Executive Officer, and Ms. Velazquez, its Chief Operating Officer (collectively the “Employment Agreements”), effective January 1, 2012. Mr. Hofmeier and Ms. Velazquez also serve as the Company’s only directors, and each is a significant stockholder of the Company. Under the Employment Agreements, the company agreed to pay each of Mr. Hofmeier and Ms. Velazquez an annual base salary of $125,000 during the first year and $150,000 during the second year and forward. Any increase to the annual base salary after the second year is subject to approval by the company’s Board of Directors. Each Employment Agreement has an initial term of ten (10) years and is automatically renewed for successive one-year terms unless either party delivers timely notice of its intention not to renew.
The foregoing descriptions of employment agreements does not purport to be complete and is qualified in its entirety by reference to the copy of each agreement filed as Exhibits10.2 and 10.3 to this registration statement.
Consulting Agreements
Effective as of June 3, 2021, the Company entered into a consulting services agreement with InfoQuest Technologies Inc., whereby Mr. Gary Rodney agreed to provide services to the Company as its Interim Chief Financial Officer as an independent contractor. Pursuant to the consulting agreement, Mr. Rodney receives a monthly fee of $7,000. The consulting agreement has an initial term of one (1) year and is automatically renewed for successive one-year terms unless either party delivers timely notice of its intention not to renew.
The foregoing description of the consulting agreement does not purport to be complete and is qualified in its entirety by reference to the copy of such agreement filed as Exhibit10.16 to this registration statement.
Retirement, Resignation or Termination Plans
We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change in the responsibilities of an executive following a change in control of our company.
Compensation of Directors
Directors are permitted to receive fixed fees and other compensation for their services as directors. The board of directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
Pension Benefits and Nonqualified Deferred Compensation
The Company does not maintain any qualified retirement plans or non-nonqualified deferred compensation plans for its employees or directors.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth the number of shares of our voting stock beneficially owned, as of February 9, 2016June 27, 2022, by (i) those persons known by Eurosportus to be owners of more than 5% of Eurosportour common stock, (ii) each director, (iii) our Named Executive Officer,Officers, and (iv) all executive officers and directors as a group:
| Common Stock | Series A Preferred Stock | |||||||||||||||
| Name and address of beneficial owner. | No. of Shares | % of Class (1) | No. of Shares | % of Class (1)(3) | ||||||||||||
| Directors and Officers | ||||||||||||||||
| Mr. Ralph Hofmeier(2) | 27,215,855 | 15.73 | % | 5,002,488 | 52.96 | % | ||||||||||
| 7901 4th Street N STE #4174, St Petersburg, Florida 33702 | ||||||||||||||||
| Ms. Irma Velazquez(2) | 39,515,388 | 22.83 | % | 4,778,488 | 47.04 | % | ||||||||||
| 7901 4th Street N STE #4174, St Petersburg, Florida 33702 | ||||||||||||||||
| All officers and directors as a group (two persons) | 66,731,243 | 38.56 | % | 9,780,976 | 100.00 | % | ||||||||||
| 5% Security Holders: | ||||||||||||||||
| Andrea Hofmeier (2) | 8,000,000 | 4.62 | % | |||||||||||||
| Common Stock (1) | ||||||||||||
| Name and Address of Beneficial Owner | No. of Shares | % of Class | Beneficial Ownership | |||||||||
| Directors and Officers | ||||||||||||
| Mr. Ralph Hofmeier (2) 2000 Ponce de Leon Blvd., 6th FL, Miami, FL 33134 | 25,000,000 | 28.67 | % | 3,137,257 | ||||||||
| Ms. Irma Velazquez 2000 Ponce de Leon Blvd., 6th FL, Miami, FL 33134 | 25,000,000 | 28.67 | % | 3,137,257 | ||||||||
| All officers and directors as a group (two persons) | 50,000,000 | 57.34 | % | |||||||||
| 5% Security Holders: | ||||||||||||
| Swiss Water Tech Research & Development (3) 2000 Ponce de Leon Blvd., 6th FL, Miami, FL 33134 | 6,274,515 | 7.196 | % | |||||||||
| Viridiana Lherisson | 5,084,468 | 5.831 | % | |||||||||
| Andrea Hofmeier | 8,000,000 | 9.175 | % | |||||||||
———————
| (1) | Applicable percentages are based on |
| (2) | Ralph Hofmeier is the record holder of |
| (3) |
|
| 57 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONSDIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
The following is a summary of transactions since the periods ended March 31, 2022 and December 31, 2021 to which we have been a party in which the amount involved exceeded the lesser of (i) $120,000 or (ii) one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our then directors, executive officers or holders of more than 5% of any class of our stock at the time of such transaction, or any members of their immediate family, had or will have a direct or indirect material interest. See also “Executive Compensation” for additional information regarding compensation of related parties.
Due to officers
Amounts due to officers as of March 31, 2022 and December 31, 2014 and 20132021 are comprised of the following:
| March 31, 2022 | December 31, 2021 | |||||||||||||||
| 2014 | 2013 | (Unaudited) | ||||||||||||||
| Ralph Hofmeier: | ||||||||||||||||
| Unsecured advances due to officer | $ | 24,161 | $ | 40,280 | ||||||||||||
| Accrued salaries | 425,000 | 275,000 | $ | 11,684 | $ | 17,485 | ||||||||||
| Total due to Ralph Hofmeier | 449,161 | 315,280 | 11,684 | 17,485 | ||||||||||||
| Irma Velazquez: | ||||||||||||||||
| Unsecured advances due to officer | 40,109 | 43,707 | ||||||||||||||
| Accrued salaries | 425,000 | 275,000 | ||||||||||||||
| Total due to Irma Velazquez | 465,109 | 318,707 | ||||||||||||||
| $ | 914,270 | $ | 633,987 | |||||||||||||
| Total due to officers | $ | 11,684 | $ | 17,485 | ||||||||||||
Unsecured advances due to officers represent unreimbursed Companycompany expenses paid by the officers on behalf of the Company. During the year ended December 31, 2014, the Company made unsecured advances to Ralph Hofmeir and Irma Velazquez of $5,000 and $120,257, respectively and received repayments of $16,619 and $128,355, respectively. During the year ended December 31, 2013, the Company made unsecured advances to Ralph Hofmeir and Irma Velazquez of $11,949 and $85,610, respectively and received repayments of $16,300 and $44,674, respectively. These net advances are non-interest bearing and are due on demand.
Accrued salaries represent amounts accrued in accordance with the employment agreements for Mr. Hofmeier, the Company’s President, Chief Executive Officer and Chairman of the Board, and Ms. Velazquez, the Company’s Chief Operating Officer (See Note 10).
In addition to the direct unsecured advances and accrued salaries due to officers, the Company’s officersVice-Chairman. Mr. Hofmeier and Ms. Velazquez are also the primary beneficiaries of transactions due to and from affiliates as discussed further below.significant stockholders.
Due to affiliate
Due to affiliate is comprised of the following as of December 31, 2014 and 2013:
| 2014 | 2013 | |||||||
| Swiss Water Tech Research and Development, S.A.: | ||||||||
| Royalty fees under Technology Transfer and License Agreement | $ | - | $ | 136,278 | ||||
| International Service Contract fees | 529,436 | 385,000 | ||||||
| $ | 529,436 | $ | 521,278 | |||||
Effective February 1, 2013, and as amended on June 29, 2015,On January 9, 2020, the Company entered into a Settlement Agreement with each of Mr. Hofmeier and Ms. Velazquez whereby (i) Mr. Hofmeier agreed to receive an exclusive Technology Transferaggregate 1,022,095 shares of Common Stock and 2,002,488 shares of Series A Preferred Stock in full and complete satisfaction of an aggregate $1,175,000 in unpaid compensation owed to him pursuant to his January 1, 2012 employment agreement with the Company and (ii) Ms. Velazquez agreed to receive an aggregate 1,022,095 shares of Common Stock and 1,778,488 shares of Series A Preferred Stock in full and complete satisfaction of an aggregate $1,063,000 in unpaid compensation owed to her pursuant to her January 1, 2012 employment agreement with the Company.
On December 18, 2020, the Company entered into a Settlement Agreement with each of Mr. Hofmeier and License Agreement (the “Technology TransferMs. Velazquez whereby Mr. Hofmeier and License Agreement”Ms. Velazquez each agreed to receive 300,000 shares of its Series A Preferred Stock with a fair market value of $150,000 (collectively, the “Compensation Shares”). The Compensation Shares were issued in full satisfaction of the $150,000 accrued salary due each of the executives in 2020 in recognition of each of Mr. Hofmeier and Ms. Velazquez’ extraordinary service to and sacrifice for the benefit of the Company, simultaneously with the Compensation Shares, each executive received a one-time bonus of (i) 10,000,000 shares of its Common Stock with an aggregate fair market value of $1,500,000 and (ii) 2,700,000 shares of its Series A Preferred Stock, with an aggregate fair market value of $1,350,000.
Customer deposit
EAWC-TV functions as a distributor of EAWD product. In 2019, EAWC-TV, having secured EAWD’s first customer, has placed a $550,000 order for a solar powered atmospheric water generator (“AWG”) for one of its customers. EAWC-TV and the Company on December 13, 2019 agreed to accept a period$303,742 reduction in the balance owed by EAWD to EAWC-TV as a deposit with EAWD related to this order. The deposit was satisfied through delivery of the equipment. The equipment was built in Germany.
In 2020, manufacture of the unit was delayed due to Covid-19 related issues. The Company and EAWC-TV agreed as it had done in 2019, to clear the outstanding balances in the D/T/F EAWC-TV and the outstanding balance it carried in its accounts payable account for administrative services, which it did on December 26, 2020 which resulted in an additional down payment of $193,497. EAWC-TV has an unpaid balance on the equipment of $55,112 and 55,169 as of March 31, 2022 and December 31, 2021, respectively, which represents the balance of the Company’s outstanding accounts receivable as of March 31, 2022 and December 31, 2021.
Related Person Transaction Policy
Our Board considers and approves or disapproves any related person transaction. The Company’s written policies and procedures on related party transactions cover any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: (i) the Company (or any subsidiary) is a participant; (ii) any related party has or will have a direct or indirect interest; and (iii) the aggregate amount involved (including any interest payable with respect to indebtedness) will or may be expected to exceed $120,000, except that there is no $120,000 threshold for members of the audit committee (if any). A related party is any: (i) person who is or was (since the beginning of the two fiscal years preceding the last fiscal year, even if they do not presently serve in that role) an executive officer, director or nominee for election as a director; (ii) greater than five percent (5%) beneficial owner of the Company’s common stock; or (iii) immediate family member of any of the foregoing. An immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and any person (other than a tenant or employee) sharing the same household as such person.
In determining whether to approve or ratify a related party transaction, the Board, or disinterested directors, as applicable, will take into account, among other factors it deems appropriate: (i) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; (ii) the nature and extent of the related party’s interest in the transaction; (iii) the material terms of the transactions; (iv) the importance of the transaction both to the Company and to the related party; (v) in the case of a transaction involving an executive officer or director, whether the transaction would interfere with the performance of such person’s duties to the Company; and (vi) in the case of a transaction involving a non-employee director or a nominee for election as a non-employee director (or their immediate family member), whether the transaction would disqualify the director or nominee from being deemed an “independent” director, and whether the transaction would disqualify the individual from serving on the audit committee or the compensation committee (if any) or other committees of the Board under applicable exchange and other regulatory requirements.
The Board only approves those related party transactions that are on terms comparable to, or more beneficial to us than, those that could be obtained in arm’s length dealings with an unrelated third party.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than ten yearspercent (10%) of the Common Stock to file with Swiss Water Tech Research & Development S.A. (SWATE)the SEC the initial reports of ownership and reports of changes in ownership of Common Stock. Officers, directors and greater than ten percent (10%) stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. During the fiscal year ended December 31, 2021, we believe that all reports required to be filed by such persons pursuant to Section 16(a) were filed on a timely basis.
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DESCRIPTION OF CAPITAL STOCK
Summary of Securities
The following description summarizes certain terms of our capital stock, as in effect upon the completion of this offering. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description of the matters set forth in this section you should refer to our amended and restated articles of incorporation (the “Articles”) and bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the applicable provisions of Florida law.
Authorized Capital and Preferred and Common Stock
Our authorized capital stock consists of 1,000,000,000 shares of Common Stock, par value $0.001 per share and 500,000,000 shares of preferred stock, par value $0.001 per share. As of March 31, 2022, there were 162,389,201 shares of Common Stock outstanding and 9,780,976 shares of Series A preferred stock outstanding.
Common Stock
The following is a summary of the material rights and restrictions associated with our Common Stock.
Each share of Common Stock has one (1) vote per share for all purposes. Our Common Stock does not provide preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Holders of shares of Common Stock are not entitled to cumulative voting for electing members of the Board. Please refer to the Company’s Articles, bylaws, and the applicable statutes of the State of Florida for a more complete description of the rights and liabilities of holders of the company’s securities.
Preferred Stock
The following is a summary of the material rights and restrictions associated with our Common Stock.
We are authorized to issue 500,000,000 shares of preferred stock, $0.001 par value per share. Pursuant to our Articles, the Board is authorized to authorize and issue preferred stock and to fix the designations, preferences and rights of the preferred stock pursuant to a board resolution. Our Board may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, redemption rights, liquidation preference, sinking fund terms, and the number of shares constituting any series or the designation of any series. The issuance of preferred stock could have the effect of restricting dividends on our Common Stock, diluting the voting power of our Common Stock, impairing the liquidation rights of our Common Stock, or delaying, deterring, or preventing a change in control. Such issuance could have the effect of decreasing the market price of our Common Stock.
Series A Preferred Stock
1.Dividends. Series A Preferred Stock shall be treated pari passu with Common Stock except that the dividend on each share of Series A Preferred Stock shall be equal to the amount of the dividend declared and paid on each share of Common Stock multiplied by the Conversion Rate.
2.Liquidation, Dissolution, or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, Series A Preferred Stock shall be treated pari passu, with Common Stock except that the payment on each share of Series A Preferred Stock shall be equal to the amount of the payment on each share of Common Stock multiplied by the Conversion Rate.
3.Voting. On any matter presented to the shareholders of the Company for their action or consideration at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of meeting), each holder of outstanding shares of Series A Preferred Stock shall be entitled to cast the number of votes equal to the number of shares of Series A Preferred Stock held by such holder as of the record date for determining shareholders entitled to vote on such matter multiplied by the Conversion Rate. Except as provided by law or by the other provisions of the Articles, holders of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class.
4. Conversion. The “ConversionRate” means that each share of Series A Preferred Stock is convertible into 5 shares of Common Stock (as adjusted pursuant to the terms set forth in the Articles).
| a. | Optional Conversion. Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time. |
| b. | Mandatory Conversion. Upon either (a) the closing of the sale of shares of Common Stock to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $25,000,000.00 of gross proceeds to the Company or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least sixty-five percent (65%) of the then outstanding shares of Series A Preferred, all outstanding shares of Series A Preferred Stock shall automatically be converted into shares of Common Stock, at the then-effective Conversion Rate. |
The foregoing description of the Series A Preferred Stock does not purport to be complete and is qualified in its entirety by reference to the provisions of the Amended and Restated Articles of Incorporation filed as Exhibit3.1 to this registration statement, which is incorporated by reference herein.
Dividends
We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our Board and depends upon our earnings, if any, our capital requirements and financial position, and general economic conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Options
On January 2, 2012, the company’s Board of Directors approved the creation of the 2012 Non-Qualified Stock Option Plan (the “2012 Plan”). The 2012 Plan provides for the issuance of incentive stock options to designated employees, certain key advisors and non-employees members of the Board of Directors with the opportunity to receive grant awards to acquire, in the aggregate, up to 5,000,000 shares of the company’s Common Stock.
A summary of information regarding the company’s Common Stock options outstanding is as follows:
| Weighted | ||||||||||||
| Average | ||||||||||||
| Weighted | Remaining | |||||||||||
| Number of | Average | Contractual | ||||||||||
| Shares | Exercise Price | Term (Years) | ||||||||||
| Outstanding at December 31, 2020 | 2,200,000 | $ | 0.10 | 1.0 | ||||||||
| Issued | — | — | — | |||||||||
| Exercised | (2,200,000 | ) | — | — | ||||||||
| Outstanding at December 31, 2021 | — | — | — | |||||||||
| Issued | — | — | — | |||||||||
| Expired | — | — | — | |||||||||
| Outstanding at March 31, 2022 | — | $ | — | — | ||||||||
The above outstanding options were granted on January 1, 2012, to a former Corporation’s executive. The options vest 20,000 options per month with 2,200,000 being vested and exercisable at December 31, 2018. These options expired in January 2021. During the three months ended March 31, 2022 and 2021, the Corporation did not recognize any stock-based compensation expense.
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Convertible loans payable
As of March 31, 2022 and December 31, 2021, the balance of convertible loans payable net of discount was $39,999 and $176,703, respectively.
During the year ended December 31, 2021, the Company issued two convertible loans in the aggregate amount of $404,000. The notes bear interest at 8% per annum and all mature within one year. On October 21, 2021, the Maturity Date of the $304,000 loan was extended from March 25, 2022 to April 21, 2022. The embedded beneficial conversion features in the notes meet the definition of a derivative and requires bifurcation and liability classification, at fair value. The fair value of the derivative liability as of the date of issuance was $746,672 and was recorded as a discount of the notes.
Derivative Liability
The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted, and all additional convertible debentures and warrants are included in the value of the derivative liabilities. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period.
Based on the various convertible notes described above, the fair value of applicable derivative liabilities on notes and change in fair value of derivative liability are as follows as of March 31, 2022 and December 31, 2021:
| Total | ||||
| Balance of derivative liability as of December 31, 2020 | $ | 310,641 | ||
| Change due to issuances | 746,672 | |||
| Change due to exercise / redemptions | (1,972,419 | ) | ||
| Change in fair value | 1,269,266 | |||
| Balance of derivative liability as of December 31, 2021 | $ | 354,160 | ||
| Change due to issuances | — | |||
| Change due to exercise / redemptions | (110,507 | ) | ||
| Change in fair value | (243,653 | ) | ||
| Balance of derivative liability as of March 31, 2022 (Unaudited) | $ | — | ||
A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the periods ended March 31, 2022 and December 31, 2021 is as follows:
March 31, 2022 | December 31, 2021 | |||||||
| (Unaudited) | ||||||||
| Stock price | $0.19 – 0.20 | $0.16 – 0.45 | ||||||
| Exercise price | $0.09 – 0.11 | $0.03 – 0.20 | ||||||
| Contractual term (in years) | 0.64 – 0.68 | 0.27 – 1 | ||||||
| Volatility (annual) | 1,313% – 1,368% | 149% – 2,095% | ||||||
| Risk-free rate | 0.51% – 0.78% | 0.04% – 0.39% | ||||||
The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations.
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Financial Liabilities Measured at Fair Value on a Recurring Basis
Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Derivative liability – warrants and derivative liabilities:
| Fair Value measured at March 31, 2022 (Unaudited) | ||||||||||||||||
| Quoted prices in | Significant other | Significant | Fair value at | |||||||||||||
| active markets | observable inputs | unobservable inputs | March 31, | |||||||||||||
| (Level 1) | (Level 2) | (Level 3) | 2022 | |||||||||||||
| Derivative liability | $ | — | $ | — | $ | — | $ | — | ||||||||
| Total | $ | — | $ | — | $ | — | $ | — | ||||||||
| Fair value measured at December 31, 2021 | ||||||||||||||||
| Quoted prices in | Significant other | Significant | Fair value at | |||||||||||||
| active markets | observable inputs | unobservable inputs | December 31 | |||||||||||||
| (Level 1) | (Level 2) | (Level 3) | 2021 | |||||||||||||
| Derivative liability | $ | — | $ | — | $ | 354,160 | $ | 354,160 | ||||||||
| Total | $ | — | $ | — | $ | 354,160 | $ | 354,160 | ||||||||
There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2022 and 2021.
During the three months ended March 31, 2022 and 2021, the Company recorded gains of $243,653 and $310,348, respectively, from the change in fair value of derivative liability.
Anti-Takeover Effects of Certain Provisions of Our Amended and Restated Articles of Incorporation and Our Bylaws.
Provisions of our amended and restated articles of incorporation, as amended, and our bylaws could make it more difficult to acquire us by means of a merger, tender offer, proxy contest, open market purchases, removal of incumbent directors and otherwise. These provisions, which are summarized below, are expected to discourage types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an entity owned and controlledunfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because negotiation of these proposals could result in an improvement of their terms.
Calling of Special Meetings of Stockholders. Our bylaws provide that special meetings of the stockholders, unless otherwise prescribed by statute, may be called by the Company’s Chief Executive Officer and Chief Operating Officer who areboard of directors, the primary beneficiaries. Under the termschairman of the agreement, SWATE: (a) will transferboard, the president or the holders of shares entitled to cast not less than 20% of the votes at that meeting. If a special meeting is called by anyone other than the Board of Directors or the President or the Chairman of the Board, then the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by other written communication to the Company the license to manufacture products developed by SWATE; (b) all know-how and technical assistance necessary for the exploitation of their licensed patents and the manufacture of certain products; and (c) will grant the Company the use of certain related trademarks. If the Company generates revenue as a resultChairman of the products and licenses relatedBoard, the President, any Vice President or the Secretary of the corporation. The officer receiving the request forthwith shall cause notice to be given to the Technology Transfer and License Agreement, the Company isshareholders entitled to pay to SWATE a minimum annual royalty fee stipulated in the agreement plus five percent of revenue generated. Since the Company has not generated revenues, during 2013 the Company accrued the minimum fee of approximately $542,000vote, in accordance with the termsprovisions of the agreement. On AprilBy-Laws, that a meeting will be held at the time requested by the person or persons calling the meeting, so long as that time is not less than 15 2015, SWATE agreednor more than 60 days after the receipt of the request.
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Removal of Directors; Vacancies. Any director may resign effective upon giving oral or written notice to waive licenses feesthe Chairman of the Board, the President, the Secretary or the Board of Directors, unless the notice specifies a later time for 2014the effectiveness of such resignation. If the resignation of a director is effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective. Vacancies on the Board of Directors may be filled by a majority of the remaining directors, or if the number of directors then in office is less than a quorum by (i) unanimous written consent of the directors then in office, (ii) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice, or (iii) a sole remaining director; however, a vacancy created by the removal of a director by the vote or written consent of the shareholders or by court order may be filled only by the affirmative vote of a majority of the shares represented and 2015.voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum), or by the unanimous written consent of all shares entitled to vote thereon. Each director so elected shall hold office until the next annual meeting of the shareholders and until a successor has been elected and qualified, or until his or her death, resignation or removal. A vacancy or vacancies in the Board of Directors shall be deemed to exist (i) in the event of the death, resignation or removal of any director, (ii) if the Board of Directors by resolution declares vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony, (iii) if the authorized number of directors is increased, or (iv) if the shareholders fail, at any meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be elected at that meeting. The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors, but any such election by written consent, other than to fill a vacancy created by removal, shall require the consent of the holders of a majority of the outstanding shares entitled to vote thereon. A director may not be elected by written consent to fill a vacancy created by removal except by unanimous consent of all shares entitled to vote for the election of directors.
As partAmendment of Bylaws. Our Bylaws provide that new By-Laws may be adopted or the By-Laws may be amended or repealed by the vote or written consent of holders of a majority of the exclusive Technology Transfer and License Agreement, on February 1, 2013,outstanding shares entitled to vote. Our Bylaws provide that new By-Laws may be adopted or the Company was required to pay a non-refundable front-end feeBy-Laws may be amended or repealed by the board of $6 million in exchange for the use of newly developed systems, concepts and license of patent and trademark. The Company satisfied the required payment through the issuance of 6 million shares of its common stock, valued at $1.00 per share. The value of the licensed technology rights acquired was recorded as an intangible asset and scheduled for amortization over the ten-year life of the Technology Transfer and License Agreement. During 2013, the Company recognized amortization expense in the amount of $550,000. On December 31, 2013 the Company evaluated the unamortized asset for impairment and determined that due to its inability to secure revenue generating commercial contracts, the recoverability of this asset in future periods was doubtful. Accordingly, the Company fully impaired the remaining unamortized value of the front-end fee of $5,450,000.directors.
Effective February 1, 2013, the Company also entered into an International Service Contract with SWATE (the “SWATE Service Contract”). Under this agreement, SWATE will provide operations management, engineeringTransfer Agent and technical services to the Company. The SWATE Service Contract has a term of five years, and provides for a monthly service fee of $35,000, plus out-of-pocket expenses. During 2014 and 2013, the Company has accrued $420,000 and $385,000, respectively, pursuant to this agreement.Registrar
On April 1, 2013, the Company signed an agreement with SWATE, which authorizes SWATE to collect on behalf of the Company, payments made by investors on sales of Company stock. According to the agreement, the proceeds collected by SWATE can be used by SWATE to pay down amounts due from the Company for royalties and or service fees pursuant to the above agreements. During the years ended December 31, 2014 and 2013, SWATE collected and applied against amounts due from the Company approximately $120,400 and $305,600 respectively from amounts received from investors.
SWATE is a Swiss research and development company with access to patent and certain scientific and technical resources. As a result of the above agreements, the Company has a variable implicit interest in SWATE, however it is not its primary beneficiary, does not provide any explicit or implied financial support and therefore does not consolidate SWATE’s financial statements in its consolidated financial statements.
Due from affiliate
During 2014, the Company advanced funds to its affiliate, EAWC Tecnologias Verdes, S.A., an entity owned and controlled by the Company’s Chief Executive Officer and Chief Operating Officer who are the primary beneficiaries. The amounts advanced of $80,758, including interest, have been offset by an allowance for doubtful collection since the affiliate does not currently have the ability to generate revenues or repay the Company.
In March 2013, the Company issued 8 million shares of its restricted common shares to its COO in exchange for her interests in the intellectual property, underling assets and equity of Swiss Green Solutions acquired in 2012. The transaction was valued at par, which represents the carry over basis of the minimal operating assets underlying this transaction.Worldwide Stock Transfer, LLC, One University Plaza, Suite 505, Hackensack, NJ 07601, Phone: (201) 820-2008, Fax: (201) 820-2010.
Quotation of Common Stock
Our Common Stock is currently quoted on the OTCQB under the symbol “EAWD”. Our securities are currently highly illiquid, and subject to large swings in trading price, and are only traded on a sporadic and limited basis. On June 27, 2022, the last reported sale price per share for our Common Stock as reported was $0.19.
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INTERESTS OF NAMED EXPERTS AND COUNSEL
None.
EXPERTS
The Company’s financial statements for the year ended December 31, 2021, included in this Prospectus have been audited by TAAD LLP, an independent registered public accounting firm, and upon the authority of said firm as experts in accounting and auditing.
The Company’s financial statements for the year ended December 31, 2020, included in this Prospectus have been audited by WithumSmith+Brown, PC, an independent registered public accounting firm, and upon the authority of said firm as experts in accounting and auditing.
LEGAL MATTERS
The law firm of di Santo Law PLLC has provided opinions regarding the validity of the shares of our common stock offered pursuant to this Prospectus. The address of di Santo Law PLLC is 429 Lenox Avenue, 4th Floor, Miami Beach, FL 33139.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by the Florida corporate law and our Bylaws.bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
We have been advised that in the opinion of the SEC indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filedare subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and file reports, proxy statements and other information with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered by this prospectus. For purposes of this section, the term registration statement means the original registration statement and any and all amendments including the schedules and exhibits to the original registration statement or any amendment. This prospectus, filed as part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules thereto as permitted by the rules and regulations of the SEC.
For further information about our common stock, and us you should refer to the registration statement, including the exhibits this prospectus summarizes provisions that we consider material of certain contracts These reports, proxy statements and other documents to which we refer you. Because the summaries may not contain all of the information that you may find important, you should review the full text of those documents. The registration statement, including its exhibits and schedules, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F.F Street, N.E., Room 1580, Washington, D.C. 20549.20549 and at the SEC’s regional offices located at the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 233 Broadway, New York, New York 10279. You can obtain copies of these materials from the Public Reference Section of the SEC upon payment of fees prescribed by the SEC. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC’s website contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of that site is http://www.sec.gov.
We have filed a registration statement on Form S-1 with the SEC under the Securities Act of 1933, as amended, with respect to the securities offered in this prospectus. This prospectus, which is filed as part of a registration statement, does not contain all of the information set forth in the registration statement, some portions of which have been omitted in accordance with the SEC’s rules and regulations. Statements made in this prospectus as to the contents of any contract, agreement or other document referred to in this prospectus are not necessarily complete and are qualified in their entirety by reference to each such contract, agreement or other document that is filed as an exhibit to the registration statement. The registration statement may be inspected without charge at the public reference roomfacilities maintained by calling 1-202-551-8909. Copiesthe SEC, and copies of such materials are also available by mailcan be obtained from the Public Reference BranchSection of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549 at prescribed rates. In addition, the SEC maintains aYou may obtain additional information regarding our Company on our website, located at (http://www.sec.gov) from which interested persons can electronically access the registration statement, including the exhibits and schedules to the registration statement.www.energy-water.com.
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Financial StatementsINDEX TO FINANCIAL STATEMENTS
Eurosport Active World Corp.
December 31, 2014 and 2013
Eurosport Active World Corp.
FINANCIAL STATEMENTS
| TAAD LLP (PCAOB ID #5854) | F-2 | |
| Independent Registered Public Accounting Firm WithumSmith + Brown, PC (PCAOB ID #100) | F-4 | |
| Audited Financial Consolidated Statements | ||
| Consolidated Balance Sheets | F-5 | |
| Consolidated Statements of Income | F-6 | |
| Consolidated Statements of Changes in Redeemable, Convertible Preferred Stock and Stockholders’ Equity | F-7 | |
| Consolidated Statements of Cash Flows | F-8 | |
| Notes to Consolidated Financial Statements | ||
| Unaudited Interim Condensed Consolidated Financial Statements | ||
| Condensed Consolidated Balance Sheets | F-24 | |
| Condensed Consolidated Statements of Income | F-25 | |
| Condensed Consolidated Statements of Changes in Redeemable, Convertible Preferred Stock and Stockholders’ (Deficit) Equity | F-26 | |
| Condensed Consolidated Statements of Cash Flows | F-27 | |
| Notes to Condensed Consolidated Financial Statements |
Report of Independent Registered Public Accounting FirmREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TheTo the Board of Directors and StockholdersEurosport Active WorldShareholders of Energy and Water Development Corp.Miami, Florida and Subsidiary
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Eurosport Active WorldEnergy and Water Development Corp. and Subsidiary (the “Company”) as of December 31, 2014 and 2013, and2021, the related consolidated statements of operations changes in stockholders'and comprehensive loss, stockholders’ deficit, and cash flows for the yearsyear then ended. These financial statements areended, and the responsibility of the Company's management. Our responsibility isrelated notes to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with(collectively referred to as the standards of the Public Company Accounting Oversight Board (United States)“consolidated financial statements”). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal controls over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Eurosport Active World Corp.the Company as of December 31, 2014 and 2013,2021, and the results of its operations and its cash flows for the yearsyear then ended, in conformity with accounting principles generally accepted in the United States of America.States.
Going Concern Matter
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the consolidated financial statements, the Company has incurred accumulated operatingsuffered recurring losses since inception, has incurred operating losses in 2014 and 2013from operations and has workinga net capital deficits at the end of 2014 and 2013, respectively. These conditions raise adeficiency that raises substantial doubt about the Company'sits ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 4 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
Fort Lauderdale, FloridaJuly 22, 2015These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
mallahfurman.comWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Brickell Bay Office Tower 1001 Brickell Bay Drive, Suite 1400, Miami, Florida 33131 Phone: 305.371.6200 Fax: 305.371.8726Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Royal Palm at Southpointe900 South Pine Island Road, Suite 110, Ft. Lauderdale, Florida 33324 Phone: 954.475.3199 Fax: 954,472,4500Critical Audit Matters
Member American InstituteThe critical audit matters communicated below are matters arising from the current period audit of Certified Public Accountants ● Florida Institutethe financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of Certified Public Accountants ● JHI Internationalcritical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| F-2 |
Convertible Notes
As discussed in Notes 11 to the consolidated financial statements, the Company had various debt instruments which included conversion features requiring bifurcation and separate accounting. Management evaluated the required accounting, significant estimates, and judgments around the valuation for these embedded derivatives. These embedded derivatives were initially measured at fair value and have subsequently been remeasured to fair value at each reporting period and at settlement.
There is no current observable market for these types of features and, as such, the Company determined the fair value of the embedded derivatives using a Black-Scholes model to measure the fair value of the bifurcated derivative. As a result, a high degree of auditor judgment and effort was required in performing audit procedures to evaluate the conclusions reached by management, as well as the inputs to the Company’s Black-Scholes model.
How We Addressed the Matter in Our Audit
Our principal audit procedures performed to address this critical audit matter included the following:
| · | We obtained an understanding of the controls and processes surrounding the evaluation, initial measurement, and revaluation of the bifurcated derivatives. |
| · | We verified note amount, interest rate and maturity date to the supporting documentation and debt agreement, and examined terms and conditions of the note and confirmed the ending balance to the note holder. |
| · | We evaluated management’s assessment and the conclusions reached to ensure these instruments were recorded in accordance with the relevant accounting guidance. |
| · | We evaluated the fair value of the bifurcated derivatives that included testing the valuation models and assumptions utilized by management. We reviewed and tested the fair value model used, significant assumptions, and underlying data used in the model. |
| · | We considered the adequacy of the disclosures in the financial statements in relation to convertible debt. |
/s/ TAAD LLP
We have served as the Company’s auditor since 2021.
Diamond Bar, California
April 14, 2022
| F-3 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Energy and Water Development Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Energy and Water Development Corp. (the “Company”) as of December 31, 2020, and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended, and the related notes to financial statements (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Eurosport Active World
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ WithumSmith+Brown, PC
We have served as the Company’s auditor from June 2021 through November 2021.
Orlando, Florida
September 30, 2021
| F-4 |
Energy and Water Development Corp. and Subsidiary
Consolidated Balance Sheets
| December 31, | December 31, | |||||||||||||||
| 2014 | 2013 | 2021 | 2020 | |||||||||||||
| ASSETS | ||||||||||||||||
| CURRENT ASSETS: | ||||||||||||||||
| Cash | $ | - | $ | 8,118 | $ | 589,668 | $ | 12,047 | ||||||||
| Accounts receivable | 55,169 | 52,761 | ||||||||||||||
| Inventory | 196,553 | — | ||||||||||||||
| Deferred cost | 0 | 350,000 | ||||||||||||||
| Prepaid expenses and other current assets | 1,498 | 1,595 | 432,082 | 14,184 | ||||||||||||
| TOTAL CURRENT ASSETS | 1,498 | 9,713 | 1,273,472 | 428,992 | ||||||||||||
| PROPERTY AND EQUIPMENT, NET | 15,745 | 20,741 | ||||||||||||||
| OTHER ASSETS, NET | 25,700 | 35,700 | ||||||||||||||
| Property and equipment, net | 3,834 | 0 | ||||||||||||||
| Operating lease right-of-use asset | 49,432 | 0 | ||||||||||||||
| TOTAL ASSETS | $ | 42,943 | $ | 66,154 | $ | 1,326,738 | $ | 428,992 | ||||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||||
| Accounts payable and accrued expenses | $ | 496,075 | $ | 530,565 | $ | 941,309 | $ | 748,926 | ||||||||
| Due to affiliate | 529,436 | 521,278 | ||||||||||||||
| Accounts payable - related party | 124,370 | 153,300 | ||||||||||||||
| Deferred revenue | 0 | 550,000 | ||||||||||||||
| Convertible loan payables, net of discount | 176,703 | 149,241 | ||||||||||||||
| Due to officers | 914,270 | 633,987 | 17,485 | 84,676 | ||||||||||||
| Stock subscribed | 122,750 | 204,600 | ||||||||||||||
| Derivative liability | 354,160 | 310,641 | ||||||||||||||
| Current portion of operating lease liability | 39,148 | 0 | ||||||||||||||
| Common stock subscriptions liability | 377,350 | — | ||||||||||||||
| TOTAL CURRENT LIABILITIES | 2,062,531 | 1,890,430 | 2,030,525 | 1,996,784 | ||||||||||||
| Operating lease liability, net of current portion | 10,283 | 0 | ||||||||||||||
| TOTAL LIABILITIES | 2,040,808 | 1,996,784 | ||||||||||||||
| COMMITMENTS AND CONTINGENCIES | — | — | ||||||||||||||
| STOCKHOLDERS' DEFICIT: | ||||||||||||||||
Preferred stock, par value $.001 per share; | - | - | ||||||||||||||
Common stock, par value $.001 per share; | 75,506 | 74,713 | ||||||||||||||
| Preferred stock, par value $ per share; shares authorized, shares issued and outstanding at December 31, 2021 and December 31, 2020 | 9,781 | 9,781 | ||||||||||||||
| Common stock, par value $ per share; shares authorized, and shares issued and outstanding at December 31, 2021 and 2020, respectively | 143,840 | 123,316 | ||||||||||||||
| Common stock subscriptions, and shares at December 31, 2021 and 2020, respectively | 792,745 | 1,504,000 | ||||||||||||||
| Additional paid in capital | 10,264,229 | 9,266,920 | 20,777,401 | 16,153,038 | ||||||||||||
| Accumulated deficit | (12,359,323 | ) | (11,165,909 | ) | (22,395,393 | ) | (19,357,927 | ) | ||||||||
| Accumulated other comprehensive income | (42,444 | ) | — | |||||||||||||
| TOTAL STOCKHOLDERS' DEFICIT | (2,019,588 | ) | (1,824,276 | ) | (714,070 | ) | (1,567,792 | ) | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 42,943 | $ | 66,154 | $ | 1,326,738 | $ | 428,992 | ||||||||
See accompanying notes to the consolidated financial statements.
Energy and Water Development Corp. and Subsidiary
Consolidated Statements of Operations and Comprehensive Loss
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| REVENUE | ||||||||
| Revenue | $ | 550,000 | $ | 0 | ||||
| TOTAL REVENUE | 550,000 | 0 | ||||||
| COST OF EQUIPMENT SOLD | ||||||||
| Cost of equipment sold | 350,000 | 0 | ||||||
| TOTAL COST OF EQUIPMENT SOLD | 350,000 | 0 | ||||||
| GROSS PROFIT | 200,000 | 0 | ||||||
| GENERAL and ADMINISTRATIVE EXPENSES | ||||||||
| Professional fees | 416,989 | $ | 535,488 | |||||
| Officers’ salaries and payroll taxes | 300,732 | 6,000,000 | ||||||
| Marketing fees | 174,892 | 20,402 | ||||||
| Travel and entertainment | 22,953 | 33 | ||||||
| Management fees to affiliate | 0 | 325,000 | ||||||
| Other general and administrative expenses | 222,229 | 278,821 | ||||||
| TOTAL GENERAL and ADMINISTRATIVE EXPENSES | 1,137,795 | 7,159,744 | ||||||
| LOSS FROM OPERATIONS | (937,795 | ) | (7,159,744 | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Change in fair value of derivative | (1,269,266 | ) | 1,257,473 | |||||
| Interest expense | (830,405 | ) | (1,690,513 | ) | ||||
| TOTAL OTHER INCOME (EXPENSE) | (2,099,671 | ) | (433,040 | ) | ||||
| LOSS BEFORE TAXES | (3,037,466 | ) | (7,592,784 | ) | ||||
| TAXES | 0 | 0 | ||||||
| NET LOSS | $ | (3,037,466 | ) | $ | (7,592,784 | ) | ||
| OTHER COMPREHENSIVE LOSS | — | |||||||
| Foreign currency translation adjustments | (42,444 | ) | 0 | |||||
| TOTAL OTHER COMPREHENSIVE LOSS | $ | (42,444 | ) | $ | 0 | |||
| COMPREHENSIVE LOSS | (3,079,910 | ) | (7,592,784 | ) | ||||
| Loss per common share - Basic and diluted | $ | (0.02 | ) | $ | (0.07 | ) | ||
| Weighted average number of common shares outstanding - Basic and diluted | 136,720,652 | 103,498,314 | ||||||
See accompanying notes to the consolidated financial statements.
Energy and Water Development Corp. and Subsidiary
Consolidated Statements of Changes in Stockholders’ Deficit
For the years ended December 31, 2021 and 2020
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Common Stock | Additional | Other | Total | |||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Subscriptions | Paid-in | Accumulated | Comprehensive | Stockholders' | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Deficit | |||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2019 | — | $ | — | 93,462,483 | $ | 93,462 | — | $ | — | $ | 7,491,197 | $ | (11,765,143 | ) | — | $ | (4,180,484 | ) | ||||||||||||||||||||||
| Sale of common stock | — | — | 5,256,111 | 5,256 | 40,000 | 4,000 | 469,684 | — | — | 478,940 | ||||||||||||||||||||||||||||||
| Common stock issued for services | — | — | 3,940,000 | 3,940 | — | — | 1,966,960 | — | — | 1,970,900 | ||||||||||||||||||||||||||||||
| Common and preferred stock issued to officers for services | 5,400,000 | 5,400 | 10,000,000 | 10,000 | — | — | 4,184,600 | — | — | 4,200,000 | ||||||||||||||||||||||||||||||
| Common and preferred stock issued to officers for accrued salary | 4,380,976 | 4,381 | 2,044,190 | 2,044 | 10,000,000 | 1,500,000 | 1,031,575 | — | — | 2,538,000 | ||||||||||||||||||||||||||||||
| Common stock issued to satisfy convertible debt | — | — | 8,334,361 | 8,334 | — | — | 562,666 | — | — | 571,000 | ||||||||||||||||||||||||||||||
| Stock issued for interest and fees | — | — | 279,741 | 280 | — | — | 14,720 | — | — | 15,000 | ||||||||||||||||||||||||||||||
| Derivative reduction due to conversion | — | — | — | — | — | — | 455,576 | — | — | 455,576 | ||||||||||||||||||||||||||||||
| Debt discount | — | — | — | — | — | — | (23,940 | ) | — | — | (23,940 | ) | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (7,592,784 | ) | — | (7,592,784 | ) | ||||||||||||||||||||||||||||
| BALANCE AT December 31, 2020 | 9,780,976 | $ | 9,781 | 123,316,886 | $ | 123,316 | 10,040,000 | $ | 1,504,000 | $ | 16,153,038 | $ | (19,357,927 | ) | $ | — | $ | (1,567,792 | ) | |||||||||||||||||||||
| Sale of Common Stock | — | — | 5,065,344 | 5,066 | (40,000 | ) | 4,000 | ) | 717,047 | — | — | 718,113 | ||||||||||||||||||||||||||||
| Common stock issued to officers for accrued salary | — | — | 10,000,000 | 10,000 | (10,000,000 | ) | (1,500,000 | ) | 1,490,000 | — | — | — | ||||||||||||||||||||||||||||
| Common stock issued for services | — | — | 500,000 | 500 | — | — | 164,500 | — | — | 165,000 | ||||||||||||||||||||||||||||||
| Common stock issued to satisfy convertible debt | — | — | 4,671,167 | 4,671 | — | — | 265,329 | — | — | 270,000 | ||||||||||||||||||||||||||||||
| Stock issued for interest and fees | — | — | 287,246 | 287 | — | — | 15,068 | — | — | 15,355 | ||||||||||||||||||||||||||||||
| Derivative settled upon conversion of debt | — | — | — | — | — | — | 1,972,419 | — | — | 1,972,419 | ||||||||||||||||||||||||||||||
| Subscription deposits received | — | — | — | — | 15,855,000 | 792,745 | — | — | — | 792,745 | ||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (3,037,466 | ) | — | (3,037,466 | ) | ||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | — | — | — | (42,444 | ) | (42,444 | ) | ||||||||||||||||||||||||||||
| BALANCE AT December 31, 2021 | 9,780,976 | $ | 9,781 | 143,840,643 | $ | 143,840 | 15,855,000 | $ | 792,745 | $ | 20,777,401 | $ | (22,395,393 | ) | $ | (42,444 | ) | $ | (714,070 | ) | ||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
| F-7 |
Energy and Water Development Corp. and Subsidiary
Consolidated Statements of Cash Flows
| For the Year ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (3,037,466 | ) | $ | (7,592,784 | ) | ||
| Reconciliation of net loss to net cash used in operating activities | ||||||||
| Stock based compensation | 0 | 4,200,000 | ||||||
| Preferred shares issued for services | 0 | 300,000 | ||||||
| Amortization of debt discount and deferred financing costs | 770,134 | 1,683,712 | ||||||
| Depreciation expense | 299 | 0 | ||||||
| Change in fair value of derivative liability | 1,269,266 | (1,257,473 | ) | |||||
| Common stock issued for services | 165,000 | 1,970,900 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (2,503 | ) | (52,761 | ) | ||||
| Inventory | (204,533 | ) | 0 | |||||
| Deferred cost | 350,000 | 0 | ||||||
| Prepaid expenses and other current assets | (435,150 | ) | (333,809 | ) | ||||
| Accounts payable and accrued expenses | 218,096 | (64,383 | ) | |||||
| Due to related party | (28,929 | ) | — | |||||
| Deferred revenue | (550,000 | ) | 0 | |||||
| Other current liabilities | 0 | 236,258 | ||||||
| Due to affiliates | 0 | (4,959 | ) | |||||
| Due to officers | 0 | 45,906 | ||||||
| Accrued management fees and due to officers | (70,482 | ) | 0 | |||||
| CASH USED IN OPERATING ACTIVITIES | (1,556,268 | ) | (869,393 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (4,299 | ) | 0 | |||||
| NET CASH USED IN INVESTING ACTIVITIES | (4,299 | ) | 0 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds on convertible loans payable | 369,500 | 402,500 | ||||||
| Repayments of convertible loans payable | (95,500 | ) | 0 | |||||
| Proceeds from sale of stock | 718,113 | 478,940 | ||||||
| Proceeds from common stock subscriptions | 1,170,095 | 0 | ||||||
| CASH PROVIDED BY FINANCING ACTIVITIES | 2,162,208 | 881,440 | ||||||
| Effect of exchange rate changes on cash | (24,020 | ) | 0 | |||||
| Net change in cash | 577,621 | 12,047 | ||||||
| Cash, beginning of period | 12,047 | 0 | ||||||
| Cash, end of period | $ | 589,668 | $ | 12,047 | ||||
See accompanying notes to the consolidated financial statements.
| F-8 |
Energy and Water Development Corp. and Subsidiary
Consolidated Statements of Cash Flows (Continued)
| For the Year ended | ||||||||
| December 31, | ||||||||
| 2021 | 2020 | |||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | 28,864 | $ | 0 | ||||
| Cash paid for taxes | $ | 0 | $ | 0 | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Common shares issued for interest and fees | $ | 15,355 | $ | 0 | ||||
| Reclassification of common stock subscriptions to common stock | $ | 1,504,000 | $ | 0 | ||||
| Common shares issued for conversion of loans payable | $ | 270,000 | $ | 0 | ||||
| Derivative liability discount | $ | 746,672 | $ | 1,609,895 | ||||
| Derivative settled upon conversion of debt | $ | 1,972,419 | $ | 0 | ||||
| Reclassification of equity to liability for derivatives | $ | 0 | $ | 455,576 | ||||
| Right of use asset exchanged for lease liability | $ | 79,214 | $ | 0 | ||||
| Common shares issued to satisfy related party liability | $ | 0 | $ | 0 | ||||
See accompanying notes to the consolidated financial statements.
| F-9 |
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements
Note 1. Incorporation
On
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of
The consolidated financial statements include the accounts of Energy and Water Development Corp. and Subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. Certain reclassifications have been made in December 31, 2020 results to conform to the presentation used in December 31, 2021 including the reclassification of from additional paid-in capital to common stock subscriptions on the consolidated balance sheets and consolidated statements of changes in stockholders’ deficit, reclassification of marketing fees out of other general and administrative expenses on the consolidated statements of operations, and the reclassification of amounts to due to related party from accounts payable and accrued expenses on the consolidated balance sheets These reclassifications had no effect on the reported results of operations of the Company or total equity. Foreign currency translation The United States dollar (“USD”) is the Company’s reporting currency. The Company has a subsidiary located in Germany. The net sales generated, and the related expenses directly incurred from the operations, if any, are denominated in local currency, Euro (“Euro”). The functional currency of the subsidiary is generally the same as the local currency. Assets and liabilities measured in Euros are translated into USD at the prevailing exchange rates in effect as of the financial statement date and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive loss in its balance sheets. Income and expense accounts are translated at the average exchange rate for the period. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. During the year ended December 31, 2021, the Company used a spot rate of 1.13 and an average rate of 1.83 when converting EURO to USD. Use of Estimates The preparation of
Effective
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. The Company does not
Cash The Company considers short-term
Inventory Inventory is stated at the lower of cost or net realizable value using the first in, first out (FIFO) method. A reserve is established if necessary to reduce excess or obsolete inventories to their net realizable value. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets include purchase deposits, miscellaneous prepaid expenses, value added tax receivable, and a security deposit. Property and Equipment
Property and equipment
Deferred Financing Costs
Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. Described below are the three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities, Level 2 – Observable prices that are based on inputs not quoted on active markets, but corroborated by market data, Level 3 – Unobservable inputs are used when little or no market data is available.
The Certain assets and liabilities
Income
Income taxes are accounted for under the asset and liability method as stipulated by ASC 740,
ASC 740 provides interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In the unlikely event that an uncertain tax position exists in which the
As of December 31,
Stock-based compensation cost to employees is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period,
Revenue Recognition
The Company To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. During the year ended December 31, 2021, the Company recognized $550,000 in revenue as a result of meeting the above criteria. During 2021, the Company completed its first sale of equipment. Upon approval of the inspection of the equipment by the customer, the Company recognized the revenue as it had met the revenue recognition criteria and had satisfied the performance obligation of the contract through acceptance by the customer. During the year ended December 31, 2021, one customer accounted for 100% of the revenue.
The
For the As discussed more fully in Note 11, convertible note holders have the option of converting their loans into common shares subject to the terms and features offered by the specific convertible notes. Some note holders were also granted purchase options to purchase additional shares subject to the features of each purchase option. If the convertible note holders of unexercised convertible notes exercised their conversion feature and the additional purchase options, they would represent and in additional common shares at December 31, 2021 and 2020, respectively. The potential shares from both the conversion feature and the rights to purchase additional shares were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive. Related Party Transactions A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. A related party is generally defined as:
Note 3. Recently Issued Accounting Standards
On January 1, 2021, the Company adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements. Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the
In In June 2020, the FASB issued ASU No. 2020-06, Debt with In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modification or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”), which will clarify and reduce diversity in practice. Specifically, the new standard includes a recognition model comprising four categories of transactions and corresponding accounting treatment for each category. The category that would apply to a modification or an exchange of an equity-classified warrant would depend on the substance of the modification transaction (e.g., a financing transaction to raise equity versus one to raise debt). This recognition model is premised on the idea that the accounting for the transaction should not differ from what it would have been had the issuer of the warrants paid cash instead of modifying the warrants. ASU 2021-04 will be effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years. Early adoption is permitted. This ASU will be applied prospectively to modifications or exchanges occurring on or after the effective date of the ASU. We adopted ASU 2021-04 on January 1, 2022. Adoption of this standard had no material impact on our consolidated financial statements.
net income. The Company has have generated losses from operations since inception. These factors raise substantial doubt The Company’s ability to transition to profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business and availability to sufficient resources. Management expects sales operations to continue to expand. If necessary, the Company will need to raise additional funds through 2022. Management of the Company intends to raise additional funds through the issuance of equity securities or debt or from deposits related to purchases orders on proposals pending customer acceptance. The ability of the Company to continue as a going concern depends upon its ability to generate sales or obtain additional funding to finance operating losses until the
Note 5.
Note 6. Inventory The components of inventory at December 31,
During the fourth quarter of 2020, the Company delivered its first equipment sale pursuant to an equipment sale agreement; however the delivery of the equipment was
Note 8. Prepaid Expenses and Other Current Assets The components of prepaid expenses and other current assets at December 31, 2021 and 2020, consisted of the following:
Note 9.Property and Equipment, Net The components of property and equipment at December 31, 2021 and 2020 consisted of the following:
Note 10. Accounts Payable and Accrued Expenses Significant components of accounts payable and accrued expenses at December 31, 2021 and 2020 are as follows:
As of December 31, 2021 and 2020, the Company owed Virhtech Gmbh, a related party of the Company, $124,370 and $153,300, respectively, for services performed for the Company and is classified as accounts payable – related party on the consolidated balance sheets. Note 11. Convertible Loans Payable As of December 31, 2021 and 2020, the Company had loans payable balances, net of discount, of $176,703 and $149,241, respectively. During the year ended December 31, 2020, the Company issued convertible loans in the aggregate principal amount of $468,500. The aggregate purchase price of the notes was $443,500 and the remaining $25,000 of principal represents the original issue discount. The notes bear interest between 0% and 8% per annum and all mature within one year. The embedded beneficial conversion feature in the notes meet the definition of a derivative and requires bifurcation and liability classification, at fair value. The fair value of the derivative liability as of the date of issuance was $1,609,895 and was recorded as a discount of the notes. The convertible loans were issued in several different forms as discussed below.
During the year ended December 31, 2021, the Company issued two convertible loans in the aggregate amount of $404,000. The notes bear interest at 8% per annum and all mature within one year. On October 21, 2021, the Maturity Date of the $304,000 loan was extended from March 25, 2022 to April 21, 2022. The embedded beneficial conversion features in the notes meet the definition of a derivative and requires bifurcation and liability classification, at fair value. The fair value of the derivative liability as of the date of issuance was $746,672 and was recorded as a discount of the notes.
Derivative Liabilities The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted, and all additional convertible debentures and warrants are included in the value of the derivative liabilities. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period. Based on the various convertible notes described above, the fair value of applicable derivative liabilities on notes and change in fair value of derivative liability are as follows as of December 31, 2021 and 2020:
A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s common stock purchase that are categorized within Level 3 of the fair value hierarchy for the years ended December 31,
The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations.
The fair value accounting standards define fair value as the amount that would be received to sell an asset or paid to transfer a
There were no transfers between Level 1, 2 or 3 during the years ended December 31,
During the years ended December 31, 2021 and 2020, the Company recorded a loss of $1,269,266 and a gain of $1,257,473, respectively, from the change in fair value of derivative liability.
The Company’s leases do not provide an implicit rate that can be readily determined. Therefore, the Company uses discount rates based on the incremental borrowing rate of its current external debt of 8%. The Company’s weighted-average remaining lease term relating to its operating leases is 1.25 years, with a weighted-average discount rate of the 8.00%. The Company incurred lease expense for its operating leases of $31,266, which was included in general and administrative expenses in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. During the year ended December 31, 2021, the Company made cash lease payments of $31,266. At December 31, 2021, the operating lease right-of-use asset was $49,432, the current portion of operating lease liability was $39,148, and the operating lease liability, net of current portion was $10,283. The following table presents information about the future maturity of the lease liability under the Company’s operating leases as of December 31, 2021.
Note
Due to officers Amounts due to officers as of December 31,
Accrued salaries represent amounts accrued in accordance with the employment agreements for Mr. Hofmeier, the
On December 18, 2020, the Company entered into a Settlement Agreement with each of Mr. Hofmeier and Ms. Velazquez whereby Mr. Hofmeier and Ms. Velazquez each agreed to receive shares of its Series A Preferred Stock with a fair market value of $ (collectively, the “Compensation Shares”). Compensation Shares are issued in full satisfaction of $150,000 accrued salary due the Employees, Mr. Ralph Hofmeier and Mrs. Irma Velazquez, MSc. simultaneously herewith, each employee shall receive a one-time bonus of (i) shares of its Common Stock with a fair market value of $1,500,000 and (ii) shares of its Series A Preferred Stock, with a fair market value of $1,350,000 (collectively the “Bonus Shares”). See Investor and officer deposit below for more information. Customer deposit
In 2020, manufacture of the unit was delayed due to Covid-19 related issues. The Company and EAWC-TV agreed as it had done in 2019, to clear the outstanding balances in the D/T/F EAWC-TV and the outstanding balance it carried in its accounts payable account for administrative services, which it did on December 26, 2020 which resulted in an additional down payment of $193,497. EAWC-TV has an unpaid balance on the equipment of $52,761, which represents a majority of the balance of the Company’s outstanding accounts receivables as of both December 31, 2021 and 2020. Virhtech Gmbh As of December 31, 2021 and 2020, the Company owed Virhtech Gmbh, a related party of the Company, $124,370 and $153,300, respectively, for services performed for the Company and is classified as accounts payable – related party on the consolidated balance sheets. Officer and investor deposits On December 31, 2020, the Company recorded $1,500,000 as officer compensation and $ in common stock subscriptions for stock issuance transactions in process. The $4,000 is part of a pending stock sale for shares that has been funded were issued on January 20, 2021. The $1.5 million is part of the bonus payment to officers authorized on December 18, 2020. The shares were issued as of December 31,
As of December 31, 2021, the Company recorded $792,745, or 15,855,000 common shares to be issued, as common stock subscriptions within stockholders’ deficit and $377,350, or 7,547,000 common shares to be issued, as a common stock subscription liability for stock issuance transactions in process. The $1,170,095 is part of pending stock sales for shares that has been funded and is waiting issuance to complete the
During
During the year ended December 31, 2021, the Company engaged in the following equity events:
During the year ended December 31, 2020, the Company engaged in the following equity events:
Stock Options
On January 2, 2012, the
A summary of information regarding the
The above outstanding options were granted on January 1, 2012, to a former Warrants On February 17, 2021, the Company entered into an agreement with a consultant to provide Business Development advisement and analysis services. In consideration, the consultant will be issued warrant shares. 500,000 warrants were issued on February 17, 2021, and the remaining will be issued on the six-month anniversary of initial issuance. On August 31, 2021, due to a failure by the consultant to provide the services as required by the agreement, the Company terminated the agreement, and the warrants were canceled. Note 16. Commitments and Contingencies Commitments Employment Agreements The
Lease Our registered office is located at 7901 4th Street N STE #4174, St. Petersburg, Florida 33702. Our telephone number is +1 (727) 677-9408. Office services are contracted for on a month-to-month basis in this Address. In October 2020, the Company established its official registered Branch in Hamburg Germany; the office Address until March 31, 2021 was Contingencies From time to time, the Litigation EAWD vs Packard and Co-Defendant Nick Norwood - Case number 18-031011 CA-01 Miami-Dade County Circuit Court. The Company is requesting the proof of payment for shares issued in 2008. Based on the lack of evidence of payment, on March 12th, EAWD filed notice of the parties ‘stipulation of mediator in accordance with the Court´s exhibit to Trial Order. CocoGrove – Case No. 09-81555 CA 21 in Miami-Dade County, Florida. The nature of the litigation was for breach of a lease agreement. This case is concluded with a judgement against the Company on July 7, 2010 for $84,393 plus 6% interest which as of December 31, Note 17. Income Taxes
The
The
The Company’s approximate net U.S. and foreign deferred tax assets as of
Net operating loss carry-forwards for U.S. federal and state in the amount of approximately $9.7 million, and for foreign of $359 thousand, will expire beginning December 31, 2033. The net change in the valuation allowance for the years ended December 31,
The Company subject to U.S. federal income tax as well as income tax in multiple state and non-U.S. jurisdictions. The Company’s federal and state tax returns for the previous three years remain open for audit. With respect to material non-U.S. jurisdictions in which we operate, we have open tax years ranging from 2 to 10 years.
Note
On January 14, 2022, the Company completed a conversion of our outstanding convertible debt by exchanging $53,222 cash for retiring $50,000 in convertible debt along with $3,222 in interest for a total of common shares. On February 1, 2022, the Company repaid the remaining balance of convertible debt for a total of $216,348, which consists of $150,000 of principal, $10,257 of interest, and On February 3, 2022, the Company issued shares of the Company’s common stock to a vendor for services. On February 18, 2022, the Company received a deposit in the amount of $300,000 for common shares to be issued pursuant to a securities purchase agreement. As of April 14, 2022, these shares have been issued. On February 23, 2022, the Company filed the European trademark applications for Registration of the Name and logo of EAWD as well as the national trademark applications for an international trademark application designating Mexico, Brazil and Australia, a national trademark application in the US and a national trademark application in Argentina. In From January 1, 2022 through April 14, 2022, the Company has issued common shares related to
Energy and Water Development Corp. Condensed Consolidated Balance Sheets
See accompanying notes to the condensed consolidated financial statements (unaudited).
Condensed Consolidated Statements of (Unaudited)
See accompanying notes to the condensed consolidated financial statements (unaudited).
Energy and Water Development Corp. Condensed Statements of Changes in Stockholders’ Deficit (Unaudited)
See accompanying notes to the condensed consolidated financial statements (unaudited).
Energy and Water Development Corp. Condensed Consolidated Statements of Cash Flows (Unaudited)
See accompanying notes to the condensed consolidated financial statements (unaudited).
Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) Note 1.Incorporation and Nature of Operations Energy and Water Development Corp. (the “Corporation”, “Company” or “EAWD”), was incorporated under the laws of the State of Florida on December 12, 2007. In September 2019, the Company changed its name from Eurosport Active World Corp.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The condensed consolidated financial statements include the accounts of
The In the opinion of management, all adjustments,
Foreign currency translation The United States dollar (“USD”) is the Company’s reporting currency. The Company has a subsidiary located in Germany. The net sales generated, and the related expenses directly incurred from the operations, if any, are denominated in local currency, Euro (“Euro”). The functional currency of the subsidiary is generally the same as the local currency. Assets and liabilities measured in Euros are translated into USD at the prevailing exchange rates in effect as of the financial statement date and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive loss in its balance sheets. Income and expense accounts are translated at the average exchange rate for the period. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.During the three months ended March 31, 2022 the Company used a spot rate of 1.11 and an average rate of 1.12 when converting EURO to USD. F-28 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) Use of Estimates The preparation of Leases
Cash The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has Inventory Inventory is stated at the Prepaid Expenses and Prepaid expenses and
Property and Equipment Property and equipment
F-29 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) Deferred Financing Costs The Company has recorded deferred financing costs as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense using the straight-line method which approximates the interest rate method over the term of the related debt. As of March 31, 2022 and December 31, 2021, unamortized deferred financing costs were $0 and $6,663, respectively and are netted against the related debt. Revenue Recognition The Company To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. Described below are the three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities, Level 2 – Observable prices that are based on inputs not quoted on active markets, but corroborated by market data, Level 3 – Unobservable inputs are used when little or no market data is available.
The
The
operations. Basic EPS amounts are calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method. When a loss from operations exists, potential common shares are excluded from the computation of diluted EPS because their inclusion would result in an anti-dilutive effect on per share amounts.
F-30 Energy and Water Development Corp. Notes to the As discussed more fully in Note 10, convertible note holders have the option of converting their loans into common shares subject to the terms and
Related Party Transactions A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. A related party is generally defined as:
Note 3.Recently Issued Accounting Standards
Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the
On January 1, 2022, the Company adopted ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In On January 1, 2022, the Company adopted ASU No. 2021-04, Earnings Per Share (Topic
In
F-31 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) Note 4.Going Concern
During the year ended December 31, 2021, pursuant to an equipment sale agreement, the Company recognized revenue of $550,000 for the sale of equipment, along with $350,000 for the cost of construction, earning $200,000 gross profit. The Company has
Management expects sales operations to continue
Note 5. Accounts Receivable
Note 6. Inventory The components of inventory at March 31, 2022 and December 31, 2021, consisted of the following:
F-32 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited)
Note The components of prepaid expenses and other current assets at March 31, 2022 and December 31, 2021, consisted of the following:
Note 8. Property and Equipment, net The components of property and equipment at March 31, 2022 and December 31, 2021 consisted of the following:
Depreciation expense for the three months ended March 31, 2022 and 2021 was $873 and $0, respectively, and is included in other general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss. Note 9. Accounts Payable and Accrued Expenses and Accounts payable – Related Party Significant components of accounts payable and accrued expenses at March 31 ,2022 and December 31, 2021 are as follows:
As of March 31, 2022 and December 31, 2021, the Company owed Virhtech Gmbh, a related party of the Company, $124,370, for services performed for the Company and is classified as accounts payable – related party on the condensed consolidated balance sheets. F-33 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) Note 10.Convertible Loans Payable As of March 31, 2022 and December 31, 2021, the balance of convertible loans payable net of discount was $39,999 and $176,703, respectively. During the year ended December 31, 2021, the Company issued two convertible loans in the aggregate amount of $404,000. The notes bear interest at 8% per annum and all mature within one year. On October 21, 2021, the Maturity Date of the $304,000 loan was extended from March 25, 2022 to April 21, 2022. The embedded beneficial conversion features in the notes meet the definition of a derivative and requires bifurcation and liability classification, at fair value. The fair value of the derivative liability as of the date of issuance was $746,672 and was recorded as a discount of the notes.
Derivative Liability The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted, and all additional convertible debentures and warrants are included in the value of the derivative liabilities. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period. Based on the various convertible notes described above, the fair value of applicable derivative liabilities on notes and change in fair value of derivative liability are as follows as of March 31, 2022 and December 31, 2021:
F-34 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s derivative liabilities that are categorized within Level 3 of the fair value hierarchy for the periods ended March 31, 2022 and December 31, 2021 is as follows:
The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations. Financial Liabilities Measured at Fair Value on a Recurring Basis Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Derivative liability – warrants and derivative liabilities:
There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2022 and 2021. During the three months ended March 31, 2022 and 2021, the Company recorded gains of $243,653 and $310,348, respectively, from the change in fair value of derivative liability. F-35 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) Note 12. Leases The Company’s leases do not provide an implicit rate that can be readily determined. Therefore, the Company uses discount rates based on the incremental borrowing rate of its current external debt of 8%. The Company’s weighted-average remaining lease term relating to its operating leases is 1.00 years, with a weighted-average discount rate of the 8.00%. The Company incurred lease expense for its operating leases of $10,173 and $2,034, respectively , which was included in general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021. During the three months ended March 31, 2022 and 2021, the Company made cash lease payments of $10,173 and $2,034, respectively. At March 31, 2022 and December 31, 2021, the operating lease right-of-use asset was $38,986 and $49,432, respectively, the current portion of operating lease liability was $38,986 and $39,148, respectively, and the operating lease liability, net of current portion was $0 and $10,283, respectively. The following table presents information about the future maturity of the lease liability under the Company’s operating leases as of March 31, 2022.
Note 13.Related Party Transactions Due to officers
Amounts due to officers as of
Unsecured advances due to officers represent unreimbursed Officer Compensation
Accrued salaries represent amounts accrued in accordance with the employment agreements for Mr. Hofmeier, the Company’s President, Chief Executive Officer and Chairman of the Board, and Ms. Velazquez, the Company’s Chief Operating Officer
F-36 Energy and Water Development Corp. Notes to
Virhtech Gmbh As of March 31, 2022 and December 31, 2021, the Company Investor deposit and officer compensation As of December 31, 2021, the Company recorded $792,745, or 15,855,000 common shares to be issued, as common stock subscriptions within stockholders’ deficit and $377,350, or 7,547,000 common shares to be issued, as a common stock subscription liability for stock issuance transactions in process. The $1,170,095 is part of pending stock sales for shares that has been funded and is waiting issuance to complete the sale at December 31, 2021. The common stock subscription liability consists of For the
Authorized: shares of voting preferred stock with a par value of $0. Common Stock Authorized: shares of voting common stock with a par value of $0. During the
F-37 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) Stock Options
On January 2, 2012, the
A summary of information regarding the
The above outstanding options were granted on January 1, 2012, to a former
Note Commitments Equity Line of Credit The Company entered into a two-year Equity Line of Credit pursuant to an Equity Purchase Agreement with Tysadco Partners, LLC, dated January 26, 2022. Pursuant to the agreement, Tysadco Partners agreed to invest up to $ to purchase the Company’s Common Stock, par value $0.001 per share, and upon execution of the ELOC the Company issued an additional shares of common stock to Tysadco Partners as commitment shares in accordance with the closing conditions within the ELOC. Requests are limited to the lesser of $1,000,000 or 500% of the average shares traded for the 10 days prior the Closing Request Date. The purchase price shall be 85% of the two lowest individual daily VWAP during the five (5) trading days immediately prior to the date the Request Notice is delivered (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction that occurs on or after the date of this Agreement). In addition, the Company and Tysadco Partners entered into a Registration Rights Agreement, whereby the Company shall register the securities on a registration statement covering the Offering Amount with the SEC within forty-five days of filing its 10-K for the year ended December 31, 2021. If the Company fails to timely register the Securities, then for each thirty-day period thereafter, the Commitment Fee will increase by $10,000 payable in restricted common stock at $ and capped at $20,000. F-38 Energy and Water Development Corp. Notes to the Condensed Consolidated Financial Statements (Unaudited) Employment Agreements
The Lease Our registered office is located at 7901 4th Street N STE #4174, St. Petersburg, Florida 33702. Our telephone number is +1 (727) 677-9408. Office services are contracted for on a month-to-month basis in this Address. In October 2020, the Company established its official registered Branch in Hamburg Germany; the office Address until March 31, 2021 was Offakamp 9f- 2.17. On April 1, 2021, the Company entered into two lease agreements for a workshop located at Industriestraße 17, 25462 Relligen and an office located at Ballindam 3 20095 Hamburg, Germany. Our Telephone number is +49 40 809081354. Rent expense in the three months ending March 31, 2022 and 2021 amounted to $19,521 and $2,034, respectively.
Contingencies
From time to time, the Corporation may be a defendant in pending or threatened legal proceedings arising in the normal course of its business. While the outcome and impact of currently pending legal proceedings cannot be predicted with certainty, the Corporation’s management and legal counsel believe that the resolution of these proceedings through settlement or adverse judgment will not have a material adverse effect on its operating results, financial position or cash flows.
Litigation
Note 10. Subsequent Events From April 1, 2022 through April 26, 2022, the Company has issued common shares related to subscriptions outstanding at March 31, 2022. On April 18, 2022, shares of the company’s common stock were issued pursuant to a securities purchase agreement in exchange for $15,000. On April 25, 2022, the Company entered into a Services Supplier Agreement with a vendor to provide shares of the Company’s common stock valued at $100,000 for consulting services. As of April 27, 2022, these common shares have been issued to the vendor. F-39 ENERGY AND WATER DEVELOPMENT CORP. 55,000,000 SHARES OF COMMON STOCK _____________________ PROSPECTUS _____________________ YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. The Date of this Prospectus is June ___, 2022 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
——————— * Estimated
Item 14. Indemnification of Directors and Officers.
Our directors and officers are indemnified as provided by the Florida corporate law and our Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities
We have been advised that in the opinion of the SEC indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.
Item 15. Recent Sales of Unregistered Securities.
The
The securities described above were issued in reliance upon the exemption from the registration requirements of the Securities Act,
Item 16. Exhibits and Financial Statement Schedules.
EXHIBIT INDEX
Item 17. Undertakings. The undersigned hereby undertakes:
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized in
* * * * Pursuant to the requirements of the Securities Act of 1933,
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