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Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions
of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by checkmark whether the registrant has filed
a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the regular public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of December 31, 2022, the last business day of
the registrant’s most recently completed fiscal quarter, the aggregate market value of the common stock held by non-affiliates
of the registrant was $7,310,080 based on the closing
price of $0.036 for the registrant’s common stock as quoted on the OTC QB Market on that date. Shares of common stock held by
each director, each officer and each person who owns 10% or more of the outstanding common stock have been excluded from this
calculation in that such persons may be deemed to be affiliates. The determination of affiliate status is not necessarily
conclusive.
None.
Certain statements contained
in this Report may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and
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. 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 still 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 current 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 Form 10-K and in our subsequent 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 our business 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. In particular, it is difficult to fully assess the impact of COVID-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.
Statements regarding
the following subjects, among others, may be forward-looking:
Forward-looking statements
are based on beliefs, assumptions and expectations as of the date of this Form 10-K. Any forward-looking statement speaks only as
of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or
how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking
statements after the date of this Form 10-K, whether as a result of new information, future events or otherwise.
The risks included here
are not exhaustive. Other sections of this Form 10-K may include additional factors that could adversely affect our business and financial
performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and
it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business
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.
PART I
ITEM 1. BUSINESS.
Company Overview
Energy and Water Development Corp. (the “Company”
or “EAWD”) was originally incorporated as a Delaware corporation named Wealthhound.com, Inc. in 2000 and was converted to
a Florida corporation under the name Eagle International Holdings Group Inc. on December 14, 2007.
On March 10, 2008, the Company changed its name to
Eurosport Active World Corporation and 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 wherein all of
the certified owners of ISA exchanged their ownership interests in ISA for shares of the Company. In connection with the closing of the
Acquisition Agreement, the Company adopted ISA’s business plan and the Company’s registered current 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 and the Company has registered
its logo “EAWD” with the United States Patent and Trademark Office, the European Union Intellectual Property Office and the
World Intellectual Property Organization (WIPO) to secure its corporate identity.
To ensure the Company is positioned to service
its growing business in one of the EU’s most environmentally progressive countries, the Company has a branch registered to conduct
business in Germany and two wholly-owned German subsidiaries: Energy and Water Development Deutschland GmbH (“EAWD Deutschland”)
and EAWD Logistik GmbH (“EAWD Logistik”).
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 existing, proven technologies, utilizing our patent pending systems configuration and our technical know-how
to customize solutions to meet our clients’ needs. To date, two water systems have been sold and deployed in Mexico and Germany. |
|
· |
Using its patent pending design, EAWD is working to design, build, and operate Off-Grid EV Charging Stations in Germany. |
|
· |
EAWD commercializes proven technologies for the sustainable generation of energy and water. The first unit has been built and tested in Germany and the Company is working to fulfill additional orders. |
|
· |
EAWD is a United Nations “accredited vendor” and offers design, construction, maintenance and specialty consulting services to private companies, government entities and non-government organizations (NGOs) for the sustainable supply of energy and water. |
In view of the increased world-wide demand for water
and energy, our business goals are focused on self-sufficient energy supplied water generation and green energy production. To accomplish
this, we set out to establish an outsourcing green tech platform to commercialize the Company’s state-of-the-art technologies while
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 subsidiaries in Hamburg Germany, where we have started to assemble our patent-pending innovative off-grid, self-sufficient
energy supply atmosphere water generation (“AWG”) systems (EAWD Off-Grid AWG Systems). EAWD Deutschland and EAWD Logistik
operate in Hamburg, Germany to meet the increasing demands of water and energy generation projects around the world as well as to operate
the solar powered EAWD Off-Grid EV Charging Stations, EAWD’s newest product, in Germany.
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 increased promotion and public education 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 EAWD Off-Grid AWG Systems, EAWD Off-Grid EV Charging Stations, EAWD Off-Grid Power Systems, EAWD Off-Grid Water Purification
Systems, 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, 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 EAWD Off-Grid AWG Systems and EAWD Off-Grid EV Charging Stations 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 nine employees: Ms. Velazquez, our Chief Executive Officer, Vice-Chairman of the Board of Directors, and a significant
stockholder, Mr. Hofmeier, our Chief Technology Officer, Chairman of the Board of Directors, and a significant stockholder, two engineers,
two technicians, one accountant assistant, and two assemblers. Ms. Velazquez and Mr. Hofmeier are married.
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 the sale of own EAWD Off-Grid AWG Systems, EAWD Off-Grid EV Charging Stations, EAWD Off-Grid Power Systems, and EAWD Off-Grid Water
Purification Systems, royalties from the commercialization of energy and water in certain cases, and the licensing of our innovated technologies;
as well as from its engineering, technical consulting, and project management services.
The following table depicts the Company’s service and product offerings
to its clients.
We plan to 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 |
|
· |
off-grid electric vehicle charging stations |
|
· |
technical assistance |
|
· |
strategic and financial partnering |
|
· |
project management |
The Company also plans to focus 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 EAWD Off-Grid AWG Systems |
|
· |
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 off-grid self-sufficient power systems |
|
· |
designing and prototyping solar powered charging stations for electric vehicles |
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 at a compound annual growth rate (CAGR)
of 14.75%, is expected to reach USD 2,515.19 million by 2027. (Source: Atmospheric Water Generator Market 2022 Report published by 360i
Research)
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 footprint 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 EAWD Off-Grid AWG Systems).
The mission of EAWD is to provide sustainable water
generation systems based on high efficiency, renewable sources and to provide off-grid self-sufficient energy supply 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
off the grid 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 the sale
of EAWD Off-Grid AWG Systems, the development, sale, and operation of the EAWD Off-Grid EV Charging Stations, sale of EAWD Off-Grid Power
Systems, and EAWD Off-Grid Water Purification Systems, royalties from the commercialization of energy and water in certain cases, and
the licensing of our innovated technologies; as well as from its engineering, technical consulting, and project management services.
Our Products
The technological solutions offered by our Company are the following:
EAWD Off-Grid AWG Systems
Today, atmospheric 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 EAWD Off-Grid AWG Systems are designed to have
an internal power supply and ability to generate power. Our EAWD Off-Grid AWG Systems produce 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 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, innovative and more efficient configuration that allows the substantial amount
of energy required to operate the equipment to be supplied by the equipment itself. Our EAWD Off-Grid AWG Systems line is different in
size from the standard AWG line. Our EAWD Off-Grid AWG Systems 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 EAWD Off-Grid AWG System 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 more than 300,000 liters of water per day. Our EAWD Off-Grid AWG Systems 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 EAWD Off-Grid AWG and Power Systems to the UN
with the hopes of initially supplying the equipment to large cluster of agencies established in key locations for humanitarian response
as well as refugee camps around the world in need of fresh water.
EAWD Off-Grid 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.
EAWD Off-Grid EV Charging Stations
The global electric vehicle market was valued
at $162.34 billion in 2019, and is projected to reach $802.81 billion by 2027, registering a CAGR of 22.6%. Asia-Pacific was the highest
revenue contributor, accounting for $84.84 billion in 2019, and is estimated to reach $357.81 billion by 2027, with a CAGR of 20.1%. North
America is estimated to reach $194.20 billion by 2027, at a significant CAGR of 27.5%. Asia- Pacific and Europe collectively accounted
for around 74.8% share in 2019, with the former constituting around 52.3% share. North America and Europe are expected to witness considerable
CAGRs of 27.5% and 25.3%, respectively, during the forecast period. The cumulative share of these two segments was 40.1% in 2019, and
is anticipated to reach 51.0% by 2027. (Source: Electric Vehicle Fluids Market Global Forecast to 2030 2021 Report from Markets and Markets.)
There is also an 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, DAF, 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 Off-Grid Power System,
EAWD has developed an innovative design and configuration of off-grid charging stations for BETs and electric vehicles in Germany. Our
product is the first off-grid solution available in Europe for charging the BETs and electric passenger vehicles that are currently on
the roads of Europe. EAWD plans to establish up to 1,700 charging stations throughout the USA, Mexico and Germany starting with 40 locations
scheduled to be deployed in the fourth quarter of 2024.
EAWD Off-Grid Power Systems
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 System (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.
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.
Current Projects
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) and the current
war in Ukraine has also caused significant changes in consumer behavior and purchasing patterns, supply chain routing, the dynamics of
current market forces, and government oversight and intervention. As a consequence of the foregoing, the following projects have been
delayed; however the Company continues to make progress on their fulfillment:
Germany
The Company has leased 24,000 sq. mi of land in
Kassel, Germany, where it is establishing the first large off-grid charging station location for electric trucks and passenger vehicles
in Germany and Europe. With enough solar panels installed, each charging station is proposed to generate at least five MWh of solar energy
per day and have a total capacity of at least one MWp. More than 2,400 MWh of energy storage capacity will be used in lithium battery
systems (LFP), to ensure the continuous use and availability of energy. The system is low voltage AC coupled, which will ensure easy
integration and expansion of the system in the future. The different elements of EAWD’s system form a “micro grid”
that is isolated and independent from the public power grid. It will have a capacity up to one MW of instant and continuous power. The
charging points will be of 300 KW of power, with the capacity to charge two trucks simultaneously of 150 KW each, of course it will also
be able to charge any other electric vehicle since it has the most common and standard connections/adapters in Europe.
The Company has completed the manufacture and installation
of the first of forty planned solar powered EAWD Off-Grid EV Charging Stations for electric long-haul trucks in Hamburg, Germany. Our
charging stations are the first off-grid 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 them in public places for per-use fees.
A solar powered EAWD Off-Grid AWG System has also
been built in Hamburg, Germany and the Company plans to use it to showcase the system’s ability to generate water for large projects
throughout Germany where it is expected to produce up to two million gallons of water per day. The Company expects these systems to be
operated throughout Germany, the United States of America, Mexico and Latin America.
Mexico
In 2020, our Mexican distributor placed a USD $550,000 initial order for a solar powered EAWD Off-Grid AWG System which was built in Germany
and delivered to the customer in accordance with the purchase agreement. The Company is currently negotiating the purchase of three additional
units by the same customer. 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 10.4 to this report on Form 10-K.
South Africa
On May 8, 2019, the Company signed a sales contract
for the sale of a solar powered EAWD Off-Grid AWG System 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 and the global supply chain, the expected completion date has been pushed to late 2023. 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 10.3
to this report on Form 10-K.
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 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.
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), 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.
Corporate Information
We were incorporated in Florida
in 2008 and have 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 report on Form
10-K.
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. We
intend to engage Worldwide Stock Transfer, LLC as transfer agent for the Warrants as well.
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 or applications, nor can we 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 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 supplied 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 December 31, 2022,
we had four 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.
JOBS Act and the Implications of Being an Emerging
Growth Company
We are an “emerging
growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of
2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. We elected to take advantage of all of these exemptions.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, and delay compliance with new or revised
accounting standards until those standards are applicable to private companies. We have elected to take advantage of the benefits of this
extended transition period.
We will be an emerging growth
company until the last day of the first fiscal year following the fifth anniversary of our first common equity offering, although we will
lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt in any
three-year period or if we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”). We will qualify as a “large accelerated filer” as of the first day
of the first fiscal year after we have (i) more than $700,000,000 in outstanding common equity held by our non-affiliates as of the last
day of our most recently completed second fiscal quarter; (ii) been a public company for at least 12 months; and (iii) filed at least
one annual report with the SEC. The value of our outstanding common equity will be measured each year on the last day of our second fiscal
quarter.
COVID-19 Pandemic Update
and the War in Ukraine
The 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:
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coordinating closely with our suppliers and customers; |
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instituting various aspects of our business continuity programs; and |
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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) and the current war in Ukraine has also caused significant changes in consumer behavior and purchasing patterns, supply
chain routing, the dynamics of current market forces, and government oversight and intervention.. 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 or the war in Ukraine
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.
Intellectual Property
We rely on a combination of trademarks, copyrights,
trade secrets and patents and contractual provisions, to protect our proprietary technology and our brands.
| · | The Company has registered its logo as a trademark with the United States
Patent and Trademark Office (USPTO, the European Union Intellectual Property Office and the World Intellectual Property Organization (WIPO)
to secure its corporate identity. |
| · | The Company has filed an application to patent its EAWD Off-Grid AWG Systems
with the USPTO and WIPO. |
| · | The Company has filed an application to patent its EAWD Off Grid Self Sufficient
Electric Vehicle Charging Station with the USPTO and WIPO. |
ITEM 1A. RISK FACTORS.
As a Smaller Reporting Company, the
Company is not required to include the disclosure required under this Item 1A.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
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. Since October 2020, the Company had an official registered Branch,
which became an officially registered subsidiary in Hamburg Germany; the office address Bellindam 3, 20095 Hamburg. Our Telephone
number is +49 40 809 08 1354.
We do not own any real property.
We may procure additional space as we add employees and expand geographically. We believe that our current facilities are adequate to
meet our needs for the immediate future and that, should it be needed, suitable additional space will be available to accommodate expansion
of our operations.
ITEM 3. LEGAL PROCEEDINGS.
EAWD vs Packard
and Co-Defendant Nick Norwood - Case number 18-031011 CA-01 Miami-Dade County Circuit Court. The Company is demanding
proof of payment for shares issued in 2008.
EAWD vs Nerve Smart Systems ApS (“Nerve”)
Case number BS-15264/2022– The Court of Roskilde, Denmark. On April 2022, the Company filed a claim against Nerve demanding
the return of amounts paid by the Company for a Battery Energy Storage System that was never delivered by Nerve to the Company, and therefore
Nerve did not meet the requirements and specifications of the contract with the Company. The Company is confident there will be a positive
outcome. This matter is not expected to be resolved prior to 2024 due to the long waiting times of the Danish court System.
EAWD vs NPP Niethammer, Posewang & Partner
GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft (“NPP”) – Case number 322
O 159/22 – On November 28, 2022, by court settlement, the legal dispute again NPP
was settled. The subject matter of the legal dispute was NPP’s fee claims against the Company in the amount of EUR 45,500, which
is approximately $48,160, plus interest. On November 28, 2022, the Company agreed to pay NPP an amount of EUR 22,749, which is approximately
$23,214. The costs of the legal dispute were set off against each other in the settlement. There is still an outstanding fee claim against
the Company according to an invoice dated January 25, 2023 in the amount of EUR 4,986, which is approximately $5,277.
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. Except as set forth above, as of December 31, 2022 we are not currently subject
to any legal proceedings, nor to the knowledge of management are any legal proceedings threatened that are likely to have a material adverse
effect on our financial position, results of operations or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock is currently
quoted on the OTCQB tier of the OTC Market under the symbol “EAWD” There is currently a limited market for our common stock
and the volume of our common stock traded on any day may vary significantly from one day to another. Trading in stock quoted on the OTC
Market’s OTCQB is often thin and characterized by wide fluctuations in trading prices due to many factors that may have little to
do with our operations or business prospects. The availability of buyers and sellers represented by this volatility could lead to a market
price for our common stock that is unrelated to operating performance. Moreover, the OTC Market’s OTCQB is not a stock exchange,
and trading of securities quoted on the OTC Market’s OTCQB is often more sporadic than the trading of securities listed on a stock
exchange like NASDAQ. There is no assurance that there will be a sufficient market in our stock, in which case it could be difficult for
our stockholders to resell their shares.
On March 28, 2023 , the closing
price of our common stock was $0.04 per share as reported on the OTC QB Market maintained by OTC Markets Group, Inc.
The
following table sets forth for the respective periods indicated the prices of our common stock in this market as reported and summarized
by the OTC Markets. Such prices are based on inter-dealer bid and asked prices, without markup, markdown, commissions, or adjustments
and may not represent actual transactions.
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HIGH |
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LOW |
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Fiscal Year 2022: |
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|
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First Quarter |
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$ |
0.45 |
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$ |
0.15 |
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Second Quarter |
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$ |
0.25 |
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$ |
0.16 |
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Third Quarter |
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$ |
0.21 |
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$ |
0.05 |
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Fourth Quarter |
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$ |
0.08 |
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$ |
0.02 |
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Fiscal Year 2021: |
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|
|
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First Quarter |
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$ |
0.76 |
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$ |
0.15 |
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Second Quarter |
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$ |
0.45 |
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$ |
0.17 |
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Third Quarter |
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$ |
0.59 |
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$ |
0.05 |
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Fourth Quarter |
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$ |
1.00 |
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$ |
0.0001 |
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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, shareholders may have difficulty selling our securities.
Holders
As of December 31, 2022,
we had 846 record holders of our common stock, holding 182,934,483 shares of 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 bank,
brokers and other nominees.
Dividends
We have never declared nor paid any cash dividends
on our 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.
Securities authorized for issuance under equity
compensation plans
Reference is made to “Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Securities Authorized for Issuance
under Equity Compensation Plans” for the information required by this item.
Recent
Sales of Unregistered Securities
During the fiscal years ended
December 31, 2022 and 2021, the Company issued $178,000 and $404,000 in convertible debentures, respectively. The holders of certain of
such instruments had the option to convert these convertible debentures into the Company’s common stock at conversion prices ranging
from $0.01 to $0.20.
During 2022 and 2021, holders
of convertible debentures exercised their conversion options on convertible debentures amounting to $50,000 and $270,000, respectively
in exchange for 540,716 and 4,671,167 shares of common stock, respectively.
During the year ended December
31, 2022, the Company engaged in the following equity events:
Sale of Common Stock and
Subscriptions
On February 18, 2022, the Company received a deposit in the amount of $300,000
for 1,875,000 common shares to be issued pursuant to a securities purchase agreement. These common shares were issued on July 4, 2022.
From January 1, 2022 through
March 31, 2022, the Company has issued 14,953,000 common shares related to subscriptions outstanding at December 31, 2021 for
total cash consideration of $747,650.
From April 1, 2022 through
June 30, 2022, the Company has issued 8,527,947 common shares related to subscriptions outstanding at March 31, 2022 for total
cash consideration of $437,450.
Shares issued pursuant
to ELOC
On January 26, 2022 the
Company entered into a two year equity line of credit (“ELOC”) with an investor to provide up to $5 million. As of March
31, 2022, 500,000 common shares had been issued pursuant to this agreement as the commitment fee at a fair value of $80,000.
On
January 26, 2022, the Company entered into a Securities Purchase Agreement with an investor. As of March 31, 2022, 2,000,000 common
shares were issued pursuant to this agreement for a purchase price of $300,000. In the third quarter of 2022, an additional 4,023,368 common
shares were issued pursuant to ELOC for a purchase price of $450,000.
In
the fourth quarter of 2022, the Company issued an additional 5,064,421 shares of the Company’s common stock pursuant to the ELOC
for total cash consideration of $187,000.
Shares issued upon conversion
of convertible debt
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 575,558 common shares.
Shares issued for services
On February 2, 2022, the
Company issued 20,000 shares of the Company’s common stock to a vendor for services valued at $3,600.
On February 3, 2022, the
Company issued 500,000 shares of the Company’s common stock to a vendor for services valued at $85,000.
On April 27, 2022, the Company
issued 227,273 shares of the Company’s common stock to a vendor for services valued at $50,000.
On August 11, 2022, the Company
issued 600,000 shares of the Company’s common stock to a vendor for services valued at $79,500.
On September 9, 2022, the
Company issued 227,273 shares of the Company’s common stock to a vendor for services valued at $50,000.
The
sale and the issuance of the foregoing securities were offered and sold in reliance upon exemptions from registration pursuant to Section
4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D promulgated under the
Securities Act (“Regulation D”). We made this determination based on the representations of each recipient, as applicable,
which included, in pertinent part, that each such investor was either (a) an “accredited investor” within the meaning of Rule
501 of Regulation D or (b) a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act and
upon such further representations from each investor that (i) such investor acquired the securities for his, her or its own account for
investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection
with any distribution within the meaning of the Securities Act, (ii) such investor agreed not to sell or otherwise transfer the purchased
securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions
from such registration are available, (iii) such investor had knowledge and experience in financial and business matters such that he,
she or it was capable of evaluating the merits and risks of an investment in us, (iv) such investor had access to all of our documents,
records, and books pertaining to the investment and was provided the opportunity to ask questions and receive answers regarding the terms
and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable
effort and expense, and (v) such investor had no need for the liquidity in its investment in us and could afford the complete loss of
such investment. In addition, there was no general solicitation or advertising for such securities issued in reliance upon these exemptions.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Introductory
Statement
The following discussion
and analysis of the results of operations and financial condition for the fiscal years ended December 31, 2022 and 2021 should be
read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this
Report. This discussion contains forward-looking statements and information relating to our business that reflect our current views
and assumptions with respect to future events and are subject to risks and uncertainties that may cause our or our industry’s actual
results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking statements.
These forward-looking
statements speak only as of the date of this report. Although we believe that the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of activity, or achievements. Except as required by applicable law, including
the securities laws of the United States, we expressly disclaim any obligation or undertaking to disseminate any update or revisions
of any of the forward-looking statements to reflect any change in our expectations with regard thereto or to conform these statements
to actual results.
Addressing Challenges
Post-COVID-19 and the 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) and the current war in Ukraine has also caused significant changes in consumer behavior and purchasing patterns, supply
chain routing, the dynamics of current market forces, and government oversight and intervention. 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 or the war in Ukraine
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.
Critical
Accounting Policies and Estimates
Our financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these
financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and
expenses. Note 2 of the Notes to Financial Statements describes the significant accounting policies used in the preparation of the financial
statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.
A critical accounting policy
is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective
or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting
estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of
the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur,
would have a material effect on our financial condition or results of operations.
Estimates and assumptions
about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various
other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as
additional information is obtained and as our operating environment changes. These changes have historically been minor and have been
included in the financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying
judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly
stated in accordance with accounting principles generally accepted in the United States and present a meaningful presentation of our financial
condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates and
assumptions used in the preparation of our financial statements:
Risks and
Uncertainties – The Company’s business could be impacted by price pressure on its product manufacturing, acceptance
of its products in the marketplace, new competitors, changes in federal and/or state legislation and other factors and new technology.
If the Company is unsuccessful in securing adequate liquidity, its plans may be curtailed. Adverse changes in these areas could negatively
impact the Company’s financial position, results of operations and cash flows.
Basis of Presentation
The consolidated financial
statements include the accounts of Energy and Water Development Corp 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.
Use of Estimates
The preparation of 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 financial statements include estimates relating to the determination
of impairment of assets, assessment of going concern, the useful life of property and equipment, the determination of the fair value of
stock-based compensation, and the recoverability of deferred income tax assets.
Leases
Effective January 1, 2019,
the Company adopted ASC 842- Leases (“ASC 842”). The lease standard provided a number of optional practical expedients in
transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired or
existing contracts are or contain a lease; did not have to reassess the lease classifications or reassess the initial direct costs associated
with expired or existing leases. The lease standard also provides practical expedients for an entity’s ongoing accounting. The Company
elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets
or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected
the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities).
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.
Income Taxes
Income taxes are accounted
for under the asset and liability method as stipulated by ASC 740, “Accounting for Income Taxes”. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized
in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use
of the valuation allowance. A valuation allowance is applied when in management’s view it is more likely than not (50%) that such
deferred tax will not be utilized.
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 Corporation could incur income taxes, the Corporation would evaluate
whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. A
liability for uncertain tax positions would then be recorded if the Corporation determined it is more likely than not that a position
would not be sustained upon examination or if a payment would have to be made to a taxing authority and the amount is reasonably estimable.
As of December 31, 2022 and
2021, the Corporation does not believe any uncertain tax positions exist that would result in the Corporation having a liability to the
taxing authorities. The Corporation’s policy is to classify interest and penalties related to unrecognized tax benefits, if and
when required, as part of interest expense and general and administrative expense, respectively, in the statement of operations. The Corporation’s
tax returns for the years ended 2012 through 2020 are subject to examination by the federal and state tax authorities. The Corporation’s
tax returns for the tax year ended 2021 have not been filed.
We record our provision for
income taxes in our consolidated statements of operations and comprehensive loss 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 arising 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 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 and comprehensive loss 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 December 31, 2022 and 2021, 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.
Revenue Recognition
The Company recognizes revenue
in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled to receive in exchange for those goods or services.
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. The Company recognized no revenue during the year
ended December 31, 2022.
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.
Certain
assets and liabilities are required to be recorded at fair value on a recurring basis. The Company adjusts derivative financial instruments
to fair value on a recurring basis. The fair value for other assets and liabilities such as cash, accounts receivable, prepaid
expenses and other current assets, accounts payable and accrued expenses, customer/investor deposit have been determined to approximate
carrying amounts due to the short maturities of these instruments. The Company believes that its indebtedness approximates fair value
based on current yields for debt instruments with similar terms.
Stock-Based Payments
The Company adopted Accounting
Standards Update 2018-07 (“ASU 2018-07”), “Improvement to Nonemployee Share Based Payment Accounting”, which expanded
the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance was
applied prospectively to all new awards granted after the date of adoption. In addition, the guidance was applied to all existing equity-classified
awards for which a measurement date has not been established under ASC 505-50 by the adoption date by remeasuring at fair value as of
the adoption date and recording a cumulative effect adjustment to opening accumulated deficit on January 1, 2019.
For the Company’s equity-classified
awards for which a measurement date has not been established under ASC 505-50, the fair value on January 1, 2019, the adoption date, approximated
the value assigned on December 31, 2018, therefore no cumulative adjustment to opening accumulated deficit was required.
Under the revised guidance,
the accounting for awards issued to non-employees will be similar to the model for employee awards, except that ASU 2018-07:
|
● |
allows the Company to elect on an award-by-award basis to use the contractual term as the expected term assumption in the option pricing model, and |
|
● |
the cost of the grant is recognized in the same period(s) and in the same manner as if the grantor had paid cash. |
Employee and Non-Employee
Share Based Compensation
The Company applies ASC 718-10,
“Share - Based Payment,” which requires the measurement and recognition of compensation expenses for all share-based payment
awards made to employees and directors including employee stock options under the Company’s stock plans and equity awards issued
to non-employees based on estimated fair values.
ASC 718-10 requires companies
to estimate the fair value of equity-based option awards on the date of grant using an option-pricing model. The fair value of the award
is recognized as an expense on a straight-line basis over the requisite service periods. The Company recognizes share based award forfeitures
as they occur.
The Company estimates the
fair value of granted option equity awards using a Black-Scholes options pricing model. The option-pricing model requires a number of
assumptions, of which the most significant are share price, expected volatility and the expected option term (the time from the grant
date until the options are exercised or expire). Expected volatility is estimated based on volatility of similar companies in the technology
sector. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is
based on the yield from governmental zero-coupon bonds with an equivalent term. The expected option term is calculated for options granted
to employees and directors using the “simplified” method. Grants to non-employees are based on the contractual term. Changes
in the determination of each of the inputs can affect the fair value of the options granted and the results of operations of the Company.
Recent
Accounting Pronouncements
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 addition, the new guidance modifies how particular convertible instruments and certain contracts
that may be settled in cash or shares impact the diluted EPS computation. The adoption of ASU 2020-06 did not have a material impact on
the Company’s consolidated financial statements.
On January 1, 2022, the Company
adopted 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. The adoption of ASU 2021-04 did
not have a material impact on the Company’s consolidated financial statements.
In June 2016, the FASB
issued ASU 2016-13, Financial Instruments – Credit Losses to improve information on credit losses for financial assets and net
investment in leases that are not accounted for at fair value through net income. ASU 2016-13 replaces the current incurred loss
impairment methodology with a methodology that reflects expected credit losses. In April 2019 and May 2019, the FASB issued ASU No.
2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and
Topic 825, Financial Instruments” and ASU No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted
Transition Relief” which provided additional implementation guidance on the previously issued ASU. In November 2019, the FASB
issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic
842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as
defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. Since the Company is an SRC, implementation is not needed until January 1, 2023. The Company adopted ASU
2016-13 on January 1, 2023. The adoption did not have a material impact on the Company’s consolidated financial
statements.
Results of Operations
The
following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in
this Report.
Comparison
of the fiscal years ended December 31, 2022 and December 31, 2021
| |
For the Years Ended | |
| |
December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
REVENUE | |
| | | |
| | |
Revenue | |
$ | — | | |
$ | 550,000 | |
TOTAL REVENUE | |
| — | | |
| 550,000 | |
| |
| | | |
| | |
COST OF EQUIPMENT SOLD | |
| | | |
| | |
Cost of equipment sold | |
| — | | |
| 350,000 | |
TOTAL COST OF EQUIPMENT SOLD | |
| — | | |
| 350,000 | |
| |
| | | |
| | |
GROSS PROFIT | |
| — | | |
| 200,000 | |
| |
| | | |
| | |
GENERAL and ADMINISTRATIVE EXPENSES | |
| | | |
| | |
Professional fees | |
| 494,926 | | |
| 416,989 | |
Officers’ salaries and payroll taxes | |
| 479,933 | | |
| 300,732 | |
Marketing fees | |
| 226,975 | | |
| 174,892 | |
Travel and entertainment | |
| 42,696 | | |
| 22,953 | |
Other general and administrative expenses | |
| 666,358 | | |
| 222,229 | |
TOTAL GENERAL and ADMINISTRATIVE EXPENSES | |
| 1,910,888 | | |
| 1,137,795 | |
| |
| | | |
| | |
LOSS FROM OPERATIONS | |
| (1,910,888 | ) | |
| (937,795 | ) |
| |
| | | |
| | |
OTHER INCOME (EXPENSE) | |
| | | |
| | |
Change in fair value of derivative | |
| 234,654 | | |
| (1,269,266 | ) |
Other expense | |
| (93,732 | ) | |
| — | |
Interest expense | |
| (172,614 | ) | |
| (830,405 | ) |
TOTAL OTHER INCOME (EXPENSE) | |
| (31,692 | ) | |
| (2,099,671 | ) |
| |
| | | |
| | |
NET LOSS | |
$ | (1,942,580 | ) | |
$ | (3,037,466 | ) |
Revenue
During
the year ended December 31, 2022 we generated no revenue. For the fiscal year 2021, the Company recognized $550,000 of revenue that was
previously deferred in 2020, pending the inspection of equipment pursuant to a sales agreement. we generated no revenue.
Cost
of equipment sold
No
costs were recognized in fiscal year 2022. The equipment sold was manufactured by third-party fabricators in accordance with EAWD’s
specifications at a cost to EAWD of $350,000, which was recognized along with the revenue during the year ended December 31, 2021.
Gross
profit
The
Company had no gross profit for the year ended December 31, 2022. EAWD recognized a gross profit of $200,000 from the sale of equipment
as discussed above for the year ended December 31, 2021, upon recognition of revenue.
General
and Administrative Expense
General and administrative
expense increased by $773,093 or 67.9% to $1,910,888 for the year ended December 31, 2022 from $1,137,795 for the year ended December
31, 2021. The following discussion provides further explanation of the change in each item.
The largest element of change
was an increase in other general and administrative expense by $444,129 or 199.9% to $666,358 as compared to $222,229 for the year ended
December 31, 2021 which includes stock-based compensation expense of $80,000. Additionally, the
increase in general and administrative expenses was due to an increase in officer’s salaries and payroll taxes by $179,201 as new
employee contracts were signed in 2022 increasing salary and an increase in professional fees of $77,937 as a result of higher accounting
fees, litigation fees, legal fees and SEC matters.
Other
Expense
Other
expense decreased expense by $2,067,979 from a $2,099,671 net expense (2021) to a $31,692 net expense (2022) primarily as a result of
a reduction of interest expense of $657,791 as a result of reduced interest and amortization of debt discount and a decrease in change
in fair value of derivatives of $1,503,920, offset by an increase in other expense by $93,732.
Net Loss
Net loss decreased by $1,094,886
to $1,942,580 for the year ended December 31, 2022, when compared to $3,037,466 for the year ended December 31, 2021 due to the reasons
discussed above.
Liquidity and Capital
Resources
We had cash of $40,886 and
a working capital deficit of $740,698 at December 31, 2022. Our operating and capital requirements in connection with supporting our operations
will continue to be significant. Since inception, our losses from operations and working capital requirements have been satisfied through
the deferral of payment for services performed by our founders and related parties discussed more fully below.
We have sustained operating
losses since we began our operations in 2012. At December 31, 2022, we had an accumulated deficit of $24,337,973. 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 project contracts, among other things. These conditions raise substantial doubt about the entity’s
ability to continue as a going concern.
We have satisfied our cash and working capital
requirements in the nine months ended December 31, 2022, through the sale of common stock.
Comparison of Cash Flows for the Years Ended
December 31, 2022 and December 31, 2021
| |
For the Year Ended December 31, | |
| |
2022 | | |
2021 | |
Net cash used in operating activities | |
$ | (1,618,916 | ) | |
$ | (1,556,268 | ) |
Net cash used in investing activities | |
| (196,018 | ) | |
| (4,299 | ) |
Net cash provided by financing activities | |
| 1,280,001 | | |
| 2,162,208 | |
Effect of exchange rate changes on cash | |
| (13,849 | ) | |
| (24,020 | ) |
Net (decrease) increase in cash | |
$ | (548,782 | ) | |
$ | 577,621 | |
Cash Flows from Operating
Activities
We used $1,618,916 of cash
in our operating activities in 2022 compared to $1,556,268 used in 2021. Cash used of $1,618,916 includes a net loss of $1,942,580, offset
by non-cash expenses of $308,585 principally related to amortization of debt discount and deferred financing costs of $93,986, stock issued
as a commitment fee of $80,000, depreciation expense of $18,252, change in fair value of derivative liability of $234,654, foreign currency
loss of $76,737, and common stock issued for services of $268,099, as well as cash used in working capital items in the amount of $15,079
principally related to an increase in inventory of $273,274 and a decrease in due to related party of $97,341, offset by an increase in
due to officers of $199,986, a decrease in prepaid expenses and other current assets of $90,524, a decrease in accounts receivable of
$2,260, and an increase in accounts payable and accrued expenses of $92,924.
Cash Flows from Investing
Activities
We used $196,018 and $4,299
of cash to purchase property and equipment for the year ended December 31, 2022 and 2021, respectively.
Cash Flows from Financing
Activities
We received $1,280,001 and
$2,162,208 in cash from financing activities in 2022 and 2021, respectively. Cash flow from financing activities of $1,280,001 is primarily
due to increased financing in 2022 through $1,252,001 in proceeds from the sale of shares and subscriptions to purchase common shares
and $178,000 in proceeds from convertible loans payable, offset by repayments of convertible loans payable in the amount of $150,000.
Financial Position
Total Assets –
At December 31, 2022, the Company had $1,174,295 total assets representing $40,886 in cash, $52,761 in accounts receivable, $457,646 in
inventory, $315,222 in prepaid expenses and other current assets, $245,667 in property and equipment, and $62,113 in operating lease right-of-use
assets.
PLAN OF OPERATION AND
FUNDING
We expect to generate more
revenues which should, grow in time and lead to a positive cash flow. In the near future, we expect that working capital requirements
will continue to be funded through sales contracts, lines of credit, convertible 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 energy 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 required technology or technical service to enhance their productivity/operability. With its outsourced technical arm and its
commission-based global network of vendors, the Company expects to create sustainable added value to each project it takes on while generating
revenue from the sale of EAWD Off-Grid AWG Systems, EAWD Off-Grid EV Charging Stations, EAWD Off-Grid Power Systems, and EAWD Off-Grid
Water Purification Systems, royalties from the commercialization of energy and water in certain cases, and the licensing of our innovated
technologies; as well as from its engineering, technical consulting, and project management services.
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 the sale of EAWD Off-Grid AWG Systems, EAWD Off-Grid EV Charging Stations, EAWD Off-Grid Power Systems, and EAWD Off-Grid
Water Purification Systems, royalties from the commercialization of energy and water in certain cases, and the licensing of our innovated
technologies, as well as from its engineering, technical consulting, and project management services.
Material Commitments
Employment Agreements
The Company entered into
employment agreements with each of Irma Velazquez, its Chief Executive Officer and Vice Chairman of the Board, and Ralph Hofmeier, its
Chairman of the Board and Chief Technology Officer, effective August 4, 2022 (together, the “Executive Employment Agreements”).
Under the Executive Employment Agreements, the Company agreed to pay each of Ms. Velazquez and Mr. Hofmeier an annual base salary of €200,000,
which is approximately $210,000 per year with discretionary cash and equity bonuses available based on the Board’s assessment of
the executive’s performance against applicable performance objectives as well as Company performance. Any increase to the annual
base salary is subject to approval by the Company’s Board of Directors. The foregoing descriptions of the Executive Employment Agreements
does not purport to be complete and is qualified in its entirety by reference to the copy of each agreement filed as Exhibits 10.1 and
10.2 to this report on Form 10-K.
The Company also entered
into employment agreement with 4 other employees, effective during the 3rd quarter of 2021. In 2022, The Company dismissed two
employees to upgrade these positions as technical assistants.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Related
Party Transactions
Due to officers
Amounts due to officers as of December 31,
2022 and 2021 are:
| |
December 31, 2022 | | |
December 31, 2021 | |
Ralph Hofmeier: | |
| | | |
| | |
Unsecured advances due to officer | |
$ | 56,400 | | |
$ | — | |
Accrued salaries | |
| 86,265 | | |
| 17,485 | |
Total due to Ralph Hofmeier | |
| 142,665 | | |
| 17,485 | |
Irma Velazquez: | |
| | | |
| | |
Unsecured advances due to officer | |
| 10,393 | | |
| — | |
Accrued salaries | |
| 69,434 | | |
| — | |
Total due to Irma Velazquez | |
| 79,827 | | |
| — | |
Total amount due to officers | |
$ | 222,492 | | |
$ | 17,485 | |
Unsecured advances due to
officers represent unreimbursed company expenses paid by the officers on behalf of the Company and accrued salaries. 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 and Vice-Chairman. Mr. Hofmeier and Ms. Velazquez
are also significant stockholders.
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 aggregate
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 Ms. Velazquez whereby Mr. Hofmeier and Ms. Velazquez each
agreed to receive 300,000 shares of its Series A Preferred Stock with fair market value of $150,000 (collectively, the “Compensation
Shares”). 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 the Company’s
Common Stock with an aggregate fair market value of $1,500,000 and (ii) 2,700,000 shares of the Company’s 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 $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 when performance has occurred. 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 $52,761,
which represents the balance of the Company’s outstanding accounts receivables as of both December 31, 2022 and 2021. As of March
31, 2023, the total unpaid balance is outstanding, however, the Company is expected to receive the total amount by the end of 2023.
Going Concern Qualification
The next operational step to accomplish is to achieve
sufficient sales volume to yield positive net income. Due to the timing of the project build out, the Company has not currently recorded
any revenue and consequently has incurred operating losses since it began operations (December 2012) totaling $24,337,973 at December
31, 2022. During the year ended December 31, 2022, the Corporation incurred net losses of $1,942,580. The Company also had a working capital
deficit of $740,698 at December 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 anticipated growth of our business and availability
to sufficient resources.
At the filling date of this report, management is
working to conclude the sales in Germany and in other regions of the world relating to the previously approved proposals, which would
bring a growing revenue. Managements plans to expand the sales operations by greater market penetration of the agricultural, industrial
and community development markets with its innovative water and energy generation solution. Management also plans to raise additional
funds during 2022 through the issuance of equity securities, from deposits related to customer purchase orders, and, if necessary, loans
from management and third-party lenders. Management also plans to reduce expenses by centralizing the assembly, logistics and administrative
operations of the Company into a larger, self-sufficient, off-grid location that will be able to house the storage of supplies and inventory,
as well as provide space for assembly and administrative operations. The Company is also planning to acquire its own electric vehicles
to reduce its supply transportation costs.
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 Corporation is profitable.
Recently Issued Accounting Pronouncements
We do not expect the
adoption of recently issued accounting pronouncements as discussed in Note 3 to have a significant impact on our results of operations,
financial position or cash flow.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
As a Smaller Reporting Company, the Company is not required to include
the disclosure required under this Item 7A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial
statements, notes to the consolidated financial statements and the respective reports of the Company’s independent registered accountants
required to be filed in response to this Item 8 begin on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
WithumSmith+Brown, PC (“Withum”)
served as the independent registered public accounting firm for Energy and Water Development Company (the “Company”) for the
year ended December 31, 2021, and reviewed the unaudited financial statements for the quarters ended March 31, 2021 and June 30, 2021
respectively. After careful consideration of the ongoing audit needs of the Company, the Board of Directors of the Company has elected
to dismiss Withum. The Company notified Withum on October 22, 2021 that it would be dismissed as the Company’s independent registered
public accounting firm, following the filing of the Company’s Form 10-Q for the quarter ended June 30, 2021.
Withum’s report on
the Company’s financial statements as of and for the year ended December 31, 2020 did not contain any adverse opinion or a disclaimer
of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles, except with respect to an explanatory
paragraph indicating that there was substantial doubt about the Company’s ability to continue as a going concern.
During the fiscal year ended
December 31, 2021 and the subsequent interim period through November 15, 2021, there were no (i) disagreements, within the meaning of
Item 304(a)(1)(iv) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (“Regulation S-K”),
and the related instructions thereto, with Withum on any matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Withum, would have caused Withum to make reference
to the subject matter of the disagreements in connection with its reports; or (ii) reportable events within the meaning of Item 304(a)(1)(v)
of Regulation S-K and the related instructions thereto, except for the material weaknesses described in Item 9A of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2021.
The Company provided Withum
with the disclosures under this Item 4.01 and requested Withum to furnish the Company with a letter addressed to the Securities and Exchange
Commission stating whether it agrees with the statements made by the Company in this Item 4.01 and, if not, stating the respects in which
it does not agree. Withum’s letter is filed as Exhibit 16.1 to the Current Report on Form 8-K filed on November 17, 2021.
On November 4, 2021, the
Board of Directors of the Company approved the appointment of TAAD LLP. (“TAAD”) as the Company’s new independent registered
public accounting firm to audit the Company’s financials for the fiscal year ending December 31, 2021 and to review the company’s
unaudited quarterly financial information for the quarter ended September 30, 2021, effective immediately.
During the Company’s
fiscal year ended December 31, 2020, and the subsequent interim period through November 15, 2021, neither the Company nor anyone acting
on its behalf has consulted with TAAD regarding: (i) the application of accounting principles to a specific transaction, either completed
or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report
nor oral advice was provided to the Company that TAAD concluded was an important factor considered by the Company in reaching a decision
as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a disagreement within the meaning
of Item 304(a)(1)(iv) of Regulation S-K and the related instructions; or (iii) any reportable event within the meaning of Item 304(a)(1)(v)
of Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d–15(e) under the Exchange Act) are designed to provide reasonable assurance that information
required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the forms and rules of the SEC and that such information is accumulated and communicated to management, including
the CEO, in a manner to allow timely decisions regarding required disclosures.
In connection with the preparation
of this Form 10–K, our management, including the CEO and CFO (Principal Accounting Officer), evaluated the effectiveness of the
design and operation of our disclosure controls and procedures as of December 31, 2022. As described below, management has identified
material weaknesses in our internal control over financial reporting, which is an integral component of our disclosure controls and procedures.
As a result of those material weaknesses, our management has concluded that, as of December 31, 2022, our disclosure controls and procedures
were not effective.
Management’s Report
on Internal Control over Financial Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the
registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the
registrant’s board of directors, management and other personnel, 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
and includes those policies and procedures that:
|
· |
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant; |
|
· |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and |
|
· |
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements. |
Our internal control system
is designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of
published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even
those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be
considered relative to their costs. In addition, because of changes in conditions, the effectiveness of internal control may vary over
time.
As
of December 31, 2022, management conducted an evaluation of the effectiveness of our internal control over financial reporting based on
the criteria in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013)
(COSO) and identified material weaknesses. Due to financial constraints, we have not fully implemented a remediation plan. A “material
weakness” is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood
that a material misstatement of our annual or interim financial statements will not be presented or detected by our employees.
The specific
material weaknesses that management identified in our internal controls as of December 31, 2022 are as follows:
|
· |
Inadequate segregation of duties, |
|
· |
Limited level of multiple reviews among those tasked with preparing the financial statements, |
|
· |
Lack of a formal internal control environment. |
We consider an incomplete
governing board and transactions running through our executives as a failure of our internal control system. To remediate we will require
the time and funds to secure additional qualified personnel and the funds to proper support services to facilitate their functions.
Plans for Remediation of Material Weaknesses
We intend to implement changes
to strengthen our internal controls in addition to the enhanced controls discussed above. We are in the process of implementing a remediation
plan for the identified material weaknesses and we expect that work on the plan will continue throughout 2022, as financial resources
permit. Specifically, to address the material weaknesses arising from insufficient accounting personnel, the Company hired a part-time
Chief Financial Officer and has secured the services of additional accounting personnel on a consulting basis which begins to address
segregation of duties. The Company is currently formalizing its policies and procedures in writing and to improve the integration of its
financial and reporting system into non accounting departments. Where appropriate, the Company is receiving advice and assistance
from third-party experts as it implements and refines its remediation plan.
Additional measures may be
necessary, and the measures we expect to take to improve our internal controls may not be sufficient to address the issues identified,
to ensure that our internal controls are effective or to ensure that such material weakness or other material weaknesses would not result
in a material misstatement of our annual or interim financial statements. In addition, other material weaknesses or significant deficiencies
may be identified in the future. If we are unable to correct deficiencies in internal controls in a timely manner, our ability to record,
process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC
will be adversely affected. This failure could negatively affect the market price and trading liquidity of our common stock, cause investors
to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally
materially and adversely impact our business and financial condition.
Changes in Internal
Control over Financial Reporting
Except as otherwise stated
above, there were no changes in our internal control over financial reporting or in other factors during the quarter ended December 31,
2022, that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of
Registered Public Accounting Firm
The Company is a non-accelerated
filer and is not subject to Section 404(b) of the Sarbanes Oxley Act. Accordingly, this Annual Report does not contain an attestation
report of our independent registered public accounting firm regarding internal control over financial reporting, since the rules for Smaller
Reporting Companies provide for this exemption.
ITEM 9B. OTHER INFORMATION.
None
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None
Energy and Water Development Corp. and Subsidiary
Consolidated Balance Sheets
| |
| | |
| |
| |
December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
ASSETS | |
| | | |
| | |
CURRENT ASSETS: | |
| | | |
| | |
Cash | |
$ | 40,886 | | |
$ | 589,668 | |
Accounts receivable | |
| 52,761 | | |
| 55,169 | |
Inventory | |
| 457,646 | | |
| 196,553 | |
Prepaid expenses and other current assets | |
| 315,222 | | |
| 432,082 | |
TOTAL CURRENT ASSETS | |
| 866,515 | | |
| 1,273,472 | |
| |
| | | |
| | |
Property and equipment, net | |
| 245,667 | | |
| 3,834 | |
Operating lease right-of-use asset | |
| 62,113 | | |
| 49,432 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 1,174,295 | | |
$ | 1,326,738 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 1,023,563 | | |
$ | 941,309 | |
Accounts payable - related party | |
| 27,029 | | |
| 124,370 | |
Convertible loan payables, net of discount | |
| 73,664 | | |
| 176,703 | |
Due to officers | |
| 222,492 | | |
| 17,485 | |
Derivative liability | |
| 184,025 | | |
| 354,160 | |
Current portion of operating lease liability | |
| 62,113 | | |
| 39,148 | |
Current portion of financing lease liability | |
| 14,327 | | |
| — | |
Common stock subscriptions liability | |
| — | | |
| 377,350 | |
TOTAL CURRENT LIABILITIES | |
| 1,607,213 | | |
| 2,030,525 | |
| |
| | | |
| | |
Financing lease liability, net of current portion | |
| 48,946 | | |
| — | |
Operating lease liability, net of current portion | |
| — | | |
| 10,283 | |
TOTAL LIABILITIES | |
| 1,656,159 | | |
| 2,040,808 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| | | |
| — | |
| |
| | | |
| | |
STOCKHOLDERS' DEFICIT: | |
| | | |
| | |
Preferred stock, par value $.001 per share; 500,000,000 shares authorized, 9,780,976 shares issued and outstanding at December 31, 2022 and 2021 | |
| 9,781 | | |
| 9,781 | |
Common stock, par value $.001 per share; 1,000,000,000 shares authorized, 182,934,483 and 143,840,643 shares issued and outstanding at December 31, 2022 and 2021, respectively | |
| 182,934 | | |
| 143,840 | |
Common stock subscriptions, 0 and 15,855,000 shares at December 31, 2022 and 2021, respectively | |
| — | | |
| 792,745 | |
Additional paid in capital | |
| 23,678,396 | | |
| 20,777,401 | |
Accumulated deficit | |
| (24,337,973 | ) | |
| (22,395,393 | ) |
Accumulated other comprehensive loss | |
| (15,002 | ) | |
| (42,444 | ) |
TOTAL STOCKHOLDERS' DEFICIT | |
| (481,864 | ) | |
| (714,070 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | |
$ | 1,174,295 | | |
$ | 1,326,738 | |
See accompanying notes to the consolidated
financial statements.
Energy and Water Development Corp. and Subsidiary
Consolidated Statements of Operations and Comprehensive
Income (Loss)
| |
| | |
| |
| |
For the Years Ended | |
| |
December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
REVENUE | |
| | | |
| | |
Revenue | |
$ | — | | |
$ | 550,000 | |
TOTAL REVENUE | |
| — | | |
| 550,000 | |
| |
| | | |
| | |
COST OF EQUIPMENT SOLD | |
| | | |
| | |
Cost of equipment sold | |
| — | | |
| 350,000 | |
TOTAL COST OF EQUIPMENT SOLD | |
| — | | |
| 350,000 | |
| |
| | | |
| | |
GROSS PROFIT | |
| — | | |
| 200,000 | |
| |
| | | |
| | |
GENERAL and ADMINISTRATIVE EXPENSES | |
| | | |
| | |
Professional fees | |
| 494,926 | | |
$ | 416,989 | |
Officers’ salaries and payroll taxes | |
| 479,933 | | |
| 300,732 | |
Marketing fees | |
| 226,975 | | |
| 174,892 | |
Travel and entertainment | |
| 42,696 | | |
| 22,953 | |
Other general and administrative expenses | |
| 666,358 | | |
| 222,229 | |
TOTAL GENERAL and ADMINISTRATIVE EXPENSES | |
| 1,910,888 | | |
| 1,137,795 | |
| |
| | | |
| | |
LOSS FROM OPERATIONS | |
| (1,910,888 | ) | |
| (937,795 | ) |
| |
| | | |
| | |
OTHER INCOME (EXPENSE) | |
| | | |
| | |
Change in fair value of derivative | |
| 234,654 | | |
| (1,269,266 | ) |
Other expense | |
| (93,732 | ) | |
| — | |
Interest expense | |
| (172,614 | ) | |
| (830,405 | ) |
TOTAL OTHER INCOME (EXPENSE) | |
| (31,692 | ) | |
| (2,099,671 | ) |
| |
| | | |
| | |
LOSS BEFORE TAXES | |
| (1,942,580 | ) | |
| (3,037,466 | ) |
| |
| | | |
| | |
TAXES | |
| — | | |
| — | |
| |
| | | |
| | |
NET LOSS | |
$ | (1,942,580 | ) | |
$ | (3,037,466 | ) |
| |
| | | |
| | |
OTHER COMPREHENSIVE INCOME (LOSS) | |
| | | |
| | |
Foreign currency translation adjustments | |
| 27,442 | | |
| (42,444 | ) |
TOTAL
OTHER COMPREHENSIVE INCOME (LOSS) | |
$ | 27,442 | | |
$ | (42,444 | ) |
| |
| | | |
| | |
COMPREHENSIVE LOSS | |
| (1,915,138 | ) | |
| (3,079,910 | ) |
| |
| | | |
| | |
Loss per common share - Basic | |
$ | (0.01 | ) | |
$ | (0.02 | ) |
Loss per common share - Diluted | |
$ | (0.01 | ) | |
$ | (0.02 | ) |
| |
| | | |
| | |
Weighted average number of common shares outstanding - Basic | |
| 169,341,781 | | |
| 136,720,652 | |
Weighted average number of common shares outstanding - Diluted | |
| 169,341,781 | | |
| 136,720,652 | |
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, 2022 and 2021
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
Common Stock | | |
| | |
| | |
Accumulated Other | | |
| |
| |
Preferred Stock | | |
Common Stock | | |
Subscriptions | | |
Paid-in | | |
Accumulated | | |
Comprehensive | | |
Stockholders' | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Loss | | |
Deficit | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
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 | |
| 9,780,796 | | |
$ | 9,781 | | |
| 143,840,643 | | |
$ | 143,840 | | |
| 15,855,000 | | |
$ | 792,745 | | |
$ | 20,777,401 | | |
$ | (22,395,393 | ) | |
$ | (42,444 | ) | |
$ | (714,070 | ) |
Subscriptions liability reclassification to subscriptions | |
| — | | |
| — | | |
| — | | |
| — | | |
| 7,547,000 | | |
| 377,350 | | |
| — | | |
| — | | |
| — | | |
| 377,350 | |
Sale of Common Stock | |
| — | | |
| — | | |
| 36,443,736 | | |
| 36,444 | | |
| (23,402,000 | ) | |
| (1,170,095 | ) | |
| 2,385,652 | | |
| — | | |
| — | | |
| 1,252,001 | |
Common stock issued for commitment fee | |
| — | | |
| — | | |
| 500,000 | | |
| 500 | | |
| — | | |
| — | | |
| 79,500 | | |
| | | |
| | | |
| 80,000 | |
Common stock issued for services | |
| — | | |
| — | | |
| 1,574,546 | | |
| 1,574 | | |
| — | | |
| — | | |
| 266,525 | | |
| — | | |
| — | | |
| 268,099 | |
Common stock issued to satisfy convertible debt | |
| — | | |
| — | | |
| 540,716 | | |
| 541 | | |
| — | | |
| — | | |
| 49,459 | | |
| — | | |
| — | | |
| 50,000 | |
Stock issued for interest and fees | |
| — | | |
| — | | |
| 34,842 | | |
| 35 | | |
| — | | |
| — | | |
| 3,187 | | |
| — | | |
| — | | |
| 3,222 | |
Imputed interest on related party loans | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 6,165 | | |
| — | | |
| — | | |
| 6,165 | |
Derivative settled upon conversion of debt | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 110,507 | | |
| — | | |
| — | | |
| 110,507 | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,942,580 | ) | |
| — | | |
| (1,942,580 | ) |
Other comprehensive loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 27,442 | | |
| 27,442 | |
BALANCE AT December 31, 2022 | |
| 9,780,796 | | |
$ | 9,781 | | |
| 182,934,483 | | |
$ | 182,934 | | |
| — | | |
$ | — | | |
$ | 23,678,396 | | |
$ | (24,337,973 | ) | |
$ | (15,002 | ) | |
$ | (481,864 | ) |
See accompanying notes to the consolidated
financial statements.
Energy and Water Development Corp. and Subsidiary
Consolidated Statements of Cash Flows
| |
| | |
| |
| |
For the Year ended | |
| |
December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net loss | |
$ | (1,942,580 | ) | |
$ | (3,037,466 | ) |
Reconciliation of net loss to net cash used in operating activities | |
| | | |
| | |
Common stock
issued for commitment fee | |
| 80,000 | | |
| — | |
Amortization of debt discount and deferred financing costs | |
| 93,986 | | |
| 770,134 | |
Depreciation expense | |
| 18,252 | | |
| 299 | |
Change in fair value of derivative liability | |
| (234,654 | ) | |
| 1,269,266 | |
Common stock issued for services | |
| 268,099 | | |
| 165,000 | |
Imputed interest on amounts owed to related parties | |
| 6,165 | | |
| — | |
Foreign currency loss | |
| 76,737 | | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable, net | |
| 2,260 | | |
| (2,503 | ) |
Inventory | |
| (273,274 | ) | |
| (204,533 | ) |
Deferred cost | |
| — | | |
| 350,000 | |
Prepaid expenses and other current assets | |
| 90,524 | | |
| (435,150 | ) |
Accounts payable and accrued expenses | |
| 92,924 | | |
| 218,096 | |
Due to related party | |
| (97,341 | ) | |
| (28,929 | ) |
Deferred revenue | |
| — | | |
| (550,000 | ) |
Due to officers | |
| 199,986 | | |
| — | |
Accrued management fees and due to officers | |
| — | | |
| (70,482 | ) |
CASH USED IN OPERATING ACTIVITIES | |
| (1,618,916 | ) | |
| (1,556,268 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Purchase of property and equipment | |
| (196,018 | ) | |
| (4,299 | ) |
NET CASH USED IN INVESTING ACTIVITIES | |
| (196,018 | ) | |
| (4,299 | ) |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Proceeds on convertible loans payable | |
| 178,000 | | |
| 369,500 | |
Repayments of convertible loans payable | |
| (150,000 | ) | |
| (95,500 | ) |
Proceeds from sale of stock | |
| 1,252,001 | | |
| 718,113 | |
Proceeds from common stock subscriptions | |
| — | | |
| 1,170,095 | |
CASH PROVIDED BY FINANCING ACTIVITIES | |
| 1,280,001 | | |
| 2,162,208 | |
| |
| | | |
| | |
Effect of exchange rate changes on cash | |
| (13,849 | ) | |
| (24,020 | ) |
| |
| | | |
| | |
Net change in cash | |
| (548,782 | ) | |
| 577,621 | |
| |
| | | |
| | |
Cash, beginning of period | |
| 589,668 | | |
| 12,047 | |
| |
| | | |
| | |
Cash, end of period | |
$ | 40,886 | | |
$ | 589,668 | |
See accompanying notes to the consolidated
financial statements.
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 | |
$ | 67,940 | | |
$ | 28,864 | |
Cash paid for taxes | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
Common shares issued for interest and fees | |
$ | 3,222 | | |
$ | 15,355 | |
Reclassification of common stock subscriptions to common stock | |
$ | 1,170,095 | | |
$ | 1,504,000 | |
Common shares issued for conversion of loans payable | |
$ | 50,000 | | |
$ | 270,000 | |
Derivative liability discount | |
$ | 175,026 | | |
$ | 746,672 | |
Derivative settled upon conversion of debt | |
$ | 110,507 | | |
$ | 1,972,419 | |
Reclassification of equity to liability for derivatives | |
$ | 377,350 | | |
$ | — | |
Right of use asset exchanged for lease liability | |
$ | — | | |
$ | 79,214 | |
Additions of finance lease obligations | |
$ | 64,417 | | |
$ | — | |
See accompanying notes to the consolidated
financial statements.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
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. to Energy and
Water Development Corp. to better present the Company’s purpose and business sector. We are an engineering services company formed
as an outsourcing green tech platform, seeking to exploit renewable energy and water technologies.
On May 7th,
2021, the Company established an official Branch to initiate operations and assist on the establishment of an official subsidiary. On
November 9, 2021, the Company established an official Subsidiary of EAWD in Germany to ensure the company is positioned to service its
growing business in one of the EU’s most environmentally progressive countries. This subsidiary was incorporated under the name
of Energy and Water development Deutschland GmbH (“EAWD Deutschland”), in Hamburg, Germany.
On May 19, 2022,
the Company initiated the process for the establishment of an additional Subsidiary of EAWD in Germany to provide logistics services for
EAWD Deutschland. This subsidiary has been now fully incorporated under the name of EAWD Logistik GmbH (“EAWD Logistik”),
in Frankfurt, Germany.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The consolidated
financial statements include the accounts of EAWD and its subsidiary. All intercompany transactions and balances have been eliminated
in consolidation.
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.
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, 2022 the Company used a spot rate of 1.07 and an average rate of 1.05 when converting EURO to USD.
Use of Estimates
The preparation
of 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 financial statements include estimates relating
to the determination of impairment of assets, assessment of going concern, the determination of the fair value of stock-based compensation,
and the recoverability of deferred income tax assets.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
Leases
Effective January
1, 2019, the Company adopted ASC 842- Leases (“ASC 842”). The lease standard provided a number of optional practical expedients
in transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired
or existing contracts are or contain a lease; did not have to reassess the lease classifications or reassess the initial direct costs
associated with expired or existing leases. The lease standard also provides practical expedients for an entity’s ongoing accounting.
The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”)
assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company
elected the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities).
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 have operating or financing 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 $40,886 and $589,668 cash at December 31, 2022 and 2021.
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 is stated at cost, less accumulated depreciation. Depreciation is recognized over an asset’s estimated useful life
using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining
useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision
to the remaining period of depreciation. Maintenance and repairs are charged to expense as incurred. Estimated useful lives of the Company’s
Property and Equipment are as follows:
Schedule of estimated useful lives |
|
|
Useful Life (in years) |
Office equipment |
5 |
Furniture and fixtures |
7 |
Automobile |
5 |
Machinery and equipment |
5 |
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 December 31, 2022 and 2021, unamortized deferred financing costs were $0 and $6,663, respectively and are
netted against the related debt.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
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
application of the three levels of the fair value hierarchy under ASC Topic 820-10-35, our derivative liabilities as of December 31,
2022 and December 31, 2021, were $184,025 and $354,160,
respectively and measured on Level 3 inputs.
Certain
assets and liabilities are required to be recorded at fair value on a recurring basis. The Company adjusts derivative financial
instruments to fair value on a recurring basis. The fair value for other assets and liabilities such as cash, accounts
receivable, prepaid expenses and other current assets, and accounts payable and accrued expenses have been determined to approximate carrying amounts due to the short maturities of these
instruments. The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with
similar terms.
Income Taxes
Income taxes
are accounted for under the asset and liability method as stipulated by ASC 740, “Accounting for Income Taxes”. Deferred tax
assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax
rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be
realized by the use of the valuation allowance. A valuation allowance is applied when in management’s view it is more likely than
not (50%) that such deferred tax will not be utilized.
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 Corporation could incur income taxes, the Corporation
would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing
authorities. A liability for uncertain tax positions would then be recorded if the Corporation determined it is more likely than not that
a position would not be sustained upon examination or if a payment would have to be made to a taxing authority and the amount is reasonably
estimable.
As of December
31, 2022 and 2021, the Corporation does not believe any uncertain tax positions exist that would result in the Corporation having a liability
to the taxing authorities. The Corporation’s policy is to classify interest and penalties related to unrecognized tax benefits,
if and when required, as part of interest expense and general and administrative expense, respectively, in the statement of operations.
The Corporation’s tax returns for the years ended 2012 through 2021 have been filed and are subject to examination by the federal
and state tax authorities. The Corporation’s tax returns for the tax year ended 2022 have not been filed.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
Revenue Recognition
The Company
recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, the core principle of which is that
an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled to receive in exchange for those goods or services.
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 years ended December 31,
2022 and 2021, the Company recognized $0 and $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.
Loss Per
Common Share
The Corporation
accounts for earnings (loss) per share in accordance with FASB ASC Topic No. 260 - 10, “Earnings Per Share”, which
establishes the requirements for presenting earnings per share (“EPS”). FASB ASC Topic No. 260 - 10 requires the presentation
of “basic” and “diluted” EPS on the face of the statement of 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.
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
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 8,317,828 and 2,406,227 in additional common shares
at December 31, 2022 and 2021, 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:
|
(i) |
any person that holds 5% or more of the Company’s securities including such person’s immediate families, |
|
(ii) |
the Company’s management, |
|
(iii) |
someone that directly or indirectly controls, is controlled by or is under common control with the Company, or |
|
(iv) |
anyone who can significantly influence the financial and operating decisions of the Company. |
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
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 Corporation’s future financial
statements. The following are a summary of recent accounting developments.
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 addition, the new guidance modifies how particular convertible instruments
and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The adoption of ASU 2020-06 did not have
a material impact on the Company’s consolidated financial statements.
On January 1,
2022, the Company adopted 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. The adoption of ASU
2021-04 did not have a material impact on the Company’s consolidated financial statements.
In June 2016,
the FASB issued ASU 2016-13, Financial Instruments – Credit Losses to improve information on credit losses for financial assets
and net investment in leases that are not accounted for at fair value through net income. ASU 2016-13 replaces the current incurred loss
impairment methodology with a methodology that reflects expected credit losses. In April 2019 and May 2019, the FASB issued ASU No. 2019-04,
“Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825,
Financial Instruments” and ASU No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief”
which provided additional implementation guidance on the previously issued ASU. In November 2019, the FASB issued ASU 2019-10, “Financial
Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective
date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission
to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is an SRC, implementation
is not needed until January 1, 2023. The Company adopted ASU 2016-13 on
January 1, 2023. The adoption will not have a material impact on the Company’s consolidated financial statements.
Note 4. Going Concern
The Company
has incurred operating losses since it began operations (December 2012) totaling $24,337,973 at December 31, 2022. During the year ended
December 31, 2022, the Corporation incurred net losses of $1,942,580. The Company had a working capital deficit of $740,698 at December
31, 2022.
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 during 2022. Management of the Company
intends to raise additional funds through the issuance of equity securities or debt, credit lines or advances from suppliers. 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 Corporation is profitable.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
These factors
raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Note 5. Accounts Receivable
At December
31, 2022 and 2021, accounts receivable was $52,761 and $55,169, respectively, and determined to be fully collectible.
Note 6. Inventory
The components of inventory
at December 31, 2022 and 2021, consisted of the following:
Schedule Of Inventories | |
| | |
| |
| |
December 31, | | |
December 31, | |
| |
2022 | | |
2021 | |
Work in progress | |
$ | 457,646 | | |
$ | 196,553 | |
Inventory, net | |
$ | 457,646 | | |
$ | 196,553 | |
Note 7. Prepaid Expenses
and Other Current Assets
The components of prepaid
expenses and other current assets at December 31, 2022 and 2021, consisted of the following:
Schedule Of Prepaid Expenses And Other Current Assets | |
| | |
| |
| |
December 31, 2022 | | |
December 31, 2021 | |
Prepayment on inventory not received | |
$ | — | | |
$ | 225,979 | |
Prepaid expenses | |
| 140,676 | | |
| 113,600 | |
Value added tax receivable | |
| 158,200 | | |
| 83,602 | |
Security deposit | |
| 16,346 | | |
| 7,394 | |
Purchase deposits | |
| — | | |
| 1,507 | |
Prepaid
expenses and other current assets | |
$ | 315,222 | | |
$ | 432,082 | |
Note
8. Property and Equipment, Net
The components
of property and equipment at December 31, 2022 and 2021 consisted of the following:
Schedule Of Property And Equipment | |
| | | |
| | |
| |
December 31, | | |
December 31, | |
| |
2022 | | |
2021 | |
Office equipment | |
$ | 5,911 | | |
$ | 1,526 | |
Furniture and fixtures | |
| 2,447 | | |
| 2,607 | |
Financing lease equipment | |
| 64,417 | | |
| — | |
Machinery and equipment | |
| 41,656 | | |
| — | |
Automobile | |
| 149,787 | | |
| — | |
Property and equipment, gross | |
| 264,218 | | |
| 4,133 | |
Less: Accumulated depreciation | |
| (18,551 | ) | |
| (299 | ) |
Property and equipment, net | |
$ | 245,667 | | |
$ | 3,834 | |
Depreciation
expense for the year ended December 31, 2022 and 2021 was $18,252 and $299, respectively, and is included in other general and administrative
expenses on the consolidated statements of operations and comprehensive loss.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
Note 9. Accounts Payable
and Accrued Expenses
Significant components of accounts
payable and accrued expenses at December 31, 2022 and 2021 are as follows:
Schedule of Accounts Payable and Accrued Liabilities | |
| | |
| |
| |
December 31, 2022 | | |
December 31, 2021 | |
| |
| | |
| |
Accrued expenses | |
$ | 241,960 | | |
$ | 385,776 | |
Accounts payable | |
| 324,754 | | |
| 375,774 | |
Accrued legal costs | |
| 349,726 | | |
| 253,901 | |
Accrued salary and payroll taxes | |
| 134,152 | | |
| 50,228 | |
Total | |
$ | 1,050,592 | | |
$ | 1,065,679 | |
As of December
31, 2022 and 2021, the Company owed Virhtech Gmbh, a related party of the Company, $27,029 and $124,370, respectively, for services performed
for the Company and is classified as accounts payable – related party on the consolidated balance sheets.
Note 10. Convertible
Loans Payable
As of December
31, 2022 and 2021, the Company had loans payable balances, net of discount, of $73,664 and $176,703, respectively.
During the year
ended December 31, 2022, the Company issued one convertible loan in the aggregate amount of $178,000. The note bears interest at 8% per
annum and all matured within one year. The conversion features in the note met the definition of a derivative and required bifurcation
and liability classification, at fair value. The fair value of the derivative liability as of the date of issuance was $175,026 and
was recorded as a discount of the notes.
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. As of December 31, 2022, these loans
were fully repaid or converted.
As of December
31, 2022 and 2021, outstanding convertible loans payable, net of discounts, was $73,664 and $176,703, respectively.
The convertible
loans were issued in several different forms as discussed below.
Schedule of Notes Payable | |
| |
| |
Amount | |
Balance of notes payable, net on December 31, 2020 | |
$ | 149,241 | |
Issuances of debt | |
| 404,000 | |
Cash settlement of debt | |
| (95,500 | ) |
Conversions | |
| (270,000 | ) |
Debt discount | |
| (406,500 | ) |
Deferred financing costs | |
| (6,663 | ) |
Amortization of debt discount | |
| 402,125 | |
Balance of notes payable, net on December 31, 2021 | |
$ | 176,703 | |
Issuances of debt | |
| 178,000 | |
Cash settlement of debt | |
| (150,000 | ) |
Debt discount | |
| (175,025 | ) |
Conversions | |
| (50,000 | ) |
Amortization of debt discount | |
| 93,986 | |
Balance of notes payable, net on December 31, 2022 | |
$ | 73,664 | |
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
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, 2022 and 2021:
Outstanding Derivative Liability | |
| |
| |
Total | |
Balance 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 as of December 31, 2021 | |
$ | 354,160 | |
Change Due to Issuances | |
| 175,026 | |
Change due to exercise / redemptions | |
| (110,507 | ) |
Change in fair value | |
| (234,654 | ) |
Balance as of December 31, 2022 | |
$ | 184,025 | |
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, 2022 and 2021 is as follows:
Summary of Quantitative Information |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2022 |
|
|
|
December 31, 2021 |
|
Stock price |
|
|
$0.04 – 0.19 |
|
|
|
$0.16 – 0.45 |
|
Exercise price |
|
|
$0.02 - 0.10 |
|
|
|
$0.03 - 0.20 |
|
Contractual term (in years) |
|
|
0.68 – 1.00 |
|
|
|
0.27 - 1 |
|
Volatility (annual) |
|
|
140% – 1,313% |
|
|
|
149% – 2,095% |
|
Risk-free rate |
|
|
0.51% - 4.73% |
|
|
|
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.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
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 and derivative
liabilities:
Summary of Financial Liabilities Measured on Recurring Basis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measured at December 31, 2022 |
|
|
|
Quoted |
|
|
Significant |
|
|
|
|
|
|
|
|
|
prices in |
|
|
other |
|
|
Significant |
|
|
|
|
|
|
active
markets |
|
|
observable inputs |
|
|
unobservable
inputs |
|
|
Fair value
December 31, |
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
2022 |
|
Derivative liability |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
184,025 |
|
|
$ |
184,025 |
|
Total |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
184,025 |
|
|
$ |
184,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value measured at December 31, 2021 |
|
|
|
Quoted |
|
|
Significant |
|
|
|
|
|
|
|
|
|
prices in |
|
|
other |
|
|
Significant |
|
|
|
|
|
|
active
markets |
|
|
observable
inputs |
|
|
unobservable
inputs |
|
|
Fair value at
December 31, |
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
2021 |
|
Derivative liability |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
354,160 |
|
|
$ |
354,160 |
|
Total |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
354,160 |
|
|
$ |
354,160 |
|
The fair value
accounting standards define fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in
pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:
|
· |
Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets; |
|
· |
Level 2 inputs: Inputs, other than quoted prices included in Level 1, that are observable either directly or indirectly; and |
|
· |
Level 3 inputs: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. |
There were no
transfers between Level 1, 2 or 3 during the years ended December 31, 2022 and 2021.
During the years
ended December 31, 2022 and 2021, the Company recorded a gain of $234,654 and a loss of $1,269,266, respectively, from the
change in fair value of derivative liability.
Note 11. Leases
Financing
leases
The Company’s
financing lease does not provide an implicit rate that can be readily determined. Therefore, the Company uses discount rates based on
the incremental borrowing rate of its most recent external debt of 8%.
The Company’s
weighted-average remaining lease term relating to its operating leases is 3.92 years, with a weighted-average discount rate
of the 8.00%.
The Company
incurred amortization expense for its financing lease of $1,299 and $0 during the years ended December 31, 2022 and 2021, respectively,
which was included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. During
the years ended December 31, 2022 and 2021, the Company made cash lease payments of $1,522 and $0, respectively. At December 31, 2022
and 2021, the financing lease right-of-use asset was $64,416 and $0, respectively, and is included in property and equipment, net on the
consolidated balance sheets, the current portion of financing lease liability was $14,327 and $0, respectively, and the operating lease
liability, net of current portion was $48,946 and $0, respectively.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
Operating
leases
The Company’s
operating 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 most recent external debt of 8%.
The Company’s
weighted-average remaining lease term relating to its operating leases is 0.81 years, with a weighted-average discount rate
of the 8.00%.
The Company
incurred lease expense for its operating leases of $47,612 and $31,266 during the years ended December 31, 2022 and 2021, respectively,
which was included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. During
the years ended December 31, 2022 and 2021, the Company made cash lease payments of $47,612 and $31,266, respectively. At December 31,
2022 and 2021, the operating lease right-of-use asset was $62,113 and $49,432, respectively, the current portion of operating lease liability
was $62,113 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 liabilities under the Company’s operating and financing leases
as of December 31, 2022.
Schedule of maturity of lease liability | |
| | | |
| | | |
| | |
Maturity of Lease Liabilities | |
Operating lease liabilities | | |
Finance lease liability | | |
Total Amount | |
2023 | |
$ | 64,364 | | |
$ | 18,871 | | |
$ | 83,235 | |
2024 | |
| — | | |
| 18,871 | | |
| 18,871 | |
2025 | |
| — | | |
| 18,871 | | |
| 18,871 | |
2026 | |
| — | | |
| 17,299 | | |
| 17,299 | |
Total future minimum lease payments | |
| 64,364 | | |
| 73,912 | | |
| 138,276 | |
Less: Imputed interest | |
| (2,251 | ) | |
| (10,639 | ) | |
| (12,890 | ) |
Present value of lease liabilities | |
$ | 62,113 | | |
$ | 63,273 | | |
$ | 125,386 | |
Remaining lease term (in years) | |
| 0.81 | | |
| 3.92 | | |
| | |
Note 12. Related Party Transactions
Due to officers
Amounts due to officers as of December
31, 2022 and 2021 are comprised of the following:
Due to Officers | |
| | |
| |
| |
December
31, | | |
December
31, | |
| |
2022 | | |
2021 | |
Ralph Hofmeier: | |
| | | |
| | |
Unsecured advances due to officer | |
$ | 56,400 | | |
$ | — | |
Accrued salaries | |
| 86,265 | | |
| 17,485 | |
Total due to Ralph Hofmeier | |
| 142,665 | | |
| 17,485 | |
| |
| | | |
| | |
Irma Velazquez: | |
| | | |
| | |
Unsecured advances due to officer | |
| 10,393 | | |
| — | |
Accrued salaries | |
| 69,434 | | |
| — | |
Total due to Irma Velazquez | |
| 79,827 | | |
| — | |
Total amounts due to
officers | |
$ | 222,492 | | |
$ | 17,485 | |
Officer Compensation
Accrued salaries
represent amounts accrued in accordance with the employment agreements for Mr. Hofmeier, the Company’s Chief Technology Officer
and Chairman of the Board, and Ms. Velazquez, the Company’s Chief Executive Officer and Vice-Chairman of the Board. Mr. Hofmeier
and Ms. Velazquez are also significant stockholders.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
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 $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
$52,761 and 55,169 as of December 31, 2022 and 2021, respectively, which represents the balance of the Company’s outstanding accounts
receivable as of December 31, 2022 and 2021. As of March 31, 2023, the balance
remains outstanding, however the Company
expects to receive the amount in full by the end of 2023.
Virhtech
Gmbh
As of December
31, 2022 and 2021, the Company owed Virhtech Gmbh, a related party of the Company, $27,029 and $124,370, respectively, for services performed
for the Company and is classified as accounts payable – related party on the consolidated balance sheets.
Officer and
investor deposits
As of December
31, 2022, the Company recorded no common stock subscriptions for stock issuance transactions in process.
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 23,402,000 shares that has been funded and is waiting issuance to complete
the sale at December 31, 2021. The common stock subscription liability consists of cash received for future share issuances in which a
sales and purchase agreement was not signed and returned from the investor.
Note 13. Shareholders’
Deficit
Preferred
Stock
Authorized: 500,000,000 shares
of voting preferred stock with a par value of $0.001. As of both December 31, 2022 and 2021, the Company had 9,780,796 shares of preferred
stock issued and outstanding, respectively.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
Common Stock
Authorized: 1,000,000,000 shares
of voting common stock with a par value of $0.001. As of December 31, 2022 and 2021, the Company had 182,934,483 and 143,840,643 shares
of common stock outstanding, respectively.
During the year
ended December 31, 2022, the Company engaged in the following equity events:
Sale of Common Stock and
Subscriptions
On
February 18, 2022, the Company received a deposit in the amount of $300,000 for 1,875,000 common shares to be issued pursuant
to a securities purchase agreement. These common shares were issued on July 4, 2022.
From January 1, 2022
through March 31, 2022, the Company has issued 14,953,000 common
shares related to subscriptions outstanding at December 31, 2021 for total cash consideration of $747,650.
From April 1, 2022
through June 30, 2022, the Company has issued 8,527,947 common
shares related to subscriptions outstanding at March 31, 2022 for total cash consideration of $437,450.
Shares issued pursuant
to ELOC
On January 26,
2022 the Company entered into a two year equity line of credit (“ELOC”) with an investor to provide up to $5
million. As of March 31, 2022, 500,000
common shares had been issued pursuant to this agreement as the commitment fee at a fair value of $80,000.
On
January 26, 2022, the Company entered into a Securities Purchase Agreement with an investor. As of March 31, 2022, 2,000,000 common
shares were issued pursuant to this agreement for a purchase price of $300,000. In the third quarter of 2022, an additional 4,023,368 common shares were issued pursuant to ELOC for a purchase price
of $450,000.
In the fourth quarter of 2022, the Company issued an additional 5,064,421 shares of the Company’s common stock pursuant
to the ELOC for a purchase price of $187,000.
Shares issued upon conversion
of convertible debt
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 575,558 common shares.
Shares issued for services
On February 2, 2022, the
Company issued 20,000 shares of the Company’s common stock to a vendor for services valued at $3,600.
On February 3, 2022, the
Company issued 500,000 shares of the Company’s common stock to a vendor for services valued at $85,000.
On April 27, 2022, the Company
issued 227,273 shares of the Company’s common stock to a vendor for services valued at $50,000.
On August 11, 2022, the Company
issued 600,000 shares of the Company’s common stock to a vendor for services valued at $79,500.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
On September 9, 2022, the
Company issued 227,273 shares of the Company’s common stock to a vendor for services valued at $50,000.
During the year
ended December 31, 2021, the Company engaged in the following equity events:
|
· |
5,065,344 common shares issued for $718,113 for the sale of shares, |
|
· |
10,000,000 common shares were issued to officers for accrued salary, |
|
· |
500,000 common shares issued for $165,000 in marketing and consulting, |
|
· |
4,671,167 common shares were issued for $270,000 to convertible note holder is satisfaction of their notes, and |
|
· |
287,246 common shares were issued for $15,355 to pay interest and fees. |
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 1,000,000 warrant shares. 500,000 warrants were issued on February 17,
2021, and the remaining 500,000 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 14. Commitments and
Contingencies
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 $5,000,000 to purchase the Company’s Common Stock, par value $0.001
per share, and upon execution of the ELOC the Company issued an additional 500,000 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 Securities and Exchange Commission
(“SEC”) within forty-five days of filing its 10-K for the year ended December 31, 2021. The Company’s Registration Statement
on Form S-1 registering 25,000,000 shares in connection with the ELOC was declared effective on July 5, 2022.
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 Corporation 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 Corporation’s Board of Directors.
The Employment Agreements each had 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. These contracts expired on August 4, 2022.
Effective
as of August 4, 2022, Mr. Ralph M. Hofmeier has resigned as Chief Executive Officer and President of Energy and Water Development Corp.
(the "Company"), and has been appointed as Chief Technology Officer of the Company. Mr. Hofmeier’s resignation is not
a result of any disagreement with the Company or its independent auditors on any matter relating to the Company’s accounting, strategy,
management, operations, policies, regulatory matters, or practices (financial or otherwise).
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
Effective
as of August 4, 2022, Ms. Irma Velazquez has resigned as Chief Operating Officer of the Company, and has been appointed as Chief Executive
Officer of the Company. Ms. Velazquez’s resignation is not a result of any disagreement with the Company or its independent auditors
on any matter relating to the Company’s accounting, strategy, management, operations, policies, regulatory matters, or practices
(financial or otherwise).
On
August 4, 2022, per a board of directors resolution, the Company entered into employment agreements with its Chief
Technology Officer, Mr. Ralph Hofmeier, and its Chief Executive Officer, Ms. Irma Velazquez (collectively the “2022 Employment
Agreements”). Effective for the fiscal year ended December 31, 2022, under the 2022 Employment Agreements, the base salary
will be $210,305 prorated
for any partial period of employment and payable in arrears in accordance with the Company’s ordinary payroll policies and
procedures. Additionally, in recognition of the employees’ past services, the Company shall pay each employee a lump sum cash
signing bonus of $29,164,
less payroll deductions and withholdings, and each individual will be eligible to receive a yearly bonus based on yearly
profitability. Additionally, if certain performance milestones are met, each employee will be granted options to purchase shares of
the Company’s common stock. No options had been granted as of December 31, 2022. Any increase to the annual base is subject to
approval by the Company’s Board of Directors. The 2022 Employment Agreements each have an indefinite term.
Leases
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. On May
23, 2022, after expiration of the office located in Ballindam, the Company signed a new lease agreement for the same office space. Additionally,
on May 20, 2022, the Company signed a new lease agreement for additional office space in Frankfurt, Germany.
Our Telephone number is
+49 40 809081354. Rent expense for the years ended December 31, 2022 and 2021 amounted to $69,171 and
$37,552.
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
EAWD vs Packard and
Co-Defendant Nick Norwood – Case number 18-031011 CA-01 Miami-Dade County Circuit Court. The Company is demanding
the proof of payment for shares issued in 2008. A Jury trial has been granted against Mr. Packard and Co-defended Mr. Northwood, which
would take place on First week of May 2023.
EAWD
vs Nerve Smart Systems ApS (“Nerve”) - Case number BS-15264/2022– The Court of Roskilde, Denmark. On
April 2022, the Company filed a claim against Nerve demanding the return of the amounts paid by the Company for a Battery Energy
Storage System that was never delivered by Nerve to the Company, and therefore Nerve did not meet the requirements and
specifications of the contract with the Company. The Company is confident there will be a positive outcome in this case. This matter is
not expected to be resolved prior to 2024 due to the long waiting times of the Danish court System.
EAWD vs NPP Niethammer, Posewang & Partner
GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft (“NPP”) – Case number 322
O 159/22 – On November 28, 2022, by court settlement, the legal dispute again NPP
was settled. The subject matter of the legal dispute was NPP’s fee claims against the Company in the amount of EUR 45,500, which
is approximately $48,160, plus interest. On November 28, 2022, the Company agreed to pay NPP an amount of EUR 22,749, which is approximately
$23,214. The costs of the legal dispute were set off against each other in the settlement. There is still an outstanding fee claim against
the Company according to an invoice dated January 25, 2023 in the amount of EUR 4,986, which is approximately $5,277.
Note 15. Income Taxes
The Company
maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between carrying amounts of the
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax asset has been
fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income. The Company did not have
an income tax provision or benefit for the year ended December 31, 2022 and 2021. The Company has incurred losses and therefore has provided
a full valuation against net deferred tax assets as December 31, 2022 and 2021.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
The items accounting
for the difference between U.S. and foreign income taxes at the effective statutory rate and the provision for income taxes for the year
ended December 31, 2022 and 2021 were as follows:
Income tax reconciliation | |
| | |
| |
| |
December 31, | | |
December 31, | |
| |
2022 | | |
2021 | |
Income tax benefit at U.S. statutory rate of 21% | |
| | | |
| | |
Net operating loss – U.S. – federal | |
$ | (169,906 | ) | |
$ | (562,283 | ) |
State income tax net of Federal benefits – U.S. | |
| (35,154 | ) | |
| (94,298 | ) |
Non-deductible expenses – U.S. | |
| 54,953 | | |
| 540,338 | |
Net operating loss - foreign | |
| (249,864 | ) | |
| (79,179 | ) |
Temporary differences | |
| (762,687 | ) | |
| — | |
Change in valuation allowance – U.S. | |
| 912,794 | | |
| 116,243 | |
Change in valuation allowance – foreign | |
| 249,864 | | |
| 79,179 | |
| |
| | | |
| | |
Total provision for income tax – U.S. and foreign | |
$ | — | | |
$ | — | |
The Company’s approximate net
U.S. and foreign deferred tax assets as of December 31, 2022 and 2021 were as follows:
Deferred tax assets | |
| | |
| |
| |
December 31, | | |
December 31, | |
| |
2022 | | |
2021 | |
Deferred tax assets | |
| | | |
| | |
Book to tax difference – fixed assets | |
$ | 506,826 | | |
$ | — | |
Net operating loss carry forward – U.S. | |
| 2,796,738 | | |
| 2,390,769 | |
Net operating loss carry forward – foreign | |
| 329,043 | | |
| 79,179 | |
| |
| | | |
| | |
Total deferred tax assets – U.S. and foreign | |
| 3,632,607 | | |
| 2,469,948 | |
Valuation allowance – U.S. and foreign | |
| (3,632,607 | ) | |
| (2,469,948 | ) |
| |
| | | |
| | |
Net deferred tax assets | |
$ | — | | |
$ | — | |
Net
operating loss carry-forwards for U.S. federal and state in the amount of approximately $11.0
million, and for foreign of $1.5
million, will expire beginning December 31, 2033.
The net change
in the valuation allowance for the years ended December 31, 2022 and 2021 was an increase of $912,794 and $116,243, respectively.
The valuation allowance increased as a result of losses in the current period. The net change in the foreign valuation allowance for the
years ended December 31, 2022 and 2021 was an increase of $249,864 and $79,179 respectively. The valuation allowance increased as
a result of losses in the current period.
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 16. Subsequent Events
On January 10, 2023, the Company issued 1,584,427
shares of common stock to Tysadco Partners LLC at a per share price of $0.025 pursuant to that certain January 26, 2022 Purchase Agreement
wherein the parties established a two-year Equity Line of Credit (ELOC). The purchase price under the ELOC is equal to 85% of the two
lowest individual VWAP during the five trading days immediately prior to the Company’s put notice.
On January 18, 2023, the Company issued an aggregate
6,250,000 shares of common stock to Gary Rodney at a per share price of $0.02 in full satisfaction of all accrued but unpaid amounts
payable for services as interim chief financial officer pursuant to that certain Consulting Agreement by and between InfoQuest Technology,
Inc. and the Company dated June 2, 2021.
Energy and Water Development Corp. and Subsidiary Notes to Consolidated Financial Statements |
On January 18, 2023, the Company issued an aggregate
702,523 shares of common stock to Ralph Hofmeier at a per share price of $0.05 in full satisfaction of all accrued but unpaid amounts
payable pursuant to that certain Employment Agreement by and between Ralph Hofmeier and the Company dated August 4, 2022.
On January 18, 2023, the Company issued 1,397,787
shares of common stock to Tysadco Partners LLC at a per share price of $0.026 pursuant to that certain January 26, 2022 Purchase Agreement
wherein the parties established a two-year Equity Line of Credit (ELOC). The purchase price under the ELOC is equal to 85% of the two
lowest individual VWAP during the five trading days immediately prior to the Company’s put notice.
On January 30, 2023, the Company issued 1,329,345
shares of common stock to Tysadco Partners LLC at a per share price of $0.038 pursuant to that certain January 26, 2022 Purchase Agreement
wherein the parties established a two-year Equity Line of Credit (ELOC). The purchase price under the ELOC is equal to 85% of the two
lowest individual VWAP during the five trading days immediately prior to the Company’s put notice.
On January 30, 2023, Energy and Water Development
Corp. (the “Company”) executed an engagement letter (the “Engagement Letter”) with AOB Accounting and Consultancy
Services Company Limited pursuant to which Mr. Amedeo Montonati, age 30, will provide services to the Company as its Chief Financial
Officer. Prior to taking this position with the Company, Mr. Montonati was a Senior Administrative Consultant at Hawksford Group in Hong
Kong from 2018 to 2021 and since then has served as an associate director at AOGB Professional Services Group and as Interim CFO at Brera
Holdings PLC. Mr. Montonati holds an MBA from University of South Australia, Hong Kong. The Engagement Letter has an initial term of
six months that can be extended by mutual agreement of the parties. The Engagement Letter sets forth the material terms and conditions
of his engagement, including compensation. Additionally, the Engagement Letter includes certain restrictive covenants that generally
prohibit him from disclosing information that is confidential to the Company.
On February 14, 2023, the Company issued 999,429
shares of common stock to Tysadco Partners LLC at a per share price of $0.0824 pursuant to that certain January 26, 2022 Purchase Agreement
wherein the parties established a two-year Equity Line of Credit (ELOC). The purchase price under the ELOC is equal to 85% of the two
lowest individual VWAP during the five trading days immediately prior to the Company’s put notice.
On February 14, 2023, the Company issued 250,000
shares of common stock to investors at a purchase price of $0.10
per share for a total value of $25,000.
On February 17, 2023, the Company issued 125,000
shares of common stock to investors at a purchase price of $0.10
per share for a total value of $12,500.
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