UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to________________
Commission file number 333-168895
QUEST WATER GLOBAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 27-1994359 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
2030 Marine Drive, Suite 302 North Vancouver, British Columbia, |
V7P 1V7 | |
| (Address of principal executive offices) | (Zip Code) |
(604) 986-2219
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSURS:
As of August 20, 2012, the registrant’s outstanding common stock consisted of 84,833,860 shares.
EXPLANATORY NOTE
This Amendment No. 1 to the quarterly report of Quest Water Global, Inc. (the “Company”), amends the Company’s quarterly report for the period ended June 30, 2012 (the “Original Filing”), which was filed with the Securities and Exchange Commission (the “SEC”) on August 20, 2012, for the sole purpose of furnishing the Interactive Data File as Exhibit 101.
No other changes have been made to the Original Filing. This amended annual report continues to speak as of the filing date of the Original Filing, does not reflect events that may have occurred subsequent to the filing date of the Original Filing, and does not modify or update any related disclosures made in the Original Filing.
EXHIBIT INDEX
| Exhibit
Number |
Description of Exhibit | |
| 2.1 | Share Exchange Agreement dated January 6, 2012 with Josh Morita, Quest Water Solutions, Inc. and the shareholders of Quest Water Solutions, Inc. (1) | |
| 3.1 | Articles of Incorporation (2) | |
| 3.2 | Bylaws (2) | |
| 3.3 | Certificate of Designation for Series A Voting Preferred Stock (1) | |
| 10.1 | Agreement of Sale dated January 6, 2012 with Josh Morita (1) | |
| 10.2 | Subscription Agreement dated January 6, 2012 (1) | |
| 10.3 | Form of Warrant dated January 6, 2012 (1) | |
| 10.4 | Registration Rights Agreement dated January 6, 2012 (1) | |
| 10.5 | Form of Lock-Up Agreement dated January 6, 2012 (1) | |
| 10.6(a) | Lock-Up/Leak Out Agreement with John Balanko dated January 6, 2012 (1) | |
| 10.6(b) | Lock-Up/Leak Out Agreement with Peter Miele dated January 6, 2012 (1) | |
| 10.7 | Management Agreement with John Balanko dated November 1, 2011 (1) | |
| 10.8 | Management Agreement with Peter Miele dated November 1, 2011 (1) | |
| 10.9 | Global Cooperation Partner Agreement between Quest Water Solutions, Inc. and Trunz Water Systems AG, dated June 29, 2011 (1) | |
| 31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (3) | |
| 31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (3) |
| 32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3) | |
| 32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3) | |
| 99.1 | Audit Committee Charter (4) | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | |
| 101.PRE | XBRL Taxonomy Presentation Linkbase |
| (1) | Incorporated by reference from the Company’s current report on Form 8-K filed with the SEC on January 10, 2012. |
| (2) | Incorporated by reference from the Company’s registration statement on Form S-1 filed with the SEC on August 17, 2010. | |
| (3) | Incorporated by reference from the Company’s quarterly report on Form 10-Q filed with the SEC on August 20, 2012. |
| (4) | Incorporated by reference from the Company’s annual report on Form 10-K filed with the SEC on April 16, 2012. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: September 11, 2012 | QUEST WATER GLOBAL, INC. | |
| By: | /s/ John Balanko | |
| John Balanko | ||
| Chairman, President, Chief Executive Officer, Director | ||
|
Schedule of Stock Options Outstanding (Details) (USD $)
|
6 Months Ended | |
|---|---|---|
|
Jun. 30, 2012
|
Dec. 31, 2011
|
|
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
| Range of exercise prices, Outstanding and Exercisable | $ 0.90 | |
| Outstanding, Number of shares | 5,050,000 | |
| Outstanding, Weighted average remaining contracutal life (years) | 2 years 10 months 24 days | |
| Outstanding, Weighted average exercise price | $ 0.90 | |
| Exercisable, Number of shares | 5,050,000 | |
| Exercisable, Weighted average remaining contractual life (years) | 2 years 10 months 24 days | |
| Exercisable, Weighted average exercise price | $ 0.90 |
|
Convertible Notes Payable (Details Narrative) (USD $)
|
0 Months Ended | 1 Months Ended | 6 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
|
May 09, 2012
|
May 04, 2012
|
May 04, 2012
|
Jan. 05, 2012
|
Jan. 06, 2012
|
Jan. 05, 2012
|
Oct. 03, 2011
|
Sep. 11, 2011
Number
|
Dec. 31, 2011
|
Jun. 30, 2012
|
Mar. 31, 2012
|
|
| Convertible Notes Payable [Abstract] | |||||||||||
| Proceeds from loans | $ 150,000 | $ 10,000 | $ 25,500 | $ 200,000 | $ 4,000 | ||||||
| Convertible promissory note | 200,000 | ||||||||||
| Percentage of interest on promissory note | 10.00% | ||||||||||
| Common stock par value | $ 0.50 | $ 0.25 | $ 0.20 | $ 0.20 | $ 0.0001 | $ 0.0001 | |||||
| Additional paid in capital on conversion | 90,000 | 3,226 | 6,375 | 50,000 | 17,419 | ||||||
| Face value of convertible notes | 150,000 | 10,000 | 25,500 | 200,000 | 54,000 | ||||||
| Convertible notes payable | 67,500 | 12,338 | 12,338 | 6,375 | 50,000 | 4,355 | |||||
| Carrying value of convertible note | 10,000 | 54,000 | 25,500 | 200,000 | |||||||
| Additional common stock shares issued to convert note | 40,000 | 216,000 | 255,000 | 2,000,000 | |||||||
| Conversion of note for common stock | 25,500 | 200,000 | |||||||||
| Common stock par value | $ 0.25 | ||||||||||
| Warrants, exercise price | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | |||||||
| Convertible notes payable | 2,419 | 2,419 | 726 | 7,500 | 807 | ||||||
| Principal unpaid on convertible note | $ 25,000 | ||||||||||
|
Summary of Significant Accounting Policies
|
6 Months Ended | |||
|---|---|---|---|---|
|
Jun. 30, 2012
|
||||
| Accounting Policies [Abstract] | ||||
| Summary of Significant Accounting Policies |
2. Summary of Significant Accounting Policies
(a) Basic of Presentation and Consolidation
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, Quest; Quest’s wholly owned subsidiary, Quest Water Solutions Inc., a company incorporated under the laws of the province of British Columbia, Canada; and its 88% owned inactive subsidiaries Agua Cuilo Lda., Cuilo Embalnages, Lda., and Cuilo Comercial, Lda. All inter-company balances and transactions have been eliminated on consolidation. The Company’s fiscal year-end is December 31.
(b) Use of Estimates
The preparation of these consolidated financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, recoverability of receivables, fair value of convertible debt, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
(c) Property and Equipment
Property and equipment are stated at cost. The Company amortizes the cost of property and equipment over their estimated useful lives at the following annual rates:
Computer equipment 45% declining balance basis Computer software 100% declining balance basis Furniture and equipment 20% declining balance basis
(d) Long-lived Assets
In accordance with ASC 360, “Property, Plant, and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount exceeds fair value.
(e) Financial Instruments and Fair Value Measures
ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are no observable inputs to the valuation methodology that are relevant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, convertible note payable, loan payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
(f) Loss Per Share
The Company computes net income (loss) per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common stocks outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
(g) Comprehensive Loss
ASC 220, “Comprehensive Income,” establishes standards for the reporting and presentation of comprehensive income (loss) and its components in the financial statements. As at June 30, 2012, and 2011, the Company had no items representing comprehensive income or loss.
(h) Reclassifications
Certain of the figures presented for comparative purposes have been reclassified to conform to the presentation adopted in the current period.
The Company’s functional currency is US dollars. Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into US dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.
The Company’s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into US dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.
(j) Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. As of June 30, 2012 and December 31, 2011, the Company did not have any amounts recorded pertaining to uncertain tax positions.
The Company is required to file federal and provincial income tax returns in Canada and federal, state and local income tax returns in the US, as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and US income tax returns, the open taxation year is 2009. In certain circumstances, the US federal statute of limitations can reach beyond the standard three year period. US state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and US have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation year noted above.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During the periods ended June 30, 2012 and December 31, 2011, there were no charges or provisions for interest or penalties.
(k) Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
|