0001062993-17-000939.txt : 20170214 0001062993-17-000939.hdr.sgml : 20170214 20170214151246 ACCESSION NUMBER: 0001062993-17-000939 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 58 CONFORMED PERIOD OF REPORT: 20161231 FILED AS OF DATE: 20170214 DATE AS OF CHANGE: 20170214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALKALINE WATER Co INC CENTRAL INDEX KEY: 0001532390 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & RELATED PRODUCTS [5140] IRS NUMBER: 990367049 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55096 FILM NUMBER: 17607715 BUSINESS ADDRESS: STREET 1: 7730 E GREENWAY ROAD STREET 2: SUITE 203 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 480-272-7290 MAIL ADDRESS: STREET 1: 7730 E GREENWAY ROAD STREET 2: SUITE 203 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL LINES INC DATE OF NAME CHANGE: 20111011 10-Q 1 form10q.htm FORM 10-Q Alkaline Water Company Inc.: Form 10-Q - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended December 31, 2016

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

Commission file number 000-55096

THE ALKALINE WATER COMPANY INC.
(Exact name of registrant as specified in its charter)

Nevada 99-0367049
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

7730 E Greenway Road, Suite 203, Scottsdale, AZ 85260
(Address of principal executive offices) (Zip Code)

(480) 656-2423
(Registrant’s telephone number, including area code)

Not Applicable
(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 [X]    No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.

  Large accelerated filer [  ] Accelerated filer [  ]
     
  Non-accelerated filer   [  ]    (Do not check if a smaller reporting company) 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]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

15,971,977 shares of common stock issued and outstanding as of February 14, 2017.

1


THE ALKALINE WATER COMPANY INC.
FORM 10-Q
FOR THE NINE MONTHS ENDED DECEMBER 31, 2016

TABLE OF CONTENTS

  Page No.  
  PART I - FINANCIAL INFORMATION  
     
Item 1. Financial Statements 3
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 20
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
     
Item 4. Controls and Procedures  
  PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 26
     
Item1A. Risk Factors 26
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
     
Item 3. Defaults Upon Senior Securities 26
     
Item 4. Mine Safety Disclosures 26
     
Item 5. Other Information 26
     
Item 6. Exhibits 27
     
  Signatures 30

2


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

THE ALKALINE WATER COMPANY INC.
CONSOLIDATED BALANCE SHEET
(unaudited)

    (Unaudited)        
    December 31, 2016     March 31, 2016  
ASSETS            
           Current assets            
                         Cash and cash equivalents $  88,540   $  1,192,119  
                         Accounts receivable   834,777     911,390  
                         Inventory   813,441     434,708  
                         Prepaid expenses   98,716     10,806  
             
                         Total current assets   1,835,474     2,549,023  
             
           Fixed assets - net   1,124,505     1,226,534  
           Equipment deposits - related party   104,619     -  
             
                         Total assets $  3,064,598   $  3,775,557  
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
           Current liabilities            
                         Accounts payable $  953,588   $  847,452  
                         Accrued expenses   375,527     251,613  
                         Revolving financing   532,020     475,273  
                         Current portion of capitalized leases   188,303     243,623  
                         Note payable, net of debt discount   -     283,120  
                         Note payable with original issue discount, net of debt discount   -     41,248  
                         Current portion of convertible notes payable, net of debt discount   46,046     -  
                         Derivative liability   3,407     11,143  
             
                         Total current liabilities   2,098,891     2,153,472  
             
           Long-term Liabilities            
                         Capitalized leases   48,703     95,204  
                         Convertible notes payable, net of debt discount   674,059     -  
             
                         Total long-term liabilities   722,762     95,204  
             
                         Total liabilities $  2,821,653   $  2,248,676  
             
           Stockholders' equity            
                        Preferred stock, $0.001 par value, 100,000,000 shares authorized, Series 
                        A issued 20,000,000, Series C issued 3,000,000
 
23,000
   
23,000
 
                        Common stock, $0.001 par value, 200,000,000 shares authorized, 
                        16,030,697 and 14,568,970 shares issued and outstanding at December 
                        31, 2016 and March 31, 2016, respectively
 
16,029

 
14,568

                         Additional paid in capital   22,925,531     21,423,247  
                         Accumulated deficit   (22,721,615 )   (19,933,934 )
             
                         Total stockholders' equity   242,945     1,526,881  
             
                         Total liabilities and stockholders' equity $  3,064,598   $  3,775,557  

See Accompanying Notes to Consolidated Financial Statements.

3


THE ALKALINE WATER COMPANY INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)

    For the Three Months Ended     For the Nine Months Ended  
    December 31, 2016     December 31, 2015     December 31, 2016     December 31, 2015  
Revenue $  2,973,689   $  1,777,701   $  8,927,976   $  5,010,547  
                         
Cost of Goods Sold   1,664,459     1,152,514     5,351,284     3,234,840  
                         
Gross Profit   1,309,230     625,187     3,576,692     1,775,707  
                         
Operating expenses                        
       Sales and marketing expenses   998,525     703,942     3,144,914     2,098,678  
       General and administrative   550,732     739,690     2,448,247     2,628,152  
       Depreciation   90,463     72,204     270,860     214,333  
                         
       Total operating expenses   1,639,720     1,515,836     5,864,021     4,941,163  
                         
Total operating loss   (330,490 )   (890,649 )   (2,287,329 )   (3,165,456 )
                         
Other income (expense)                        
       Interest income   -     14     102     24  
       Interest expense   (83,738 )   (99,112 )   (296,382 )   (242,877 )
       Amortization of debt discount and accretion   (85,525 )   (195,000 )   (211,808 )   (283,083 )
       Change in derivative liability   1,379     90,026     7,736     47,364  
                         
       Total other income (expense)   (167,884 )   (204,072 )   (500,352 )   (478,572 )
                         
Net loss $  (498,374 ) $  (1,094,721 ) $  (2,787,681 ) $  (3,644,028 )
                         
EARNINGS PER SHARE (Basic) $  (0.03 ) $  (0.36 ) $  (0.18 ) $  (1.29 )
                         
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic)   15,604,623     3,006,148     15,391,901     2,831,761  

See Accompanying Notes to Consolidated Financial Statements.

4


THE ALKALINE WATER COMPANY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

    For the Nine Months Ended  
    December 31, 2016     December 31, 2015  
CASH FLOWS FROM OPERATING ACTIVITIES            
             Net loss $  (2,787,681 ) $  (3,644,028 )
             
             Adjustments to reconcile net loss to net cash used in operating            
             activities            
                   Depreciation expense   270,860     214,333  
                   Stock compensation expense   319,125     1,111,445  
                   Amortization of debt discount and accretion   226,436     296,415  
                   Interest expense relating to amortization of capital lease discount   77,257     77,029  
                   Change in derivative liabilities   (7,736 )   (47,364 )
                   Changes in operating assets and liabilities:            
                       Accounts receivable   76,613     (282,835 )
                       Inventory   (378,733 )   (7,964 )
                       Prepaid expenses and other current assets   (87,910 )   15,000  
                       Accounts payable   106,136     116,418  
                       Accounts payable - related party   -     (43,036 )
                       Accrued expenses   123,914     50,632  
             
                   NET CASH USED IN OPERATING ACTIVITIES   (2,061,719 )   (2,143,955 )
             
CASH FLOWS FROM INVESTING ACTIVITIES            
             
                   Purchase of fixed assets   (168,831 )   (19,461 )
                   Equipment deposits - related party   (104,619 )   (194,997 )
             
                   CASH USED IN INVESTING ACTIVITIES   (273,450 )   (214,458 )
             
CASH FLOWS FROM FINANCING ACTIVITIES            
                   Proceeds from notes payable   1,010,000     1,325,000  
                   Proceeds from convertible note payable   -     435,000  
                   Proceeds from revolving financing   56,747     141,061  
                   Proceeds from sale of common stock, net   425,000     781,200  
                   Proceeds for the exercise of warrants, net   300,000     -  
                   Repayment of notes payable   (381,079 )   (152,058 )
                   Repayment of capital lease   (179,078 )   (152,122 )
             
                   CASH PROVIDED BY FINANCING ACTIVITIES   1,231,590     2,378,081  
             
NET CHANGE IN CASH   (1,103,579 )   19,668  
             
CASH AT BEGINNING OF PERIOD   1,192,119     90,113  
             
CASH AT END OF PERIOD $  88,540   $  109,781  
             
INTEREST PAID $  83,738   $  112,395  

See Accompanying Notes to Consolidated Financial Statements.

5


THE ALKALINE WATER COMPANY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended March 31, 2016 (including the notes thereto) set forth on Form 10-K. The Company uses as guidance the Accounting Standard Codification (ASC) as established by the Financial Accounting Standards Board (FASB).

Principles of consolidation

The consolidated financial statements include the accounts of The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company).

All significant intercompany balances and transactions have been eliminated. The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company) will be collectively referred herein to as the “Company”. Any reference herein to “The Alkaline Water Company Inc.”, the “Company”, “we”, “our” or “us” is intended to mean The Alkaline Water Company Inc., including the subsidiaries indicated above, unless otherwise indicated.

Reverse split

Effective December 30, 2015, the Company effected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock. As a result, the authorized common stock has decreased from 1,125,000,000 shares of common stock, with a par value of $0.001 per share, to 22,500,000 shares of common stock, with a par value of $0.001 per share. All shares and per share amounts have been retroactively restated to reflect such split.

On January 21, 2016, stockholders of our company approved, by written consents, an amendment to the articles of incorporation of our company to increase the number of authorized shares of our common stock from 22,500,000 to 200,000,000.

The Company received written consents representing 20,776,000 votes from the holders of shares of its common stock and our Series A Preferred Stock voting as a single class, representing approximately 61% of the voting power of its outstanding common stock and its outstanding Series A Preferred Stock voting as a single class as of the record date (January 12, 2016). On January 21, 2016, there were no written consents received by the Company representing a vote against, abstention or broker non-vote with respect to the proposal.

6


Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share. In addition, the number of issued and outstanding shares of Series A Preferred Stock continues to be 20,000,000. However, holders of Series A Preferred Stock had 0.2 vote per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse stock split.

On January 22, 2016, the Company amended the certificate of designation for our Series A Preferred Stock by filing an amendment to certificate of designation with the Secretary of State of the State of Nevada. The Company amended the certificate of designation for our Series A Preferred Stock by deleting Section 2.2 of the certificate of designation, which proportionately increases or decreases the number of votes per share of Series A Preferred Stock in the event of any dividend or other distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock. Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock, instead of 0.2 votes per share of Series A Preferred Stock.

Use of estimates

The preparation of financial statements in conformity 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 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 significantly from those estimates.

Cash and cash equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be considered cash equivalents. The carrying value of these investments approximates fair value. The Company had $88,540 and $1,192,119 in cash and cash equivalents at December 31, 2016 and March 31, 2016, respectively.

Accounts receivable and allowance for doubtful accounts

The Company generally does not require collateral, and the majority of its trade receivables are unsecured. The carrying amount for accounts receivable approximates fair value.

Accounts receivable are periodically evaluated for collectability based on past credit history with clients. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current economic conditions.

Inventory

Inventory represents raw and blended chemicals and other items valued at the lower of cost or market with cost determined using the weight average method which approximates first-in first-out method, and with market defined as the lower of replacement cost or realizable value.

As of December 31, 2016 and March, 31 2016, inventory consisted of the following:

  December 31, 2016     March 31, 2016  
Raw materials $  597,428   $  300,575  
Finished goods   216,013     134,133  
Total inventory $  813,441   $  434,708  

Property and equipment

7


The Company records all property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter. Depreciation periods are as follows for the relevant fixed assets:

Equipment 5 years
Equipment under capital lease 3 years or term of the lease

Stock-based Compensation

The Company accounts for stock-based compensation to employees in accordance with Accounting Standards Codification (“ASC”) 718. Stock-based compensation to employees is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances.

Revenue recognition

The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount to be paid by the customer is fixed or determinable; and (4) the collection of such amount is probable.

The Company records revenue when it is realizable and earned upon shipment of the finished products. The Company does not accept returns due to the nature of the product. However, the Company will provide credit to our customers for damaged goods.

Fair value measurements

The valuation of our embedded derivatives and warrant derivatives are determined primarily by the multinomial distribution (Lattice) model. An embedded derivative is a derivative instrument that is embedded within another contract, which under the convertible note (the host contract) includes the right to convert the note by the holder, certain default redemption right premiums and a change of control premium (payable in cash if a fundamental change occurs). In accordance with ASC 815 “Accounting for Derivative Instruments and Hedging Activities”, as amended, these embedded derivatives are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. A warrant derivative liability is also determined in accordance with ASC 815. Based on ASC 815, warrants which are determined to be classified as derivative liabilities are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. The practical effect of this has been that when our stock price increases so does our derivative liability resulting in a non-cash loss charge that reduces our earnings and earnings per share. When our stock price declines, the Company records a non-cash gain, increasing our earnings and earnings per share. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1

unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

 

Level 2

inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

8



Level 3

unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

To determine the fair value of our embedded derivatives, management evaluates assumptions regarding the probability of certain future events. Other factors used to determine fair value include our period end stock price, historical stock volatility, risk free interest rate and derivative term. The fair value recorded for the derivative liability varies from period to period. This variability may result in the actual derivative liability for a period either above or below the estimates recorded on our consolidated financial statements, resulting in significant fluctuations in other income (expense) because of the corresponding non-cash gain or loss recorded.

Income taxes

In accordance with ASC 740 “Accounting for Income Taxes”, the provision for income taxes is computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

Basic and diluted loss per share

Basic and diluted earnings or loss per share (“EPS”) amounts in the consolidated financial statements are computed in accordance ASC 260 – 10 “Earnings per Share”, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Potentially dilutive securities were excluded from the calculation of diluted loss per share, because their effect would be anti-dilutive.

Reclassification

Certain accounts in the prior period were reclassified to conform to the current period financial statements presentation.

Newly issued accounting pronouncements

During the period ended December 31, 2016, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability and/or acquisition and sale of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities, developing its business plan and building its initial customer and distribution base for its products. As a result, the Company incurred accumulated net losses from Inception (June 19, 2012) through the period ended December 31, 2016 of ($22,721,615). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.

9


The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 – PROPERTY AND EQUIPMENT

Fixed assets consisted of the following at:

    December 31, 2016     March 31, 2016  
Machinery and Equipment $  1,048,699   $  970,728  
Machinery under Capital Lease   735,781     735,781  
Machinery – Construction in progress   85,600     -  
Office Equipment   58,891     53,631  
Leasehold Improvements   3,979     3,979  
Less: Accumulated Depreciation   (808,445 )   (537,585 )
Fixed Assets, net $  1,124,505   $  1,226,534  

Depreciation expense for the nine months ended December 31, 2016 and December 31 2015 was $270,860 and $214,333, respectively.

NOTE 4 – EQUIPMENT DEPOSITS – RELATED PARTY

During the nine month period ending December 31, 2016 the company made a net deposit on equipment of $104,619 to Water Engineering Solutions. During the nine month period ending December 31, 2015 the company made a net deposit on equipment of $194,997 to Water Engineering Solutions. Water Engineering Solutions LLC is an entity that is controlled and majority owned by Steven P. Nickolas and Richard A. Wright for the production of our alkaline water.

NOTE 5 – REVOLVING FINANCING

On February 20, 2014, The Alkaline Water Company Inc., and subsidiaries, Alkaline 88, LLC and Alkaline Water Corp., entered into a revolving accounts receivable funding agreement with Gibraltar Business Capital, LLC (“Gibraltar”). Under the agreement, from time to time, the Company agreed to tender to Gibraltar all of our accounts (which is defined as our rights to payment whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, or (ii) for services rendered or to be rendered, or (iii) as otherwise defined in the Uniform Commercial Code of the State of Illinois). Gibraltar will have the right, but will not be obligated, to purchase such accounts tendered in its sole discretion. If Gibraltar purchases such accounts, Gibraltar will make cash advances to us as the purchase price for the purchased accounts.

The Company assumed full risk of non-payment and unconditionally guaranteed the full and prompt payment of the full face amount of all purchased accounts. The Company also agreed to direct all parties obligated to pay the accounts to send all payments for all accounts directly to Gibraltar. All collections from accounts will be applied to our indebtedness, which is defined as the amount owed by us to Gibraltar from time to time, i.e., all cash advances, plus all charges, plus all other amounts owning from us to Gibraltar pursuant to the agreement, less all collections retained by Gibraltar from either purchased accounts or from us which are applied to indebtedness, unless Gibraltar elects to hold any such collections to establish reserves to secure payment of any purchased accounts.

In consideration of Gibraltar’s purchase of the accounts, the Company agreed to pay Gibraltar interest on the indebtedness outstanding at the rate of 8% per annum plus the prime rate in effect at the end of each month with the prime rate for these purposes never being less than 3.25% per annum, calculated on a 360-day year and payable monthly. In addition, the Company agreed to pay to Gibraltar a monthly collateral/management fee in the amount of 0.5% calculated on the average daily borrowing amount for the given month and an unused line fee of 0.25% monthly based on the difference between the actual line of credit and the average daily borrowing amount for the given month. The Company also agreed to pay to Gibraltar upon execution of the agreement and as of the commencement of each renewal term, a closing cost of 1% of the initial indebtedness in addition to the amount of any other credit accommodations granted from Gibraltar, which amount will be deducted from the first cash advances.

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The initial indebtedness is $500,000 and the Company increased the amount available under the revolving accounts receivable funding agreement to $900,000 on May 12, 2016. The Company may request further increase(s) to the in $100,000 increments up to $5,000,000, subject the Company’s financial performance and/or projections are satisfactory to Gibraltar, and absent an event of default. The Company also granted to Gibraltar a security interest in all of our presently-owned and hereafter-acquired personal and fixture property, wherever located. The agreement will continue until the first to occur of (i) demand by Gibraltar; or (ii) 24 months from the first day of the month following the date that the first purchased account is purchased and will be automatically renewed for successive periods of 12 months thereafter unless, at least 30 days prior to the end of the term, the Company gives Gibraltar notice of our intention to terminate the agreement. In addition, the Company will be able to exit the agreement at any time for a fee of 2% of the line of credit in place at the time of prepayment. On December 31, 2016 the amount borrowed on this facility was $532,020.

NOTE 6 – DERIVATIVE LIABILITY

On May 1, 2014, the Company sold 346,667 shares of our common stock and warrants to purchase an aggregate of 173,333 shares of our common stock, for aggregate gross proceeds of $2,599,999. Each share of common stock sold in the offering was accompanied by a warrant to purchase one-half of a share of common stock at an exercise price of $7.50 per share for a period of five years from the date of issuance. Each share of common stock, together with each warrant was sold at a price of $7.50. The warrants include down-round provisions that reduce the exercise price of a warrant and convertible instrument

On August 20, 2014, the Company entered into a warrant amendment agreement with certain holders of the Company’s outstanding common stock purchase warrants whereby the Company agreed to reduce the exercise price of the Existing Warrants to $5.00 per share. in consideration for the immediate exercise of the Existing Warrants by the Holders and the Holders are to be issued new common stock purchase warrants of the Company in the form of the Existing Warrants to purchase up to a number of shares of our common stock equal to the number of Existing Warrants exercised by the Holders, provided that the exercise price of the New Warrants will be $6.25 per share, subject to adjustment in the New Warrants. Each New Warrant has a term of five years from the date of issuance. Each share of common stock, together with each warrant was sold at a price of $6.25. The warrants include down-round provisions that reduce the exercise price of a warrant and convertible instrument. As required by ASC 815 “Derivatives and Hedging” , if the Company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price, the investors will be entitled to down-round protection. The Company evaluated whether its warrants and convertible debt instruments contain provisions that protect holders from declines in its stock price or otherwise could result in modification of either the exercise price or the shares to be issued under the respective warrant agreements. The Company determined that a portion of its outstanding warrants and conversion instruments contained such provisions thereby concluding they were not indexed to the Company’s own stock and therefore a derivative instrument. As of December 31, 2016, one holder has 6,667 warrants and the derivative liability associated with these warrants is $1,101.

Pursuant to the engagement agreement dated March 12, 2014 with H.C. Wainwright & Co., LLC (“Wainwright”), Wainwright agreed to act as our exclusive placement agent in connection with the offering. Pursuant to the engagement agreement, the Company, the Company issued warrants to purchase an aggregate of 5.5% of the aggregate number of shares of our common stock sold in the offering, or 19,067 to Wainwright and its designees. These warrants have an exercise price of $9.38 per share and expire on April 16, 2019. The warrants include down-round provisions that reduce the exercise price of a warrant and convertible instrument. As required by ASC 815 “Derivatives and Hedging” the Company evaluated whether its warrants and convertible debt instruments contain provisions that protect holders from declines in its stock price or otherwise could result in modification of either the exercise price or the shares to be issued under the respective warrant agreements. The Company determined that a portion of its outstanding warrants and conversion instruments contained such provisions thereby concluding they were not indexed to the Company’s own stock and therefore a derivative instrument. As of December 31, 2016, six holders have 21,392 warrants and the derivative liability associated with these warrants is $2,306.

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The Company analyzed the warrants and conversion feature under ASC 815 “Derivatives and Hedging” to determine the derivative liability. The Company estimated the fair value of these derivatives using a multinomial distribution (Lattice) valuation model. The fair value of these warrant liabilities at March 31, 2016 was $11,143 at December 31, 2016 was $6,357. Changes in the derivative liability for the period ended December 31, 2016 consist of:

    Nine Months Ended  
    December 31, 2016  
Derivative liability at March 31, 2016 $  11,143  
Change in derivative liability – mark to market   (7,736 )
Derivative liability at December 31, 2016 $  3,407  

NOTE 7 – STOCKHOLDERS’ EQUITY

Preferred shares

Grant of series A preferred stock

On October 8, 2013, the Company issued a total of 20,000,000 shares of non-convertible Series A Preferred Stock to Steven A. Nickolas and Richard A. Wright (10,000,000 shares to each), our directors and executive officers, in consideration for the past services, at a deemed value of $0.001 per share. The company valued these shares based on the cost considering the time and average billing rate of these individuals and recorded a $20,000 stock compensation cost for the year ended March 31, 2014.

Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share. In addition, the number of issued and outstanding shares of Series A Preferred Stock continues to be 20,000,000. However, holders of Series A Preferred Stock had 0.2 votes per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse-stock split.

On January 22, 2016, the Company amended the certificate of designation for our Series A Preferred Stock by filing an amendment to certificate of designation with the Secretary of State of the State of Nevada. The Company amended the certificate of designation for our Series A Preferred Stock by deleting Section 2.2 of the certificate of designation, which proportionately increases or decreases the number of votes per share of Series A Preferred Stock in the event of any dividend or other distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock. Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock, instead of 0.2 votes per share of Series A Preferred Stock.

Grant of series C Convertible preferred stock

On March 30, 2016, the Company designated 3,000,000 shares of the authorized and unissued preferred stock of our company as “Series C Preferred Stock” by filing a Certificate of Designation with the Secretary of State of the State of Nevada. Each share of the Series C Preferred Stock will be convertible, without the payment of any additional consideration by the holder and at the option of the holder, into one fully paid and non-assessable share of our common stock at any time after (i) the Company achieves consolidated revenue equal to or greater than $15,000,000 in any 12 month period, ending on the last day of any quarterly period of our fiscal year; or (ii) a Negotiated Trigger Event, defined as an event upon which the Series C Preferred Stock will be convertible as may be agreed by our company and the holder in writing from time to time.

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Effective March 31, 2016, the Company issued a total of 3,000,000 shares of our Series C Preferred Stock to Steven P. Nickolas and Richard A. Wright (1,500,000 shares to each), our directors and executive officers, pursuant to their employment agreements dated effective March 1, 2016.

Common stock

The Company is authorized to issue 1,125,000,000 shares of $0.001 par value common stock. On May 31, 2013, the Company affected a 15-for-1 forward stock split of our $0.001 par value common stock. All shares and per share amounts have been retroactively restated to reflect such split. Prior to the acquisition of Alkaline Water Corp., the Company had 109,500,000 shares of common stock issued and outstanding. On May 31, 2013, the Company issued 43,000,000 shares in exchange for a 100% interest in Alkaline Water Corp. For accounting purposes, the acquisition of Alkaline Water Corp. by The Alkaline Water Company Inc. has been recorded as a reverse acquisition of a company and recapitalization of Alkaline Water Corp. based on the factors demonstrating that Alkaline Water Corp. represents the accounting acquirer. Consequently, after the closing of this agreement the Company adopted the business of Alkaline Water Corp.’s wholly-owned subsidiary, Alkaline 88, LLC. As part of the acquisition, the former management of the Company agreed to cancel 75,000,000 shares of common stock.

On December 30, 2015, the Company affected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock. As a result, the authorized common stock has decreased from 1,125,000,000 shares of common stock, with a par value of $0.001 per share, to 22,500,000 shares of common stock, with a par value of $0.001 per share. All shares and per share amounts have been retroactively restated to reflect such split.

On January 21, 2016, stockholders of our company approved, by written consents, an amendment to the articles of incorporation of our company to increase the number of authorized shares of our common stock from 22,500,000 to 200,000,000.

The Company received written consents representing 20,776,000 votes from the holders of shares of its common stock and our Series A Preferred Stock voting as a single class, representing approximately 61% of the voting power of its outstanding common stock and its outstanding Series A Preferred Stock voting as a single class as of the record date (January 12, 2016). On January 21, 2016, there were no written consents received by the Company representing a vote against, abstention or broker non-vote with respect to the proposal.

Sale of restricted shares

During the period from May 7, 2015 through December 31, 2015, the Company sold units of our securities at a price of $3.50 per unit. Each unit consists of one share of our common stock and one non-transferable common stock purchase warrant, with each common stock purchase warrant entitling the holder to acquire one additional share of our common stock at a price of $5.00 per share for a period of two years. The Company sold 223,200 units during the period ended December 31, 2015 consisting of 223,200 shares of common stock and 223,200 warrants for gross proceeds of $781,200.

The evaluated these transaction using ASC 480-10 “Distinguishing liabilities from equity” and ASC 505 -10 “Equity”. The Company sold 223,200 units and issued 223,200 shares of common stock and issued 223,200 warrants. The warrants were valued using the Black-Scholes option pricing model with the following assumptions:

Market value of stock on purchase date $  3.75     to   $  7.10  
Risk-free interest rate   .26%     to     1.42%  
Dividend yield         0.00%        
Volatility factor   116%     to     161%  
Weighted average expected life (years)         2        

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The proceeds were allocated as follows:

Common stock $  414,036  
Warrant   367,164  
Total proceeds $  781,200  

On March 4, 2016, the Company completed the offering and sale of an aggregate of 9,000,000 shares of our common stock and warrants to purchase an aggregate of 4,500,000 shares of our common stock, for aggregate gross proceeds of $2,970,000. Each share of common stock the Company sold in the offering was accompanied by one-half of a warrant to purchase one share of common stock at an exercise price of $0.50 per share for a period of two years from the date of issuance. Each share of common stock and accompanying one-half of one warrant was sold at a price of $0.33.

These securities have been registered under the Securities Act of 1933 pursuant to our registration statement on Form S-1, as amended (No. 333-209124), which was declared effective by the Securities and Exchange Commission on February 11, 2016.

Also on March 4, 2016, the Company used the proceeds of the Offering to repay loans in the aggregate principal amounts of $1,500,000 In connection with the repayment of loans in the aggregate principal amounts of $1,500,000 on March 4, 2016, 526,316 shares of our common stock issued to Neil Rogers and held in escrow and 1,500,000 shares of our common stock issued to Turnstone Capital Inc. and held in escrow were cancelled effective as of March 31, 2016.

In June 2016, the Company issued an aggregate of 425,000 shares of our common stock to six investors in a private placement, at a purchase price of $1.00 per share for gross proceeds of $425,000.

Common stock issued for services

On April 1, 2016, the Company issued 5,000 common shares to consultant for services rendered that were valued at the market value on that date of $1.65 per share.

On April 1, 201, the Company issued 12,500 common shares to consultant for services rendered that were valued at the market value on that date of $1.65 per share.

On June 1, 2016, the Company issued 65,000 common shares to consultant for services rendered that were valued at the market value on that date of $1.75 per share.

On August 18, 2016, the Company issued 50,000 common shares to consultant for services rendered that were valued at the market value on that date of $1.53 per share.

On September 20, 2016, the Company agreed to issue 58,720 common shares to consultant for services rendered that were valued at the market value on that date of $1.70 per share.

Warrant Exercised

In July 2016, the Company issued 25,600 shares of our common stock in connection with a cashless exercise of a warrant and cancelled 32,000 warrants were cancelled.

In August 2016 two warrant holders exercised 600,000 warrants to acquire 600,000 common shares at an exercise price of $0.50 per share.

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Options Exercised

In August 2016 option holders exercised 85,000 options in a cashless exercise to acquire 56,705 common shares.

NOTE 8 – OPTIONS AND WARRANTS

Stock option awards

On January 29, 2016, the Company granted a total of 1,310,000 stock options to certain employees. The stock options are exercisable at the exercise price of $0.52 per share for a period of 7.6 years from the date of grant and vested upon the date of grant.

On January 29, 2016, the Company granted a total of 3,000,000 stock options Steven A. Nickolas and Richard A. Wright (1,500,000 stock options to each). The stock options are exercisable at the exercise price of $0.52 per share for a period of 7.6 years from the date of grant and vested upon the date of grant.

On March 4, 2016, the Company completed the offering and sale of an aggregate of 9,000,000 shares of our common stock the offering included warrants to purchase an aggregate of 4,500,000 shares of our common stock, at an exercise price of $0.50 per share for a period of two years from the date of issuance.

Stock option activity summary covering options is presented in the table below:

                Weighted-  
          Weighted-      Average  
          Average     Remaining  
    Number of     Exercise     Contractual  
    Shares     Price     Term  
                (years)  
Outstanding at March 31, 2015   343,400   $  7.00     8.2  
Granted   4,310,000   $  0.52     7.8  
Exercised   -   $  -     -  
Expired/Forfeited   -   $  -     -  
Outstanding at March 31, 2016   4,653,400   $  0.92     7.7  
Granted   -   $  -     -  
Exercised   (85,000 ) $  0.52     6.4  
Expired/Forfeited   (8,800 ) $  1.91     6.4  
Outstanding at December 31, 2016   4,559,600   $  0.92     5.7  
Exercisable at December 31, 2016   4,559,600   $  0.92     5.7  

Warrants

For the nine months period ended warrants activity at December 31, 2016 is presented in the table below:

                Weighted-  
          Weighted-     Average  
    Number     Average     Remaining  
    of Warrant     Exercise     Contractual  
    Shares     Price     Term  
                (years)  
Outstanding at March 31, 2016   4,988,118   $  0.96     .94  
Granted   -   $  -     -  
Exercised   (795,202 ) $  1.58     .13  
Expired/Forfeited   -   $  5.00     .05  
Outstanding at December 31, 2016   4,192,916   $  0.84     .67  
Exercisable at December 31, 2016   4,192,916   $  0.84     .67  

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In July 2016, the Company issued 25,600 shares of our common stock in connection with a cashless exercise of a warrant and cancelled 32,000 warrants were cancelled.

On August 20, 2016 two warrant holder exercised 600,000 warrants to acquire 600,000 common shares at an exercise price of $0.50 per share

NOTE 9 – RELATED PARTY TRANSACTIONS

On January 29, 2016, the Company granted a total of 3,000,000 stock options Steven A. Nickolas and Richard A. Wright (1,500,000 stock options to each). The stock options are exercisable at the exercise price of $0.52 per share for a period of 7.6 years from the date of grant and vested upon the date of grant.

Effective March 31, 2016, the Company issued a total of 3,000,000 shares of our Series C Preferred Stock to Steven P. Nickolas and Richard A. Wright (1,500,000 shares to each), our directors and executive officers, pursuant to their

On August 1, 2013, the Company entered into a 3-year sub-lease agreement requiring a monthly payment of $2,085 for office space in Scottsdale, Arizona, with a basic monthly lease increase of 8% and 7% on each anniversary date. The Company or the landlord can cancel the lease with 30 days’ notice. The sub-lessor is an entity owned by the Company’s Chief Executive Officer and President.

During the nine month period ending December 31, 2016 the company made a net deposit on equipment of $104,619 to Water Engineering Solutions. During the nine month period ending December 31, 2015 the company made a net deposit on equipment of $139,997 to Water Engineering Solutions. Water Engineering Solutions LLC is an entity that is controlled and majority owned by Steven P. Nickolas and Richard A. Wright for the production of our alkaline water.

NOTE 10 – INCOME TAXES

The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on antic The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

For the years ended March 31, 2016 and 2015, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any deferred tax assets.

Based on the available objective evidence, including the Company’s history of losses, management believes it is more likely than not that any net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2016 and March 31, 2016, respectively.

In accordance with ASC 740, the Company has evaluated its tax positions and determined that there are no uncertain tax positions.

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NOTE 11 –CAPITAL LEASE

On October 22, 2014, the Company entered into a master lease agreement with Veterans Capital Fund, LLC (the “Lessor”) for the secured lease line of credit financing in an amount not to exceed $600,000. The lease is expected to be secured by three new alkaline generating electrolysis system machines. Our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC acted as co-lessees. Water Engineering Solutions, LLC is an entity that is controlled and owned by our President, Chief Executive Officer, director and major stockholder, Steven P. Nickolas, and our Vice-President, Secretary, Treasurer and director, Richard A. Wright. Pursuant to the master lease agreement, the Lessor agreed to lease to us the equipment described in any equipment schedule signed by us and approved by the Lessor. It is expected that any lease under the master lease agreement will be structured for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate factor of 3.4667% of the Lessor’s capital cost. In connection with the entering into the master lease agreement, the Company also entered into a warrant agreement with the Lessor, pursuant to which the Company agreed to issue a warrant to purchase 72,000 shares of our common stock to the Lessor and/or its affiliates at an exercise price of $6. 25 per share for a period of five years, 18,000 shares vested.

On February 25, 2015, the Company amended the master lease agreement with Veterans Capital Fund, LLC for the increase in the secured lease line of credit financing to an amount not to exceed $800,000. The lease was secured by new alkaline generating electrolysis system machines by our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC. Water Engineering Solutions, LLC is an entity that is controlled and owned by our President, Chief Executive Officer, director and major stockholder, Steven P. Nickolas, and our Vice-President, Secretary, Treasurer and director, Richard A. Wright. Pursuant to the master lease agreement, the Lessor agreed to lease to us the equipment described in any equipment schedule signed by us and approved by the Lessor. It is expected that any lease under the master lease agreement will be structured for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate factor of 3.4667% of the Lessor’s capital cost. In connection with the entering into the master lease agreement, the Company entered into a warrant agreement with the Lessor, pursuant to which the Company agreed to cancel the previous issued warrant for 72,000 and issue a warrant to purchase 102,000 shares of our common stock to the Lessor and/or its affiliates at an exercise price of $5.00 per share for a period of five years. 18,000 shares vested on October 22, 2014, 13,316 shares on October 28, 2014, 13,606 shares on December 22, 2014, 6,945 shares on February 3, 2015 and 15,799 shares on March 5, 2015. The remaining 18,105 shares will vest on a pro rata basis according to any mounts the Lessor funds pursuant to any lease schedules under the master lease agreement, provided that if the Company draws on 90% or more of the total lease line under the master lease agreement, then all such shares will be deemed to be vested. The Company recorded the bifurcated value of $309,028 of the warrants issued as additional paid in capital, the value was determine using a Black-Scholes, a level 3 valuation measure.

During the year ended March 31, 2015 the Company agreed to lease the specialized equipment used to make our alkaline water with a value of $735,781 under the above Master Lease agreement. The Company evaluated this lease under ASC 840-30 “Leases- Capital Leases” and concluded that these lease where a capital asset.

NOTE 12 – NOTES PAYABLE

On August 19, 2015, the Company entered into a securities purchase agreement pursuant to which the Company issued a secured term note of our company in the aggregate principal amount of $240,000, together with 20,000 shares of our common stock, in consideration for $200,000. The secured term note bears requires monthly payments of $20,000 per month, along with a final payment due on August 20, 2016.

On November 2, 2015 the Company issued a promissory note to a lender in the amount of $125,000. The note requires weekly payments of $2,451 plus interest. The final payment is due on November 19, 2016.

Between June 10, 2016 and June 20, 2016, the Company entered into loan agreements with various lenders pursuant to which the Company issued convertible promissory notes of our company in the aggregate principal amount of $260,000, The convertible promissory note bears interest at the rate of 10% per annum and matures on June 10, 2017 and is convertible into common shares at $1.00 per share. The Company evaluated this transaction under ASC 470-20-30 “Debt – liability and equity component” determine that a Debt Discount of $240,100 was provided and will be amortized over the 1-year term of the note. As of December 31, 2016, the unamortized debt discount was $100,041.

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On September 20, 2016 the Company agreed to a $1,000,000 loan facility which also included a conversion right of principal and/or accrued interest the convertible note bears interest at the rate of 10% per annum and matures on December 20, 2018 and is convertible into common shares at $1.00 per share. As of December 31, 2016 the Company had drawn $750,000 of the facility. The Company evaluated this transaction under ASC 470-20-30 “Debt – liability and equity component” determine that a Debt Discount of $219,520 was provided and will be amortized over the 2-year term of the note. As of December 31, 2016, the unamortized debt discount was $189,854.

NOTE 13 – SUBSEQUENT EVENTS

On February 1, 2017, The Alkaline Water Company Inc. and its subsidiaries (the “Company”) entered into a Credit and Security Agreement (the “Credit Agreement”) with SCM Specialty Finance Opportunities Fund, L.P. (the “Lender”).

The Credit Agreement provides the Company with a revolving credit facility (the “Revolving Facility”), the proceeds of which are to be used to repay existing indebtedness of the Company, transaction fees incurred in connection with the Credit Agreement and for working capital needs of the Company.

Under the terms of the Credit Agreement, the Lender has agreed to make cash advances to the Company in an aggregate principal at any one time outstanding not to exceed the lesser of (i) $3 million (the “Revolving Loan Commitment Amount”) and (ii) the Borrowing Base (defined to mean, as of any date of determination, 85% of net eligible billed receivables plus 65% of eligible unbilled receivables, minus certain reserves).

The Credit Agreement has a term of three years, unless earlier terminated by the parties in accordance with the terms of the Credit Agreement.

The principal amount of the Revolving Facility outstanding bears interest at a rate per annum equal to (i) a fluctuating interest rate per annum equal at all times to the rate of interest announced, from time to time, within Wells Fargo Bank at its principal office in San Francisco as its “prime rate,” plus (ii) 3.25%, payable monthly in arrears.

To secure the payment and performance of the obligations under the Credit Agreement, the Company granted to the Lender a continuing security interest in all of the Company’s assets and agreed to a lockbox account arrangement in respect of certain eligible receivables.

In connection with the Credit Agreement, the Company paid to the Lender a $30,000 facility fee. The Company agreed to pay to Lender monthly an unused line fee in amount equal to 0.083% per month of the difference derived by subtracting (i) the average daily outstanding balance under the Revolving Facility during the preceding month, from (ii) the Revolving Loan Commitment Amount. The unused line fee will be payable monthly in arrears. The Company also agreed to pay the Lender as additional interest a monthly collateral management fee equal to 0.35% per month calculated on the basis of the average daily balance under the Revolving Facility outstanding during the preceding month. The collateral management fee will be payable monthly in arrears. Upon a termination of the Revolving Facility, the Company agreed to pay the Lender a termination fee in an amount equal to 2% of the Revolving Loan Commitment Amount if the termination occurs before February 1, 2020. The Company must also pay certain fees in the event that receivables are not properly deposited in the appropriate lockbox account.

The interest rate will be increased by 5% in the event of a default under the Credit Agreement. Events of default under the Credit Agreement, some of which are subject to certain cure periods, include a failure to pay obligations when due, the making of a material misrepresentation to the Lender, the rendering of certain judgments or decrees against the Company and the commencement of a proceeding for the appointment of a receiver, trustee, liquidator or conservator or filing of a petition seeking reorganization or liquidation or similar relief.

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The Credit Agreement contains customary representations and warranties and various affirmative and negative covenants including the right of first refusal to provide financing for the Company and the financial and loan covenants, such as the loan turnover rate, minimum EBTDA, fixed charge coverage ratio and minimum liquidity requirements.

On February 1, 2017, the Company drew $686,080.94 from the Revolving Facility, to be disbursed as follows: $628,782.94 to pay off the amount borrowed from Gibraltar Business Capital, LLC (“Gibraltar”) under the revolving accounts receivable funding agreement dated February 20, 2014 (paid off on February 1, 2017) and the balance for the closing costs.

As of February 1, 2017, the Company and Gibraltar entered into a payoff agreement (the “Payoff Agreement”), pursuant to which the Company agreed to pay an amount equal to the outstanding indebtedness and obligations owing from the Company to Gibraltar (the “Gibraltar Obligations”). The Payoff Agreement provided that the Payoff Agreement will confirm that, upon receipt via wire transfer of immediately available funds to Gibraltar in the aggregate amount of $628,782.94, all of the Gibraltar Obligations will be terminated and satisfied in full as of the close of business on February 1, 2017

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This report contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except as required by applicable law, including the securities laws of the United States, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 

our current lack of working capital;

 

inability to raise additional financing;

 

the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;

 

deterioration in general or regional economic conditions;

 

adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

 

inability to efficiently manage our operations;

 

inability to achieve future sales levels or other operating results; and

 

the unavailability of funds for capital expenditures.

As used in this quarterly report on Form 10-Q, the terms “we”, “us” “our”, the “Company” and “Alkaline” refer to The Alkaline Water Company Inc., a Nevada corporation, and its wholly-owned subsidiary, Alkaline Water Corp., and Alkaline Water Corp.’s wholly-owned subsidiary, Alkaline 88, LLC, unless otherwise specified.

Results of Operations

Our results of operations for the three months ended December 31, 2016 and December 31, 2015 are as follows:

    For the three     For the three  
    months ended     months ended  
    December 31,     December 31,  
    2016     2015  
Revenue $  2,973,689   $  1,777,701  
Cost of goods sold   1,664,459     1,152,514  
Gross profit   1,309,230     625,187  
             
Net Loss (after operating expenses and other expenses)  (498,374 )   (1,094,721 )

20


Revenue and Cost of Goods Sold

We had revenue from sales of our product for the three months ended December 31, 2016 of $2,973,689 as compared to $1,777,701 for the three months ended December 31, 2015, an increase of 67% generated by sales of our alkaline water. The increase in sales is due to the expanded distribution of our products to additional retailers throughout the country. As of December 31, 2016, the product is now available in all 50 states at an estimated 25,000 retail locations. As of December 31, 2015, the product was available in all 50 states at an estimated 20,000 retail locations. This increase has occurred primarily through the addition of 36 of the top national grocery retailers as customer during the year ended March 31, 2016. We distribute our product through several channels. We sell through large national distributors (UNFI, KeHe, Tree of Life, C&S, Core-Mark and Nature’s Best), which together represent over 150,000 retail outlets. We also sell our product directly to retail clients, including convenience stores, natural food products stores, large ethnic markets and national retailers. Some examples of retail clients are, Albertson’s, Safeway, Kroger, Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas’, Stater Bros. Markets, Unified Grocers, Bristol Farms, Vallarta, Superior Foods, Ingles, HEB and Brookshire’s.

Cost of goods sold is comprised of production costs, shipping and handling costs. For the three months ended December 31, 2016, we had cost of goods sold of $1,664,459, or 56% of revenue, as compared to cost of goods sold of $1,152,514 or 64% of revenue, for the three months ended December 31, 2015. The increase in gross profit rate is a result of reduced raw material cost through greater volume purchases from our suppliers.

Expenses

Our operating expenses for the three months ended December 31, 2016 and December 31, 2015 are as follows:

    For the three     For the three  
    months ended     months ended  
    December 31,     December 31,  
    2016     2015  
Sales and marketing expenses $  998,525   $  703,942  
General and administrative expenses   550,732     739,690  
Depreciation expenses   90,463     72,204  
Total operating expenses $  1,639,720   $  1,515,836  

For the three months ended December 31, 2016, our total operating expenses were $1,639,720, as compared to $1,515,836 for the three months ended December 31, 2015.

For the three months ended December 31, 2016, the total included $998,525 of sales and marketing expenses and $550,732 of general and administrative expenses, consisting primarily of approximately $195,899 of professional fees.

For the three months ended December 31, 2015 the total included $703,942 of sales and marketing expenses and $739,690 of general and administrative expenses, consisting primarily of approximately $192,861 of stock and stock option compensation expense, and $157,022 of professional fees.

Our results of operations for the nine months ended December 31, 2016 and December 31, 2015 are as follows:

    For the nine     For the nine  
    months ended     months ended  
    December 31,     December 31,  
    2016     2015  
Revenue $  8,927,976   $  5,010,547  
Cost of goods sold   5,351,284     3,234,840  
Gross profit   3,576,692     1,775,707  
             
Net Loss (after operating expenses and other expenses) $  (2,787,681 ) $  (3,644,028 ))

21


Revenue and Cost of Goods Sold

We had revenue from sales of our product for the nine months ended December 31, 2016 of $8,927,976 as compared to $5,010,547 for the nine months ended December 31, 2015, an increase of 78% generated by sales of our alkaline water. The increase in sales is due to the expanded distribution of our products to additional retailers throughout the country. As of December 31, 2016, the product is now available in all 50 states at an estimated 25,000 retail locations. As of December 31, 2015, the product was available in all 50 states at an estimated 20,000 retail locations. This increase has occurred primarily through the addition of 36 of the top national grocery retailers as customer during the year ended March 31, 2016. We distribute our product through several channels. We sell through large national distributors (UNFI, KeHe, Tree of Life, C&S, Core-Mark and Nature’s Best), which together represent over 150,000 retail outlets. We also sell our product directly to retail clients, including convenience stores, natural food products stores, large ethnic markets and national retailers. Some examples of retail clients are, Albertson’s, Safeway, Kroger, Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas’, Stater Bros. Markets, Unified Grocers, Bristol Farms, Vallarta, Superior Foods, Ingles, HEB and Brookshire’s.

Cost of goods sold is comprised of production costs, shipping and handling costs. For the nine months ended December 31, 2016, we had cost of goods sold of $5,351,284, or 60% of revenue, as compared to cost of goods sold of $3,234,840 or 64% of revenue, for the nine months ended December 31, 2015. The increase in gross profit rate is a result of reduced raw material cost through greater volume purchases from our suppliers.

Expenses

Our operating expenses for the nine months ended December 31, 2016 and December 31, 2015 are as follows:

    For the nine     For the nine  
    months ended     months ended  
    December 31,     December 31,  
    2016     2015  
Sales and marketing expenses $  3,144,914   $  2,098,678  
General and administrative expenses   2,448,247     2,628,152  
Depreciation expenses   270,860     214,333  
Total operating expenses $  5,864,021   $  4,941,163  

For the nine months ended December 31, 2016, our total operating expenses were $5,864,021, as compared to $4,941,163 for the nine months ended December 31, 2015.

For the nine months ended December 31, 2016, the total included $3,144,914 of sales and marketing expenses and $2,448,247 of general and administrative expenses, consisting primarily of approximately $319,125 of stock and stock option compensation expense, and $766,132 of professional fees.

For the nine months ended December 31, 2015 the total included $2,098,678 of sales and marketing expenses and $2,628,152 of general and administrative expenses, consisting primarily of approximately $1,190,444 of stock and stock option compensation expense, and $337,979 of professional fees.

Liquidity and Capital Resources

Working Capital

    December 31, 2016     March 31, 2016  
Current assets $  1,835,474   $  2,549,023  
Current liabilities   2,098,891     2,153,472  
Working capital (deficiency) $  (263,417 ) $  395,551  

22


Current Assets

Current assets as of December 31, 2016 and March 31, 2016 primarily relate to $88,540 and $1,192,119 in cash, $834,777 and $911,390 in accounts receivable and $813,441 and $434,708 in inventory, respectively.

Current Liabilities

Current liabilities as of December 31, 2016 and March 31, 2016 primarily relate to $953,588 and $847,452 in accounts payable, revolving financing of $532,020 and $475,273, note payables of $46,046 and $324,368, current portion of capital leases of $188,303 and $243,623 and accrued expenses of $375,527 and $251,613 respectively.

Cash Flow

Our cash flows for the nine months ended December 31, 2016 and December 31, 2015 are as follows:

    For the nine     For the nine  
    months ended     months ended  
    December 31,     December 31,  
    2016     2015  
Net Cash used in operating activities $  (2,061,719 ) $  (2,143,955 )
Net Cash used in investing activities   (273,450 )   (214,458 )
Net Cash provided by financing activities   1,231,591     2,378,081  
Net increase in cash and cash equivalents $  (1,103,579 ) $  19,668  

Operating Activities

Net cash used in operating activities was $2,061,719 for the nine months ended December 31, 2016, as compared to $2,143,955 used in operating activities for the nine months ended December 31, 2015. The decrease in net cash used in operating activities was primarily due to reduction of accounts payable in the quarter ended December 31, 2016 compared to an increase of accounts payable in the quarter ended December 31, 2015.

Investing Activities

Net cash used in investing activities was $273,450 for the nine months ended December 31, 2016, as compared to $214,458 used in investing activities for the nine months ended December 31, 2015. The increase in net cash used by investing activities was the result of an increase of purchase of fixed assets and equipment deposits.

Financing Activities

Net cash provided by financing activities for the nine months ended December 31, 2016 was $1,231,591, as compared to $2,378,081 for the nine months ended December 31, 2015. The decrease of net cash provided by financing activities was mainly attributable to repayment of notes payable.

Loan Facility Agreement with Turnstone Capital Inc.

On September 20, 2016, we entered into a loan facility agreement (the “Loan Agreement”) with Turnstone Capital Inc. (“Turnstone”), whereby Turnstone agreed to make available to our company a loan in the aggregate principal amount of $1,000,000 (the “Loan Amount”). Pursuant to the Loan Agreement, Turnstone agreed to make one or more advances of the Loan Amount to our company as requested from time to time by our company in an amount to be agreed upon by our company and Turnstone (each, an “Advance”), provided that Turnstone has the option to provide an additional Advances of up to $500,000 for the purchase of equipment by our company.

On September 20, 2016, Turnstone made the first Advance in the amount of $250,000 to our company. As of December 31, 2016, the amount outstanding under the Loan Agreement was $750,000.

23


The Loan Amount will mature on the date which is two years after the date of the first Advance or such earlier date as the principal amount of all Advances owing from time to time and all other amounts payable under the Loan Agreement, and at any time outstanding, (the “Principal Amount”) may become due and payable in accordance with the terms and conditions of the Loan Agreement.

We agreed to commence repayment of the Principal Amount, on a monthly basis, beginning on the date that is 12 months after the date of the first Advance with the amount to be repaid each month being equal to the Principal Amount outstanding on the date of such monthly payment divided by the number of months remaining before the Maturity Date.

The Principal Amount will bear simple interest at a rate of 10.0% per annum. Interest will be calculated daily and paid monthly for the previous 30 days commencing on the date which is 35 days after the first Advance. We may prepare all or any portion of the Principal Amount and any accrued but unpaid interest thereon not less than ten days’ prior written notice.

So long as any Principal Amount remains outstanding, if we complete any debt or equity financing of more than $250,000 (other than in connection with certain exempt issuances), then we agreed to use the proceeds of such financing to repay any Principal Amount remaining outstanding at the time of the completion of such financing.

Any Principal Amount, and any accrued but unpaid interest thereon, will be convertible into shares of our common stock by Turnstone, at its option, at any time. The conversion is to occur at a conversion price of $1.00.

Credit and Security Agreement with SCM Specialty Finance Opportunities Fund, L.P.

On February 1, 2017, we entered into a credit and security agreement (the “Credit Agreement”) with SCM Specialty Finance Opportunities Fund, L.P. (“SCM”).

The Credit Agreement provides our company with a revolving credit facility (the “Revolving Facility”), the proceeds of which are to be used to repay existing indebtedness of our company, transaction fees incurred in connection with the Credit Agreement and for working capital needs of our company.

Under the terms of the Credit Agreement, SCM has agreed to make cash advances to our company in an aggregate principal at any one time outstanding not to exceed the lesser of (i) $3 million (the “Revolving Loan Commitment Amount”) and (ii) the Borrowing Base (defined to mean, as of any date of determination, 85% of net eligible billed receivables plus 65% of eligible unbilled receivables, minus certain reserves).

The Credit Agreement has a term of three years, unless earlier terminated by the parties in accordance with the terms of the Credit Agreement.

The principal amount of the Revolving Facility outstanding bears interest at a rate per annum equal to (i) a fluctuating interest rate per annum equal at all times to the rate of interest announced, from time to time, within Wells Fargo Bank at its principal office in San Francisco as its “prime rate,” plus (ii) 3.25%, payable monthly in arrears.

To secure the payment and performance of the obligations under the Credit Agreement, we granted to SCM a continuing security interest in all of our assets and agreed to a lockbox account arrangement in respect of certain eligible receivables.

In connection with the Credit Agreement, we paid to SCM a $30,000 facility fee. We agreed to pay to SCM monthly an unused line fee in amount equal to 0.083% per month of the difference derived by subtracting (i) the average daily outstanding balance under the Revolving Facility during the preceding month, from (ii) the Revolving Loan Commitment Amount. The unused line fee will be payable monthly in arrears. We also agreed to pay SCM as additional interest a monthly collateral management fee equal to 0.35% per month calculated on the basis of the average daily balance under the Revolving Facility outstanding during the preceding month. The collateral management fee will be payable monthly in arrears. Upon a termination of the Revolving Facility, we agreed to pay SCM a termination fee in an amount equal to 2% of the Revolving Loan Commitment Amount if the termination occurs before February 1, 2020. We must also pay certain fees in the event that receivables are not properly deposited in the appropriate lockbox account.

24


The interest rate will be increased by 5% in the event of a default under the Credit Agreement. Events of default under the Credit Agreement, some of which are subject to certain cure periods, include a failure to pay obligations when due, the making of a material misrepresentation to SCM, the rendering of certain judgments or decrees against our company and the commencement of a proceeding for the appointment of a receiver, trustee, liquidator or conservator or filing of a petition seeking reorganization or liquidation or similar relief.

The Credit Agreement contains customary representations and warranties and various affirmative and negative covenants including the right of first refusal to provide financing for our company and the financial and loan covenants, such as the loan turnover rate, minimum EBTDA, fixed charge coverage ratio and minimum liquidity requirements.

On February 1, 2017, we drew $686,080.94 from the Revolving Facility, to be disbursed as follows: $628,782.94 to pay off the amount borrowed from Gibraltar Business Capital, LLC (“Gibraltar”) under the revolving accounts receivable funding agreement dated February 20, 2014 (paid off on February 1, 2017) and the balance for the closing costs.

As of February 1, 2017, our company and Gibraltar entered into a payoff agreement (the “Payoff Agreement”), pursuant to which we agreed to pay an amount equal to the outstanding indebtedness and obligations owing from our company to Gibraltar (the “Gibraltar Obligations”). The Payoff Agreement provided that the Payoff Agreement will confirm that, upon receipt via wire transfer of immediately available funds to Gibraltar in the aggregate amount of $628,782.94, all of the Gibraltar Obligations will be terminated and satisfied in full as of the close of business on February 1, 2017.

Cash Requirements

We believe that cash flow from operations will not meet our present and near-term cash needs and thus we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We estimate that our capital needs over the next 12 months will be up to $3,000,000. We will require additional cash resources to, among other things, expand broker network, increase manufacturing capacity, expand retail distribution and add support staff. If our own financial resources and future cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

25


We maintain "disclosure controls and procedures", as that term is defined in Rule 13a-15(e), promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure.

As required by paragraph (b) of Rules 13a-15 under the Securities Exchange Act of 1934, our management, with the participation of our principal executive officer and principal financial officer, evaluated our company's disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our management concluded that as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not a party to any material legal proceedings.

Item 1A. Risk Factors.

Information regarding risk factors appears in our Annual Report on Form 10-K filed on July 14, 2016. There have been no material changes since July 14, 2016 from the risk factors disclosed in that Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

26


Item 6. Exhibits.

Exhibit

Number

Description

 

(1)

Underwriting Agreement

1.1

Engagement Agreement dated October 7, 2013 with H.C. Wainwright & Co., LLC (incorporated by reference from our Registration Statement on Form S-1, filed on November 27, 2013)

1.2

Amendment Agreement to Engagement Agreement dated November 1, 2013 with H.C. Wainwright & Co., LLC (incorporated by reference from our Registration Statement on Form S-1/A, filed on January 9, 2014)

1.3

Amendment Agreement to Engagement Agreement dated November 25, 2013 with H.C. Wainwright & Co., LLC (incorporated by reference from our Registration Statement on Form S-1, filed on November 27, 2013)

1.4

Termination Agreement for Engagement Agreement dated March 12, 2014 with H.C. Wainwright & Co., LLC (incorporated by reference from our Registration Statement on Form S-1, filed on March 12, 2014)

1.5

Engagement Agreement dated March 12, 2014 with H.C. Wainwright & Co., LLC (incorporated by reference from our Registration Statement on Form S-1, filed on March 12, 2014)

(2)

Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession

2.1

Share Exchange Agreement dated May 31, 2013 with Alkaline Water Corp. and its shareholders (incorporated by reference from our Current Report on Form 8-K, filed on September 5, 2013)

(3)

Articles of Incorporation and Bylaws

3.1

Articles of Incorporation (incorporated by reference from our Form S-1 Registration Statement, filed on October 28, 2011)

3.2

Certificate of Change (incorporated by reference from our Quarterly Report on Form 10-Q, filed on August 13, 2013)

3.3

Articles of Merger (incorporated by reference from our Quarterly Report on Form 10-Q, filed on August 13, 2013)

3.4

Certificate of Amendment (incorporated by reference from our Current Report on Form 8-K, filed on October 11, 2013)

3.5

Certificate of Designation (incorporated by reference from our Current Report on Form 8-K, filed on October 11, 2013)

3.6

Certificate of Designation (incorporated by reference from our Current Report on Form 8-K, filed on November 12, 2013)

3.7

Certificate of Change (incorporated by reference from our Current Report on Form 8-K, filed on December 30, 2015)

3.8

Certificate of Amendment to Articles of Incorporation (incorporated by reference from our Current Report on Form 8-K, filed on January 25, 2016)

3.9

Certificate of Amendment to Certificate of Designation (incorporated by reference from our Current Report on Form 8-K, filed on January 25, 2016)

3.10

Certificate of Designation (incorporated by reference from our Current Report on Form 8-K, filed on April 5, 2016)

3.11

Amended and Restated Bylaws (incorporated by reference from our Current Report on Form 8-K, filed on March 15, 2013)

(10)

Material Contracts

10.1

Contract Packer Agreement dated November 14, 2012 between Alkaline 84, LLC and AZ Bottled Water, LLC (incorporated by reference from our Current Report on Form 8-K, filed on June 5, 2013)

10.2

Stock Option Agreement dated October 9, 2013 with Steven P. Nickolas (incorporated by reference from our Quarterly Report on Form 10-Q, filed on November 13, 2013)

10.3

Stock Option Agreement dated October 9, 2013 with Richard A. Wright (incorporated by reference from our Quarterly Report on Form 10-Q, filed on November 13, 2013)

10.4

Contract Packer Agreement dated October 7, 2013 with White Water, LLC (incorporated by reference from our Quarterly Report on Form 10-Q, filed on November 13, 2013)

27



10.5

Manufacturing Agreement dated August 15, 2013 with Water Engineering Solutions, LLC (incorporated by reference from our Registration Statement on Form S-1, filed on November 27, 2013)

10.6

Equipment Lease Agreement dated January 17, 2014 (incorporated by reference from our Current Report on Form 8-K, filed on January 27, 2014)

10.7

Revolving Accounts Receivable Funding Agreement dated February 20, 2014 (incorporated by reference from our Current Report on Form 8-K, filed on February 25, 2014)

10.8

Form of Securities Purchase Agreement dated as of April 28, 2014, between The Alkaline Water Company Inc. and the purchasers named therein (incorporated by reference from our Current Report on Form 8-K, filed on May 6, 2014)

10.9

Form of Common Stock Purchase Warrant (incorporated by reference from our Current Report on Form 8-K, filed on May 6, 2014)

10.10

Form of Placement Agent Common Stock Purchase Warrant (incorporated by reference from our Current Report on Form 8-K, filed on May 6, 2014)

10.11

Stock Option Agreement dated May 12, 2014 with Steven P. Nickolas (incorporated by reference from our Current Report on Form 8-K, filed on May 14, 2014)

10.12

Stock Option Agreement dated May 12, 2014 with Richard A. Wright (incorporated by reference from our Current Report on Form 8-K, filed on May 14, 2014)

10.13

Stock Option Agreement dated May 21, 2014 with Steven P. Nickolas (incorporated by reference from our Current Report on Form 8-K, filed on May 23, 2014)

10.14

Stock Option Agreement dated May 21, 2014 with Richard A. Wright (incorporated by reference from our Current Report on Form 8-K, filed on May 23, 2014)

10.15

Amendment #1 dated February 12, 2014 to Equipment Lease Agreement (incorporated by reference from our Quarterly Report on Form 10-Q, filed on August 13, 2014)

10.16

Equipment Sale/Lease Back Agreement dated April 2, 2014 (incorporated by reference from our Quarterly Report on Form 10-Q, filed on August 13, 2014)

10.17

Agreement dated August 12, 2014 with H.C. Wainwright & Co., LLC (incorporated by reference from our Current Report on Form 8-K, filed on August 21, 2014)

10.18

Form of Warrant Amendment Agreement (incorporated by reference from our Current Report on Form 8-K, filed on August 21, 2014)

10.19

Form of Common Stock Purchase Warrant (incorporated by reference from our Current Report on Form 8-K, filed on August 21, 2014)

10.20

Form of Warrant Amendment Agreement (incorporated by reference from our Current Report on Form 8-K, filed on October 9, 2014)

10.21

Form of Common Stock Purchase Warrant (incorporated by reference from our Current Report on Form 8-K, filed on October 9, 2014)

10.22

Master Lease Agreement dated October 28, 2014 with Veterans Capital Fund, LLC (incorporated by reference from our Current Report on Form 8-K, filed on November 4, 2014)

10.23

Warrant Agreement dated October 28, 2014 with Veterans Capital Fund, LLC (incorporated by reference from our Current Report on Form 8-K, filed on November 4, 2014)

10.24

Registration Rights Agreement dated October 28, 2014 with Veterans Capital Fund, LLC (incorporated by reference from our Current Report on Form 8-K, filed on November 4, 2014)

10.25

2013 Equity Incentive Plan (incorporated by reference from our Current Report on Form 8-K, filed on November 4, 2014)

10.26

Form of Amending Agreement to Stock Option Agreement (incorporated by reference from our Current Report on Form 8-K, filed on November 4, 2014)

10.27

Stock Option Agreement dated February 18, 2016 with Steven P. Nickolas (incorporated by reference from our Current Report on Form 8-K, filed on April 14, 2016)

10.28

Stock Option Agreement dated February 18, 2016 with Richard A. Wright (incorporated by reference from our Current Report on Form 8-K, filed on April 14, 2016)

10.29

Securities Purchase Agreement dated as of May 11, 2015 with Assurance Funding Solutions LLC (incorporated by reference from our Annual Report on Form 10-K, filed on July 14, 2015)

10.30

Secured Term Note dated May 2015 issued to Assurance Funding Solutions LLC (incorporated by reference from our Annual Report on Form 10-K, filed on July 14, 2015)

10.31

General Security Agreement dated as of May 11, 2015 with Assurance Funding Solutions LLC (incorporated by reference from our Annual Report on Form 10-K, filed on July 14, 2015)

10.32

Securities Purchase Agreement dated as of August 20, 2015 with Assurance Funding Solutions LLC

28



10.33

Secured Term Note dated August 20, 2015 issued to Assurance Funding Solutions LLC

10.34

General Security Agreement dated as of August 20, 2015 with Assurance Funding Solutions LLC

10.35

Form of Warrant Exchange Agreement (incorporated by reference from our Current Report on Form 8- K, filed on December 1, 2015)

10.36

Loan Agreement dated November 30, 2015 with Neil Rogers (incorporated by reference from our Current Report on Form 8-K, filed on December 4, 2015)

10.37

Promissory Note dated November 30, 2015 issued to Neil Rogers (incorporated by reference from our Current Report on Form 8-K, filed on December 4, 2015)

10.38

Escrow Agreement dated November 30, 2015 with Neil Rogers and Escrow Agent (incorporated by reference from our Current Report on Form 8-K, filed on December 4, 2015)

10.39

2013 Equity Incentive Plan (incorporated by reference from our Current Report on Form 8-K, filed on January 25, 2016)

10.40

Loan Agreement dated January 25, 2016 with Turnstone Capital Inc. (incorporated by reference from our Current Report on Form 8-K, filed on January 25, 2016)

10.41

Promissory Note dated January 25, 2016 issued to Turnstone Capital Inc. (incorporated by reference from our Current Report on Form 8-K, filed on January 25, 2016)

10.42

Escrow Agreement dated January 25, 2016 with Turnstone Capital Inc. and Escrow Agent (incorporated by reference from our Current Report on Form 8-K, filed on January 25, 2016)

10.43

Amendment Agreement dated January 25, 2016 with Neil Rogers (incorporated by reference from our Current Report on Form 8-K, filed on January 25, 2016)

10.44

Stock Option Agreement dated January 29, 2016 with Steven P. Nickolas (incorporated by reference from our Current Report on Form 8-K, filed on February 4, 2016)

10.45

Stock Option Agreement dated January 29, 2016 with Richard A. Wright (incorporated by reference from our Current Report on Form 8-K, filed on February 4, 2016)

10.46

Form of Subscription Agreement (incorporated by reference from our Registration Statement on Form S- 1/A, filed on February 8, 2016)

10.47

Form of Warrant Certificate (incorporated by reference from our Registration Statement on Form S- 1/A, filed on February 8, 2016)

10.48

Employment Agreement dated effective March 1, 2016 with Steven P. Nickolas (incorporated by reference from our Current Report on Form 8-K, filed on April 5, 2016)

10.49

Employment Agreement dated effective March 1, 2016 with Richard A. Wright (incorporated by reference from our Current Report on Form 8-K, filed on April 5, 2016)

10.50

Form of Promissory Note and Warrant Exchange Agreement (incorporated by reference from our Current Report on Form 8-K, filed on June 16, 2016)

10.51

Form of Warrant Exchange Agreement (incorporated by reference from our Current Report on Form 8- K, filed on June 16, 2016)

10.52

Loan Facility Agreement dated September 20, 2016 with Turnstone Capital Inc. (incorporated by reference from our Current Report on Form 8-K, filed on September 22, 2016)

10.53

Credit and Security Agreement dated February 1, 2017 with SCM Specialty Finance Opportunities Fund, L.P. (incorporated by reference from our Current Report on Form 8-K, filed on February 7, 2017)

10.54

Payoff Agreement dated February 1, 2017 with Gibraltar Business Capital, LLC (incorporated by reference from our Current Report on Form 8-K, filed on February 7, 2017)

(31)

Rule 13a-14 Certifications

31.1*

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(32)

Section 1350 Certifications

32.1*

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(101)

Interactive Data File

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 Extension Presentation Linkbase

*Filed herewith.

29


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.

  THE ALKALINE WATER COMPANY INC.
     
     
Date: February 14, 2017 By:   /s/ Richard A. Wright
    Richard A. Wright
    Vice-President, Chief Operating Officer, Secretary,
    Treasurer and Director
    (Principal Executive Officer, Principal Financial Officer
    and Principal Accounting Officer)

30


EX-31.1 2 exhibit31-1.htm EXHIBIT 31.1 Alkaline Water Company Inc.: Exhibit 31.1 - Filed by newsfilecorp.com

Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard A. Wright, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of The Alkaline Water Company Inc.;

     
2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     
3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     
4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     
(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

     
(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, 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;

     
(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     
(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     
5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     
(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     
(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 14, 2017

/s/ Richard A. Wright         
Richard A. Wright
Vice-President, Chief Operating Officer, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)


EX-32.1 3 exhibit32-1.htm EXHIBIT 32.1 Alkaline Water Company Inc.: Exhibit 32.1 - Filed by newsfilecorp.com

Exhibit 32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, Richard A. Wright, hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

1.

the quarterly report on Form 10-Q of The Alkaline Water Company Inc. for the period ended December 31, 2016 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

   
2.

the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of The Alkaline Water Company Inc.

February 14, 2017

  /s/ Richard A. Wright
  Richard A. Wright
  Vice-President, Chief Operating Officer, Secretary,
  Treasurer and Director
  (Principal Executive Officer, Principal Financial
  Officer and Principal Accounting Officer)


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Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended March 31, 2016 (including the notes thereto) set forth on Form 10-K. The Company uses as guidance the Accounting Standard Codification (ASC) as established by the Financial Accounting Standards Board (FASB).</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Principles of consolidation</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The consolidated financial statements include the accounts of The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company).</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">All significant intercompany balances and transactions have been eliminated. The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company) will be collectively referred herein to as the &#8220;Company&#8221;. Any reference herein to &#8220;The Alkaline Water Company Inc.&#8221;, the &#8220;Company&#8221;, &#8220;we&#8221;, &#8220;our&#8221; or &#8220;us&#8221; is intended to mean The Alkaline Water Company Inc., including the subsidiaries indicated above, unless otherwise indicated.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Reverse split</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Effective December 30, 2015, the Company effected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock. As a result, the authorized common stock has decreased from 1,125,000,000 shares of common stock, with a par value of $0.001 per share, to 22,500,000 shares of common stock, with a par value of $0.001 per share. All shares and per share amounts have been retroactively restated to reflect such split. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On January 21, 2016, stockholders of our company approved, by written consents, an amendment to the articles of incorporation of our company to increase the number of authorized shares of our common stock from 22,500,000 to 200,000,000. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company received written consents representing 20,776,000 votes from the holders of shares of its common stock and our Series A Preferred Stock voting as a single class, representing approximately 61% of the voting power of its outstanding common stock and its outstanding Series A Preferred Stock voting as a single class as of the record date (January 12, 2016). On January 21, 2016, there were no written consents received by the Company representing a vote against, abstention or broker non-vote with respect to the proposal. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share. In addition, the number of issued and outstanding shares of Series A Preferred Stock continues to be 20,000,000. However, holders of Series A Preferred Stock had 0.2 vote per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse stock split. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On January 22, 2016, the Company amended the certificate of designation for our Series A Preferred Stock by filing an amendment to certificate of designation with the Secretary of State of the State of Nevada. The Company amended the certificate of designation for our Series A Preferred Stock by deleting Section 2.2 of the certificate of designation, which proportionately increases or decreases the number of votes per share of Series A Preferred Stock in the event of any dividend or other distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock. Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock, instead of 0.2 votes per share of Series A Preferred Stock. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Use of estimates</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The preparation of financial statements in conformity 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 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 significantly from those estimates.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Cash and cash equivalents</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company considers all highly liquid instruments with an original maturity of three months or less to be considered cash equivalents. The carrying value of these investments approximates fair value. The Company had $88,540 and $1,192,119 in cash and cash equivalents at December 31, 2016 and March 31, 2016, respectively. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Accounts receivable and allowance for doubtful accounts</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company generally does not require collateral, and the majority of its trade receivables are unsecured. The carrying amount for accounts receivable approximates fair value.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Accounts receivable are periodically evaluated for collectability based on past credit history with clients. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current economic conditions.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Inventory</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Inventory represents raw and blended chemicals and other items valued at the lower of cost or market with cost determined using the weight average method which approximates first-in first-out method, and with market defined as the lower of replacement cost or realizable value.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">As of December 31, 2016 and March, 31 2016, inventory consisted of the following:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%"> <tr valign="top"> <td align="center" nowrap="nowrap" valign="bottom">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%"> <b> <u>December 31,</u> </b> <b> <u>2016</u> </b> </td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="1%">&#160;</td> <td align="center" nowrap="nowrap" valign="bottom" width="12%"> <b> <u>March 31, 2016</u> </b> </td> <td align="center" nowrap="nowrap" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Raw materials</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 597,428 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 300,575 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" valign="bottom">Finished goods</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 216,013 </td> <td align="left" valign="bottom" width="2%">&#160;</td> <td align="left" valign="bottom" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%"> 134,133 </td> <td align="left" valign="bottom" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Total inventory</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 813,441 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 434,708 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%">&#160;</td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Property and equipment</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company records all property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter. Depreciation periods are as follows for the relevant fixed assets:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="90%"> <tr valign="top"> <td align="left" nowrap="nowrap">Equipment</td> <td align="center" nowrap="nowrap" width="15%"> 5 years </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Equipment under capital lease</td> <td align="center" bgcolor="#e6efff" nowrap="nowrap" width="15%"> 3 years or term of the lease </td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Stock-based Compensation</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company accounts for stock-based compensation to employees in accordance with Accounting Standards Codification (&#8220;ASC&#8221;) 718. Stock-based compensation to employees is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company&#8217;s common stock for common share issuances.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Revenue recognition</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount to be paid by the customer is fixed or determinable; and (4) the collection of such amount is probable.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company records revenue when it is realizable and earned upon shipment of the finished products. The Company does not accept returns due to the nature of the product. However, the Company will provide credit to our customers for damaged goods.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Fair value measurements</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The valuation of our embedded derivatives and warrant derivatives are determined primarily by the multinomial distribution (Lattice) model. An embedded derivative is a derivative instrument that is embedded within another contract, which under the convertible note (the host contract) includes the right to convert the note by the holder, certain default redemption right premiums and a change of control premium (payable in cash if a fundamental change occurs). In accordance with ASC 815 &#8220; <i>Accounting for Derivative Instruments and Hedging Activities&#8221;</i> , as amended, these embedded derivatives are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. A warrant derivative liability is also determined in accordance with ASC 815. Based on ASC 815, warrants which are determined to be classified as derivative liabilities are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. The practical effect of this has been that when our stock price increases so does our derivative liability resulting in a non-cash loss charge that reduces our earnings and earnings per share. When our stock price declines, the Company records a non-cash gain, increasing our earnings and earnings per share. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: </p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left">Level 1</td> <td align="left" width="90%"> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.</p> </td> </tr> <tr> <td>&#160;</td> <td width="90%"> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">&#160;</p> </td> </tr> <tr valign="top"> <td align="left">Level 2</td> <td align="left" width="90%"> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.</p> </td> </tr> <tr valign="top"> <td align="left">&#160;</td> <td align="left">&#160;</td> </tr> <tr valign="top"> <td align="left">Level 3</td> <td align="left" width="90%"> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;">unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.</p> </td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">To determine the fair value of our embedded derivatives, management evaluates assumptions regarding the probability of certain future events. Other factors used to determine fair value include our period end stock price, historical stock volatility, risk free interest rate and derivative term. The fair value recorded for the derivative liability varies from period to period. This variability may result in the actual derivative liability for a period either above or below the estimates recorded on our consolidated financial statements, resulting in significant fluctuations in other income (expense) because of the corresponding non-cash gain or loss recorded.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Income taxes</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In accordance with ASC 740 &#8220; <i>Accounting for Income Taxes</i> &#8221;, the provision for income taxes is computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Basic and diluted loss per share</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Basic and diluted earnings or loss per share (&#8220;EPS&#8221;) amounts in the consolidated financial statements are computed in accordance ASC 260 &#8211; 10 &#8220; <i>Earnings per Share</i> &#8221;, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Potentially dilutive securities were excluded from the calculation of diluted loss per share, because their effect would be anti-dilutive. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Reclassification</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Certain accounts in the prior period were reclassified to conform to the current period financial statements presentation.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Newly issued accounting pronouncements</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">During the period ended December 31, 2016, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company&#8217;s consolidated financial statements</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Basis of presentation</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended March 31, 2016 (including the notes thereto) set forth on Form 10-K. The Company uses as guidance the Accounting Standard Codification (ASC) as established by the Financial Accounting Standards Board (FASB).</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Principles of consolidation</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The consolidated financial statements include the accounts of The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company).</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">All significant intercompany balances and transactions have been eliminated. The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company) will be collectively referred herein to as the &#8220;Company&#8221;. Any reference herein to &#8220;The Alkaline Water Company Inc.&#8221;, the &#8220;Company&#8221;, &#8220;we&#8221;, &#8220;our&#8221; or &#8220;us&#8221; is intended to mean The Alkaline Water Company Inc., including the subsidiaries indicated above, unless otherwise indicated.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Reverse split</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Effective December 30, 2015, the Company effected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock. As a result, the authorized common stock has decreased from 1,125,000,000 shares of common stock, with a par value of $0.001 per share, to 22,500,000 shares of common stock, with a par value of $0.001 per share. All shares and per share amounts have been retroactively restated to reflect such split. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On January 21, 2016, stockholders of our company approved, by written consents, an amendment to the articles of incorporation of our company to increase the number of authorized shares of our common stock from 22,500,000 to 200,000,000. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company received written consents representing 20,776,000 votes from the holders of shares of its common stock and our Series A Preferred Stock voting as a single class, representing approximately 61% of the voting power of its outstanding common stock and its outstanding Series A Preferred Stock voting as a single class as of the record date (January 12, 2016). On January 21, 2016, there were no written consents received by the Company representing a vote against, abstention or broker non-vote with respect to the proposal. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share. In addition, the number of issued and outstanding shares of Series A Preferred Stock continues to be 20,000,000. 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The Company does not accept returns due to the nature of the product. However, the Company will provide credit to our customers for damaged goods.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Fair value measurements</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The valuation of our embedded derivatives and warrant derivatives are determined primarily by the multinomial distribution (Lattice) model. An embedded derivative is a derivative instrument that is embedded within another contract, which under the convertible note (the host contract) includes the right to convert the note by the holder, certain default redemption right premiums and a change of control premium (payable in cash if a fundamental change occurs). 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Other factors used to determine fair value include our period end stock price, historical stock volatility, risk free interest rate and derivative term. The fair value recorded for the derivative liability varies from period to period. This variability may result in the actual derivative liability for a period either above or below the estimates recorded on our consolidated financial statements, resulting in significant fluctuations in other income (expense) because of the corresponding non-cash gain or loss recorded.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i> <u>Income taxes</u> </i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In accordance with ASC 740 &#8220; <i>Accounting for Income Taxes</i> &#8221;, the provision for income taxes is computed using the asset and liability method. 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Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. 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font-size: 10pt;"> <b>NOTE 4 &#8211; EQUIPMENT DEPOSITS &#8211; RELATED PARTY</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During the nine month period ending December 31, 2016 the company made a net deposit on equipment of $104,619 to Water Engineering Solutions. 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Under the agreement, from time to time, the Company agreed to tender to Gibraltar all of our accounts (which is defined as our rights to payment whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, or (ii) for services rendered or to be rendered, or (iii) as otherwise defined in the Uniform Commercial Code of the State of Illinois). Gibraltar will have the right, but will not be obligated, to purchase such accounts tendered in its sole discretion. If Gibraltar purchases such accounts, Gibraltar will make cash advances to us as the purchase price for the purchased accounts.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company assumed full risk of non-payment and unconditionally guaranteed the full and prompt payment of the full face amount of all purchased accounts. 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All collections from accounts will be applied to our indebtedness, which is defined as the amount owed by us to Gibraltar from time to time, i.e., all cash advances, plus all charges, plus all other amounts owning from us to Gibraltar pursuant to the agreement, less all collections retained by Gibraltar from either purchased accounts or from us which are applied to indebtedness, unless Gibraltar elects to hold any such collections to establish reserves to secure payment of any purchased accounts.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In consideration of Gibraltar&#8217;s purchase of the accounts, the Company agreed to pay Gibraltar interest on the indebtedness outstanding at the rate of 8% per annum plus the prime rate in effect at the end of each month with the prime rate for these purposes never being less than 3.25% per annum, calculated on a 360 -day year and payable monthly. In addition, the Company agreed to pay to Gibraltar a monthly collateral/management fee in the amount of 0.5% calculated on the average daily borrowing amount for the given month and an unused line fee of 0.25% monthly based on the difference between the actual line of credit and the average daily borrowing amount for the given month. The Company also agreed to pay to Gibraltar upon execution of the agreement and as of the commencement of each renewal term, a closing cost of 1% of the initial indebtedness in addition to the amount of any other credit accommodations granted from Gibraltar, which amount will be deducted from the first cash advances. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The initial indebtedness is $500,000 and the Company increased the amount available under the revolving accounts receivable funding agreement to $900,000 on May 12, 2016. The Company may request further increase(s) to the in $100,000 increments up to $5,000,000, subject the Company&#8217;s financial performance and/or projections are satisfactory to Gibraltar, and absent an event of default. The Company also granted to Gibraltar a security interest in all of our presently-owned and hereafter-acquired personal and fixture property, wherever located. The agreement will continue until the first to occur of (i) demand by Gibraltar; or (ii) 24 months from the first day of the month following the date that the first purchased account is purchased and will be automatically renewed for successive periods of 12 months thereafter unless, at least 30 days prior to the end of the term, the Company gives Gibraltar notice of our intention to terminate the agreement. In addition, the Company will be able to exit the agreement at any time for a fee of 2% of the line of credit in place at the time of prepayment. On December 31, 2016 the amount borrowed on this facility was $532,020. </p> 0.08 0.0325 360 0.005 0.0025 0.01 500000 900000 100000 5000000 24 12 30 0.02 532020 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>NOTE 6 &#8211; DERIVATIVE LIABILITY</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On May 1, 2014, the Company sold 346,667 shares of our common stock and warrants to purchase an aggregate of 173,333 shares of our common stock, for aggregate gross proceeds of $2,599,999. Each share of common stock sold in the offering was accompanied by a warrant to purchase one-half of a share of common stock at an exercise price of $7.50 per share for a period of five years from the date of issuance. Each share of common stock, together with each warrant was sold at a price of $7.50. 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The warrants include down-round provisions that reduce the exercise price of a warrant and convertible instrument. As required by ASC 815 &#8220;Derivatives and Hedging&#8221; the Company evaluated whether its warrants and convertible debt instruments contain provisions that protect holders from declines in its stock price or otherwise could result in modification of either the exercise price or the shares to be issued under the respective warrant agreements. The Company determined that a portion of its outstanding warrants and conversion instruments contained such provisions thereby concluding they were not indexed to the Company&#8217;s own stock and therefore a derivative instrument. 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Nickolas and Richard A. Wright ( 10,000,000 shares to each), our directors and executive officers, in consideration for the past services, at a deemed value of $0.001 per share. The company valued these shares based on the cost considering the time and average billing rate of these individuals and recorded a $20,000 stock compensation cost for the year ended March 31, 2014. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share. In addition, the number of issued and outstanding shares of Series A Preferred Stock continues to be 20,000,000. However, holders of Series A Preferred Stock had 0.2 votes per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse-stock split. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On January 22, 2016, the Company amended the certificate of designation for our Series A Preferred Stock by filing an amendment to certificate of designation with the Secretary of State of the State of Nevada. The Company amended the certificate of designation for our Series A Preferred Stock by deleting Section 2.2 of the certificate of designation, which proportionately increases or decreases the number of votes per share of Series A Preferred Stock in the event of any dividend or other distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock. Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock, instead of 0.2 votes per share of Series A Preferred Stock. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <i>Grant of series C Convertible preferred stock</i> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On March 30, 2016, the Company designated 3,000,000 shares of the authorized and unissued preferred stock of our company as &#8220;Series C Preferred Stock&#8221; by filing a Certificate of Designation with the Secretary of State of the State of Nevada. Each share of the Series C Preferred Stock will be convertible, without the payment of any additional consideration by the holder and at the option of the holder, into one fully paid and non-assessable share of our common stock at any time after (i) the Company achieves consolidated revenue equal to or greater than $15,000,000 in any 12 month period, ending on the last day of any quarterly period of our fiscal year; or (ii) a Negotiated Trigger Event, defined as an event upon which the Series C Preferred Stock will be convertible as may be agreed by our company and the holder in writing from time to time. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Effective March 31, 2016, the Company issued a total of 3,000,000 shares of our Series C Preferred Stock to Steven P. Nickolas and Richard A. Wright ( 1,500,000 shares to each), our directors and executive officers, pursuant to their employment agreements dated effective March 1, 2016. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Common stock</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company is authorized to issue 1,125,000,000 shares of $0.001 par value common stock. On May 31, 2013, the Company affected a 15 -for- 1 forward stock split of our $0.001 par value common stock. All shares and per share amounts have been retroactively restated to reflect such split. Prior to the acquisition of Alkaline Water Corp., the Company had 109,500,000 shares of common stock issued and outstanding. On May 31, 2013, the Company issued 43,000,000 shares in exchange for a 100% interest in Alkaline Water Corp. For accounting purposes, the acquisition of Alkaline Water Corp. by The Alkaline Water Company Inc. has been recorded as a reverse acquisition of a company and recapitalization of Alkaline Water Corp. based on the factors demonstrating that Alkaline Water Corp. represents the accounting acquirer. Consequently, after the closing of this agreement the Company adopted the business of Alkaline Water Corp.&#8217;s wholly-owned subsidiary, Alkaline 88, LLC. As part of the acquisition, the former management of the Company agreed to cancel 75,000,000 shares of common stock. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On December 30, 2015, the Company affected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock. 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font-size: 10pt;"> On March 4, 2016, the Company completed the offering and sale of an aggregate of 9,000,000 shares of our common stock and warrants to purchase an aggregate of 4,500,000 shares of our common stock, for aggregate gross proceeds of $2,970,000. Each share of common stock the Company sold in the offering was accompanied by one-half of a warrant to purchase one share of common stock at an exercise price of $0.50 per share for a period of two years from the date of issuance. 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font-size: 10pt;"> <b>NOTE 8 &#8211; OPTIONS AND WARRANTS</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <u>Stock option awards</u> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On January 29, 2016, the Company granted a total of 1,310,000 stock options to certain employees. 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Nickolas and Richard A. Wright ( 1,500,000 stock options to each). The stock options are exercisable at the exercise price of $0.52 per share for a period of 7.6 years from the date of grant and vested upon the date of grant. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Effective March 31, 2016, the Company issued a total of 3,000,000 shares of our Series C Preferred Stock to Steven P. Nickolas and Richard A. Wright ( 1,500,000 shares to each), our directors and executive officers, pursuant to their </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On August 1, 2013, the Company entered into a 3 -year sub-lease agreement requiring a monthly payment of $2,085 for office space in Scottsdale, Arizona, with a basic monthly lease increase of 8% and 7% on each anniversary date. The Company or the landlord can cancel the lease with 30 days&#8217; notice. The sub-lessor is an entity owned by the Company&#8217;s Chief Executive Officer and President. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During the nine month period ending December 31, 2016 the company made a net deposit on equipment of $104,619 to Water Engineering Solutions. During the nine month period ending December 31, 2015 the company made a net deposit on equipment of $139,997 to Water Engineering Solutions. Water Engineering Solutions LLC is an entity that is controlled and majority owned by Steven P. Nickolas and Richard A. Wright for the production of our alkaline water. </p> 3000000 1500000 0.52 7.6 3000000 1500000 3 2085 0.08 0.07 30 104619 139997 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>NOTE 10 &#8211; INCOME TAXES</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on antic The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. 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Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2016 and March 31, 2016, respectively.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In accordance with ASC 740, the Company has evaluated its tax positions and determined that there are no uncertain tax positions.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>NOTE 11 &#8211;CAPITAL LEASE</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On October 22, 2014, the Company entered into a master lease agreement with Veterans Capital Fund, LLC (the &#8220;Lessor&#8221;) for the secured lease line of credit financing in an amount not to exceed $600,000. The lease is expected to be secured by three new alkaline generating electrolysis system machines. Our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC acted as co-lessees. Water Engineering Solutions, LLC is an entity that is controlled and owned by our President, Chief Executive Officer, director and major stockholder, Steven P. Nickolas, and our Vice-President, Secretary, Treasurer and director, Richard A. Wright. Pursuant to the master lease agreement, the Lessor agreed to lease to us the equipment described in any equipment schedule signed by us and approved by the Lessor. It is expected that any lease under the master lease agreement will be structured for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate factor of 3.4667% of the Lessor&#8217;s capital cost. In connection with the entering into the master lease agreement, the Company also entered into a warrant agreement with the Lessor, pursuant to which the Company agreed to issue a warrant to purchase 72,000 shares of our common stock to the Lessor and/or its affiliates at an exercise price of $6.25 per share for a period of five years, 18,000 shares vested. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On February 25, 2015, the Company amended the master lease agreement with Veterans Capital Fund, LLC for the increase in the secured lease line of credit financing to an amount not to exceed $800,000. The lease was secured by new alkaline generating electrolysis system machines by our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC. Water Engineering Solutions, LLC is an entity that is controlled and owned by our President, Chief Executive Officer, director and major stockholder, Steven P. Nickolas, and our Vice-President, Secretary, Treasurer and director, Richard A. Wright. Pursuant to the master lease agreement, the Lessor agreed to lease to us the equipment described in any equipment schedule signed by us and approved by the Lessor. It is expected that any lease under the master lease agreement will be structured for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate factor of 3.4667% of the Lessor&#8217;s capital cost. In connection with the entering into the master lease agreement, the Company entered into a warrant agreement with the Lessor, pursuant to which the Company agreed to cancel the previous issued warrant for 72,000 and issue a warrant to purchase 102,000 shares of our common stock to the Lessor and/or its affiliates at an exercise price of $5.00 per share for a period of five years. 18,000 shares vested on October 22, 2014, 13,316 shares on October 28, 2014, 13,606 shares on December 22, 2014, 6,945 shares on February 3, 2015 and 15,799 shares on March 5, 2015. The remaining 18,105 shares will vest on a pro rata basis according to any mounts the Lessor funds pursuant to any lease schedules under the master lease agreement, provided that if the Company draws on 90% or more of the total lease line under the master lease agreement, then all such shares will be deemed to be vested. The Company recorded the bifurcated value of $309,028 of the warrants issued as additional paid in capital, the value was determine using a Black-Scholes, a level 3 valuation measure. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During the year ended March 31, 2015 the Company agreed to lease the specialized equipment used to make our alkaline water with a value of $735,781 under the above Master Lease agreement. The Company evaluated this lease under ASC 840-30 &#8220;Leases- Capital Leases&#8221; and concluded that these lease where a capital asset. </p> 600000 0.034667 72000 6.25 18000 800000 0.034667 72000 102000 5.00 18000 13316 13606 6945 15799 18105 0.90 309028 735781 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>NOTE 12 &#8211; NOTES PAYABLE</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On August 19, 2015, the Company entered into a securities purchase agreement pursuant to which the Company issued a secured term note of our company in the aggregate principal amount of $240,000, together with 20,000 shares of our common stock, in consideration for $200,000. The secured term note bears requires monthly payments of $20,000 per month, along with a final payment due on August 20, 2016. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On November 2, 2015 the Company issued a promissory note to a lender in the amount of $125,000. The note requires weekly payments of $2,451 plus interest. The final payment is due on November 19, 2016. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Between June 10, 2016 and June 20, 2016, the Company entered into loan agreements with various lenders pursuant to which the Company issued convertible promissory notes of our company in the aggregate principal amount of $260,000, The convertible promissory note bears interest at the rate of 10% per annum and matures on June 10, 2017 and is convertible into common shares at $1.00 per share. The Company evaluated this transaction under ASC 470-20-30 <i>&#8220;Debt &#8211; liability and equity component&#8221;</i> determine that a Debt Discount of $240,100 was provided and will be amortized over the 1 -year term of the note. As of December 31, 2016, the unamortized debt discount was $100,041. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On September 20, 2016 the Company agreed to a $1,000,000 loan facility which also included a conversion right of principal and/or accrued interest the convertible note bears interest at the rate of 10% per annum and matures on December 20, 2018 and is convertible into common shares at $1.00 per share. As of December 31, 2016 the Company had drawn $750,000 of the facility. 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The Company agreed to pay to Lender monthly an unused line fee in amount equal to 0.083% per month of the difference derived by subtracting (i) the average daily outstanding balance under the Revolving Facility during the preceding month, from (ii) the Revolving Loan Commitment Amount. The unused line fee will be payable monthly in arrears. The Company also agreed to pay the Lender as additional interest a monthly collateral management fee equal to 0.35% per month calculated on the basis of the average daily balance under the Revolving Facility outstanding during the preceding month. The collateral management fee will be payable monthly in arrears. Upon a termination of the Revolving Facility, the Company agreed to pay the Lender a termination fee in an amount equal to 2% of the Revolving Loan Commitment Amount if the termination occurs before February 1, 2020. The Company must also pay certain fees in the event that receivables are not properly deposited in the appropriate lockbox account. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The interest rate will be increased by 5% in the event of a default under the Credit Agreement. Events of default under the Credit Agreement, some of which are subject to certain cure periods, include a failure to pay obligations when due, the making of a material misrepresentation to the Lender, the rendering of certain judgments or decrees against the Company and the commencement of a proceeding for the appointment of a receiver, trustee, liquidator or conservator or filing of a petition seeking reorganization or liquidation or similar relief. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Credit Agreement contains customary representations and warranties and various affirmative and negative covenants including the right of first refusal to provide financing for the Company and the financial and loan covenants, such as the loan turnover rate, minimum EBTDA, fixed charge coverage ratio and minimum liquidity requirements.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On February 1, 2017, the Company drew $686,080.94 from the Revolving Facility, to be disbursed as follows: $628,782.94 to pay off the amount borrowed from Gibraltar Business Capital, LLC (&#8220;Gibraltar&#8221;) under the revolving accounts receivable funding agreement dated February 20, 2014 (paid off on February 1, 2017) and the balance for the closing costs. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> As of February 1, 2017, the Company and Gibraltar entered into a payoff agreement (the &#8220;Payoff Agreement&#8221;), pursuant to which the Company agreed to pay an amount equal to the outstanding indebtedness and obligations owing from the Company to Gibraltar (the &#8220;Gibraltar Obligations&#8221;). 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Restricted Shares [Table Text Block] Schedules of Proceeds from Restricted Shares Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] Schedule of Stockholders' Equity Note, Warrants or Rights, Activity [Table Text Block] Schedule of Stockholders' Equity Note, Warrants or Rights, Activity [Table Text Block] Schedule of Share-based Payment Award, Warrants, Valuation Assumptions [Table Text Block] Schedule of Share-based Payment Award, Warrants, Valuation Assumptions [Table Text Block] Schedule of Stock Options for Directors and Executive Officers [Table Text Block] Schedule of Stock Options for Directors and Executive Officers Schedule of Deferred Tax Assets and Liabilities [Table Text Block] Schedule Of Share Based Payment Award Stock Warrants Valuation Assumptions [Table Text Block] Schedule Of Share Based Payment Award Stock Warrants Valuation Assumptions Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] Schedule of Stockholders Equity [Table Text Block] Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] Schedule of Convertible Notes Payable [Table Text Block] Schedule of Convertible Notes Payable [Table Text Block] Summary Of Significant Accounting Policies 1 Summary Of Significant Accounting Policies 1 Summary Of Significant Accounting Policies 2 Summary Of Significant Accounting Policies 2 Summary Of Significant Accounting Policies 3 Summary Of Significant Accounting Policies 3 Summary Of Significant Accounting Policies 4 Summary Of Significant Accounting Policies 4 Summary Of Significant Accounting Policies 5 Summary Of Significant Accounting Policies 5 Summary Of Significant Accounting Policies 6 Summary Of Significant Accounting Policies 6 Summary Of Significant Accounting Policies 7 Summary Of Significant Accounting Policies 7 Summary Of Significant Accounting Policies 8 Summary Of Significant Accounting Policies 8 Summary Of Significant Accounting Policies 9 Summary Of Significant Accounting Policies 9 Summary Of Significant Accounting Policies 10 Summary Of Significant Accounting Policies 10 Summary Of Significant Accounting Policies 11 Summary Of Significant Accounting Policies 11 Summary Of Significant Accounting Policies 12 Summary Of Significant Accounting Policies 12 Summary Of Significant Accounting Policies 13 Summary Of Significant Accounting Policies 13 Summary Of Significant Accounting Policies 14 Summary Of Significant Accounting Policies 14 Summary Of Significant Accounting Policies 15 Summary Of Significant Accounting Policies 15 Summary Of Significant Accounting Policies 16 Summary Of Significant Accounting Policies 16 Summary Of Significant Accounting Policies 17 Summary Of Significant Accounting Policies 17 Summary Of Significant Accounting Policies 18 Summary Of Significant Accounting Policies 18 Going Concern 1 Going Concern 1 Property And Equipment 1 Property And Equipment 1 Property And Equipment 2 Property And Equipment 2 Equipment Deposits - Related Party 1 Equipment Deposits - Related Party 1 Equipment Deposits - Related Party 2 Equipment Deposits - Related Party 2 Revolving Financing 1 Revolving Financing 1 Revolving Financing 2 Revolving Financing 2 Revolving Financing 3 Revolving Financing 3 Revolving Financing 4 Revolving Financing 4 Revolving Financing 5 Revolving Financing 5 Revolving Financing 6 Revolving Financing 6 Revolving Financing 7 Revolving Financing 7 Revolving Financing 8 Revolving Financing 8 Revolving Financing 9 Revolving Financing 9 Revolving Financing 10 Revolving Financing 10 Revolving Financing 11 Revolving Financing 11 Revolving Financing 12 Revolving Financing 12 Revolving Financing 13 Revolving Financing 13 Revolving Financing 14 Revolving Financing 14 Revolving Financing 15 Revolving Financing 15 Derivative Liability 1 Derivative Liability 1 Derivative Liability 2 Derivative Liability 2 Derivative Liability 3 Derivative Liability 3 Derivative Liability 4 Derivative Liability 4 Derivative Liability 5 Derivative Liability 5 Derivative Liability 6 Derivative Liability 6 Derivative Liability 7 Derivative Liability 7 Derivative Liability 8 Derivative Liability 8 Derivative Liability 9 Derivative Liability 9 Derivative Liability 10 Derivative Liability 10 Derivative Liability 11 Derivative Liability 11 Derivative Liability 12 Derivative Liability 12 Derivative Liability 13 Derivative Liability 13 Derivative Liability 14 Derivative Liability 14 Derivative Liability 15 Derivative Liability 15 Derivative Liability 16 Derivative Liability 16 Derivative Liability 17 Derivative Liability 17 Stockholders Equity 1 Stockholders Equity 1 Stockholders Equity 2 Stockholders Equity 2 Stockholders Equity 3 Stockholders Equity 3 Stockholders Equity 4 Stockholders Equity 4 Stockholders Equity 5 Stockholders Equity 5 Stockholders Equity 6 Stockholders Equity 6 Stockholders Equity 7 Stockholders Equity 7 Stockholders Equity 8 Stockholders Equity 8 Stockholders Equity 9 Stockholders Equity 9 Stockholders Equity 10 Stockholders Equity 10 Stockholders Equity 11 Stockholders Equity 11 Stockholders Equity 12 Stockholders Equity 12 Stockholders Equity 13 Stockholders Equity 13 Stockholders Equity 14 Stockholders Equity 14 Stockholders Equity 15 Stockholders Equity 15 Stockholders Equity 16 Stockholders Equity 16 Stockholders Equity 17 Stockholders Equity 17 Stockholders Equity 18 Stockholders Equity 18 Stockholders Equity 19 Stockholders Equity 19 Stockholders Equity 20 Stockholders Equity 20 Stockholders Equity 21 Stockholders Equity 21 Stockholders Equity 22 Stockholders Equity 22 Stockholders Equity 23 Stockholders Equity 23 Stockholders Equity 24 Stockholders Equity 24 Stockholders Equity 25 Stockholders Equity 25 Stockholders Equity 26 Stockholders Equity 26 Stockholders Equity 27 Stockholders Equity 27 Stockholders Equity 28 Stockholders Equity 28 Stockholders Equity 29 Stockholders Equity 29 Stockholders Equity 30 Stockholders Equity 30 Stockholders Equity 31 Stockholders Equity 31 Stockholders Equity 32 Stockholders Equity 32 Stockholders Equity 33 Stockholders Equity 33 Stockholders Equity 34 Stockholders Equity 34 Stockholders Equity 35 Stockholders Equity 35 Stockholders Equity 36 Stockholders Equity 36 Stockholders Equity 37 Stockholders Equity 37 Stockholders Equity 38 Stockholders Equity 38 Stockholders Equity 39 Stockholders Equity 39 Stockholders Equity 40 Stockholders Equity 40 Stockholders Equity 41 Stockholders Equity 41 Stockholders Equity 42 Stockholders Equity 42 Stockholders Equity 43 Stockholders Equity 43 Stockholders Equity 44 Stockholders Equity 44 Stockholders Equity 45 Stockholders Equity 45 Stockholders Equity 46 Stockholders Equity 46 Stockholders Equity 47 Stockholders Equity 47 Stockholders Equity 48 Stockholders Equity 48 Stockholders Equity 49 Stockholders Equity 49 Stockholders Equity 50 Stockholders Equity 50 Stockholders Equity 51 Stockholders Equity 51 Stockholders Equity 52 Stockholders Equity 52 Stockholders Equity 53 Stockholders Equity 53 Stockholders Equity 54 Stockholders Equity 54 Stockholders Equity 55 Stockholders Equity 55 Stockholders Equity 56 Stockholders Equity 56 Stockholders Equity 57 Stockholders Equity 57 Stockholders Equity 58 Stockholders Equity 58 Stockholders Equity 59 Stockholders Equity 59 Stockholders Equity 60 Stockholders Equity 60 Stockholders Equity 61 Stockholders Equity 61 Stockholders Equity 62 Stockholders Equity 62 Stockholders Equity 63 Stockholders Equity 63 Stockholders Equity 64 Stockholders Equity 64 Stockholders Equity 65 Stockholders Equity 65 Stockholders Equity 66 Stockholders Equity 66 Stockholders Equity 67 Stockholders Equity 67 Stockholders Equity 68 Stockholders Equity 68 Stockholders Equity 69 Stockholders Equity 69 Stockholders Equity 70 Stockholders Equity 70 Stockholders Equity 71 Stockholders Equity 71 Stockholders Equity 72 Stockholders Equity 72 Options And Warrants 1 Options And Warrants 1 Options And Warrants 2 Options And Warrants 2 Options And Warrants 3 Options And Warrants 3 Options And Warrants 4 Options And Warrants 4 Options And Warrants 5 Options And Warrants 5 Options And Warrants 6 Options And Warrants 6 Options And Warrants 7 Options And Warrants 7 Options And Warrants 8 Options And Warrants 8 Options And Warrants 9 Options And Warrants 9 Options And Warrants 10 Options And Warrants 10 Options And Warrants 11 Options And Warrants 11 Options And Warrants 12 Options And Warrants 12 Options And Warrants 13 Options And Warrants 13 Options And Warrants 14 Options And Warrants 14 Options And Warrants 15 Options And Warrants 15 Related Party Transactions 1 Related Party Transactions 1 Related Party Transactions 2 Related Party Transactions 2 Related Party Transactions 3 Related Party Transactions 3 Related Party Transactions 4 Related Party Transactions 4 Related Party Transactions 5 Related Party Transactions 5 Related Party Transactions 6 Related Party Transactions 6 Related Party Transactions 7 Related Party Transactions 7 Related Party Transactions 8 Related Party Transactions 8 Related Party Transactions 9 Related Party Transactions 9 Related Party Transactions 10 Related Party Transactions 10 Related Party Transactions 11 Related Party Transactions 11 Related Party Transactions 12 Related Party Transactions 12 Related Party Transactions 13 Related Party Transactions 13 Capital Lease 1 Capital Lease 1 Capital Lease 2 Capital Lease 2 Capital Lease 3 Capital Lease 3 Capital Lease 4 Capital Lease 4 Capital Lease 5 Capital Lease 5 Capital Lease 6 Capital Lease 6 Capital Lease 7 Capital Lease 7 Capital Lease 8 Capital Lease 8 Capital Lease 9 Capital Lease 9 Capital Lease 10 Capital Lease 10 Capital Lease 11 Capital Lease 11 Capital Lease 12 Capital Lease 12 Capital Lease 13 Capital Lease 13 Capital Lease 14 Capital Lease 14 Capital Lease 15 Capital Lease 15 Capital Lease 16 Capital Lease 16 Capital Lease 17 Capital Lease 17 Capital Lease 18 Capital Lease 18 Capital Lease 19 Capital Lease 19 Notes Payable 1 Notes Payable 1 Notes Payable 2 Notes Payable 2 Notes Payable 3 Notes Payable 3 Notes Payable 4 Notes Payable 4 Notes Payable 5 Notes Payable 5 Notes Payable 6 Notes Payable 6 Notes Payable 7 Notes Payable 7 Notes Payable 8 Notes Payable 8 Notes Payable 9 Notes Payable 9 Notes Payable 10 Notes Payable 10 Notes Payable 11 Notes Payable 11 Notes Payable 12 Notes Payable 12 Notes Payable 13 Notes Payable 13 Notes Payable 14 Notes Payable 14 Notes Payable 15 Notes Payable 15 Notes Payable 16 Notes Payable 16 Notes Payable 17 Notes Payable 17 Notes Payable 18 Notes Payable 18 Notes Payable 19 Notes Payable 19 Subsequent Events 1 Subsequent Events 1 Subsequent Events 2 Subsequent Events 2 Subsequent Events 3 Subsequent Events 3 Subsequent Events 4 Subsequent Events 4 Subsequent Events 5 Subsequent Events 5 Subsequent Events 6 Subsequent Events 6 Subsequent Events 7 Subsequent Events 7 Subsequent Events 8 Subsequent Events 8 Subsequent Events 9 Subsequent Events 9 Subsequent Events 10 Subsequent Events 10 Subsequent Events 11 Subsequent Events 11 Subsequent Events 12 Subsequent Events 12 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 1 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 1 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 2 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 2 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 3 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 3 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 4 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 4 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 5 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 5 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 6 Summary Of Significant Accounting Policies Schedule Of Inventory, Current 6 Summary Of Significant Accounting Policies Straight-line Method Of Depreciation 1 Summary Of Significant Accounting Policies Straight-line Method Of Depreciation 1 Summary Of Significant Accounting Policies Straight-line Method Of Depreciation 2 Summary Of Significant Accounting Policies Straight-line Method Of Depreciation 2 Property And Equipment Schedule Of Property, Plant And Equipment 1 Property And Equipment Schedule Of Property, Plant And Equipment 1 Property And Equipment Schedule Of Property, Plant And Equipment 2 Property And Equipment Schedule Of Property, Plant And Equipment 2 Property And Equipment Schedule Of Property, Plant And Equipment 3 Property And Equipment Schedule Of Property, Plant And Equipment 3 Property And Equipment Schedule Of Property, Plant And Equipment 4 Property And Equipment Schedule Of Property, Plant And Equipment 4 Property And Equipment Schedule Of Property, Plant And Equipment 5 Property And Equipment Schedule Of Property, Plant And Equipment 5 Property And Equipment Schedule Of Property, Plant And Equipment 6 Property And Equipment Schedule Of Property, Plant And Equipment 6 Property And Equipment Schedule Of Property, Plant And Equipment 7 Property And Equipment Schedule Of Property, Plant And Equipment 7 Property And Equipment Schedule Of Property, Plant And Equipment 8 Property And Equipment Schedule Of Property, Plant And Equipment 8 Property And Equipment Schedule Of Property, Plant And Equipment 9 Property And Equipment Schedule Of Property, Plant And Equipment 9 Property And Equipment Schedule Of Property, Plant And Equipment 10 Property And Equipment Schedule Of Property, Plant And Equipment 10 Property And Equipment Schedule Of Property, Plant And Equipment 11 Property And Equipment Schedule Of Property, Plant And Equipment 11 Property And Equipment Schedule Of Property, Plant And Equipment 12 Property And Equipment Schedule Of Property, Plant And Equipment 12 Property And Equipment Schedule Of Property, Plant And Equipment 13 Property And Equipment Schedule Of Property, Plant And Equipment 13 Property And Equipment Schedule Of Property, Plant And Equipment 14 Property And Equipment Schedule Of Property, Plant And Equipment 14 Derivative Liability Schedule Of Derivative Liabilities At Fair Value 1 Derivative Liability Schedule Of Derivative Liabilities At Fair Value 1 Derivative Liability Schedule Of Derivative Liabilities At Fair Value 2 Derivative Liability Schedule Of Derivative Liabilities At Fair Value 2 Derivative Liability Schedule Of Derivative Liabilities At Fair Value 3 Derivative Liability Schedule Of Derivative Liabilities At Fair Value 3 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 1 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 1 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 2 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 2 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 3 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 3 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 4 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 4 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 5 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 5 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 6 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 6 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 7 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 7 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 8 Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 8 Stockholders Equity Schedules Of Proceeds From Restricted Shares 1 Stockholders Equity Schedules Of Proceeds From Restricted Shares 1 Stockholders Equity Schedules Of Proceeds From Restricted Shares 2 Stockholders Equity Schedules Of Proceeds From Restricted Shares 2 Stockholders Equity Schedules Of Proceeds From Restricted Shares 3 Stockholders Equity Schedules Of Proceeds From Restricted Shares 3 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 1 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 1 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 2 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 2 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 3 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 3 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 4 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 4 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 5 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 5 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 6 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 6 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 7 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 7 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 8 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 8 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 9 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 9 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 10 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 10 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 11 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 11 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 12 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 12 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 13 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 13 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 14 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 14 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 15 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 15 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 16 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 16 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 17 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 17 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 18 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 18 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 19 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 19 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 20 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 20 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 21 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 21 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 22 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 22 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 23 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 23 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 24 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 24 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 25 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 25 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 26 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 26 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 27 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 27 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 28 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 28 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 29 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 29 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 30 Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 30 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 1 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 1 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 2 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 2 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 3 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 3 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 4 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 4 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 5 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 5 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 6 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 6 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 7 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 7 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 8 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 8 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 9 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 9 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 10 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 10 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 11 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 11 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 12 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 12 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 13 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 13 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 14 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 14 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 15 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 15 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 16 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 16 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 17 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 17 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 18 Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 18 Total Current Assets Total Assets Total Current Liabilities Convertible notes payable, net of debt discount Total long-term liabilities Total Liabilities Total stockholders' deficit Total liabilities and stockholders' deficit Common Stock, Shares, Issued Gross profit Total operating expenses Total operating loss Interest expense Interest expense - accretive Interest expense on capital lease Interest expense on redeemable preferred stock Fees Paid On Credit Line Capital Lease Discount Amortization of debt discount and accretion Other expenses Total other income (expense) Net loss Bad Debt expense Stock compensation expense Amortization of debt discount and accretion (AmortizationOfFinancingCostsAndDiscounts) Interest Expense Related To Amortization Of Capital Lease Discount Accounts receivable (IncreaseDecreaseInAccountsReceivable) Inventory (IncreaseDecreaseInInventories) Prepaid expenses and other current assets Accounts payable (IncreaseDecreaseInAccountsPayable) Accounts payable - related party Accrued expenses (IncreaseDecreaseInAccruedLiabilities) Accrued interest NET CASH USED IN OPERATING ACTIVITIES Purchase of fixed assets Equipment deposits - related party (PaymentsForDeposits) CASH USED IN INVESTING ACTIVITIES Proceeds from convertible note payable Proceeds From Revolving Financing Repayment of notes payable Repayment of capital lease Repayment Of Redeemable Preferred Shares CASH PROVIDED BY FINANCING ACTIVITIES NET CHANGE IN CASH CASH AT BEGINNING OF PERIOD INTEREST PAID Equipment Deposits Related Party [Text Block] Straightline Method Of Depreciation [Table Text Block] Schedule Of Stockholders Equity Note Warrants Or Rights Valuation Assumptions [Text Block] Schedule Of Stockholders Equity Note Warrants Or Rights Activity [Text Block] Schedule Of Sharebased Payment Award Warrants Valuation Assumptions [Table Text Block] Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Nbt D Dprb Bqd G Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Four Zx Mm Eightk Nn Chv Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Spd Threect Xzs Cp X Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Pqq Five Pm G S Pp Hv Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Fourv Fivep Sevend G Eighty J W Five Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero T Five Four C P Three Zero One V X F Eight Summary Of Significant Accounting Policies Zero Three Four Four Eight Zerox Threewd Cs Three W Z Z Twog Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Qnrx Hzws H Hg Zero Summary Of Significant Accounting Policies Zero Three Four Four Eight Zerop Mnrm N Vmpt H Z Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Dyd Two L One Sixg Zh L W Summary Of Significant Accounting Policies Zero Three Four Four Eight Zerofv Twor T S V Km D Three Six Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Two B W Jp Nine L W Six Bs Eight Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Nine B Ninek Sixk F Vv Four X Nine Summary Of Significant Accounting Policies Zero Three Four Four Eight Zeroz Sixppxwth M Six G Eight Summary Of Significant Accounting Policies Zero Three Four Four Eight Zeros Eight S J Twoc H N Six H Pk Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Nine Vvdr P Zq D Six Zero X Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero D W G M Kq Seven Vxk Bb Summary Of Significant Accounting Policies Zero Three Four Four Eight Zero Qf Q Xr D Hvk Onel B Going Concern Zero Three Four Four Eight Zerob S Fh T H Vckw Zl Property And Equipment Zero Three Four Four Eight Zero Six Four Eightn Two B P Pct Seven Eight Property And Equipment Zero Three Four Four Eight Zero Fx Ksz D Bp M Twoz T Equipment Deposits Related Party Zero Three Four Four Eight Zerozqvs J Seven Seven P T Fourv Four Equipment Deposits Related Party Zero Three Four Four Eight Zeroyrxm R G W Eight Four M Hf Revolving Financing Zero Three Four Four Eight Zeros Niner J Kqlcmz Seveny Revolving Financing Zero Three Four Four Eight Zero Two Gr K Threemc W X Sixs Nine Revolving Financing Zero Three Four Four Eight Zeroggd Sevenkd Two Jnhqy Revolving Financing Zero Three Four Four Eight Zero T Eight Seven Z K W Q Eight Sevenck S Revolving Financing Zero Three Four Four Eight Zero D Zero Hmcs M Cw V G Three Revolving Financing Zero Three Four Four Eight Zerop R G L N R Hm Zero Xcw Revolving Financing Zero Three Four Four Eight Zero K Kxxf H One Two Five Eighthr Revolving Financing Zero Three Four Four Eight Zerod Vn C Two K T Ninefm R H Revolving Financing Zero Three Four Four Eight Zero Spv Pd Sevenx Six Fg Sy Revolving Financing Zero Three Four Four Eight Zero V Lsmpr Z Sixlx Fc Revolving Financing Zero Three Four Four Eight Zerom P Cw Three C F K Threeq Kf Revolving Financing Zero Three Four Four Eight Zero One Nine Seven Zero Zeror M Ls M Xd Revolving Financing Zero Three Four Four Eight Zerohsh N Khq Hf One S Z Revolving Financing Zero Three Four Four Eight Zero G Ppg R Pp Three Eightkb S Revolving Financing Zero Three Four Four Eight Zero Tm F Nines Fiveq Zl Six Nr Derivative Liability Zero Three Four Four Eight Zero Zero Lqvr F Xqxkt Eight Derivative Liability Zero Three Four Four Eight Zero V Tksmtd Threer Ws Q Derivative Liability Zero Three Four Four Eight Zero Three G Six Four Bh Nine Qw Six Q Eight Derivative Liability Zero Three Four Four Eight Zerosn G K B Eight Zero W Ninedbg Derivative Liability Zero Three Four Four Eight Zero M X M Sb Six Vwf One Zerob Derivative Liability Zero Three Four Four Eight Zerofwk Eight Nl Twoxt D L Six Derivative Liability Zero Three Four Four Eight Zerowc S Tdx Zero Rfs Four K Derivative Liability Zero Three Four Four Eight Zeroh One Lzk Two G One B T H Zero Derivative Liability Zero Three Four Four Eight Zerow Eight P Xzv C Svl V J Derivative Liability Zero Three Four Four Eight Zero Gnd Lx Eight J Nine Tr K One Derivative Liability Zero Three Four Four Eight Zero Eightg H T Q Six Nk Fourm S L Derivative Liability Zero Three Four Four Eight Zero Vcv Ds Pn L Sixw J Nine Derivative Liability Zero Three Four Four Eight Zerol K Tgp D Eight Z Jp Sixn Derivative Liability Zero Three Four Four Eight Zero Zeros K Hq W Vk R Xwq Derivative Liability Zero Three Four Four Eight Zero D Pr Eight Six Qzf Lf B Five Derivative Liability Zero Three Four Four Eight Zeroz Qm Z Hc Q Zeronv T Six Derivative Liability Zero Three Four Four Eight Zero D Nine Z Rp Zero Five Eight Ls Zf Stockholders Equity Zero Three Four Four Eight Zerobnl L Onek Cr One Tpc Stockholders Equity Zero Three Four Four Eight Zerob Sixznqbf Wdc Kd Stockholders Equity Zero Three Four Four Eight Zerohmysklmc L Bcc Stockholders Equity Zero Three Four Four Eight Zero Gy Zs Three Twoz Eight T Nine H N Stockholders Equity Zero Three Four Four Eight Zero Five Eight Ntc Qb N Sixx F F Stockholders Equity Zero Three Four Four Eight Zero Four N L Fr Four Lm M Jsl Stockholders Equity Zero Three Four Four Eight Zero Jp Three G J S Three Wc Nhm Stockholders Equity Zero Three Four Four Eight Zeroqdqsd N R V Q G Fivel Stockholders Equity Zero Three Four Four Eight Zeroz M Four M Ps B Six N N S D Stockholders Equity Zero Three Four Four Eight Zero X H Wl Jxvl Kl Zq Stockholders Equity Zero Three Four Four Eight Zero Xqb V F Fourt N H Nine Td Stockholders Equity Zero Three Four Four Eight Zero One Gpf T Z Twov Xkw S Stockholders Equity Zero Three Four Four Eight Zero One K Twowqwz C Z Three Gk Stockholders Equity Zero Three Four Four Eight Zero Zero F Zq X C Threeh Ws Oneb Stockholders Equity Zero Three Four Four Eight Zerowbz Seven G T Q V H Zx X Stockholders Equity Zero Three Four Four Eight Zeros Fivey Four W Four Nnd Eightl Three Stockholders Equity Zero Three Four Four Eight Zero D Vt Ninel Mf P Six Seven Onez Stockholders Equity Zero Three Four Four Eight Zero One Q Xrp Three Vg Swf Two Stockholders Equity Zero Three Four Four Eight Zero L R Sevenpyb F Onezr Z B Stockholders Equity Zero Three Four Four Eight Zero Z One Seven Ninekf C Zero Two Q J J Stockholders Equity Zero Three Four Four Eight Zero H N Nine Gg T Six X Msxg Stockholders Equity Zero Three Four Four Eight Zero M T One N T Pp Q Ht Zero B Stockholders Equity Zero Three Four Four Eight Zerox Oneh Fcy M Wlb Sevent Stockholders Equity Zero Three Four Four Eight Zero Km D L Gz G X Five X G S Stockholders Equity Zero Three Four Four Eight Zero X Two Tnf Onev D Wm Bh Stockholders Equity Zero Three Four Four Eight Zero Twozny Vdhy Foursf J Stockholders Equity Zero Three Four Four Eight Zero T Hckdnnts Eight Q J Stockholders Equity Zero Three Four Four Eight Zeroxl Eightftz W Wz W T Five Stockholders Equity Zero Three Four Four Eight Zerogn Tx Hhpw H J C L Stockholders Equity Zero Three Four Four Eight Zero Two Threexpb Fourb Zero Sk Threet Stockholders Equity Zero Three Four Four Eight Zero Fiveyy M M Two Eightmqhqp Stockholders Equity Zero Three Four Four Eight Zero Sixd Kp Seven X Vl G Q Zerow Stockholders Equity Zero Three Four Four Eight Zero Four X Fn Mf T P Seveny C M Stockholders Equity Zero Three Four Four Eight Zerohb Prh Frn Sixxfy Stockholders Equity Zero Three Four Four Eight Zero S Zero D H Zerom L Wp C N D Stockholders Equity Zero Three Four Four Eight Zeroyyr Hh Zero Ninem T J Tq Stockholders Equity Zero Three Four Four Eight Zeroc X K D Dc Gsgzl G Stockholders Equity Zero Three Four Four Eight Zero J Zero Xw Eightcb G Rq Seven Three Stockholders Equity Zero Three Four Four Eight Zero Threeqyl Jbv Q Hy Wr Stockholders Equity Zero Three Four Four Eight Zerov Three D Sevenh Three Qx Xw H Zero Stockholders Equity Zero Three Four Four Eight Zero Wcf Eights Lz Zg M C F Stockholders Equity Zero Three Four Four Eight Zero M Four Nine Nt Seven P Oned Xlb Stockholders Equity Zero Three Four Four Eight Zerod Twos W X Seven C Mp B Sk Stockholders Equity Zero Three Four Four Eight Zero Twolbbt F V L P Fivel Q Stockholders Equity Zero Three Four Four Eight Zero Vrq Sr Zero R Five Two X Zy Stockholders Equity Zero Three Four Four Eight Zero R Lq Zero Four K Vp H Hs S Stockholders Equity Zero Three Four Four Eight Zerol Oney Zeroh Eight Gd Zero Seven Five F Stockholders Equity Zero Three Four Four Eight Zero Llhz Zeron Q Six B One W X Stockholders Equity Zero Three Four Four Eight Zerol Seven S Nine V Z B Three Lx Zerol Stockholders Equity Zero Three Four Four Eight Zero R Threexgqzl S Q Q Twox Stockholders Equity Zero Three Four Four Eight Zero Nydrt W R Nineg Z Cw Stockholders Equity Zero Three Four Four Eight Zero P Zeroxg Hk Ph Fivev Eight H Stockholders Equity Zero Three Four Four Eight Zerow N V T W Ninec Five N Fzs Stockholders Equity Zero Three Four Four Eight Zero Fiveb D Ninedxwfg Bb Six Stockholders Equity Zero Three Four Four Eight Zeror Three P Ln Sixgv Mmd J Stockholders Equity Zero Three Four Four Eight Zero B R Wl Eight Ninep Fivex G Tc Stockholders Equity Zero Three Four Four Eight Zeroc S T Zero Zeroxw Six Wh Nineg Stockholders Equity Zero Three Four Four Eight Zero F B Lw Xp Pqqq X T Stockholders Equity Zero Three Four Four Eight Zerorgmz M Threef Three Lnf P Stockholders Equity Zero Three Four Four Eight Zero Zbdp Xg Ninefm Z T Zero Stockholders Equity Zero Three Four Four Eight Zerol Zero T Zero Ms C H Three V Five F Stockholders Equity Zero Three Four Four Eight Zero Fn Three Nine Jl C W B Six Gb Stockholders Equity Zero Three Four Four Eight Zeron Q H Ntz Twok T Z Z Eight Stockholders Equity Zero Three Four Four Eight Zeroq T Z Zero V Eight Sevenn Kq M P Stockholders Equity Zero Three Four Four Eight Zero Glb Six Ninefm Eightf R Nine Eight Stockholders Equity Zero Three Four Four Eight Zero R X M Six Five Hqw G Tf D Stockholders Equity Zero Three Four Four Eight Zerowy J Vs H W G Gwqw Stockholders Equity Zero Three Four Four Eight Zero Ch K Two Three T L V Six P V Z Stockholders Equity Zero Three Four Four Eight Zeron W Nine Tdn J Ngzk J Stockholders Equity Zero Three Four Four Eight Zero Q L Six Three Six Ll Sevens Fk Z Stockholders Equity Zero Three Four Four Eight Zero J Nine G V Bxp Fivet Wvw Stockholders Equity Zero Three Four Four Eight Zero Four S Eightb K Nine D Nine Six Five L Six Options And Warrants Zero Three Four Four Eight Zero Q Q Sevenmw M Eight Seven K Zc Three Options And Warrants Zero Three Four Four Eight Zerodg C Eightw Q Xh Zeror H Five Options And Warrants Zero Three Four Four Eight Zerocdpvh Seven Threeq P Sevenz B Options And Warrants Zero Three Four Four Eight Zero Bnk G J Five Z M Eight Nkg Options And Warrants Zero Three Four Four Eight Zerog S Two Sevenyth Ls Twoqc Options And Warrants Zero Three Four Four Eight Zeror F Nine Zero Pcl Cwgh L Options And Warrants Zero Three Four Four Eight Zero Fy G Q Gkk Hk H T V Options And Warrants Zero Three Four Four Eight Zerov K R Nine Hdb Tm G B J Options And Warrants Zero Three Four Four Eight Zerock Ck Seven J Ty G T V C Options And Warrants Zero Three Four Four Eight Zero Nine Dk Fourrbk Fz Sixl Seven Options And Warrants Zero Three Four Four Eight Zero G Ptg Trw Twog Fourr Five Options And Warrants Zero Three Four Four Eight Zeroz X Four M T T W Xz K D D Options And Warrants Zero Three Four Four Eight Zero K H Dcsc G P Threefnr Options And Warrants Zero Three Four Four Eight Zeroz G One W Hh Two Mqp Lk Options And Warrants Zero Three Four Four Eight Zerogs Four Qk M V T Xr L Seven Related Party Transactions Zero Three Four Four Eight Zeroy Hq Gx Eight Dfg Zero Sp Related Party 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Nine Zero Zero Wp Kr Capital Lease Zero Three Four Four Eight Zero P D Threeh Nine F Tqf T Fm Capital Lease Zero Three Four Four Eight Zero Five T Five Seven Vgbhmkp C Capital Lease Zero Three Four Four Eight Zeroww Mh T Jp Gb Lg V Capital Lease Zero Three Four Four Eight Zero L Fourg Sixk Nine Q Ds Eightrm Capital Lease Zero Three Four Four Eight Zero Xy Q Six C M Eight Jx W Eight T Capital Lease Zero Three Four Four Eight Zero B B Nine P Five Two Zb Three V Dy Capital Lease Zero Three Four Four Eight Zero Sevenvzvwph X M Eight Rm Capital Lease Zero Three Four Four Eight Zerozvp Three Q T Two T Ht S Two Capital Lease Zero Three Four Four Eight Zeros Kw J Two W Zero C Four C Four Zero Capital Lease Zero Three Four Four Eight Zerofgd P R One Gz Lbxt Capital Lease Zero Three Four Four Eight Zero N P Z J S Vw Four P Seven X Four Capital Lease Zero Three Four Four Eight Zero Two Q N Zerom R Threelr Xq Six Capital Lease Zero Three Four Four Eight Zerow M H M Eightp Sixm X H Five R Capital Lease Zero Three Four Four Eight Zero Five G Sx Four Two B Four Five One Kh Capital Lease Zero Three Four Four Eight Zero B M Eight G S Zero M F C X Kz Capital Lease Zero Three Four Four Eight Zero Hvg T B T Twopx Two One K Capital Lease Zero Three Four Four Eight Zerobv S D Five Zero One N Seven W V T Capital Lease Zero Three Four Four Eight Zero R Fh Xsvl Zc R K M Capital Lease Zero Three Four Four Eight Zero Nine X Threey Eightp Threel Plf D Notes Payable Zero Three Four Four Eight Zeroh Z N R Fivey Vgnn Three D Notes Payable Zero Three Four Four Eight Zeroxmws Five Z D Nine Ninev Twod Notes Payable Zero Three Four Four Eight Zero Zero Seven Gz Sevenx X M D Zerozh Notes Payable Zero Three Four Four Eight Zero Five Nine B Pc Seven W Psk Fivem Notes Payable Zero Three Four Four Eight Zerodqbq Six Ccm F V Tr Notes Payable Zero Three Four Four Eight Zeropc Zl Dx Onex N Tp C Notes Payable Zero Three Four Four Eight Zero Three B Zero Two K J T Tq Ninesh Notes Payable Zero Three Four Four Eight Zerown Ldsr W Zeroz One L V Notes Payable Zero Three Four Four Eight Zero One Five Lp Sgsfk Mg Q Notes Payable Zero Three Four Four Eight Zerozz Gy Twoq Ht Dhzs Notes Payable Zero Three Four Four Eight Zero Nineqr B Ps Seven Five F X M R Notes Payable Zero Three Four Four Eight Zero Oneh Eight G G C D Q Five Cn Eight Notes Payable Zero Three Four Four Eight Zero D P Nwp Zvd Rdc B Notes Payable Zero Three Four Four Eight Zeroqf One C Bpqk Kr Cv Notes Payable Zero Three Four Four Eight Zero Jb Bvd Seven Five Hc T Qd Notes Payable Zero Three Four Four Eight Zero Three N H Tt W Mtsk J F Notes Payable Zero Three Four Four Eight Zero Oneb R Sxn Wf Threed Rm Notes Payable Zero Three Four Four Eight Zero Xnk One Xg Vwp X Qf Notes Payable Zero Three Four Four Eight Zero Ktv D D Onem B Onefs Z Subsequent Events Zero Three Four Four Eight Zeroft Rkctsd Sixv Six P Subsequent Events Zero Three Four Four Eight Zero Q Vr T Lyk Vk V Four J Subsequent Events Zero Three Four Four Eight Zero T Three One One F P Nine N D H Kl Subsequent Events Zero Three Four Four Eight Zero G Cb Four Zf Pz Five Eight R G Subsequent Events Zero Three Four Four Eight Zero Zerom Four R R Six L Ftm Ss Subsequent Events Zero Three Four Four Eight Zero Six Mx Qdb T Tc Threeg Five Subsequent Events Zero Three Four Four Eight Zero Ninewf D G Kk L Three W X Q Subsequent Events Zero Three Four Four Eight Zero Three Mcb Zero J Eight Sns Xl Subsequent Events Zero Three Four Four Eight Zeroh Kfty Gg Sixlf D Five Subsequent Events Zero Three Four Four Eight Zerop Td H Ft Six Q Hy Five W Subsequent Events Zero Three Four Four Eight Zerop Seven Q Cpnl D Zerohht Subsequent Events Zero Three Four Four Eight Zerow Twow N Kd W Qv Three B Two Schedule Of Inventory Current Zero Three Four Four Eight Zero W Gt Ts Bgnmqb B Schedule Of Inventory Current Zero Three Four Four Eight Zero C Fourq Twow Ninep Seven Q P B Five Schedule Of Inventory Current Zero Three Four Four Eight Zero Three Ct H H J Four T Zeron X S Schedule Of Inventory Current Zero Three Four Four Eight Zero Five Fours R One K R Jy Onebk Schedule Of Inventory Current Zero Three Four Four Eight Zero Two Vz Zero Eight Vs Five J T Ht Schedule Of Inventory Current Zero Three Four Four Eight Zero Z Three Nine X V Gc Kp Seven Three P Straightline Method Of Depreciation Zero Three Four Four Eight Zero M Qd Fourr Fourx Cnr Twod Straightline Method Of Depreciation Zero Three Four Four Eight Zerofskc X Cvbrc S One Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero Zerob N Eightc V X One Fourx V Eight Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zerofn Jlbp Sevenwg Z Zg Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zerolxm Sevenf Two Five One Six Z L N Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero R H Z Tg Tmk Fivey T Nine Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zerod Z L S Fr Bfy Fivevf Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero Twof Five Rz L R B R Ninef Two Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero W Bd Four Gddy Q T Zero F Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zerowp H F Threey Xt One Twoxx Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero Fivel Gww Fw T Five Sevenmz Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero T R Zb Jpb Dtpd Zero Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero Tworf Fr Sevenr G T Jcx Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero Nw Onek Xcf D One Eight K One Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero Zeroh Sevenchh Fourn Five M J Z Schedule Of Property Plant And Equipment Zero Three Four Four Eight Zero T Jv S M B Ny P Jzw Schedule Of Derivative Liabilities At Fair Value Zero Three Four Four Eight Zerov Onezt Fd Fmk Zerovv Schedule Of Derivative Liabilities At Fair Value Zero Three Four Four Eight Zeroy Nlw Vqwzqh G H Schedule Of Derivative Liabilities At Fair Value Zero Three Four Four Eight Zerobn Ninetch T L G M T Four Schedule Of Stockholdersapos Equity Note Warrants Or Rights Valuation Assumptions Zero Three Four Four Eight Zero One Sixk W D Ninepq Two L K G Schedule Of Stockholdersapos Equity Note Warrants Or Rights Valuation Assumptions Zero Three Four Four Eight Zerolm T B W H P One Sixg Ninek Schedule Of Stockholdersapos Equity Note Warrants Or Rights Valuation Assumptions Zero Three Four Four Eight Zeros Zero Vkhpy Four Q F G Three Schedule Of Stockholdersapos Equity Note Warrants Or Rights Valuation Assumptions Zero Three Four Four Eight Zero B G M L Eightc Fourdm B Dr Schedule Of Stockholdersapos Equity Note Warrants Or Rights Valuation Assumptions Zero Three Four Four Eight Zero Zd Onezbn Nd One M Z Nine Schedule Of Stockholdersapos Equity Note Warrants Or Rights Valuation Assumptions Zero Three Four Four Eight Zero N H R Eight C Q Seven Eightz T B Four Schedule Of Stockholdersapos Equity Note Warrants Or Rights Valuation Assumptions Zero Three Four Four Eight Zero Sg Fivey G Four Eight D G Kkz Schedule Of Stockholdersapos Equity Note Warrants Or Rights Valuation Assumptions Zero Three Four Four Eight Zero Eight Zero Sw Zero Eight Hh Twol P Four Schedules Of Proceeds From Restricted Shares Zero Three Four Four Eight Zerovc T Eight M Eight Z Z V Hw M Schedules Of Proceeds From Restricted Shares Zero Three Four Four Eight Zerom Jkcg Hg Threec Nm Seven Schedules Of Proceeds From Restricted Shares Zero Three Four Four Eight Zerorvhvp Three K Cq Tfl Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Six Two Mz N Sixhm Bb Xk Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero S T Six Xv R Six One Nqq Nine Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Kkrf F Wc Z R B Seven Two Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zerovq Nine S Seven X Zy T Four L T Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero J Dq Cx Jx Bl Tl Z Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zerov H Qq Three G Nine Z X Three J B Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Fourfpmq R X S Rb Bg Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zerow Two Lq Four Zero Zerog S Jw X Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero X Seven C Five W J Zeroy S Wl T Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Eightmv Seven H F X Ld Mv G Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Ninelycy S Fourm Five Zn T Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Nw Twobq W Mq J K Rr Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Zero Three M J Fz Two Sevenmtfk Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Threez N N Z R Mhfm Cw Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero F T B N G Mkpyt Four Three Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero S C Sixw Eightbyk L Two W Six Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Wgb Bp Fourzl Four Lk T Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero One Qh Dmm Ninettb S Z Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zeroph W Threec Seven Zc C Fiveh Five Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Zl L W Wsq Bq Zero Onev Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Rc Zero D Fg Nine Zerox Sevenv C Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zerod D T R Threeq M Three Eight D Nine F Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zeron D M Five Zeroqpp Zero W Two V Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Zerol B S Three Fz W J Gwr Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero T Q Onef Seven K L W Dp W Nine Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero Twotrxs Sevenc V Rzmm Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero S W G Seven Five B Z Xrw M L Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zero J Fived One Three S P Lvr Onef Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zeront T Pc Seven Nine K Nine P K C Schedule Of Sharebased Compensation Stock Options Activity Zero Three Four Four Eight Zerov Pc L L D T X Six Tworl Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero Zerownb Zg S Threel One B T Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero Prk L X F Q Zero P Four Wz Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero Qrd F Xk Five Hm Ly D Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zerodc K Xm Zerorg Three Pb C Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero V L Kx Rv J D Threeqk S Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zerop J F P Z R Wl Sixkk Seven Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zerol Seven Vn C Cph Four H Eightq Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zeroc C W One Twox J Fourz G Six Eight Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zerow One Sevent Zero Zc Mc Eight R W Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero D Five Jz Tmrd G P Nv Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero Bhm Snbk V X Two Ninel Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero Fivey Gf Four B Nfl Skp Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zerohnxxz S C Nine C Twogk Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero G Ztm P N Fourgy Dyw Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero Fourb F T One Eight G N Onel Mn Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero P J T Six M V K Seven Two Zero Three F Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero Four Five K F Twox K Kcw K G Schedule Of Stockholdersapos Equity Note Warrants Or Rights Activity Zero Three Four Four Eight Zero Ninehq Zero Nine N Vh Zq Eight One EX-101.PRE 9 wter-20161231_pre.xml XBRL PRESENTATION FILE XML 10 R1.htm IDEA: XBRL DOCUMENT v3.6.0.2
Document and Entity Information - shares
9 Months Ended
Dec. 31, 2016
Feb. 14, 2017
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Dec. 31, 2016  
Trading Symbol wter  
Entity Registrant Name ALKALINE WATER Co INC  
Entity Central Index Key 0001532390  
Current Fiscal Year End Date --08-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   15,971,977
Entity Current Reporting Status Yes  
Entity Voluntary Filers No  
Entity Well Known Seasoned Issuer No  
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q3  
XML 11 R2.htm IDEA: XBRL DOCUMENT v3.6.0.2
CONSOLIDATED BALANCE SHEET - USD ($)
Dec. 31, 2016
Mar. 31, 2016
Current assets    
Cash and cash equivalents $ 88,540 $ 1,192,119
Accounts receivable 834,777 911,390
Inventory 813,441 434,708
Prepaid expenses 98,716 10,806
Total current assets 1,835,474 2,549,023
Fixed assets - net 1,124,505 1,226,534
Equipment deposits - related party 104,619 0
Total assets 3,064,598 3,775,557
Current liabilities    
Accounts payable 953,588 847,452
Accrued expenses 375,527 251,613
Revolving financing 532,020 475,273
Current portion of capitalized leases 188,303 243,623
Note payable, net of debt discount 0 283,120
Note payable with original issue discount, net of debt discount 0 41,248
Current portion of convertible notes payable, net of debt discount 46,046 0
Derivative liability 3,407 11,143
Total current liabilities 2,098,891 2,153,472
Long-term Liabilities    
Capitalized leases 48,703 95,204
Convertible notes payable, net of debt discount 674,059 0
Total long-term liabilities 722,762 95,204
Total liabilities 2,821,653 2,248,676
Stockholders' equity    
Preferred stock, $0.001 par value, 100,000,000 shares authorized, Series A issued 20,000,000, Series C issued 3,000,000 23,000 23,000
Common stock, $0.001 par value, 200,000,000 shares authorized, 16,030,697 and 14,568,970 shares issued and outstanding at September 30, 2016 and March 31, 2016, respectively 16,029 14,568
Additional paid in capital 22,925,531 21,423,247
Accumulated deficit (22,721,615) (19,933,934)
Total stockholders' equity 242,945 1,526,881
Total liabilities and stockholders' equity $ 3,064,598 $ 3,775,557
XML 12 R3.htm IDEA: XBRL DOCUMENT v3.6.0.2
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares
Dec. 31, 2016
Mar. 31, 2016
Preferred Stock, Par Value Per Share $ 0.001 $ 0.001
Preferred Stock, Shares Authorized 100,000,000 100,000,000
Common Stock, Par Value Per Share $ 0.001 $ 0.001
Common Stock, Shares Authorized 200,000,000 200,000,000
Common Stock, Shares, Issued 16,030,697 14,568,970
Common Stock, Shares, Outstanding 16,030,697 14,568,970
Series A Preferred Stock [Member]    
Preferred Stock, Shares Issued 20,000,000 20,000,000
Series C Preferred Stock [Member]    
Preferred Stock, Shares Issued 3,000,000 3,000,000
XML 13 R4.htm IDEA: XBRL DOCUMENT v3.6.0.2
CONSOLIDATED STATEMENT OF OPERATIONS - USD ($)
3 Months Ended 9 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2015
Revenue $ 2,973,689 $ 1,777,701 $ 8,927,976 $ 5,010,547
Cost of Goods Sold 1,664,459 1,152,514 5,351,284 3,234,840
Gross Profit 1,309,230 625,187 3,576,692 1,775,707
Operating expenses        
Sales and marketing expenses 998,525 703,942 3,144,914 2,098,678
General and administrative 550,732 739,690 2,448,247 2,628,152
Depreciation 90,463 72,204 270,860 214,333
Total operating expenses 1,639,720 1,515,836 5,864,021 4,941,163
Total operating loss (330,490) (890,649) (2,287,329) (3,165,456)
Other income (expense)        
Interest income 0 14 102 24
Interest expense (83,738) (99,112) (296,382) (242,877)
Amortization of debt discount and accretion (85,525) (195,000) (211,808) (283,083)
Change in derivative liability 1,379 90,026 7,736 47,364
Total other income (expense) (167,884) (204,072) (500,352) (478,572)
Net loss $ (498,374) $ (1,094,721) $ (2,787,681) $ (3,644,028)
EARNINGS PER SHARE (Basic) $ (0.03) $ (0.36) $ (0.18) $ (1.29)
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic) 15,604,623 3,006,148 15,391,901 2,831,761
XML 14 R5.htm IDEA: XBRL DOCUMENT v3.6.0.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
9 Months Ended
Dec. 31, 2016
Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (2,787,681) $ (3,644,028)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation expense 270,860 214,333
Stock compensation expense 319,125 1,111,445
Amortization of debt discount and accretion 226,436 296,415
Interest expense relating to amortization of capital lease discount 77,257 77,029
Change in derivative liabilities (7,736) (47,364)
Changes in operating assets and liabilities:    
Accounts receivable 76,613 (282,835)
Inventory (378,733) (7,964)
Prepaid expenses and other current assets (87,910) 15,000
Accounts payable 106,136 116,418
Accounts payable - related party 0 (43,036)
Accrued expenses 123,914 50,632
NET CASH USED IN OPERATING ACTIVITIES (2,061,719) (2,143,955)
CASH FLOWS FROM INVESTING ACTIVITIES    
Purchase of fixed assets (168,831) (19,461)
Equipment deposits - related party (104,619) (194,997)
CASH USED IN INVESTING ACTIVITIES (273,450) (214,458)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from notes payable 1,010,000 1,325,000
Proceeds from convertible note payable 0 435,000
Proceeds from revolving financing 56,747 141,061
Proceeds from sale of common stock, net 425,000 781,200
Proceeds for the exercise of warrants, net 300,000 0
Repayment of notes payable (381,079) (152,058)
Repayment of capital lease (179,078) (152,122)
CASH PROVIDED BY FINANCING ACTIVITIES 1,231,590 2,378,081
NET CHANGE IN CASH (1,103,579) 19,668
CASH AT BEGINNING OF PERIOD 1,192,119 90,113
CASH AT END OF PERIOD 88,540 109,781
INTEREST PAID $ 83,738 $ 112,395
XML 15 R6.htm IDEA: XBRL DOCUMENT v3.6.0.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Dec. 31, 2016
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Text Block]

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended March 31, 2016 (including the notes thereto) set forth on Form 10-K. The Company uses as guidance the Accounting Standard Codification (ASC) as established by the Financial Accounting Standards Board (FASB).

Principles of consolidation

The consolidated financial statements include the accounts of The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company).

All significant intercompany balances and transactions have been eliminated. The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company) will be collectively referred herein to as the “Company”. Any reference herein to “The Alkaline Water Company Inc.”, the “Company”, “we”, “our” or “us” is intended to mean The Alkaline Water Company Inc., including the subsidiaries indicated above, unless otherwise indicated.

Reverse split

Effective December 30, 2015, the Company effected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock. As a result, the authorized common stock has decreased from 1,125,000,000 shares of common stock, with a par value of $0.001 per share, to 22,500,000 shares of common stock, with a par value of $0.001 per share. All shares and per share amounts have been retroactively restated to reflect such split.

On January 21, 2016, stockholders of our company approved, by written consents, an amendment to the articles of incorporation of our company to increase the number of authorized shares of our common stock from 22,500,000 to 200,000,000.

The Company received written consents representing 20,776,000 votes from the holders of shares of its common stock and our Series A Preferred Stock voting as a single class, representing approximately 61% of the voting power of its outstanding common stock and its outstanding Series A Preferred Stock voting as a single class as of the record date (January 12, 2016). On January 21, 2016, there were no written consents received by the Company representing a vote against, abstention or broker non-vote with respect to the proposal.

Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share. In addition, the number of issued and outstanding shares of Series A Preferred Stock continues to be 20,000,000. However, holders of Series A Preferred Stock had 0.2 vote per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse stock split.

On January 22, 2016, the Company amended the certificate of designation for our Series A Preferred Stock by filing an amendment to certificate of designation with the Secretary of State of the State of Nevada. The Company amended the certificate of designation for our Series A Preferred Stock by deleting Section 2.2 of the certificate of designation, which proportionately increases or decreases the number of votes per share of Series A Preferred Stock in the event of any dividend or other distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock. Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock, instead of 0.2 votes per share of Series A Preferred Stock.

Use of estimates

The preparation of financial statements in conformity 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 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 significantly from those estimates.

Cash and cash equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be considered cash equivalents. The carrying value of these investments approximates fair value. The Company had $88,540 and $1,192,119 in cash and cash equivalents at December 31, 2016 and March 31, 2016, respectively.

Accounts receivable and allowance for doubtful accounts

The Company generally does not require collateral, and the majority of its trade receivables are unsecured. The carrying amount for accounts receivable approximates fair value.

Accounts receivable are periodically evaluated for collectability based on past credit history with clients. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current economic conditions.

Inventory

Inventory represents raw and blended chemicals and other items valued at the lower of cost or market with cost determined using the weight average method which approximates first-in first-out method, and with market defined as the lower of replacement cost or realizable value.

As of December 31, 2016 and March, 31 2016, inventory consisted of the following:

    December 31, 2016     March 31, 2016  
Raw materials $ 597,428   $ 300,575  
Finished goods   216,013     134,133  
Total inventory $ 813,441   $ 434,708  

Property and equipment

The Company records all property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter. Depreciation periods are as follows for the relevant fixed assets:

Equipment 5 years
Equipment under capital lease 3 years or term of the lease

Stock-based Compensation

The Company accounts for stock-based compensation to employees in accordance with Accounting Standards Codification (“ASC”) 718. Stock-based compensation to employees is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances.

Revenue recognition

The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount to be paid by the customer is fixed or determinable; and (4) the collection of such amount is probable.

The Company records revenue when it is realizable and earned upon shipment of the finished products. The Company does not accept returns due to the nature of the product. However, the Company will provide credit to our customers for damaged goods.

Fair value measurements

The valuation of our embedded derivatives and warrant derivatives are determined primarily by the multinomial distribution (Lattice) model. An embedded derivative is a derivative instrument that is embedded within another contract, which under the convertible note (the host contract) includes the right to convert the note by the holder, certain default redemption right premiums and a change of control premium (payable in cash if a fundamental change occurs). In accordance with ASC 815 “ Accounting for Derivative Instruments and Hedging Activities” , as amended, these embedded derivatives are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. A warrant derivative liability is also determined in accordance with ASC 815. Based on ASC 815, warrants which are determined to be classified as derivative liabilities are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. The practical effect of this has been that when our stock price increases so does our derivative liability resulting in a non-cash loss charge that reduces our earnings and earnings per share. When our stock price declines, the Company records a non-cash gain, increasing our earnings and earnings per share. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1

unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

 

 

Level 2

inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

   
Level 3

unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

To determine the fair value of our embedded derivatives, management evaluates assumptions regarding the probability of certain future events. Other factors used to determine fair value include our period end stock price, historical stock volatility, risk free interest rate and derivative term. The fair value recorded for the derivative liability varies from period to period. This variability may result in the actual derivative liability for a period either above or below the estimates recorded on our consolidated financial statements, resulting in significant fluctuations in other income (expense) because of the corresponding non-cash gain or loss recorded.

Income taxes

In accordance with ASC 740 “ Accounting for Income Taxes ”, the provision for income taxes is computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

Basic and diluted loss per share

Basic and diluted earnings or loss per share (“EPS”) amounts in the consolidated financial statements are computed in accordance ASC 260 – 10 “ Earnings per Share ”, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Potentially dilutive securities were excluded from the calculation of diluted loss per share, because their effect would be anti-dilutive.

Reclassification

Certain accounts in the prior period were reclassified to conform to the current period financial statements presentation.

Newly issued accounting pronouncements

During the period ended December 31, 2016, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements

XML 16 R7.htm IDEA: XBRL DOCUMENT v3.6.0.2
GOING CONCERN
9 Months Ended
Dec. 31, 2016
GOING CONCERN [Text Block]

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability and/or acquisition and sale of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities, developing its business plan and building its initial customer and distribution base for its products. As a result, the Company incurred accumulated net losses from Inception (June 19, 2012) through the period ended December 31, 2016 of ($22,721,615). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.6.0.2
PROPERTY AND EQUIPMENT
9 Months Ended
Dec. 31, 2016
PROPERTY AND EQUIPMENT [Text Block]

NOTE 3 – PROPERTY AND EQUIPMENT

Fixed assets consisted of the following at:

    December 31, 2016     March 31, 2016  
Machinery and Equipment $ 1,048,699   $ 970,728  
Machinery under Capital Lease   735,781     735,781  
Machinery – Construction in progress   85,600     -  
Office Equipment   58,891     53,631  
Leasehold Improvements   3,979     3,979  
Less: Accumulated Depreciation   (808,445 )   (537,585 )
Fixed Assets, net $ 1,124,505   $ 1,226,534  

Depreciation expense for the nine months ended December 31, 2016 and December 31 2015 was $270,860 and $214,333, respectively.

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.6.0.2
EQUIPMENT DEPOSITS - RELATED PARTY
9 Months Ended
Dec. 31, 2016
EQUIPMENT DEPOSITS - RELATED PARTY [Text Block]

NOTE 4 – EQUIPMENT DEPOSITS – RELATED PARTY

During the nine month period ending December 31, 2016 the company made a net deposit on equipment of $104,619 to Water Engineering Solutions. During the nine month period ending December 31, 2015 the company made a net deposit on equipment of $194,997 to Water Engineering Solutions. Water Engineering Solutions LLC is an entity that is controlled and majority owned by Steven P. Nickolas and Richard A. Wright for the production of our alkaline water.

XML 19 R10.htm IDEA: XBRL DOCUMENT v3.6.0.2
REVOLVING FINANCING
9 Months Ended
Dec. 31, 2016
REVOLVING FINANCING [Text Block]

NOTE 5 – REVOLVING FINANCING

On February 20, 2014, The Alkaline Water Company Inc., and subsidiaries, Alkaline 88, LLC and Alkaline Water Corp., entered into a revolving accounts receivable funding agreement with Gibraltar Business Capital, LLC (“Gibraltar”). Under the agreement, from time to time, the Company agreed to tender to Gibraltar all of our accounts (which is defined as our rights to payment whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, or (ii) for services rendered or to be rendered, or (iii) as otherwise defined in the Uniform Commercial Code of the State of Illinois). Gibraltar will have the right, but will not be obligated, to purchase such accounts tendered in its sole discretion. If Gibraltar purchases such accounts, Gibraltar will make cash advances to us as the purchase price for the purchased accounts.

The Company assumed full risk of non-payment and unconditionally guaranteed the full and prompt payment of the full face amount of all purchased accounts. The Company also agreed to direct all parties obligated to pay the accounts to send all payments for all accounts directly to Gibraltar. All collections from accounts will be applied to our indebtedness, which is defined as the amount owed by us to Gibraltar from time to time, i.e., all cash advances, plus all charges, plus all other amounts owning from us to Gibraltar pursuant to the agreement, less all collections retained by Gibraltar from either purchased accounts or from us which are applied to indebtedness, unless Gibraltar elects to hold any such collections to establish reserves to secure payment of any purchased accounts.

In consideration of Gibraltar’s purchase of the accounts, the Company agreed to pay Gibraltar interest on the indebtedness outstanding at the rate of 8% per annum plus the prime rate in effect at the end of each month with the prime rate for these purposes never being less than 3.25% per annum, calculated on a 360 -day year and payable monthly. In addition, the Company agreed to pay to Gibraltar a monthly collateral/management fee in the amount of 0.5% calculated on the average daily borrowing amount for the given month and an unused line fee of 0.25% monthly based on the difference between the actual line of credit and the average daily borrowing amount for the given month. The Company also agreed to pay to Gibraltar upon execution of the agreement and as of the commencement of each renewal term, a closing cost of 1% of the initial indebtedness in addition to the amount of any other credit accommodations granted from Gibraltar, which amount will be deducted from the first cash advances.

The initial indebtedness is $500,000 and the Company increased the amount available under the revolving accounts receivable funding agreement to $900,000 on May 12, 2016. The Company may request further increase(s) to the in $100,000 increments up to $5,000,000, subject the Company’s financial performance and/or projections are satisfactory to Gibraltar, and absent an event of default. The Company also granted to Gibraltar a security interest in all of our presently-owned and hereafter-acquired personal and fixture property, wherever located. The agreement will continue until the first to occur of (i) demand by Gibraltar; or (ii) 24 months from the first day of the month following the date that the first purchased account is purchased and will be automatically renewed for successive periods of 12 months thereafter unless, at least 30 days prior to the end of the term, the Company gives Gibraltar notice of our intention to terminate the agreement. In addition, the Company will be able to exit the agreement at any time for a fee of 2% of the line of credit in place at the time of prepayment. On December 31, 2016 the amount borrowed on this facility was $532,020.

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DERIVATIVE LIABILITY
9 Months Ended
Dec. 31, 2016
DERIVATIVE LIABILITY [Text Block]

NOTE 6 – DERIVATIVE LIABILITY

On May 1, 2014, the Company sold 346,667 shares of our common stock and warrants to purchase an aggregate of 173,333 shares of our common stock, for aggregate gross proceeds of $2,599,999. Each share of common stock sold in the offering was accompanied by a warrant to purchase one-half of a share of common stock at an exercise price of $7.50 per share for a period of five years from the date of issuance. Each share of common stock, together with each warrant was sold at a price of $7.50. The warrants include down-round provisions that reduce the exercise price of a warrant and convertible instrument

On August 20, 2014, the Company entered into a warrant amendment agreement with certain holders of the Company’s outstanding common stock purchase warrants whereby the Company agreed to reduce the exercise price of the Existing Warrants to $5.00 per share. in consideration for the immediate exercise of the Existing Warrants by the Holders and the Holders are to be issued new common stock purchase warrants of the Company in the form of the Existing Warrants to purchase up to a number of shares of our common stock equal to the number of Existing Warrants exercised by the Holders, provided that the exercise price of the New Warrants will be $6.25 per share, subject to adjustment in the New Warrants. Each New Warrant has a term of five years from the date of issuance. Each share of common stock, together with each warrant was sold at a price of $6.25. The warrants include down-round provisions that reduce the exercise price of a warrant and convertible instrument. As required by ASC 815 “Derivatives and Hedging” , if the Company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price, the investors will be entitled to down-round protection. The Company evaluated whether its warrants and convertible debt instruments contain provisions that protect holders from declines in its stock price or otherwise could result in modification of either the exercise price or the shares to be issued under the respective warrant agreements. The Company determined that a portion of its outstanding warrants and conversion instruments contained such provisions thereby concluding they were not indexed to the Company’s own stock and therefore a derivative instrument. As of December 31, 2016, one holder has 6,667 warrants and the derivative liability associated with these warrants is $1,101.

Pursuant to the engagement agreement dated March 12, 2014 with H.C. Wainwright & Co., LLC (“Wainwright”), Wainwright agreed to act as our exclusive placement agent in connection with the offering. Pursuant to the engagement agreement, the Company, the Company issued warrants to purchase an aggregate of 5.5% of the aggregate number of shares of our common stock sold in the offering, or 19,067 to Wainwright and its designees. These warrants have an exercise price of $9.38 per share and expire on April 16, 2019. The warrants include down-round provisions that reduce the exercise price of a warrant and convertible instrument. As required by ASC 815 “Derivatives and Hedging” the Company evaluated whether its warrants and convertible debt instruments contain provisions that protect holders from declines in its stock price or otherwise could result in modification of either the exercise price or the shares to be issued under the respective warrant agreements. The Company determined that a portion of its outstanding warrants and conversion instruments contained such provisions thereby concluding they were not indexed to the Company’s own stock and therefore a derivative instrument. As of December 31, 2016, six holders have 21,392 warrants and the derivative liability associated with these warrants is $2,306.

The Company analyzed the warrants and conversion feature under ASC 815 “Derivatives and Hedging” to determine the derivative liability. The Company estimated the fair value of these derivatives using a multinomial distribution (Lattice) valuation model. The fair value of these warrant liabilities at March 31, 2016 was $11,143 at December 31, 2016 was $6,357. Changes in the derivative liability for the period ended December 31, 2016 consist of:

    Nine Months Ended  
    December 31, 2016  
Derivative liability at March 31, 2016 $ 11,143  
Change in derivative liability – mark to market   (7,736 )
Derivative liability at December 31, 2016 $ 3,407  
XML 21 R12.htm IDEA: XBRL DOCUMENT v3.6.0.2
STOCKHOLDERS EQUITY
9 Months Ended
Dec. 31, 2016
STOCKHOLDERS EQUITY [Text Block]

NOTE 7 – STOCKHOLDERS’ EQUITY

Preferred shares

Grant of series A preferred stock

On October 8, 2013, the Company issued a total of 20,000,000 shares of non-convertible Series A Preferred Stock to Steven A. Nickolas and Richard A. Wright ( 10,000,000 shares to each), our directors and executive officers, in consideration for the past services, at a deemed value of $0.001 per share. The company valued these shares based on the cost considering the time and average billing rate of these individuals and recorded a $20,000 stock compensation cost for the year ended March 31, 2014.

Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share. In addition, the number of issued and outstanding shares of Series A Preferred Stock continues to be 20,000,000. However, holders of Series A Preferred Stock had 0.2 votes per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse-stock split.

On January 22, 2016, the Company amended the certificate of designation for our Series A Preferred Stock by filing an amendment to certificate of designation with the Secretary of State of the State of Nevada. The Company amended the certificate of designation for our Series A Preferred Stock by deleting Section 2.2 of the certificate of designation, which proportionately increases or decreases the number of votes per share of Series A Preferred Stock in the event of any dividend or other distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock. Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock, instead of 0.2 votes per share of Series A Preferred Stock.

Grant of series C Convertible preferred stock

On March 30, 2016, the Company designated 3,000,000 shares of the authorized and unissued preferred stock of our company as “Series C Preferred Stock” by filing a Certificate of Designation with the Secretary of State of the State of Nevada. Each share of the Series C Preferred Stock will be convertible, without the payment of any additional consideration by the holder and at the option of the holder, into one fully paid and non-assessable share of our common stock at any time after (i) the Company achieves consolidated revenue equal to or greater than $15,000,000 in any 12 month period, ending on the last day of any quarterly period of our fiscal year; or (ii) a Negotiated Trigger Event, defined as an event upon which the Series C Preferred Stock will be convertible as may be agreed by our company and the holder in writing from time to time.

Effective March 31, 2016, the Company issued a total of 3,000,000 shares of our Series C Preferred Stock to Steven P. Nickolas and Richard A. Wright ( 1,500,000 shares to each), our directors and executive officers, pursuant to their employment agreements dated effective March 1, 2016.

Common stock

The Company is authorized to issue 1,125,000,000 shares of $0.001 par value common stock. On May 31, 2013, the Company affected a 15 -for- 1 forward stock split of our $0.001 par value common stock. All shares and per share amounts have been retroactively restated to reflect such split. Prior to the acquisition of Alkaline Water Corp., the Company had 109,500,000 shares of common stock issued and outstanding. On May 31, 2013, the Company issued 43,000,000 shares in exchange for a 100% interest in Alkaline Water Corp. For accounting purposes, the acquisition of Alkaline Water Corp. by The Alkaline Water Company Inc. has been recorded as a reverse acquisition of a company and recapitalization of Alkaline Water Corp. based on the factors demonstrating that Alkaline Water Corp. represents the accounting acquirer. Consequently, after the closing of this agreement the Company adopted the business of Alkaline Water Corp.’s wholly-owned subsidiary, Alkaline 88, LLC. As part of the acquisition, the former management of the Company agreed to cancel 75,000,000 shares of common stock.

On December 30, 2015, the Company affected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock. As a result, the authorized common stock has decreased from 1,125,000,000 shares of common stock, with a par value of $0.001 per share, to 22,500,000 shares of common stock, with a par value of $0.001 per share. All shares and per share amounts have been retroactively restated to reflect such split.

On January 21, 2016, stockholders of our company approved, by written consents, an amendment to the articles of incorporation of our company to increase the number of authorized shares of our common stock from 22,500,000 to 200,000,000.

The Company received written consents representing 20,776,000 votes from the holders of shares of its common stock and our Series A Preferred Stock voting as a single class, representing approximately 61% of the voting power of its outstanding common stock and its outstanding Series A Preferred Stock voting as a single class as of the record date (January 12, 2016). On January 21, 2016, there were no written consents received by the Company representing a vote against, abstention or broker non-vote with respect to the proposal.

Sale of restricted shares

During the period from May 7, 2015 through December 31, 2015, the Company sold units of our securities at a price of $3.50 per unit. Each unit consists of one share of our common stock and one non-transferable common stock purchase warrant, with each common stock purchase warrant entitling the holder to acquire one additional share of our common stock at a price of $5.00 per share for a period of two years. The Company sold 223,200 units during the period ended December 31, 2015 consisting of 223,200 shares of common stock and 223,200 warrants for gross proceeds of $781,200.

The evaluated these transaction using ASC 480-10 “Distinguishing liabilities from equity” and ASC 505 -10 “Equity”. The Company sold 223,200 units and issued 223,200 shares of common stock and issued 223,200 warrants. The warrants were valued using the Black-Scholes option pricing model with the following assumptions:

Market value of stock on purchase date $ 3.75     to   $ 7.10  
Risk-free interest rate   . 26%     to     1.42%  
Dividend yield         0.00%        
Volatility factor   116%     to     161%  
Weighted average expected life (years)         2        

The proceeds were allocated as follows:

Common stock $ 414,036  
Warrant   367,164  
Total proceeds $ 781,200  

On March 4, 2016, the Company completed the offering and sale of an aggregate of 9,000,000 shares of our common stock and warrants to purchase an aggregate of 4,500,000 shares of our common stock, for aggregate gross proceeds of $2,970,000. Each share of common stock the Company sold in the offering was accompanied by one-half of a warrant to purchase one share of common stock at an exercise price of $0.50 per share for a period of two years from the date of issuance. Each share of common stock and accompanying one-half of one warrant was sold at a price of $0.33.

These securities have been registered under the Securities Act of 1933 pursuant to our registration statement on Form S-1, as amended (No. 333-209124), which was declared effective by the Securities and Exchange Commission on February 11, 2016.

Also on March 4, 2016, the Company used the proceeds of the Offering to repay loans in the aggregate principal amounts of $1,500,000 In connection with the repayment of loans in the aggregate principal amounts of $1,500,000 on March 4, 2016, 526,316 shares of our common stock issued to Neil Rogers and held in escrow and 1,500,000 shares of our common stock issued to Turnstone Capital Inc. and held in escrow were cancelled effective as of March 31, 2016.

In June 2016, the Company issued an aggregate of 425,000 shares of our common stock to six investors in a private placement, at a purchase price of $1.00 per share for gross proceeds of $425,000.

Common stock issued for services

On April 1, 2016, the Company issued 5,000 common shares to consultant for services rendered that were valued at the market value on that date of $1.65 per share.

On April 1, 201, the Company issued 12,500 common shares to consultant for services rendered that were valued at the market value on that date of $1.65 per share.

On June 1, 2016, the Company issued 65,000 common shares to consultant for services rendered that were valued at the market value on that date of $1.75 per share.

On August 18, 2016, the Company issued 50,000 common shares to consultant for services rendered that were valued at the market value on that date of $1.53 per share.

On September 20, 2016, the Company agreed to issue 58,720 common shares to consultant for services rendered that were valued at the market value on that date of $1.70 per share .

Warrant Exercised

In July 2016, the Company issued 25,600 shares of our common stock in connection with a cashless exercise of a warrant and cancelled 32,000 warrants were cancelled.

In August 2016 two warrant holders exercised 600,000 warrants to acquire 600,000 common shares at an exercise price of $0.50 per share.

Options Exercised

In August 2016 option holders exercised 85,000 options in a cashless exercise to acquire 56,705 common shares.

XML 22 R13.htm IDEA: XBRL DOCUMENT v3.6.0.2
OPTIONS AND WARRANTS
9 Months Ended
Dec. 31, 2016
OPTIONS AND WARRANTS [Text Block]

NOTE 8 – OPTIONS AND WARRANTS

Stock option awards

On January 29, 2016, the Company granted a total of 1,310,000 stock options to certain employees. The stock options are exercisable at the exercise price of $0.52 per share for a period of 7.6 years from the date of grant and vested upon the date of grant.

On January 29, 2016, the Company granted a total of 3,000,000 stock options Steven A. Nickolas and Richard A. Wright ( 1,500,000 stock options to each). The stock options are exercisable at the exercise price of $0.52 per share for a period of 7.6 years from the date of grant and vested upon the date of grant.

On March 4, 2016, the Company completed the offering and sale of an aggregate of 9,000,000 shares of our common stock the offering included warrants to purchase an aggregate of 4,500,000 shares of our common stock, at an exercise price of $0.50 per share for a period of two years from the date of issuance.

Stock option activity summary covering options is presented in the table below:

                Weighted-  
          Weighted-       Average  
          Average     Remaining  
    Number of     Exercise     Contractual  
    Shares     Price     Term  
                (years)  
Outstanding at March 31, 2015   343,400   $ 7.00     8.2  
Granted   4,310,000   $ 0.52     7.8  
Exercised   -   $   -     -  
Expired/Forfeited   -   $   -     -  
Outstanding at March 31, 2016   4,653,400   $ 0.92     7.7  
Granted   -   $   -     -  
Exercised   (85,000 ) $ 0.52     6.4  
Expired/Forfeited   (8,800 ) $ 1.91     6.4  
Outstanding at December 31, 2016   4,559,600   $ 0.92     5.7  
Exercisable at December 31, 2016   4,559,600   $ 0.92     5.7  

Warrants

For the nine months period ended warrants activity at December 31, 2016 is presented in the table below:

                Weighted-  
          Weighted-     Average  
    Number     Average     Remaining  
    of Warrant     Exercise     Contractual  
    Shares     Price     Term  
                (years)  
Outstanding at March 31, 2016   4,988,118   $ 0.96     .94  
Granted   -   $   -     -  
Exercised   (795,202 ) $ 1.58     .13  
Expired/Forfeited   -   $ 5.00     .05  
Outstanding at December 31, 2016   4,192,916   $ 0.84     .67  
Exercisable at December 31, 2016   4,192,916   $ 0.84     .67  

In July 2016, the Company issued 25,600 shares of our common stock in connection with a cashless exercise of a warrant and cancelled 32,000 warrants were cancelled.

On August 20, 2016 two warrant holder exercised 600,000 warrants to acquire 600,000 common shares at an exercise price of $0.50 per share

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RELATED PARTY TRANSACTIONS
9 Months Ended
Dec. 31, 2016
RELATED PARTY TRANSACTIONS [Text Block]

NOTE 9 – RELATED PARTY TRANSACTIONS

On January 29, 2016, the Company granted a total of 3,000,000 stock options Steven A. Nickolas and Richard A. Wright ( 1,500,000 stock options to each). The stock options are exercisable at the exercise price of $0.52 per share for a period of 7.6 years from the date of grant and vested upon the date of grant.

Effective March 31, 2016, the Company issued a total of 3,000,000 shares of our Series C Preferred Stock to Steven P. Nickolas and Richard A. Wright ( 1,500,000 shares to each), our directors and executive officers, pursuant to their

On August 1, 2013, the Company entered into a 3 -year sub-lease agreement requiring a monthly payment of $2,085 for office space in Scottsdale, Arizona, with a basic monthly lease increase of 8% and 7% on each anniversary date. The Company or the landlord can cancel the lease with 30 days’ notice. The sub-lessor is an entity owned by the Company’s Chief Executive Officer and President.

During the nine month period ending December 31, 2016 the company made a net deposit on equipment of $104,619 to Water Engineering Solutions. During the nine month period ending December 31, 2015 the company made a net deposit on equipment of $139,997 to Water Engineering Solutions. Water Engineering Solutions LLC is an entity that is controlled and majority owned by Steven P. Nickolas and Richard A. Wright for the production of our alkaline water.

XML 24 R15.htm IDEA: XBRL DOCUMENT v3.6.0.2
INCOME TAXES
9 Months Ended
Dec. 31, 2016
INCOME TAXES [Text Block]

NOTE 10 – INCOME TAXES

The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on antic The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

For the years ended March 31, 2016 and 2015, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any deferred tax assets.

Based on the available objective evidence, including the Company’s history of losses, management believes it is more likely than not that any net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2016 and March 31, 2016, respectively.

In accordance with ASC 740, the Company has evaluated its tax positions and determined that there are no uncertain tax positions.

XML 25 R16.htm IDEA: XBRL DOCUMENT v3.6.0.2
CAPITAL LEASE
9 Months Ended
Dec. 31, 2016
CAPITAL LEASE [Text Block]

NOTE 11 –CAPITAL LEASE

On October 22, 2014, the Company entered into a master lease agreement with Veterans Capital Fund, LLC (the “Lessor”) for the secured lease line of credit financing in an amount not to exceed $600,000. The lease is expected to be secured by three new alkaline generating electrolysis system machines. Our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC acted as co-lessees. Water Engineering Solutions, LLC is an entity that is controlled and owned by our President, Chief Executive Officer, director and major stockholder, Steven P. Nickolas, and our Vice-President, Secretary, Treasurer and director, Richard A. Wright. Pursuant to the master lease agreement, the Lessor agreed to lease to us the equipment described in any equipment schedule signed by us and approved by the Lessor. It is expected that any lease under the master lease agreement will be structured for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate factor of 3.4667% of the Lessor’s capital cost. In connection with the entering into the master lease agreement, the Company also entered into a warrant agreement with the Lessor, pursuant to which the Company agreed to issue a warrant to purchase 72,000 shares of our common stock to the Lessor and/or its affiliates at an exercise price of $6.25 per share for a period of five years, 18,000 shares vested.

On February 25, 2015, the Company amended the master lease agreement with Veterans Capital Fund, LLC for the increase in the secured lease line of credit financing to an amount not to exceed $800,000. The lease was secured by new alkaline generating electrolysis system machines by our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC. Water Engineering Solutions, LLC is an entity that is controlled and owned by our President, Chief Executive Officer, director and major stockholder, Steven P. Nickolas, and our Vice-President, Secretary, Treasurer and director, Richard A. Wright. Pursuant to the master lease agreement, the Lessor agreed to lease to us the equipment described in any equipment schedule signed by us and approved by the Lessor. It is expected that any lease under the master lease agreement will be structured for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate factor of 3.4667% of the Lessor’s capital cost. In connection with the entering into the master lease agreement, the Company entered into a warrant agreement with the Lessor, pursuant to which the Company agreed to cancel the previous issued warrant for 72,000 and issue a warrant to purchase 102,000 shares of our common stock to the Lessor and/or its affiliates at an exercise price of $5.00 per share for a period of five years. 18,000 shares vested on October 22, 2014, 13,316 shares on October 28, 2014, 13,606 shares on December 22, 2014, 6,945 shares on February 3, 2015 and 15,799 shares on March 5, 2015. The remaining 18,105 shares will vest on a pro rata basis according to any mounts the Lessor funds pursuant to any lease schedules under the master lease agreement, provided that if the Company draws on 90% or more of the total lease line under the master lease agreement, then all such shares will be deemed to be vested. The Company recorded the bifurcated value of $309,028 of the warrants issued as additional paid in capital, the value was determine using a Black-Scholes, a level 3 valuation measure.

During the year ended March 31, 2015 the Company agreed to lease the specialized equipment used to make our alkaline water with a value of $735,781 under the above Master Lease agreement. The Company evaluated this lease under ASC 840-30 “Leases- Capital Leases” and concluded that these lease where a capital asset.

XML 26 R17.htm IDEA: XBRL DOCUMENT v3.6.0.2
NOTES PAYABLE
9 Months Ended
Dec. 31, 2016
NOTES PAYABLE [Text Block]

NOTE 12 – NOTES PAYABLE

On August 19, 2015, the Company entered into a securities purchase agreement pursuant to which the Company issued a secured term note of our company in the aggregate principal amount of $240,000, together with 20,000 shares of our common stock, in consideration for $200,000. The secured term note bears requires monthly payments of $20,000 per month, along with a final payment due on August 20, 2016.

On November 2, 2015 the Company issued a promissory note to a lender in the amount of $125,000. The note requires weekly payments of $2,451 plus interest. The final payment is due on November 19, 2016.

Between June 10, 2016 and June 20, 2016, the Company entered into loan agreements with various lenders pursuant to which the Company issued convertible promissory notes of our company in the aggregate principal amount of $260,000, The convertible promissory note bears interest at the rate of 10% per annum and matures on June 10, 2017 and is convertible into common shares at $1.00 per share. The Company evaluated this transaction under ASC 470-20-30 “Debt – liability and equity component” determine that a Debt Discount of $240,100 was provided and will be amortized over the 1 -year term of the note. As of December 31, 2016, the unamortized debt discount was $100,041.

On September 20, 2016 the Company agreed to a $1,000,000 loan facility which also included a conversion right of principal and/or accrued interest the convertible note bears interest at the rate of 10% per annum and matures on December 20, 2018 and is convertible into common shares at $1.00 per share. As of December 31, 2016 the Company had drawn $750,000 of the facility. The Company evaluated this transaction under ASC 470-20-30 “Debt – liability and equity component” determine that a Debt Discount of $219,520 was provided and will be amortized over the 2 -year term of the note. As of December 31, 2016, the unamortized debt discount was $189,854.

XML 27 R18.htm IDEA: XBRL DOCUMENT v3.6.0.2
SUBSEQUENT EVENTS
9 Months Ended
Dec. 31, 2016
SUBSEQUENT EVENTS [Text Block]

NOTE 13 – SUBSEQUENT EVENTS

On February 1, 2017, The Alkaline Water Company Inc. and its subsidiaries (the “Company”) entered into a Credit and Security Agreement (the “Credit Agreement”) with SCM Specialty Finance Opportunities Fund, L.P. (the “Lender”).

The Credit Agreement provides the Company with a revolving credit facility (the “Revolving Facility”), the proceeds of which are to be used to repay existing indebtedness of the Company, transaction fees incurred in connection with the Credit Agreement and for working capital needs of the Company.

Under the terms of the Credit Agreement, the Lender has agreed to make cash advances to the Company in an aggregate principal at any one time outstanding not to exceed the lesser of (i) $3 million (the “Revolving Loan Commitment Amount”) and (ii) the Borrowing Base (defined to mean, as of any date of determination, 85% of net eligible billed receivables plus 65% of eligible unbilled receivables, minus certain reserves).

The Credit Agreement has a term of three years, unless earlier terminated by the parties in accordance with the terms of the Credit Agreement.

The principal amount of the Revolving Facility outstanding bears interest at a rate per annum equal to (i) a fluctuating interest rate per annum equal at all times to the rate of interest announced, from time to time, within Wells Fargo Bank at its principal office in San Francisco as its “prime rate,” plus (ii) 3.25%, payable monthly in arrears.

To secure the payment and performance of the obligations under the Credit Agreement, the Company granted to the Lender a continuing security interest in all of the Company’s assets and agreed to a lockbox account arrangement in respect of certain eligible receivables.

In connection with the Credit Agreement, the Company paid to the Lender a $30,000 facility fee. The Company agreed to pay to Lender monthly an unused line fee in amount equal to 0.083% per month of the difference derived by subtracting (i) the average daily outstanding balance under the Revolving Facility during the preceding month, from (ii) the Revolving Loan Commitment Amount. The unused line fee will be payable monthly in arrears. The Company also agreed to pay the Lender as additional interest a monthly collateral management fee equal to 0.35% per month calculated on the basis of the average daily balance under the Revolving Facility outstanding during the preceding month. The collateral management fee will be payable monthly in arrears. Upon a termination of the Revolving Facility, the Company agreed to pay the Lender a termination fee in an amount equal to 2% of the Revolving Loan Commitment Amount if the termination occurs before February 1, 2020. The Company must also pay certain fees in the event that receivables are not properly deposited in the appropriate lockbox account.

The interest rate will be increased by 5% in the event of a default under the Credit Agreement. Events of default under the Credit Agreement, some of which are subject to certain cure periods, include a failure to pay obligations when due, the making of a material misrepresentation to the Lender, the rendering of certain judgments or decrees against the Company and the commencement of a proceeding for the appointment of a receiver, trustee, liquidator or conservator or filing of a petition seeking reorganization or liquidation or similar relief.

The Credit Agreement contains customary representations and warranties and various affirmative and negative covenants including the right of first refusal to provide financing for the Company and the financial and loan covenants, such as the loan turnover rate, minimum EBTDA, fixed charge coverage ratio and minimum liquidity requirements.

On February 1, 2017, the Company drew $686,080.94 from the Revolving Facility, to be disbursed as follows: $628,782.94 to pay off the amount borrowed from Gibraltar Business Capital, LLC (“Gibraltar”) under the revolving accounts receivable funding agreement dated February 20, 2014 (paid off on February 1, 2017) and the balance for the closing costs.

As of February 1, 2017, the Company and Gibraltar entered into a payoff agreement (the “Payoff Agreement”), pursuant to which the Company agreed to pay an amount equal to the outstanding indebtedness and obligations owing from the Company to Gibraltar (the “Gibraltar Obligations”). The Payoff Agreement provided that the Payoff Agreement will confirm that, upon receipt via wire transfer of immediately available funds to Gibraltar in the aggregate amount of $628,782.94, all of the Gibraltar Obligations will be terminated and satisfied in full as of the close of business on February 1, 2017

XML 28 R19.htm IDEA: XBRL DOCUMENT v3.6.0.2
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Dec. 31, 2016
Basis of presentation [Policy Text Block]

Basis of presentation

The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended March 31, 2016 (including the notes thereto) set forth on Form 10-K. The Company uses as guidance the Accounting Standard Codification (ASC) as established by the Financial Accounting Standards Board (FASB).

Principles of consolidation [Policy Text Block]

Principles of consolidation

The consolidated financial statements include the accounts of The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company).

All significant intercompany balances and transactions have been eliminated. The Alkaline Water Company Inc. (a Nevada Corporation), Alkaline Water Corp. (an Arizona Corporation) and Alkaline 88, LLC (an Arizona Limited Liability Company) will be collectively referred herein to as the “Company”. Any reference herein to “The Alkaline Water Company Inc.”, the “Company”, “we”, “our” or “us” is intended to mean The Alkaline Water Company Inc., including the subsidiaries indicated above, unless otherwise indicated.

Reverse split [Policy Text Block]

Reverse split

Effective December 30, 2015, the Company effected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock. As a result, the authorized common stock has decreased from 1,125,000,000 shares of common stock, with a par value of $0.001 per share, to 22,500,000 shares of common stock, with a par value of $0.001 per share. All shares and per share amounts have been retroactively restated to reflect such split.

On January 21, 2016, stockholders of our company approved, by written consents, an amendment to the articles of incorporation of our company to increase the number of authorized shares of our common stock from 22,500,000 to 200,000,000.

The Company received written consents representing 20,776,000 votes from the holders of shares of its common stock and our Series A Preferred Stock voting as a single class, representing approximately 61% of the voting power of its outstanding common stock and its outstanding Series A Preferred Stock voting as a single class as of the record date (January 12, 2016). On January 21, 2016, there were no written consents received by the Company representing a vote against, abstention or broker non-vote with respect to the proposal.

Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share. In addition, the number of issued and outstanding shares of Series A Preferred Stock continues to be 20,000,000. However, holders of Series A Preferred Stock had 0.2 vote per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse stock split.

On January 22, 2016, the Company amended the certificate of designation for our Series A Preferred Stock by filing an amendment to certificate of designation with the Secretary of State of the State of Nevada. The Company amended the certificate of designation for our Series A Preferred Stock by deleting Section 2.2 of the certificate of designation, which proportionately increases or decreases the number of votes per share of Series A Preferred Stock in the event of any dividend or other distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock. Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock, instead of 0.2 votes per share of Series A Preferred Stock.

Use of estimates [Policy Text Block]

Use of estimates

The preparation of financial statements in conformity 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 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 significantly from those estimates.

Cash and cash equivalents [Policy Text Block]

Cash and cash equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be considered cash equivalents. The carrying value of these investments approximates fair value. The Company had $88,540 and $1,192,119 in cash and cash equivalents at December 31, 2016 and March 31, 2016, respectively.

Accounts receivable and allowance for doubtful accounts [Policy Text Block]

Accounts receivable and allowance for doubtful accounts

The Company generally does not require collateral, and the majority of its trade receivables are unsecured. The carrying amount for accounts receivable approximates fair value.

Accounts receivable are periodically evaluated for collectability based on past credit history with clients. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current economic conditions.

Inventory [Policy Text Block]

Inventory

Inventory represents raw and blended chemicals and other items valued at the lower of cost or market with cost determined using the weight average method which approximates first-in first-out method, and with market defined as the lower of replacement cost or realizable value.

As of December 31, 2016 and March, 31 2016, inventory consisted of the following:

    December 31, 2016     March 31, 2016  
Raw materials $ 597,428   $ 300,575  
Finished goods   216,013     134,133  
Total inventory $ 813,441   $ 434,708  
Property and equipment [Policy Text Block]

Property and equipment

The Company records all property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter. Depreciation periods are as follows for the relevant fixed assets:

Equipment 5 years
Equipment under capital lease 3 years or term of the lease
Stock-based Compensation [Policy Text Block]

Stock-based Compensation

The Company accounts for stock-based compensation to employees in accordance with Accounting Standards Codification (“ASC”) 718. Stock-based compensation to employees is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of stock-based payments using the Black-Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances.

Revenue recognition [Policy Text Block]

Revenue recognition

The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount to be paid by the customer is fixed or determinable; and (4) the collection of such amount is probable.

The Company records revenue when it is realizable and earned upon shipment of the finished products. The Company does not accept returns due to the nature of the product. However, the Company will provide credit to our customers for damaged goods.

Fair value measurements [Policy Text Block]

Fair value measurements

The valuation of our embedded derivatives and warrant derivatives are determined primarily by the multinomial distribution (Lattice) model. An embedded derivative is a derivative instrument that is embedded within another contract, which under the convertible note (the host contract) includes the right to convert the note by the holder, certain default redemption right premiums and a change of control premium (payable in cash if a fundamental change occurs). In accordance with ASC 815 “ Accounting for Derivative Instruments and Hedging Activities” , as amended, these embedded derivatives are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. A warrant derivative liability is also determined in accordance with ASC 815. Based on ASC 815, warrants which are determined to be classified as derivative liabilities are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. The practical effect of this has been that when our stock price increases so does our derivative liability resulting in a non-cash loss charge that reduces our earnings and earnings per share. When our stock price declines, the Company records a non-cash gain, increasing our earnings and earnings per share. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1

unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

 

 

Level 2

inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

   
Level 3

unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

To determine the fair value of our embedded derivatives, management evaluates assumptions regarding the probability of certain future events. Other factors used to determine fair value include our period end stock price, historical stock volatility, risk free interest rate and derivative term. The fair value recorded for the derivative liability varies from period to period. This variability may result in the actual derivative liability for a period either above or below the estimates recorded on our consolidated financial statements, resulting in significant fluctuations in other income (expense) because of the corresponding non-cash gain or loss recorded.

Income taxes [Policy Text Block]

Income taxes

In accordance with ASC 740 “ Accounting for Income Taxes ”, the provision for income taxes is computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

Basic and diluted loss per share [Policy Text Block]

Basic and diluted loss per share

Basic and diluted earnings or loss per share (“EPS”) amounts in the consolidated financial statements are computed in accordance ASC 260 – 10 “ Earnings per Share ”, which establishes the requirements for presenting EPS. Basic EPS is based on the weighted average number of common shares outstanding. Diluted EPS is based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net income or loss available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Potentially dilutive securities were excluded from the calculation of diluted loss per share, because their effect would be anti-dilutive.

Reclassification [Policy Text Block]

Reclassification

Certain accounts in the prior period were reclassified to conform to the current period financial statements presentation.

Newly issued accounting pronouncements [Policy Text Block]

Newly issued accounting pronouncements

During the period ended December 31, 2016, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements

XML 29 R20.htm IDEA: XBRL DOCUMENT v3.6.0.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Dec. 31, 2016
Schedule of Inventory, Current [Table Text Block]
    December 31, 2016     March 31, 2016  
Raw materials $ 597,428   $ 300,575  
Finished goods   216,013     134,133  
Total inventory $ 813,441   $ 434,708  
Straight-line Method of Depreciation [Table Text Block]
Equipment 5 years
Equipment under capital lease 3 years or term of the lease
XML 30 R21.htm IDEA: XBRL DOCUMENT v3.6.0.2
PROPERTY AND EQUIPMENT (Tables)
9 Months Ended
Dec. 31, 2016
Schedule of Property, Plant and Equipment [Table Text Block]
    December 31, 2016     March 31, 2016  
Machinery and Equipment $ 1,048,699   $ 970,728  
Machinery under Capital Lease   735,781     735,781  
Machinery – Construction in progress   85,600     -  
Office Equipment   58,891     53,631  
Leasehold Improvements   3,979     3,979  
Less: Accumulated Depreciation   (808,445 )   (537,585 )
Fixed Assets, net $ 1,124,505   $ 1,226,534  
XML 31 R22.htm IDEA: XBRL DOCUMENT v3.6.0.2
DERIVATIVE LIABILITY (Tables)
9 Months Ended
Dec. 31, 2016
Schedule of Derivative Liabilities at Fair Value [Table Text Block]
    Nine Months Ended  
    December 31, 2016  
Derivative liability at March 31, 2016 $ 11,143  
Change in derivative liability – mark to market   (7,736 )
Derivative liability at December 31, 2016 $ 3,407  
XML 32 R23.htm IDEA: XBRL DOCUMENT v3.6.0.2
STOCKHOLDERS EQUITY (Tables)
9 Months Ended
Dec. 31, 2016
Schedule of Stockholders' Equity Note, Warrants or Rights, Valuation Assumptions [Table Text Block]
Market value of stock on purchase date $ 3.75     to   $ 7.10  
Risk-free interest rate   . 26%     to     1.42%  
Dividend yield         0.00%        
Volatility factor   116%     to     161%  
Weighted average expected life (years)         2        
Schedules of Proceeds from Restricted Shares [Table Text Block]
Common stock $ 414,036  
Warrant   367,164  
Total proceeds $ 781,200  
XML 33 R24.htm IDEA: XBRL DOCUMENT v3.6.0.2
OPTIONS AND WARRANTS (Tables)
9 Months Ended
Dec. 31, 2016
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]
                Weighted-  
          Weighted-       Average  
          Average     Remaining  
    Number of     Exercise     Contractual  
    Shares     Price     Term  
                (years)  
Outstanding at March 31, 2015   343,400   $ 7.00     8.2  
Granted   4,310,000   $ 0.52     7.8  
Exercised   -   $   -     -  
Expired/Forfeited   -   $   -     -  
Outstanding at March 31, 2016   4,653,400   $ 0.92     7.7  
Granted   -   $   -     -  
Exercised   (85,000 ) $ 0.52     6.4  
Expired/Forfeited   (8,800 ) $ 1.91     6.4  
Outstanding at December 31, 2016   4,559,600   $ 0.92     5.7  
Exercisable at December 31, 2016   4,559,600   $ 0.92     5.7  
Schedule of Stockholders' Equity Note, Warrants or Rights, Activity [Table Text Block]
                Weighted-  
          Weighted-     Average  
    Number     Average     Remaining  
    of Warrant     Exercise     Contractual  
    Shares     Price     Term  
                (years)  
Outstanding at March 31, 2016   4,988,118   $ 0.96     .94  
Granted   -   $   -     -  
Exercised   (795,202 ) $ 1.58     .13  
Expired/Forfeited   -   $ 5.00     .05  
Outstanding at December 31, 2016   4,192,916   $ 0.84     .67  
Exercisable at December 31, 2016   4,192,916   $ 0.84     .67  
XML 34 R25.htm IDEA: XBRL DOCUMENT v3.6.0.2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
$ / shares
shares
Summary Of Significant Accounting Policies 1 | shares 1,125,000,000
Summary Of Significant Accounting Policies 2 | $ / shares $ 0.001
Summary Of Significant Accounting Policies 3 | shares 22,500,000
Summary Of Significant Accounting Policies 4 | $ / shares $ 0.001
Summary Of Significant Accounting Policies 5 22,500,000
Summary Of Significant Accounting Policies 6 200,000,000
Summary Of Significant Accounting Policies 7 20,776,000
Summary Of Significant Accounting Policies 8 61.00%
Summary Of Significant Accounting Policies 9 | shares 100,000,000
Summary Of Significant Accounting Policies 10 | $ / shares $ 0.001
Summary Of Significant Accounting Policies 11 20,000,000
Summary Of Significant Accounting Policies 12 0.2
Summary Of Significant Accounting Policies 13 10
Summary Of Significant Accounting Policies 14 2.2
Summary Of Significant Accounting Policies 15 10
Summary Of Significant Accounting Policies 16 0.2
Summary Of Significant Accounting Policies 17 | $ $ 88,540
Summary Of Significant Accounting Policies 18 | $ $ 1,192,119
XML 35 R26.htm IDEA: XBRL DOCUMENT v3.6.0.2
GOING CONCERN (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Going Concern 1 $ 22,721,615
XML 36 R27.htm IDEA: XBRL DOCUMENT v3.6.0.2
PROPERTY AND EQUIPMENT (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Property And Equipment 1 $ 270,860
Property And Equipment 2 $ 214,333
XML 37 R28.htm IDEA: XBRL DOCUMENT v3.6.0.2
EQUIPMENT DEPOSITS - RELATED PARTY (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Equipment Deposits - Related Party 1 $ 104,619
Equipment Deposits - Related Party 2 $ 194,997
XML 38 R29.htm IDEA: XBRL DOCUMENT v3.6.0.2
REVOLVING FINANCING (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
mo
d
Revolving Financing 1 8.00%
Revolving Financing 2 3.25%
Revolving Financing 3 360
Revolving Financing 4 0.50%
Revolving Financing 5 0.25%
Revolving Financing 6 1.00%
Revolving Financing 7 $ 500,000
Revolving Financing 8 900,000
Revolving Financing 9 100,000
Revolving Financing 10 $ 5,000,000
Revolving Financing 11 | mo 24
Revolving Financing 12 | mo 12
Revolving Financing 13 | d 30
Revolving Financing 14 2.00%
Revolving Financing 15 $ 532,020
XML 39 R30.htm IDEA: XBRL DOCUMENT v3.6.0.2
DERIVATIVE LIABILITY (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
$ / shares
shares
Derivative Liability 1 | shares 346,667
Derivative Liability 2 | shares 173,333
Derivative Liability 3 $ 2,599,999
Derivative Liability 4 | $ / shares $ 7.50
Derivative Liability 5 $ 7.50
Derivative Liability 6 | $ / shares $ 5.00
Derivative Liability 7 | $ / shares $ 6.25
Derivative Liability 8 $ 6.25
Derivative Liability 9 | shares 6,667
Derivative Liability 10 $ 1,101
Derivative Liability 11 5.50%
Derivative Liability 12 19,067
Derivative Liability 13 | $ / shares $ 9.38
Derivative Liability 14 | shares 21,392
Derivative Liability 15 $ 2,306
Derivative Liability 16 11,143
Derivative Liability 17 $ 6,357
XML 40 R31.htm IDEA: XBRL DOCUMENT v3.6.0.2
STOCKHOLDERS EQUITY (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
mo
$ / shares
shares
Stockholders Equity 1 20,000,000
Stockholders Equity 2 10,000,000
Stockholders Equity 3 | $ / shares $ 0.001
Stockholders Equity 4 | $ $ 20,000
Stockholders Equity 5 100,000,000
Stockholders Equity 6 | $ / shares $ 0.001
Stockholders Equity 7 20,000,000
Stockholders Equity 8 0.2
Stockholders Equity 9 10
Stockholders Equity 10 2.2
Stockholders Equity 11 10
Stockholders Equity 12 0.2
Stockholders Equity 13 3,000,000
Stockholders Equity 14 | $ $ 15,000,000
Stockholders Equity 15 | mo 12
Stockholders Equity 16 3,000,000
Stockholders Equity 17 1,500,000
Stockholders Equity 18 1,125,000,000
Stockholders Equity 19 | $ $ 0.001
Stockholders Equity 20 15
Stockholders Equity 21 1
Stockholders Equity 22 | $ $ 0.001
Stockholders Equity 23 109,500,000
Stockholders Equity 24 43,000,000
Stockholders Equity 25 100.00%
Stockholders Equity 26 75,000,000
Stockholders Equity 27 1,125,000,000
Stockholders Equity 28 | $ / shares $ 0.001
Stockholders Equity 29 22,500,000
Stockholders Equity 30 | $ / shares $ 0.001
Stockholders Equity 31 22,500,000
Stockholders Equity 32 200,000,000
Stockholders Equity 33 20,776,000
Stockholders Equity 34 61.00%
Stockholders Equity 35 | $ / shares $ 3.50
Stockholders Equity 36 | $ / shares $ 5.00
Stockholders Equity 37 223,200
Stockholders Equity 38 223,200
Stockholders Equity 39 223,200
Stockholders Equity 40 | $ $ 781,200
Stockholders Equity 41 223,200
Stockholders Equity 42 223,200
Stockholders Equity 43 223,200
Stockholders Equity 44 9,000,000
Stockholders Equity 45 4,500,000
Stockholders Equity 46 | $ $ 2,970,000
Stockholders Equity 47 | $ / shares $ 0.50
Stockholders Equity 48 | $ $ 0.33
Stockholders Equity 49 | $ 1,500,000
Stockholders Equity 50 | $ $ 1,500,000
Stockholders Equity 51 526,316
Stockholders Equity 52 1,500,000
Stockholders Equity 53 425,000
Stockholders Equity 54 | $ / shares $ 1.00
Stockholders Equity 55 | $ $ 425,000
Stockholders Equity 56 5,000
Stockholders Equity 57 | $ / shares $ 1.65
Stockholders Equity 58 12,500
Stockholders Equity 59 | $ / shares $ 1.65
Stockholders Equity 60 65,000
Stockholders Equity 61 | $ / shares $ 1.75
Stockholders Equity 62 50,000
Stockholders Equity 63 | $ / shares $ 1.53
Stockholders Equity 64 58,720
Stockholders Equity 65 | $ / shares $ 1.70
Stockholders Equity 66 25,600
Stockholders Equity 67 32,000
Stockholders Equity 68 600,000
Stockholders Equity 69 600,000
Stockholders Equity 70 | $ / shares $ 0.50
Stockholders Equity 71 85,000
Stockholders Equity 72 56,705
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OPTIONS AND WARRANTS (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
yr
$ / shares
shares
Options And Warrants 1 1,310,000
Options And Warrants 2 | $ / shares $ 0.52
Options And Warrants 3 | yr 7.6
Options And Warrants 4 3,000,000
Options And Warrants 5 1,500,000
Options And Warrants 6 | $ / shares $ 0.52
Options And Warrants 7 | yr 7.6
Options And Warrants 8 9,000,000
Options And Warrants 9 4,500,000
Options And Warrants 10 | $ / shares $ 0.50
Options And Warrants 11 25,600
Options And Warrants 12 32,000
Options And Warrants 13 600,000
Options And Warrants 14 600,000
Options And Warrants 15 | $ / shares $ 0.50
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RELATED PARTY TRANSACTIONS (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
yr
d
$ / shares
shares
Related Party Transactions 1 3,000,000
Related Party Transactions 2 1,500,000
Related Party Transactions 3 | $ / shares $ 0.52
Related Party Transactions 4 | yr 7.6
Related Party Transactions 5 3,000,000
Related Party Transactions 6 1,500,000
Related Party Transactions 7 3
Related Party Transactions 8 | $ $ 2,085
Related Party Transactions 9 8.00%
Related Party Transactions 10 7.00%
Related Party Transactions 11 | d 30
Related Party Transactions 12 | $ $ 104,619
Related Party Transactions 13 | $ $ 139,997
XML 43 R34.htm IDEA: XBRL DOCUMENT v3.6.0.2
CAPITAL LEASE (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
$ / shares
shares
Capital Lease 1 | $ $ 600,000
Capital Lease 2 3.4667%
Capital Lease 3 72,000
Capital Lease 4 | $ / shares $ 6.25
Capital Lease 5 18,000
Capital Lease 6 | $ $ 800,000
Capital Lease 7 3.4667%
Capital Lease 8 72,000
Capital Lease 9 102,000
Capital Lease 10 | $ / shares $ 5.00
Capital Lease 11 18,000
Capital Lease 12 13,316
Capital Lease 13 13,606
Capital Lease 14 6,945
Capital Lease 15 15,799
Capital Lease 16 18,105
Capital Lease 17 90.00%
Capital Lease 18 | $ $ 309,028
Capital Lease 19 | $ $ 735,781
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NOTES PAYABLE (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
$ / shares
$ / mo
shares
Notes Payable 1 $ 240,000
Notes Payable 2 | shares 20,000
Notes Payable 3 $ 200,000
Notes Payable 4 | $ / mo 20,000
Notes Payable 5 $ 125,000
Notes Payable 6 2,451
Notes Payable 7 $ 260,000
Notes Payable 8 10.00%
Notes Payable 9 | $ / shares $ 1.00
Notes Payable 10 $ 240,100
Notes Payable 11 1
Notes Payable 12 $ 100,041
Notes Payable 13 $ 1,000,000
Notes Payable 14 10.00%
Notes Payable 15 | $ / shares $ 1.00
Notes Payable 16 $ 750,000
Notes Payable 17 $ 219,520
Notes Payable 18 2
Notes Payable 19 $ 189,854
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SUBSEQUENT EVENTS (Narrative) (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Subsequent Events 1 $ 3,000,000
Subsequent Events 2 85.00%
Subsequent Events 3 65.00%
Subsequent Events 4 3.25%
Subsequent Events 5 $ 30,000
Subsequent Events 6 0.083%
Subsequent Events 7 0.35%
Subsequent Events 8 2.00%
Subsequent Events 9 5.00%
Subsequent Events 10 $ 686,080.94
Subsequent Events 11 628,782.94
Subsequent Events 12 $ 628,782.94
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Schedule of Inventory, Current (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Summary Of Significant Accounting Policies Schedule Of Inventory, Current 1 $ 597,428
Summary Of Significant Accounting Policies Schedule Of Inventory, Current 2 300,575
Summary Of Significant Accounting Policies Schedule Of Inventory, Current 3 216,013
Summary Of Significant Accounting Policies Schedule Of Inventory, Current 4 134,133
Summary Of Significant Accounting Policies Schedule Of Inventory, Current 5 813,441
Summary Of Significant Accounting Policies Schedule Of Inventory, Current 6 $ 434,708
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Straight-line Method of Depreciation (Details)
9 Months Ended
Dec. 31, 2016
yr
Summary Of Significant Accounting Policies Straight-line Method Of Depreciation 1 5
Summary Of Significant Accounting Policies Straight-line Method Of Depreciation 2 3
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Schedule of Property, Plant and Equipment (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Property And Equipment Schedule Of Property, Plant And Equipment 1 $ 1,048,699
Property And Equipment Schedule Of Property, Plant And Equipment 2 970,728
Property And Equipment Schedule Of Property, Plant And Equipment 3 735,781
Property And Equipment Schedule Of Property, Plant And Equipment 4 735,781
Property And Equipment Schedule Of Property, Plant And Equipment 5 85,600
Property And Equipment Schedule Of Property, Plant And Equipment 6 0
Property And Equipment Schedule Of Property, Plant And Equipment 7 58,891
Property And Equipment Schedule Of Property, Plant And Equipment 8 53,631
Property And Equipment Schedule Of Property, Plant And Equipment 9 3,979
Property And Equipment Schedule Of Property, Plant And Equipment 10 3,979
Property And Equipment Schedule Of Property, Plant And Equipment 11 (808,445)
Property And Equipment Schedule Of Property, Plant And Equipment 12 (537,585)
Property And Equipment Schedule Of Property, Plant And Equipment 13 1,124,505
Property And Equipment Schedule Of Property, Plant And Equipment 14 $ 1,226,534
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Schedule of Derivative Liabilities at Fair Value (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Derivative Liability Schedule Of Derivative Liabilities At Fair Value 1 $ 11,143
Derivative Liability Schedule Of Derivative Liabilities At Fair Value 2 (7,736)
Derivative Liability Schedule Of Derivative Liabilities At Fair Value 3 $ 3,407
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Schedule of Stockholders' Equity Note, Warrants or Rights, Valuation Assumptions (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 1 3.75
Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 2 7.10
Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 3 26.00%
Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 4 1.42%
Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 5 0.00%
Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 6 116.00%
Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 7 161.00%
Stockholders Equity Schedule Of Stockholders' Equity Note, Warrants Or Rights, Valuation Assumptions 8 $ 2
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Schedules of Proceeds from Restricted Shares (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Stockholders Equity Schedules Of Proceeds From Restricted Shares 1 $ 414,036
Stockholders Equity Schedules Of Proceeds From Restricted Shares 2 367,164
Stockholders Equity Schedules Of Proceeds From Restricted Shares 3 $ 781,200
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Schedule of Share-based Compensation, Stock Options, Activity (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 1 $ 343,400
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 2 7.00
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 3 8.2
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 4 $ 4,310,000
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 5 0.52
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 6 7.8
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 7 $ 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 8 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 9 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 10 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 11 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 12 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 13 $ 4,653,400
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 14 0.92
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 15 7.7
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 16 $ 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 17 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 18 0
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 19 $ (85,000)
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 20 0.52
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 21 6.4
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 22 $ (8,800)
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 23 1.91
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 24 6.4
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 25 $ 4,559,600
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 26 0.92
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 27 5.7
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 28 $ 4,559,600
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 29 0.92
Options And Warrants Schedule Of Share-based Compensation, Stock Options, Activity 30 5.7
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Schedule of Stockholders' Equity Note, Warrants or Rights, Activity (Details)
9 Months Ended
Dec. 31, 2016
USD ($)
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 1 $ 4,988,118
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 2 0.96
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 3 0.94
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 4 $ 0
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 5 0
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 6 0
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 7 $ (795,202)
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 8 1.58
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 9 0.13
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 10 $ 0
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 11 5.00
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 12 0.05
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 13 $ 4,192,916
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 14 0.84
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 15 0.67
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 16 $ 4,192,916
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 17 0.84
Options And Warrants Schedule Of Stockholders' Equity Note, Warrants Or Rights, Activity 18 0.67
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