UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarter ended
For the transition period from ________ to ________
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices, including Zip Code)
Tel No.:
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| None | None | None |
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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
The number of shares outstanding of the registrant’s classes of common stock as of November 11, 2021 was shares.
INDEX
| Page | ||
| PART I. FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 1 |
| Condensed Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020 | 1 | |
| Condensed Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020 (Unaudited) | 2 | |
| Condensed Statements of Changes in Stockholders' Deficit for the three and nine months ended September 30, 2021 and 2020 (Unaudited) | 3 | |
| Condensed Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (Unaudited) | 5 | |
| Notes to Condensed Financial Statements (Unaudited) | 6 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 20 |
| Item 4. | Controls and Procedures | 20 |
| PART II. OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 22 |
| Item 1A. | Risk Factors | 22 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 22 |
| Item 3. | Defaults Upon Senior Securities | 22 |
| Item 4. | Mine Safety Disclosures | 22 |
| Item 5. | Other Information | 22 |
| Item 6. | Exhibits | 23 |
| SIGNATURES | 24 | |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
The information contained in this Report, including in the documents incorporated by reference into this Report, includes some statements that are not purely historical and that are “forward-looking statements.” Such forward-looking statements include, but are not limited to, statements regarding our Company and management’s expectations, hopes, beliefs, intentions or strategies regarding the future, including our financial condition, results of operations, and the expected impact of the offering on the parties’ individual and combined financial performance. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this Report are based on current expectations and beliefs concerning future developments and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting us will be those anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the parties’ control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date hereof.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with our financial statements and the related notes included in this Report.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Energy and Water Development Corp.
Condensed Balance Sheets
| September 30 | December 31, | |||||||
| 2021 | 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Deferred cost | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Deferred revenue | ||||||||
| Convertible loans payable, net of discounts | ||||||||
| Due to officers | ||||||||
| Derivative liability | ||||||||
| Current portion of operating lease liability | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Operating lease liability, net of current portion | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS' DEFICIT: | ||||||||
| Preferred stock, par value $ per share; shares authorized, shares issued and outstanding at both September 30, 2021 and December 31, 2020 | ||||||||
| Common stock, par value $ per share; shares authorized, and shares issued and outstanding in September 30, 2021 and December 31, 2020, respectively | ||||||||
| Common stock subscriptions; 78,033 shares | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ||||||
| TOTAL STOCKHOLDERS' DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | $ | ||||||
See accompanying notes to the condensed financial statements (unaudited).
| 1 |
Energy and Water Development Corp.
Condensed Statements of Operations and Comprehensive Loss
(Unaudited)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| GENERAL and ADMINISTRATIVE EXPENSES | ||||||||||||||||
| Officers’ salaries and payroll taxes | $ | $ | $ | $ | ||||||||||||
| Marketing fees | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Management fees to affiliate | ||||||||||||||||
| Travel and entertainment | ||||||||||||||||
| Other general and administrative expenses | ||||||||||||||||
| TOTAL GENERAL and ADMINISTRATIVE EXPENSES | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Change in fair value of derivative | ( | ) | ||||||||||||||
| Interest income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TOTAL OTHER INCOME (EXPENSE) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS BEFORE TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TAXES | ( | ) | ( | ) | ||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| OTHER COMPREHENSIVE LOSS | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
| TOTAL OTHER COMPREHENSIVE LOSS | ( | ) | ( | ) | ||||||||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share - Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding - Basic and diluted | ||||||||||||||||
See accompanying notes to the condensed financial statements (unaudited).
| 2 |
Energy and Water Development Corp.
Condensed Statement of Changes in Stockholders’ Deficit
For the Three and Nine Months Ended September 30, 2021 and 2020
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Common Stock Subscriptions | Additional Paid-in | Accumulated | Other Comprehensive | Total Stockholders' | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Deficit | |||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
| Common and preferred stock issued to satisfy accrued payroll to officers | — | |||||||||||||||||||||||||||||||||||||||
| Conversion of debt | — | — | ||||||||||||||||||||||||||||||||||||||
| Conversion of interest and fees | — | — | ||||||||||||||||||||||||||||||||||||||
| Derivative settled upon conversion of debt | — | — | — | |||||||||||||||||||||||||||||||||||||
| Reclassification of equity to liability for derivatives | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
| Sale of Common Stock | — | — | ||||||||||||||||||||||||||||||||||||||
| Common and preferred stock issued to satisfy accrued payroll to officers | — | — | — | |||||||||||||||||||||||||||||||||||||
| Conversion of debt | — | — | ||||||||||||||||||||||||||||||||||||||
| Conversion of interest and fees | — | — | ||||||||||||||||||||||||||||||||||||||
| Common stock issued for marketing services | — | — | ||||||||||||||||||||||||||||||||||||||
| Derivative settled upon conversion of debt | — | — | — | |||||||||||||||||||||||||||||||||||||
| Subscription deposits received | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
| Sale of Common Stock | — | — | ||||||||||||||||||||||||||||||||||||||
| Conversion of debt | — | — | ||||||||||||||||||||||||||||||||||||||
| Conversion of interest and fees | — | — | ||||||||||||||||||||||||||||||||||||||
| Derivative settled upon conversion of debt | — | — | — | |||||||||||||||||||||||||||||||||||||
| Subscription deposits received/used | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||
See accompanying notes to the condensed financial statements (unaudited).
3
Energy and Water Development Corp.
Condensed Statement of Changes in Stockholders’ Deficit (Continued)
For the Three and Nine Months Ended September 30, 2021 and 2020
(unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Common Stock Subscriptions | Additional Paid-in | Accumulated | Other Comprehensive | Total Stockholders' | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Deficit | |||||||||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||
| Sale of common stock | — | |||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | — | — | ||||||||||||||||||||||||||||||||||||||
| Common stock issued to satisfy convertible loans payable | — | — | ||||||||||||||||||||||||||||||||||||||
| Common stock issued for interest and fees on convertible loans payable | — | — | ||||||||||||||||||||||||||||||||||||||
| Derivative liability settled upon conversion of loans payable | — | — | — | |||||||||||||||||||||||||||||||||||||
| Common stock issued on subscriptions | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Sale of common stock | — | |||||||||||||||||||||||||||||||||||||||
| Common stock issued on subscriptions | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Sale of common stock | ||||||||||||||||||||||||||||||||||||||||
| Common stock issued on subscriptions | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | |||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| BALANCE AT SEPTEMBER 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
See accompanying notes to the condensed financial statements (unaudited).
| 4 |
Energy and Water Development Corp.
Condensed Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended | ||||||||
| September 30 | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Reconciliation of net loss to net cash used in operating activities | ||||||||
| Amortization of debt discount and deferred financing costs | ||||||||
| Depreciation expense | ||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||
| Stock issued for services | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Accrued management fees and due to officers | ( | ) | ||||||
| Due to affiliates | ( | ) | ||||||
| CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds on convertible loans payable | ||||||||
| Repayments of convertible loans payable | ( | ) | ||||||
| Proceeds from sale of stock | ||||||||
| Proceeds from subscriptions | ||||||||
| CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Net change in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Common shares issued for interest and fees | $ | $ | ||||||
| Reclassification of common stock subscriptions to common stock | $ | $ | ||||||
| Common shares issued for conversion of loans payable | $ | $ | ||||||
| Increase in derivative liability | $ | $ | ||||||
| Derivative settled upon conversion of debt | $ | $ | ||||||
| Reclassification of equity to liability for derivatives | $ | $ | ||||||
| Right of use asset exchanged for lease liability | $ | $ | ||||||
| Common shares issued to satisfy related party liability | $ | $ | ||||||
See accompanying notes to the condensed financial statements (unaudited).
| 5 |
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
Note 1. Incorporation and Nature of Operations
Energy and Water Development Corp. (the “Corporation”, “Company” or “EAWD”), was incorporated under the laws of the State of Florida on December 12, 2007. In September 2019, the Company changed its name from Eurosport Active World Corp. to Energy and Water Development Corp. to better present the Company’s purpose and business sector. We are an engineering services company formed as an outsourcing green tech platform, seeking to exploit renewable energy and water technologies.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The condensed financial statements (unaudited) include the accounts of Energy and Water Development Corp. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements of Energy and Water Development Corp. for the fiscal year ended December 31, 2020, have been omitted.
Certain reclassifications have been made in
December 31, 2020 results to conform to the presentation used in September 30, 2021 including the reclassification of $
Foreign currency translation
The United States dollar (“USD”) is the Company’s reporting currency. The Company has a branch located in Germany. The net sales generated, and the related expenses directly incurred from the operations, if any, are denominated in local currency, Euro (“EUR”). The functional currency of the subsidiary is generally the same as the local currency.
Assets and liabilities measured in Euros are translated into USD at the prevailing exchange rates in effect as of the financial statement date and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive loss in its balance sheets. Income and expense accounts are translated at the average exchange rate for the period. The Company has not, to the date of these condensed financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Use of Estimates
The preparation of condensed financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Estimates which are particularly significant to the condensed financial statements include estimates relating to the determination of impairment of assets, assessment of going concern, the useful life of property and equipment, the determination of the fair value of stock-based compensation, and the recoverability of deferred income tax assets.
6
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
Leases
Effective January 1, 2019, the Company adopted ASC 842- Leases (“ASC 842”). The lease standard provided a number of optional practical expedients in transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired or existing contracts are or contain a lease; did not have to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities).
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable.
Cash
The Company considers short-term
interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has $
Inventory
Inventory is stated at the lower of cost or net realizable value using the first in, first out (FIFO) method. A reserve is established if necessary to reduce excess or obsolete inventories to their net realizable value.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets include purchase deposits, miscellaneous prepaid expenses, value added tax receivable, and a security deposit.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation, including assets acquired under capital leases or finance leases, are recorded over the shorter of the estimated useful life or the lease term of the applicable assets using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Certain capitalized software has been reclassified from property and equipment to intangibles and comparative periods have been adjusted accordingly. Maintenance and repairs are charged to expense as incurred. The estimated useful lives of the Company’s Property and Equipment are as follows:
| Useful Life (in years) | ||
| Office equipment | ||
| Furniture and fixtures |
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.
Described below are the three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities,
Level 2 – Observable prices that are based on inputs not quoted on active markets, but corroborated by market data,
Level 3 – Unobservable inputs are used when little or no market data is available.
The application of the three levels of the
fair value hierarchy under ASC Topic 820-10-35, our derivative liabilities as of September 30, 2021 and December 31, 2020, were $
7
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company adjusts derivative financial instruments to fair value on a recurring basis. The fair value for other assets and liabilities such as cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses, deferred cost and deferred revenue have been determined to approximate carrying amounts due to the short maturities of these instruments. The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with similar terms.
The Corporation accounts for loss per share in accordance with FASB ASC Topic No. 260 - 10, “Earnings Per Share”, which establishes the requirements for presenting earnings per share (“EPS”). FASB ASC Topic No. 260 - 10 requires the presentation of “basic” and “diluted” EPS on the face of the statement of operations. Basic EPS amounts are calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method. When a loss from operations exists, potential common shares are excluded from the computation of diluted EPS because their inclusion would result in an anti-dilutive effect on per share amounts.
For the three and nine months ended September 30, 2020, an aggregate of stock options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive. These stock options expired as of September 30, 2021.
As discussed more fully in Note 7, convertible note holders have the option of converting their loans into common shares subject to the terms and features offered by the specific convertible notes. Some note holders were also granted purchase options to purchase additional shares subject to the features of each purchase option. If the convertible note holders of unexercised convertible notes exercised their conversion feature and the additional purchase options, they would represent and in additional common shares at September 30, 2021 and 2020, respectively. The potential shares from both the conversion feature and the rights to purchase additional shares were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive.
Deferred Financing Costs
The Company has recorded deferred financing costs
as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense
using the straight-line method which approximates the interest rate method over the term of the related debt. As of September 30, 2021 and
December 31, 2020, unamortized deferred financing costs were $
Related Party Transactions
A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. A related party is generally defined as:
| (i) | any person that holds 10% or more of the Company’s securities including such person’s immediate families, | |
| (ii) | the Company’s management, | |
| (iii) | someone that directly or indirectly controls, is controlled by or is under common control with the Company, or | |
| (iv) | anyone who can significantly influence the financial and operating decisions of the Company. |
Customer deposit
The Company´s Distributor EAWC-TV, placed a
$
| 8 |
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
Note 3. Recently Issued Accounting Standards
Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Corporation’s future financial statements. The following are a summary of recent accounting developments.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. In April 2019 and May 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” and ASU No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief” which provided additional implementation guidance on the previously issued ASU. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is an SRC, implementation is not needed until January 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company’s financial statements and disclosures.
On January 1, 2021, the Company adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The adoption of ASU 2019-12 did not have a material impact on the Company’s condensed financial statements.
In June 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. For public business entities, it is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years using the fully retrospective or modified retrospective method. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact this new guidance will have on its condensed financial statements.
In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modification or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”), which will clarify and reduce diversity in practice. Specifically, the new standard includes a recognition model comprising four categories of transactions and corresponding accounting treatment for each category. The category that would apply to a modification or an exchange of an equity-classified warrant would depend on the substance of the modification transaction (e.g., a financing transaction to raise equity versus one to raise debt). This recognition model is premised on the idea that the accounting for the transaction should not differ from what it would have been had the issuer of the warrants paid cash instead of modifying the warrants. ASU 2021-04 will be effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years. Early adoption is permitted. This ASU will be applied prospectively to modifications or exchanges occurring on or after the effective date of the ASU. The Company is currently evaluating the impact this new guidance will have on its condensed financial statements.
| 9 |
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
Note 4. Going Concern
The Company delivered its first equipment sale on
December 26, 2020. The Company will recognize the sale for $
The Company’s ability to transition to profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business and availability to sufficient resources.
Management expects sales operations to continue to expand. If necessary, the Company will need to raise additional funds through the remainder of 2021. Management of the Company intends to raise additional funds through the issuance of equity securities or debt or from deposits related to purchases orders on proposals pending customer acceptance. The ability of the Company to continue as a going concern depends upon its ability to generate sales or obtain additional funding to finance operating losses until the Corporation is profitable
These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Note 5. Accounts Receivable
At September 30, 2021 and December 31, 2020, accounts receivable
was $
Note 6. Inventory
The components of inventory at September 30, 2021, consisted of the following:
| September 30, 2021 | ||||
| Work in progress | $ | |||
| Raw materials | ||||
| Inventory, net | $ | |||
Note 7. Deferred Cost
During the fourth quarter of 2020, the Company delivered its first
equipment sale pursuant to an equipment sale agreement; however, the revenue and construction costs will not be recognized until the equipment
is installed. The installation of the equipment has been deemed to be an unfulfilled performance obligation at September 30, 2021 and
December 31, 2020. Deferred cost at both September 30, 2021 and December 31, 2020 was $
Note 8. Prepaid Expenses and Other Current Assets
The components of prepaid expenses and other current assets at September 30, 2021 and December 31. 2020, consisted of the following:
| September 30, 2021 | December 31, 2021 | |||||||
| Purchase deposits | $ | $ | ||||||
| Miscellaneous prepaid expenses | ||||||||
| Value added tax receivable | ||||||||
| Security deposit | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
| 10 |
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
Note 9. Related Party Transactions
Due to officers
Amounts due to officers as of September 30, 2021 and December 31, 2020 are comprised of the following:
| 2021 | 2020 | |||||||
| (Unaudited) | ||||||||
| Ralph Hofmeier: | ||||||||
| Unsecured advances due to officer | $ | $ | ||||||
| Accrued salaries | ||||||||
| Total due to Ralph Hofmeier | ||||||||
| Irma Velazquez: | ||||||||
| Unsecured advances due to officer | ( |
) | ||||||
| Accrued salaries | ||||||||
| Total due to Irma Velazquez | ||||||||
| $ | $ | |||||||
Unsecured advances due to officers represent unreimbursed Corporation expenses paid by the officers on behalf of the Corporation. These advances are non-interest bearing and are due on demand.
Officer Compensation
Accrued salaries represent amounts accrued in accordance with the employment agreements for Mr. Hofmeier, the Company’s President, Chief Executive Officer and Chairman of the Board, and Ms. Velazquez, the Company’s Chief Operating Officer and Vice-Chairman. Mr. Hofmeier and Ms. Velazquez are also significant stockholders.
On December 18, 2020, the Company entered into
a Settlement Agreement with each of Mr. Hofmeier and Ms. Velazquez whereby Mr. Hofmeier and Ms. Velazquez each agreed to receive
shares of its Series A Preferred Stock with a fair market value of $ (collectively, the “Compensation Shares”). Compensation
Shares are issued in full satisfaction of $
Customer deposit
EAWC-TV functions as a distributor of EAWD product.
In 2019, EAWC-TV, having secured EAWD’s first customer, has placed a $
In 2020, manufacture of the unit was delayed
due to Covid-19 related issues. The Company and EAWC-TV agreed as it had done in 2019, to clear the outstanding balances in the
D/T/F EAWC-TV and the outstanding balance it carried in its accounts payable account for administrative services, which it did on
December 26, 2020 which resulted in an additional down payment of $
Investor deposit and officer compensation
On
December 31, 2020, the Company recorded $
| 11 |
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
As of September 30, 2021, the Company recorded $
Note 10. Property and Equipment, Net
The components of property and equipment at September 30, 2021 consisted of the following:
| September 30, | ||||
| 2021 | ||||
| Office equipment | ||||
| Furniture and fixtures | ||||
Note 11. Convertible Loans Payable
As of September 30, 2021 and December 31, 2020, the
balance of convertible loans payable net of discount was $
The convertible loans were issued in several different
forms as discussed below. During the nine months ended September 30, 2021, the Company issued two convertible loans in the aggregate amount of
$
| Amount | ||||
| Balance of convertible loan payables, net of discounts on December 31, 2019 | $ | |||
| Issuances of debt | ||||
| Repayments | ( | ) | ||
| Amortization of debt discount | ||||
| Debt discount | ( | ) | ||
| Conversions | ( | ) | ||
| Balance of convertible loan payables, net of discounts on December 31, 2020 | $ | |||
| Issuances of debt | ||||
| Repayments | ( | ) | ||
| Amortization of debt discount | ||||
| Debt discount | ( | ) | ||
| Conversions | ( | ) | ||
| Deferred financing costs | ( | ) | ||
| Balance of convertible loan payables, net of discounts on September 30, 2021 | $ | |||
Derivative Liability
The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted, and all additional convertible debentures and warrants are included in the value of the derivative liabilities. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period.
| 12 |
Energy and Water Development Corp.
Notes to the Condensed d Financial Statements (Unaudited)
Based on the various convertible notes described above, the fair value of applicable derivative liabilities on notes and change in fair value of derivative liability are as follows as of September 30, 2021 and December 31, 2020:
| Total | ||||
| Balance of derivative liability as of December 31, 2019 | $ | |||
| Change due to issuances | ||||
| Change due to exercise / redemptions | ( | ) | ||
| Change in fair value | ( | ) | ||
| Balance of derivative liability as of December 31, 2020 | $ | |||
| Change due to issuances | ||||
| Change due to exercise / redemptions | ( | ) | ||
| Change in fair value | ( | ) | ||
| Balance of derivative liability as of June 30, 2021 | $ | |||
A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s common stock purchase warrants that are categorized within Level 3 of the fair value hierarchy at September 30, 2021 and December 31, 2020 is as follows:
| September 30, 2021 | December 31, 2020 | ||||||
| Stock price | $ |
$ |
|||||
| Exercise price | $ |
$ |
|||||
| Contractual term (in years) | |||||||
| Volatility (annual) | % | % | |||||
| Risk-free rate | % | % |
The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations.
Financial Liabilities Measured at Fair Value on a Recurring Basis
Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Derivative liability – warrants and derivative liabilities:
| Fair Value measured at September 30, 2021 | ||||||||||||||||
| Quoted prices in | Significant other | Significant | ||||||||||||||
| active markets | observable inputs | unobservable inputs | Fair value at | |||||||||||||
| (Level 1) | (Level 2) | (Level 3) | September 30, 2021 | |||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| 13 |
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
| Fair value measured at December 31, 2020 | ||||||||||||||||
| Quoted prices in | Significant other | Significant | ||||||||||||||
| active markets | observable inputs | unobservable inputs | Fair value at | |||||||||||||
| (Level 1) | (Level 2) | (Level 3) | December 31, 2020 | |||||||||||||
| Derivative liability | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The fair value accounting standards define fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:
| • | Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets; | |
| • | Level 2 inputs: Inputs, other than quoted prices included in Level 1, that are observable either directly or indirectly; and | |
| • | Level 3 inputs: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. |
There were no transfers between Level 1, 2 or 3 during the nine months ended September 30, 2021 and December 31, 2020.
During the three months ended September 30, 2021 and
2020, the Company recorded a loss of $
Note 12. Leases
The Company’s leases do not provide an implicit
rate that can be readily determined. Therefore, the Company uses discount rates based on the incremental borrowing rate of its current
external debt of
The Company’s weighted-average remaining lease
term relating to its operating leases is
The Company incurred lease expense for its operating
leases of $
The following table presents information about the future maturity of the lease liability under the Company’s operating leases as of September 30, 2021.
| Maturity of Lease Liability | Amount | |||
| 2021 | $ | |||
| 2022 | ||||
| 2023 | ||||
| Thereafter | ||||
| Total undiscounted lease payments | ||||
| Less: Imputed interest | ||||
| Present value of lease liabilities | $ | |||
| Remaining lease term (in years) | ||||
| 14 |
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
Note 13. Stockholders’ Deficit
Preferred Stock
Authorized: shares of voting preferred stock with a par value of $0.
Common Stock
Authorized: shares of voting common stock with a par value of $0.
During the three months ended March 31, 2021 the Company engaged in the following equity events:
| · | common shares issued for $ |
| · | common shares issued for $ |
| · | common shares were issued for $ |
| · | common shares were issued for $ |
| · | common shares were issued for $ |
| · | common shares were issued for $ |
During the three months ended June 30, 2021 the Company engaged in the following equity events:
| · | common shares were issued for $ |
During the three months ended September 30, 2021, the Company engaged in the following equity events:
| · | common shares were issued for $ |
Stock Options
On January 2, 2012, the Corporation’s Board of Directors approved the creation of the 2012 Non-Qualified Stock Option Plan (the “2012 Plan”). The 2012 Plan provides for the issuance of incentive stock options to designated employees, certain key advisors and non-employee members of the Board of Directors with the opportunity to receive grant awards to acquire, in the aggregate, up to shares of the Corporation’s common stock.
A summary of information regarding the Corporation’s common stock options outstanding is as follows:
| Weighted | ||||||||||||
| Average | ||||||||||||
| Weighted | Remaining | |||||||||||
| Number of | Average | Contractual | ||||||||||
| Shares | Exercise Price | Term (Years) | ||||||||||
| Outstanding at December 31, 2019 | $ | |||||||||||
| Issued | — | |||||||||||
| Exercised | — | |||||||||||
| Outstanding at December 31, 2020 | ||||||||||||
| Issued | — | |||||||||||
| Expired | ( |
) | — | |||||||||
| Outstanding at September 30, 2021 | $ | — | ||||||||||
The above outstanding options were granted
on January 1, 2012, to a former executive of the Company. The options were fully vested and exercisable at December 31, 2016.
Accordingly, during the three and nine months ended September 30, 2021 and 2020, the Corporation did
Warrants
On February 17, 2021, the Company entered into an agreement with a
consultant to provide Business Development advisement and analysis services. In consideration, the consultant will be issued
warrant shares. warrants were issued on February 17, 2021, and the remaining
| 15 |
Energy and Water Development Corp.
Notes to the Condensed Financial Statements (Unaudited)
Note 15. Commitments and Contingencies
Commitments
Employment Agreements
The Corporation entered into employment agreements
with its Chief Executive Officer, Mr. Ralph Hofmeier, and its Chief Operating Officer, Ms. Irma Velazquez (collectively the “Employment
Agreements”), effective January 1, 2012. Under the Employment Agreements, the Corporation will pay each of Mr. Hofmeier and Ms.
Velazquez an annual base salary of $
Lease
Our registered office is located at 7901 4th
Street N STE #4174, St. Petersburg, Florida 33702. Our telephone number is +1 (727) 677-9408. Office services are contracted for on
a month-to-month basis in this Address. In October 2020, the Company established its official registered Branch in Hamburg Germany;
the office Address until March 31, 2021 was Offakamp 9f- 2.17. On April 1, 2021, the Company entered into two lease agreements for a
workshop located at Industriestraße 17, 25462 Relligen and an office located at Ballindam 3 20095 Hamburg, Germany. Our
Telephone number is +49 40 809081354. Rent expense in the three months ending September 30, 2021 and 2020 amounted to $
Contingencies
From time to time, the Corporation may be a defendant in pending or threatened legal proceedings arising in the normal course of its business. While the outcome and impact of currently pending legal proceedings cannot be predicted with certainty, the Corporation’s management and legal counsel believe that the resolution of these proceedings through settlement or adverse judgment will not have a material adverse effect on its operating results, financial position or cash flows.
Litigation
EAWD vs Packard and Co-Defendant Nick Norwood - Case number 18-031011 CA-01 Miami-Dade County Circuit Court. The Company is requesting the proof of payment for shares issued in 2008.
CocoGrove –
Case No. 09-81555 CA 21 in Miami-Dade County, Florida. The nature of the litigation was for breach of a lease agreement. This case
is concluded with a judgement against the Company on July 7, 2010 for $
Note 16. Subsequent Events
On October 13, 2021, the Company sold
shares of its common stock to
On November 4, 2021 and November 10, 2021,
the Company completed two conversions of our outstanding convertible debt by exchanging $
On November 9, 2021, the Company established an official Subsidiary of EAWD in Germany to ensure the company is positioned to service its growing business in one of the EU’s most environmentally progressive countries.
| 16 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
INTRODUCTORY STATEMENT
The following discussion should be read in conjunction with our condensed financial statements and the notes to those condensed financial statements that are included elsewhere in this Report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Forward-Looking Statements.”
RESULTS of OPERATIONS
Results of Operations for the Three Months ended September 30, 2021 Compared to the Three Months ended September 30, 2020
Revenue
During the fourth quarter of 2020, EAWD delivered its first equipment sale pursuant to an equipment sale agreement; however, the revenue of $550,000 along with the associate $350,000 of construction costs will not be recognized until the equipment is installed. The installation of the equipment has been deemed to be an unfulfilled performance obligation. The sales agreement, as amended states that EAWD will complete the equipment installation upon notice from the buyer of the final location of the system. Due to the COVID 19 situation in Mexico, the installation has been delayed. For both the three months ended September 30, 2021 and 2020, we generated no revenue.
General and Administrative Expense
General and administrative expense decreased by $34,131 to $207,876 for the three months ended September 30, 2021 from $242,007 for the three months ended September 30, 2020.
The decrease in general and administrative expenses was primarily due to a reduction in management fees to affiliate by $78,148 as the contract with EAWC-TV was terminated as of December 31, 2020 and a reduction in professional fees of $12,878 as a result of lower accounting fees, litigation fees, legal fees and SEC matters, and a reduction in salary expense by $12,878. Those decreases were offset by an increase in rent expense and travel and entertainment of $37,552 and $13,696, respectively.
Other Income (Expense)
Other income (expense) increased expense by $66,569 from a $227,610 net expense (2020) to a $294,179 net expense (2021) primarily as a result of a reduction of interest expense of $806,200 as a result of reduced interest and amortization of debt discount, offset by an increase in the loss on the fair value of derivative liabilities by $872,769.
Net Loss
Net loss increased by $21,436 to a $502,055 net loss for the three months ended September 30, 2021 from a $480,619 net loss for the three months ended September 30, 2020. This increase in net loss was attributable to the net increases and decreases as discussed above.
Results of Operations for the Nine Months ended September 30, 2021 Compared to the Nine Months ended September 30, 2020
Revenue
During the fourth quarter of 2020, EAWD delivered its first equipment sale pursuant to an equipment sale agreement; however, the revenue of $550,000 along with the associate $350,000 of construction costs will not be recognized until the equipment is installed. The installation of the equipment has been deemed to be an unfulfilled performance obligation. The sales agreement, as amended states that EAWD will complete the equipment installation upon notice from the buyer of the final location of the system. Due to the COVID 19 situation in Mexico, the installation has been delayed. For both the nine months ended September 30, 2021 and 2020, we generated no revenue.
| 17 |
General and Administrative Expense
General and administrative expense decreased by $348,733 to $670,707 for the nine months ended September 30, 2021 from $1,019,440 for the nine months ended September 30, 2020.
The decrease in general and administrative expenses was primarily due to a reduction in management fees to affiliate by $276,221 as the contract with EAWC-TV was terminated as of December 31, 2020, a reduction in professional fees of $83,500 as a result of lower accounting fees, litigation fees, legal fees and SEC matters, and a reduction in website expense of $250,289 as we purchased web services and research materials in 2020. These decreases were offset by an increase in marketing expense of $168,832, as we entered into a new agreement with a consulting firm to provide marketing services, and increases in rent expense of $37,552 and an increase in travel and entertainment by $13,663, respectively.
Other Income (Expense)
Other income (expense) increased expense by $324,736 from $344,145 of expense (2020) to $668,881 of expense (2021) primarily as a result of a $583,269 decrease in interest expense related to the issuance of debt instruments which incurred interest and resulted in amortization of debt discount, offset by a $908,005 decrease in the gain in the fair value of derivatives.
Net Loss
Net Loss decreased by $34,999 to a $1,339,588 net loss for the nine months ended September 30, 2021 from a $1,374,587 net loss for the nine months ended September 30, 2020. This increase in net loss was attributable to the net increases and decreases as discussed above.
LIQUIDITY and CAPITAL RESOURCES
We had $59,159 cash and a working capital deficit of $1,923,626 at September 30, 2021. Our operating and capital requirements in connection with supporting our operations will continue to be significant. Since inception, our losses from operations and working capital requirements have been satisfied through the deferral of payment for services performed by our founders and related parties discussed more fully below.
We have sustained operating losses since our operations began. At September 30, 2021, we had an accumulated deficit of $20,697,515. The Company cannot predict how long it will continue to incur further losses or whether it will ever become profitable as this is dependent upon the reduction of certain expenses and success in obtaining more project contracts, among other things. These conditions raise substantial doubt about the entity’s ability to continue as a going concern.
We have satisfied our cash and working capital requirements in the nine months ended September 30, 2021, through the issuance of convertible loans and the sale of common stock. During the nine months ended September 30, 2021, the Company issued $404,000 of convertible loans with a variable vested conversion feature. Refer to Note 7 of the financial statements for more information. In two individual transactions ranging from February 9, 2021 to March 25, 2021, the Company secured interim financing. The notes provide for interest at 8% per annum and require all interest and principal be repaid in one year.
Comparison of Cash Flows for the Nine Months Ended September 30, 2021 (2021) and September 30, 2020 (2020)
Cash Flows from Operating Activities
We used $949,115 of cash in our operating activities in 2021 compared to $779,730 used in 2020. The increase in cash used of $169,385 is due primarily to a $506,232 net reduction in working capital components to $391,070 for 2021 compared to increases of $115,162 in 2020 and a $336,847 net increase in the reconciliation of net loss to net cash used in operating activities.
Cash Flows from Investing Activities
We used $4,301 of cash to purchase property and equipment for the nine months ended September 30, 2021. No cash was used or provides from our investing activities in 2021 or 2020.
Cash Flows from Financing Activities
We received $1,014,461 (2021) and $789,000 (2020) in cash provided from financing activities. The net increase of $225,461 is due primarily to a a $455,461 increase in proceeds from the sale of subscriptions and common stock, offset by a $46,500 decrease in financing through issuance of convertible loans, a $95,500 decrease due to payments of convertible loans payable and a $87,000 decrease in proceeds from subscriptions.
| 18 |
Financial Position
Total Assets – At September 30, 2021, the Company had $1,129,328 representing $59,159 in cash, $52,761 in accounts receivable, $403,932 in inventory, $350,000 in deferred cost, $197,716 in prepaid expenses and other current assets, $4,177 in property and equipment, and $61,583 in operating lease right-of-use assets.
PLAN OF OPERATION AND FUNDING
We expect to generate our first revenues which should, grow in time and lead to a positive cash flow. In the near future, we expect that working capital requirements will continue to be funded through lines of credit, convertible loans and/or further issuances of other securities in sufficient quantities that we will be able to meet our working capital requirement from these possible sources. Additional issuances of equity or convertible debt will result in dilution to our current shareholders.
We seek to focus on three main aspects of the water and energy business: (1) generation, (2) supply, and (3) maintenance. We seek to assist private companies, government entities and NGO’s to build profitable and sustainable supplies/generation capabilities of water and energy as required, by selling them the required technology or technical service to enhance their productivity/operability. With its outsourced technical arm and its commission-based global network of vendors, the Company expects to create sustainable added value to each project it takes on while generating revenue from its engineering and technical consultancy services, project management, sale of our patent pending Self Sufficient Power Supply Atmosphere Water Generation Systems (eAWGs) Solar Energy Generation Systems and Energy Management Systems, royalties from the commercialization of energy and water in certain cases, and revenues from the licensed innovated technologies.
Through our BlueTech Alliance for Water Generation established in December 2020, we have state-of the art technology partners, technology transfer agreements, and technology representation agreements in place relating to aspects of renewable energy and water supply. These unique key relationships offer important selling features and capabilities that differentiated EAWD from its competitors.
The Company plans to generate revenue from its engineering and technical consultancy services, project management, sale of our Self-Sufficient Power Supply Atmosphere Water Generation Systems (eAWGs), Solar Energy Generation Systems, and Energy Management Systems, royalties from the commercialization of energy and water in certain cases, and revenues from the licensed innovated technologies.
MATERIAL COMMITMENTS
Employment Agreements
The Company entered into employment agreements with each of Mr. Hofmeier, its President, Chief Executive Officer and Chairman of the Board, and Ms. Velazquez, its Chief Operating Officer and Vice-Chairman (together, the “Employment Agreements”), effective January 1, 2012. Under the Employment Agreements, the Company agreed to pay each of Mr. Hofmeier and Ms. Velazquez an annual base salary of $125,000 during the first year and $150,000 during the second year and forward. Any increase to the annual base salary after the second year is subject to approval by the company’s Board of Directors. Each Employment Agreement has an initial term of ten (10) years and is automatically renewed for successive one-year terms unless either party delivers timely notice of its intention not to renew.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
GOING CONCERN
The Company delivered its first equipment sale on December 26, 2020. The Company will recognize the sale for $550,000 net of costs of $350,000 and earning a $200,000 gross profit once the installation is complete. The next operational step to accomplish is to achieve sufficient sales volume to yield positive a net income. The Company has incurred operating losses since it began operations (December 2012) totaling $20,697,515 at September 30, 2021. During the three and nine months ended September 30, 2021, the Corporation incurred net losses of $502,055 and $1,339,588, respectively. The Company also incurred a working capital deficit of $1,923,626 at September 30, 2021.
The Company’s ability to transition to profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business and availability to sufficient resources.
| 19 |
At the filling date of this report, management plans to conclude the sales in Germany and in other regions of the world further the received approved proposals, which would bring a growing revenue. Managements plans to expand the sales operations by greater market penetration of the Agriculture, Industrial and Community development market with its water and energy generation, innovative solution, this to make sales operations to continue to expand. Management also plans to raise additional funds through during 2021; through the issuance of equity securities and from deposits related to purchases orders on proposals pending customer acceptance as well, if necessary, loans from management and third-party lender. Management also plans to deferral expenses by centralizing assembling, logistic and administration operations expenses.
The ability of the Company to continue as a going concern depends upon its ability to generate sales or obtain additional funding to finance operating losses until the Corporation is profitable.
ADDRESSING CHALLENGS POST-COVID-19
As of November 1, 2021, the cumulative number of cases reported globally is now over 247 million and the cumulative number of deaths is just over 5.0 million (WHO) and has caused the worst global economic contraction of the past 80 years (IMF). The concerted global efforts achieved the development of vaccines that have helped to reduce a person´s risk of contracting the virus. However, as the COVID-19 pandemic continues to evolve, the disruptions due to COVID 19 could continue causing a materially and adversely affect our business, financial condition and results of operations. If the corona virus cannot get under control and or worsens in any regions in which we have material operations or sales, our business activities originating from affected areas, including sales, manufacturing and supply chain related activities, could be adversely affected. Disruptive activities could include the temporary closure of our manufacturing facilities and those used in our supply chain processes, restrictions on the export or shipment of our products, significant cutback of ocean container delivery from Germany, business closures in impacted areas, and restrictions on our employees’ and consultants’ ability to travel and to meet with customers. The extent to which COVID-19 impacts our results will depend on future developments, which still uncertain and cannot be predicted, including new information which may emerge concerning the severity of the virus variants and the actions to contain it or treat its impact, among others. COVID-19 could also continue to result in social, economic and labor instability in the countries in which we or our customers and suppliers operate.
CRITICAL ACCOUNTING POLICIES
Our critical accounting policies are set forth in Note 2 to the condensed financial statements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We do not expect the adoption of recently issued accounting pronouncements as discussed in Note 3 to have a significant impact on our results of operations, financial position or cash flow.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13(a)-15(e) and 15(d)-15(e)) as of December 31, 2020. This evaluation was carried out by our Principal Executive Officer and our Principal Finance Officer. Based on that evaluation, our Principal Executive Officer and our Principal Finance Officer concluded that, as of September 30, 2021, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses, which have caused management to conclude that, as of September 30, 2021, our disclosure controls and procedures were not effective:
| · | Inadequate segregation of duties, | |
| · | Limited level of multiple reviews among those tasked with preparing the financial statements, | |
| · | Lack of a formal internal control environment. |
| 20 |
Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
We intend to implement changes to strengthen our internal controls in addition to the enhanced controls discussed above. We are in the process of implementing a remediation plan for the identified material weaknesses and we expect that work on the plan will continue throughout 2021, as financial resources permit. Specifically, to address the material weaknesses arising from insufficient accounting personnel, the Company plans to hire a full-time Chief Financial Officer and has secured the services of additional accounting personnel on a consulting basis which begins to address segregation of duties. The Company is currently formalizing its policies and procedures in writing and to improve the integration of its financial and reporting system into non accounting departments. Where appropriate, the Company is receiving advice and assistance from third-party experts as it implements and refines its remediation plan.
Additional measures may be necessary, and the measures we expect to take to improve our internal controls may not be sufficient to address the issues identified, to ensure that our internal controls are effective or to ensure that such material weakness or other material weaknesses would not result in a material misstatement of our annual or interim financial statements. In addition, other material weaknesses or significant deficiencies may be identified in the future. If we are unable to correct deficiencies in internal controls in a timely manner, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC will be adversely affected. This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally materially and adversely impact our business and financial condition.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2021 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Management’s conclusion that our disclosure controls and procedures were not effective means that if a fraud or material misstatement of the company’s annual or interim financial statements were to occur; there is a reasonable possibility that they will not be prevented or detected on a timely basis. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
| 21 |
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
EAWD vs Packard and Co-Defendant Nick Norwood - Case number 18-031011 CA-01 Miami-Dade County Circuit Court. The company is requesting the proof of payment for shares issued in 2008.
CocoGrove – Case No. 09-81555 CA 21 in Miami-Dade County, Florida. The nature of the litigation was for breach of a lease agreement. This case is concluded with a judgement against the Company on July 7, 2010 for $84,393 plus 6% interest which as of September 30, 2021 interest had accrued to $57,870. There have been no efforts to seek collection of this judgement. Management intends to settle this judgement when it is in a financial position to make a payment.
ITEM 1A. RISK FACTORS
We are a smaller reporting company and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company issued the following common shares during the nine months ended September 30, 2021:
| • | 2,713,095 common shares issued for $613,122 for the sale of shares, | |
| • | 500,000 common shares issued for $165,000 in marketing and consulting, | |
| • | 690,606 common shares were issued for $66,000 to convertible note holder is satisfaction of their notes, | |
| • | 38,690 common shares were issues for $3,441 to pay interest and fees, | |
| • | 10,000,000 common shares were issued for $1,500,000 to our CEO as a compensation bonus, | |
| • | 40,000 common shares were issued for $4,000 for sales of shares, | |
| • | 2,241,662 common shares were issued for $453,100 for the sale of shares, and | |
| • | 2,278,916 common shares were issued for $127,340 for the sale of shares |
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
N/A
ITEM 5. OTHER INFORMATION
On October 15, 2020, EAWD announced its official registration of a new branch of the corporation in Hamburg Germany. The new location in Germany will allow the company to expand capacity for assembling, manufacturing, customer support, engineering, sales and services, and leadership functions across the entity.
| 22 |
ITEM 6. EXHIBITS
EXHIBIT INDEX
| Incorporated by Reference | Filed or Furnished | |||||||||||
| Exhibit # | Exhibit Description | Form | Date Filed | Exhibit # | Herewith | |||||||
| 31.1 | Certification of Principal Executive Officer (Section 302) | * | ||||||||||
| 31.2 | Certification of Principal Financial Officer (Section 302) | * | ||||||||||
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer (Section 906) | * | ||||||||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | * | ||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | * | ||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | * | ||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | * | ||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | * | ||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | * | ||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | * | ||||||||||
| 23 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| Energy and Water Development Corp. | ||
| Date: November 15, 2021 | By: | /s/ Ralph Hofmeier |
| Ralph Hofmeier | ||
| President and Chief Executive Officer (Principal Executive Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Ralph Hofmeier | President, Chief Executive Officer, Director, and | November 15, 2021 | ||
| Ralph Hofmeier | Chairman (Principal Executive Officer) | |||
| /s/ Irma Velazquez | Chief Operating Officer (Principal Financial Officer and | November 15, 2021 | ||
| Irma Velazquez | Principal Accounting Officer), Director and Vice-Chairman | |||
24
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Ralph Hofmeier, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Energy and Water Development Corp.;
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. The registrant’s other certifying officer(s) and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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 our 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. The registrant’s other certifying officer(s) and I have disclosed, based on our 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.
Date: November 15, 2021
| /s/ Ralph Hofmeier |
|
Ralph Hofmeier President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Irma Velazquez, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Energy and Water Development Corp.;
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. The registrant’s other certifying officer(s) and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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 our 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. The registrant’s other certifying officer(s) and I have disclosed, based on our 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.
Date: November 15, 2021
| /s/ Irma Velazquez |
|
Irma Velazquez Chief Operating Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Energy and Water Development Corp. (the “Company”) on Form 10-Q for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof, I, Ralph Hofmeier, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The Quarterly Report 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 Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Ralph Hofmeier |
|
Ralph Hofmeier President and Chief Executive Officer |
Dated: November 15, 2021
In connection with the Quarterly Report of Energy and Water Development Corp. (the “Company”) on Form 10-Q for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof, I, Irma Velazquez, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The Quarterly Report 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 Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Irma Velazquez |
|
Irma Velazquez Chief Operating Officer |
Dated: November 15, 2021
Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 500,000,000 | 500,000,000 |
| Preferred stock, share issued | 9,780,976 | 9,780,976 |
| Preferred stock, shares outstanding | 9,780,976 | 9,780,976 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
| Common stock, shares issued | 139,578,193 | 123,316,886 |
| Common stock, shares outstanding | 139,578,193 | 123,316,886 |
Condensed Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| GENERAL and ADMINISTRATIVE EXPENSES | ||||
| Officers’ salaries and payroll taxes | $ 68,195 | $ 75,000 | $ 225,472 | $ 225,000 |
| Marketing fees | 1,357 | 0 | 168,832 | 0 |
| Professional fees | 68,272 | 81,150 | 159,538 | 243,038 |
| Management fees to affiliate | 0 | 78,148 | 0 | 276,221 |
| Travel and entertainment | 13,696 | 0 | 13,696 | 33 |
| Other general and administrative expenses | 56,356 | 7,709 | 103,169 | 275,148 |
| TOTAL GENERAL and ADMINISTRATIVE EXPENSES | 207,876 | 242,007 | 670,707 | 1,019,440 |
| LOSS FROM OPERATIONS | (207,876) | (242,007) | (670,707) | (1,019,440) |
| OTHER INCOME (EXPENSE) | ||||
| Change in fair value of derivative | (178,673) | 694,096 | 4,820 | 912,825 |
| Interest income (expense), net | (115,506) | (921,706) | (673,701) | (1,256,970) |
| TOTAL OTHER INCOME (EXPENSE) | (294,179) | (227,610) | (668,881) | (344,145) |
| LOSS BEFORE TAXES | (502,055) | (469,617) | (1,339,588) | (1,363,585) |
| TAXES | 0 | (11,002) | 0 | (11,002) |
| NET LOSS | (502,055) | (480,619) | (1,339,588) | (1,374,587) |
| OTHER COMPREHENSIVE LOSS | ||||
| Foreign currency translation adjustments | (10,027) | 0 | (13,933) | 0 |
| TOTAL OTHER COMPREHENSIVE LOSS | (10,027) | 0 | (13,933) | 0 |
| COMPREHENSIVE LOSS | $ (512,082) | $ (480,619) | $ (1,353,521) | $ (1,374,587) |
| Net loss per common share - Basic and diluted | $ (0.00) | $ (0.00) | $ (0.01) | $ (0.01) |
| Weighted average number of common shares outstanding - Basic and diluted | 139,144,989 | 107,287,560 | 134,931,518 | 100,764,795 |
Incorporation and Nature of Operations |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Incorporation and Nature of Operations | Note 1. Incorporation and Nature of Operations
Energy and Water Development Corp. (the “Corporation”, “Company” or “EAWD”), was incorporated under the laws of the State of Florida on December 12, 2007. In September 2019, the Company changed its name from Eurosport Active World Corp. to Energy and Water Development Corp. to better present the Company’s purpose and business sector. We are an engineering services company formed as an outsourcing green tech platform, seeking to exploit renewable energy and water technologies.
|
Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The condensed financial statements (unaudited) include the accounts of Energy and Water Development Corp. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements of Energy and Water Development Corp. for the fiscal year ended December 31, 2020, have been omitted.
Certain reclassifications have been made in December 31, 2020 results to conform to the presentation used in September 30, 2021 including the reclassification of $10,040,000 from additional paid-in capital to common stock subscriptions on the condensed balance sheets and condensed statements of changes in stockholders’ deficit. These reclassifications had no effect on the reported results of operations of the Company or total equity.
Foreign currency translation
The United States dollar (“USD”) is the Company’s reporting currency. The Company has a branch located in Germany. The net sales generated, and the related expenses directly incurred from the operations, if any, are denominated in local currency, Euro (“EUR”). The functional currency of the subsidiary is generally the same as the local currency.
Assets and liabilities measured in Euros are translated into USD at the prevailing exchange rates in effect as of the financial statement date and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive loss in its balance sheets. Income and expense accounts are translated at the average exchange rate for the period. The Company has not, to the date of these condensed financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Use of Estimates
The preparation of condensed financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Estimates which are particularly significant to the condensed financial statements include estimates relating to the determination of impairment of assets, assessment of going concern, the useful life of property and equipment, the determination of the fair value of stock-based compensation, and the recoverability of deferred income tax assets.
Leases
Effective January 1, 2019, the Company adopted ASC 842- Leases (“ASC 842”). The lease standard provided a number of optional practical expedients in transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired or existing contracts are or contain a lease; did not have to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities).
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable.
Cash
The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has $62,541 and $12,047 cash at September 30, 2021 and December 31, 2020, respectively.
Inventory
Inventory is stated at the lower of cost or net realizable value using the first in, first out (FIFO) method. A reserve is established if necessary to reduce excess or obsolete inventories to their net realizable value.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets include purchase deposits, miscellaneous prepaid expenses, value added tax receivable, and a security deposit.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation, including assets acquired under capital leases or finance leases, are recorded over the shorter of the estimated useful life or the lease term of the applicable assets using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Certain capitalized software has been reclassified from property and equipment to intangibles and comparative periods have been adjusted accordingly. Maintenance and repairs are charged to expense as incurred. The estimated useful lives of the Company’s Property and Equipment are as follows:
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.
Described below are the three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities, Level 2 – Observable prices that are based on inputs not quoted on active markets, but corroborated by market data, Level 3 – Unobservable inputs are used when little or no market data is available.
The application of the three levels of the fair value hierarchy under ASC Topic 820-10-35, our derivative liabilities as of September 30, 2021 and December 31, 2020, were $968,751 and $310,641, respectively and measured on Level 3 inputs.
Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company adjusts derivative financial instruments to fair value on a recurring basis. The fair value for other assets and liabilities such as cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses, deferred cost and deferred revenue have been determined to approximate carrying amounts due to the short maturities of these instruments. The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with similar terms.
The Corporation accounts for loss per share in accordance with FASB ASC Topic No. 260 - 10, “Earnings Per Share”, which establishes the requirements for presenting earnings per share (“EPS”). FASB ASC Topic No. 260 - 10 requires the presentation of “basic” and “diluted” EPS on the face of the statement of operations. Basic EPS amounts are calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method. When a loss from operations exists, potential common shares are excluded from the computation of diluted EPS because their inclusion would result in an anti-dilutive effect on per share amounts.
For the three and nine months ended September 30, 2020, an aggregate of stock options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive. These stock options expired as of September 30, 2021.
As discussed more fully in Note 7, convertible note holders have the option of converting their loans into common shares subject to the terms and features offered by the specific convertible notes. Some note holders were also granted purchase options to purchase additional shares subject to the features of each purchase option. If the convertible note holders of unexercised convertible notes exercised their conversion feature and the additional purchase options, they would represent and in additional common shares at September 30, 2021 and 2020, respectively. The potential shares from both the conversion feature and the rights to purchase additional shares were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive.
Deferred Financing Costs
The Company has recorded deferred financing costs as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense using the straight-line method which approximates the interest rate method over the term of the related debt. As of September 30, 2021 and December 31, 2020, unamortized deferred financing costs were $10,739 and $0, respectively and are netted against the related debt.
Related Party Transactions
A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. A related party is generally defined as:
Customer deposit
The Company´s Distributor EAWC-TV, placed a $550,000 order for a solar powered atmospheric water generator (“AWG”) for one of its customers. EAWC-TV and the Company on December 13, 2019, agreed to accept a $303,742 reduction in the balance owed by EAWD to EAWC-TV as a deposit with EAWD related to this order. The deposit will be satisfied through delivery of the equipment when performance has occurred. The equipment was built in Germany. EAWC-TV has an unpaid balance on the equipment of $52,761, which represents the entire balance of the Company´s outstanding accounts receivables as September 30, 2021. |
Recently Issued Accounting Standards |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Accounting Changes and Error Corrections [Abstract] | |
| Recently Issued Accounting Standards | Note 3. Recently Issued Accounting Standards
Accounting standards promulgated by the FASB are subject to change. Changes in such standards may have an impact on the Corporation’s future financial statements. The following are a summary of recent accounting developments.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. In April 2019 and May 2019, the FASB issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” and ASU No. 2019-05, “Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief” which provided additional implementation guidance on the previously issued ASU. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is an SRC, implementation is not needed until January 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company’s financial statements and disclosures.
On January 1, 2021, the Company adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The adoption of ASU 2019-12 did not have a material impact on the Company’s condensed financial statements.
In June 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. For public business entities, it is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years using the fully retrospective or modified retrospective method. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact this new guidance will have on its condensed financial statements.
In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modification or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”), which will clarify and reduce diversity in practice. Specifically, the new standard includes a recognition model comprising four categories of transactions and corresponding accounting treatment for each category. The category that would apply to a modification or an exchange of an equity-classified warrant would depend on the substance of the modification transaction (e.g., a financing transaction to raise equity versus one to raise debt). This recognition model is premised on the idea that the accounting for the transaction should not differ from what it would have been had the issuer of the warrants paid cash instead of modifying the warrants. ASU 2021-04 will be effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years. Early adoption is permitted. This ASU will be applied prospectively to modifications or exchanges occurring on or after the effective date of the ASU. The Company is currently evaluating the impact this new guidance will have on its condensed financial statements.
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Going Concern |
9 Months Ended |
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Sep. 30, 2021 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Going Concern | Note 4. Going Concern
The Company delivered its first equipment sale on December 26, 2020. The Company will recognize the sale for $550,000 net of costs of $350,000 and earning a $200,000 gross profit once the installation is complete. The next operational step to accomplish is to achieve sufficient sales volume to yield positive a net income. The Company has incurred operating losses since it began operations (December 2012) totaling $20,697,515 at September 30, 2021. During the three and nine months ended September 30, 2021, the Corporation incurred net losses of $502,055 and $1,339,588, respectively. The Company also incurred a working capital deficit of $1,923,626 at September 30, 2021.
The Company’s ability to transition to profitable operations is dependent upon achieving a level of revenues adequate to support its cost structure. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business and availability to sufficient resources.
Management expects sales operations to continue to expand. If necessary, the Company will need to raise additional funds through the remainder of 2021. Management of the Company intends to raise additional funds through the issuance of equity securities or debt or from deposits related to purchases orders on proposals pending customer acceptance. The ability of the Company to continue as a going concern depends upon its ability to generate sales or obtain additional funding to finance operating losses until the Corporation is profitable
These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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Accounts Receivable |
9 Months Ended |
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Sep. 30, 2021 | |
| Credit Loss [Abstract] | |
| Accounts Receivable | Note 5. Accounts Receivable
At September 30, 2021 and December 31, 2020, accounts receivable was $52,761 and determined to be fully collectible.
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Inventory |
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| Inventory | Note 6. Inventory
The components of inventory at September 30, 2021, consisted of the following:
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Deferred Cost |
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Sep. 30, 2021 | |
| Insurance [Abstract] | |
| Deferred Cost | Note 7. Deferred Cost
During the fourth quarter of 2020, the Company delivered its first equipment sale pursuant to an equipment sale agreement; however, the revenue and construction costs will not be recognized until the equipment is installed. The installation of the equipment has been deemed to be an unfulfilled performance obligation at September 30, 2021 and December 31, 2020. Deferred cost at both September 30, 2021 and December 31, 2020 was $350,000.
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Prepaid Expenses and Other Current Assets |
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| Prepaid Expenses and Other Current Assets | Note 8. Prepaid Expenses and Other Current Assets
The components of prepaid expenses and other current assets at September 30, 2021 and December 31. 2020, consisted of the following:
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Related Party Transactions |
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| Related Party Transactions | Note 9. Related Party Transactions
Due to officers
Amounts due to officers as of September 30, 2021 and December 31, 2020 are comprised of the following:
Unsecured advances due to officers represent unreimbursed Corporation expenses paid by the officers on behalf of the Corporation. These advances are non-interest bearing and are due on demand.
Officer Compensation
Accrued salaries represent amounts accrued in accordance with the employment agreements for Mr. Hofmeier, the Company’s President, Chief Executive Officer and Chairman of the Board, and Ms. Velazquez, the Company’s Chief Operating Officer and Vice-Chairman. Mr. Hofmeier and Ms. Velazquez are also significant stockholders.
On December 18, 2020, the Company entered into a Settlement Agreement with each of Mr. Hofmeier and Ms. Velazquez whereby Mr. Hofmeier and Ms. Velazquez each agreed to receive shares of its Series A Preferred Stock with a fair market value of $ (collectively, the “Compensation Shares”). Compensation Shares are issued in full satisfaction of $150,000 accrued salary due the Employees, Mr. Ralph Hofmeier and Mrs. Irma Velazquez, MSc. simultaneously herewith, each employee shall receive a one-time bonus of (i) shares of its Common Stock with a fair market value of $1,500,000 and (ii) shares of its Series A Preferred Stock, with a fair market value of $1,350,000 (collectively the “Bonus Shares”).
Customer deposit
EAWC-TV functions as a distributor of EAWD product. In 2019, EAWC-TV, having secured EAWD’s first customer, has placed a $550,000 order for a solar powered atmospheric water generator (“AWG”) for one of its customers. EAWC-TV and the Company on December 13, 2019 agreed to accept a $303,742 reduction in the balance owed by EAWD to EAWC-TV as a deposit with EAWD related to this order. The deposit will be satisfied through delivery of the equipment when performance has occurred. The equipment was built in Germany.
In 2020, manufacture of the unit was delayed due to Covid-19 related issues. The Company and EAWC-TV agreed as it had done in 2019, to clear the outstanding balances in the D/T/F EAWC-TV and the outstanding balance it carried in its accounts payable account for administrative services, which it did on December 26, 2020 which resulted in an additional down payment of $193,497. EAWC-TV has an unpaid balance on the equipment of $52,761, which represents the entire balance of the Company’s outstanding accounts receivables as of both September 30, 2021 and December 31, 2020.
Investor deposit and officer compensation
On December 31, 2020, the Company recorded $1,500,000 as officer compensation and $4,000 in common stock subscriptions for stock issuance transactions in process. The $4,000 is part of a pending stock sale for shares that has been funded were issued on January 20, 2021. The $1.5 million is part of the bonus payment to officers authorized on December 18, 2020. The shares were issued as of September 30, 2021.
As of September 30, 2021, the Company recorded $27,530 in common stock subscriptions for stock issuance transactions in process. The $27,350 is part of pending stock sales for shares that has been funded and is waiting issuance to complete the sale.
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Note 10. Property and Equipment, Net |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||
| Note 10. Property and Equipment, Net | Note 10. Property and Equipment, Net
The components of property and equipment at September 30, 2021 consisted of the following:
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Convertible Loans Payable |
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| Convertible Loans Payable | Note 11. Convertible Loans Payable
As of September 30, 2021 and December 31, 2020, the balance of convertible loans payable net of discount was $248,201 and $149,241, respectively. During the year ended December 31, 2020, the Company issued convertible loans in the aggregate principal amount of $468,500. The aggregate purchase price of the notes was $441,000 and the remaining $27,500 of principal represents the original issue discount. The notes bear interest between 0% and 8% per annum and all mature within one year. The embedded beneficial conversion feature in the notes meet the definition of a derivative and requires bifurcation and liability classification, at fair value. The fair value of the derivative liability as of the date of issuance was $1,609,895 and was recorded as a discount of the note.
The convertible loans were issued in several different forms as discussed below. During the nine months ended September 30, 2021, the Company issued two convertible loans in the aggregate amount of $404,000. The notes bear interest at 8% per annum and all mature within one year. On October 21, 2021, the Maturity Date of the $304,000 loan was extended from March 25, 2022 to April 21, 2022. The embedded beneficial conversion features in the notes meet the definition of a derivative and requires bifurcation and liability classification, at fair value. The fair value of the derivative liability as of the date of issuance was $968,751 and was recorded as a discount of the notes.
Derivative Liability
The Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted, and all additional convertible debentures and warrants are included in the value of the derivative liabilities. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period.
Based on the various convertible notes described above, the fair value of applicable derivative liabilities on notes and change in fair value of derivative liability are as follows as of September 30, 2021 and December 31, 2020:
A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s common stock purchase warrants that are categorized within Level 3 of the fair value hierarchy at September 30, 2021 and December 31, 2020 is as follows:
The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations.
Financial Liabilities Measured at Fair Value on a Recurring Basis
Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Derivative liability – warrants and derivative liabilities:
The fair value accounting standards define fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:
There were no transfers between Level 1, 2 or 3 during the nine months ended September 30, 2021 and December 31, 2020.
During the three months ended September 30, 2021 and 2020, the Company recorded a loss of $178,673 and a gain of 694,096, respectively, and for the nine months ended September 30, 2021 and 2020, the Company recorded gains of $4,820 and $912,825, respectively, from the change in fair value of derivative liability.
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Leases |
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| Leases | Note 12. Leases
The Company’s leases do not provide an implicit rate that can be readily determined. Therefore, the Company uses discount rates based on the incremental borrowing rate of its current external debt of 8%.
The Company’s weighted-average remaining lease term relating to its operating leases is 1.50 years, with a weighted-average discount rate of the 8.00%.
The Company incurred lease expense for its operating leases of $10,813 and $0, which was included in general and administrative expenses in the condensed statements of operations and comprehensive loss for the three ended September 30, 2021 and 2020, respectively, and $21,885 and $0 for the nine months ended September 30, 2021 and 2020, respectively. During the three months ended September 30, 2021 and 2020, the Company made cash lease payments of $10,813 and $0, and for the nine months ended September 30, 2021 and 2020, the Company made cash lease payments in the amount of $21,885 and $0, respectively. At September 30, 2021, the operating lease right-of-use asset was $61,583, the current portion of operating lease liability was $40,389, and the operating lease liability, net of current portion was $21,195.
The following table presents information about the future maturity of the lease liability under the Company’s operating leases as of September 30, 2021.
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| Equity [Abstract] | |||||||||||||||||||||||||
| Stockholders’ Deficit | Note 13. Stockholders’ Deficit
Preferred Stock
Authorized: shares of voting preferred stock with a par value of $0.
Common Stock
Authorized: shares of voting common stock with a par value of $0.
During the three months ended March 31, 2021 the Company engaged in the following equity events:
During the three months ended June 30, 2021 the Company engaged in the following equity events:
During the three months ended September 30, 2021, the Company engaged in the following equity events:
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Stock Option Plan |
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| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Option Plan |
Stock Options
On January 2, 2012, the Corporation’s Board of Directors approved the creation of the 2012 Non-Qualified Stock Option Plan (the “2012 Plan”). The 2012 Plan provides for the issuance of incentive stock options to designated employees, certain key advisors and non-employee members of the Board of Directors with the opportunity to receive grant awards to acquire, in the aggregate, up to shares of the Corporation’s common stock.
A summary of information regarding the Corporation’s common stock options outstanding is as follows:
The above outstanding options were granted on January 1, 2012, to a former executive of the Company. The options were fully vested and exercisable at December 31, 2016. Accordingly, during the three and nine months ended September 30, 2021 and 2020, the Corporation did not recognize any stock-based compensation expense on stock options.
Warrants
On February 17, 2021, the Company entered into an agreement with a consultant to provide Business Development advisement and analysis services. In consideration, the consultant will be issued warrant shares. warrants were issued on February 17, 2021, and the remaining 500,000 will be issued on the six-month anniversary of initial issuance. On August 31, 2021, due to a failure by the consultant to provide the services as required by the agreement, the Company terminated the agreement, and the warrants were canceled.
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Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Note 15. Commitments and Contingencies
Commitments
Employment Agreements
The Corporation entered into employment agreements with its Chief Executive Officer, Mr. Ralph Hofmeier, and its Chief Operating Officer, Ms. Irma Velazquez (collectively the “Employment Agreements”), effective January 1, 2012. Under the Employment Agreements, the Corporation will pay each of Mr. Hofmeier and Ms. Velazquez an annual base salary of $125,000 during the first year and $150,000 during the second year and forward. Any increase to the annual base salary after the second year is subject to approval by the Corporation’s Board of Directors. The Employment Agreements each has initial terms of ten (10) years and is automatically renewed for successive one-year terms unless either party delivers timely notice of its intention not to renew.
Lease
Our registered office is located at 7901 4th Street N STE #4174, St. Petersburg, Florida 33702. Our telephone number is +1 (727) 677-9408. Office services are contracted for on a month-to-month basis in this Address. In October 2020, the Company established its official registered Branch in Hamburg Germany; the office Address until March 31, 2021 was Offakamp 9f- 2.17. On April 1, 2021, the Company entered into two lease agreements for a workshop located at Industriestraße 17, 25462 Relligen and an office located at Ballindam 3 20095 Hamburg, Germany. Our Telephone number is +49 40 809081354. Rent expense in the three months ending September 30, 2021 and 2020 amounted to $17,472 and $0, respectively, and for the nine months ended September 30, 2021 and 2020 rent expense amounted to $37,552 and $0, respectively.
Contingencies
From time to time, the Corporation may be a defendant in pending or threatened legal proceedings arising in the normal course of its business. While the outcome and impact of currently pending legal proceedings cannot be predicted with certainty, the Corporation’s management and legal counsel believe that the resolution of these proceedings through settlement or adverse judgment will not have a material adverse effect on its operating results, financial position or cash flows.
Litigation
EAWD vs Packard and Co-Defendant Nick Norwood - Case number 18-031011 CA-01 Miami-Dade County Circuit Court. The Company is requesting the proof of payment for shares issued in 2008.
CocoGrove – Case No. 09-81555 CA 21 in Miami-Dade County, Florida. The nature of the litigation was for breach of a lease agreement. This case is concluded with a judgement against the Company on July 7, 2010 for $84,393 plus 6% interest which as of September 30, 2021 interest had accrued to $57,870. There have been no efforts to seek collection of this judgement. Management intends to settle this judgement when it is in a financial position to make a payment.
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Subsequent Events |
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Sep. 30, 2021 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 16. Subsequent Events
On October 13, 2021, the Company sold shares of its common stock to 1 investor raising $5,000.
On November 4, 2021 and November 10, 2021, the Company completed two conversions of our outstanding convertible debt by exchanging $163,110 cash for retiring $154,000 in convertible debt along with $9,110 in interest for a total of common shares.
On November 9, 2021, the Company established an official Subsidiary of EAWD in Germany to ensure the company is positioned to service its growing business in one of the EU’s most environmentally progressive countries.
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Summary of Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||
| Basis of Presentation | Basis of Presentation
The condensed financial statements (unaudited) include the accounts of Energy and Water Development Corp. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC.
In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements of Energy and Water Development Corp. for the fiscal year ended December 31, 2020, have been omitted.
Certain reclassifications have been made in December 31, 2020 results to conform to the presentation used in September 30, 2021 including the reclassification of $10,040,000 from additional paid-in capital to common stock subscriptions on the condensed balance sheets and condensed statements of changes in stockholders’ deficit. These reclassifications had no effect on the reported results of operations of the Company or total equity.
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| Foreign currency translation | Foreign currency translation
The United States dollar (“USD”) is the Company’s reporting currency. The Company has a branch located in Germany. The net sales generated, and the related expenses directly incurred from the operations, if any, are denominated in local currency, Euro (“EUR”). The functional currency of the subsidiary is generally the same as the local currency.
Assets and liabilities measured in Euros are translated into USD at the prevailing exchange rates in effect as of the financial statement date and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive loss in its balance sheets. Income and expense accounts are translated at the average exchange rate for the period. The Company has not, to the date of these condensed financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
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| Use of Estimates | Use of Estimates
The preparation of condensed financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Estimates which are particularly significant to the condensed financial statements include estimates relating to the determination of impairment of assets, assessment of going concern, the useful life of property and equipment, the determination of the fair value of stock-based compensation, and the recoverability of deferred income tax assets.
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| Leases | Leases
Effective January 1, 2019, the Company adopted ASC 842- Leases (“ASC 842”). The lease standard provided a number of optional practical expedients in transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired or existing contracts are or contain a lease; did not have to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (facilities).
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable.
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| Cash | Cash
The Company considers short-term interest-bearing investments with initial maturities of three months or less to be cash equivalents. The Company has $62,541 and $12,047 cash at September 30, 2021 and December 31, 2020, respectively.
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| Inventory | Inventory
Inventory is stated at the lower of cost or net realizable value using the first in, first out (FIFO) method. A reserve is established if necessary to reduce excess or obsolete inventories to their net realizable value.
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| Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets include purchase deposits, miscellaneous prepaid expenses, value added tax receivable, and a security deposit.
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| Property and Equipment | Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation, including assets acquired under capital leases or finance leases, are recorded over the shorter of the estimated useful life or the lease term of the applicable assets using the straight-line method beginning on the date an asset is placed in service. The Company regularly evaluates the estimated remaining useful lives of the Company’s property and equipment to determine whether events or changes in circumstances warrant a revision to the remaining period of depreciation. Certain capitalized software has been reclassified from property and equipment to intangibles and comparative periods have been adjusted accordingly. Maintenance and repairs are charged to expense as incurred. The estimated useful lives of the Company’s Property and Equipment are as follows:
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| Fair Value of Financial Instruments | Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at a measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.
Described below are the three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities, Level 2 – Observable prices that are based on inputs not quoted on active markets, but corroborated by market data, Level 3 – Unobservable inputs are used when little or no market data is available.
The application of the three levels of the fair value hierarchy under ASC Topic 820-10-35, our derivative liabilities as of September 30, 2021 and December 31, 2020, were $968,751 and $310,641, respectively and measured on Level 3 inputs.
Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company adjusts derivative financial instruments to fair value on a recurring basis. The fair value for other assets and liabilities such as cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses, deferred cost and deferred revenue have been determined to approximate carrying amounts due to the short maturities of these instruments. The Company believes that its indebtedness approximates fair value based on current yields for debt instruments with similar terms.
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| Loss Per Common Share |
The Corporation accounts for loss per share in accordance with FASB ASC Topic No. 260 - 10, “Earnings Per Share”, which establishes the requirements for presenting earnings per share (“EPS”). FASB ASC Topic No. 260 - 10 requires the presentation of “basic” and “diluted” EPS on the face of the statement of operations. Basic EPS amounts are calculated using the weighted-average number of common shares outstanding during each period. Diluted EPS assumes the exercise of all stock options, warrants and convertible securities having exercise prices less than the average market price of the common stock during the periods, using the treasury stock method. When a loss from operations exists, potential common shares are excluded from the computation of diluted EPS because their inclusion would result in an anti-dilutive effect on per share amounts.
For the three and nine months ended September 30, 2020, an aggregate of stock options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive. These stock options expired as of September 30, 2021.
As discussed more fully in Note 7, convertible note holders have the option of converting their loans into common shares subject to the terms and features offered by the specific convertible notes. Some note holders were also granted purchase options to purchase additional shares subject to the features of each purchase option. If the convertible note holders of unexercised convertible notes exercised their conversion feature and the additional purchase options, they would represent and in additional common shares at September 30, 2021 and 2020, respectively. The potential shares from both the conversion feature and the rights to purchase additional shares were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive.
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| Deferred Financing Costs | Deferred Financing Costs
The Company has recorded deferred financing costs as a result of fees incurred by the Company in conjunction with its debt financing activities. These costs are amortized to interest expense using the straight-line method which approximates the interest rate method over the term of the related debt. As of September 30, 2021 and December 31, 2020, unamortized deferred financing costs were $10,739 and $0, respectively and are netted against the related debt.
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| Related Party Transactions | Related Party Transactions
A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. A related party is generally defined as:
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| Customer deposit | Customer deposit
The Company´s Distributor EAWC-TV, placed a $550,000 order for a solar powered atmospheric water generator (“AWG”) for one of its customers. EAWC-TV and the Company on December 13, 2019, agreed to accept a $303,742 reduction in the balance owed by EAWD to EAWC-TV as a deposit with EAWD related to this order. The deposit will be satisfied through delivery of the equipment when performance has occurred. The equipment was built in Germany. EAWC-TV has an unpaid balance on the equipment of $52,761, which represents the entire balance of the Company´s outstanding accounts receivables as September 30, 2021. |
Summary of Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||
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Sep. 30, 2021 | |||||||||||||
| Accounting Policies [Abstract] | |||||||||||||
| Schedule of estimated useful lives |
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Inventory (Tables) |
9 Months Ended | |||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||
| Schedule Of Inventories |
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Prepaid Expenses and Other Current Assets (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Schedule Of Prepaid Expenses And Other Current Assets |
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Related Party Transactions (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Due to Officers |
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Note 10. Property and Equipment, Net (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||
| Schedule Of Property And Equipment |
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Convertible Loans Payable (Tables) |
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Notes Payable |
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| Outstanding Derivative Liability |
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| Summary of Quantitative Information |
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| Summary of Financial Liabilities Measured on Recurring Basis |
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of maturity of lease liability |
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Stock Option Plan (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Options Outstanding |
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Summary of Significant Accounting Policies (Details) |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Office Equipment [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful life | 5 years |
| Furniture and Fixtures [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated useful life | 7 years |
Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Additional paid-in capital | $ 10,040,000 | |||
| Cash and cash equivalents | 62,541 | $ 12,047 | ||
| Derivative Liability, Current | $ 413,795 | $ 968,751 | 310,641 | |
| Additional common shares | 2,897,917 | 10,114,286 | ||
| Unamortized deferred financing costs | $ 10,739 | $ 0 | ||
| Solar powered atmospheric water generator | 550,000 | |||
| Deposit Liability, Current | $ 303,742 | |||
| Unpaid amount of equipment | $ 52,761 | |||
| Share-based Payment Arrangement [Member] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,200,000 |
Going Concern (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
| Deferred Revenue, Current | $ 550,000 | $ 550,000 | $ 550,000 | ||
| Deferred Costs, Current | 350,000 | 350,000 | 350,000 | ||
| Gross Profit | 200,000 | ||||
| Operating losses | 20,697,515 | 20,697,515 | $ 19,357,927 | ||
| Net losses | 502,055 | $ 480,619 | 1,339,588 | $ 1,374,587 | |
| Working capital deficit | $ 1,923,626 | $ 1,923,626 | |||
Accounts Receivable (Details Narrative) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Credit Loss [Abstract] | ||
| Accounts receivable | $ 52,761 | $ 52,761 |
INVENTORY (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Work in progress | $ 399,581 | |
| Raw materials | 4,351 | |
| Inventory, net | $ 403,932 | $ 0 |
Deferred Cost (Details Narrative) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Insurance [Abstract] | ||
| Deferred cost | $ 350,000 | $ 350,000 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Prepaid Expenses And Other Current Assets | ||
| Purchase deposits | $ 125,135 | |
| Miscellaneous prepaid expenses | 294 | 14,184 |
| Value added tax receivable | 67,072 | |
| Security deposit | 5,215 | |
| Prepaid expenses and other current assets | $ 197,716 | $ 14,184 |
Related Party Transactions (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Related Party Transaction [Line Items] | ||
| Due to officers | $ 84,608 | $ 84,676 |
| Officer Ralph Hofmeier [Member] | ||
| Related Party Transaction [Line Items] | ||
| Unsecured advances due to officer | 18,482 | 17,778 |
| Accrued salaries | 37,178 | |
| Due to officers | 55,660 | 17,778 |
| Unsecured advances due to officer | (18,482) | (17,778) |
| Officer Irma Velazquez [Member] | ||
| Related Party Transaction [Line Items] | ||
| Unsecured advances due to officer | 21,052 | 66,898 |
| Accrued salaries | 50,000 | |
| Due to officers | 28,948 | 66,898 |
| Unsecured advances due to officer | $ (21,052) | $ (66,898) |
Property and Equipment, Net (Details) |
Sep. 30, 2021
USD ($)
|
|---|---|
| Property, Plant and Equipment [Line Items] | |
| Property and equipment | $ 4,177 |
| Property, Plant and Equipment, Gross | 4,301 |
| Office Equipment [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property and equipment | 1,588 |
| Furniture and Fixtures [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property and equipment | $ 2,713 |
Convertible Loans Payable (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Debt Disclosure [Abstract] | ||
| Balance of notes payable, net | $ 149,241 | $ 243,923 |
| Issuances of debt | 404,000 | 468,500 |
| Repayments | (95,500) | (66,000) |
| Amortization of debt discount | 273,699 | 514,244 |
| Debt Discount | (406,500) | (440,426) |
| Conversions | (66,000) | (571,000) |
| Deferred financing costs | (10,739) | |
| End balance of notes payable, net | $ 248,201 | $ 149,241 |
Convertible Loans Payable (Details 1) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Debt Disclosure [Abstract] | ||
| Balance at beginning | $ 310,641 | $ 413,795 |
| Change Due to Issuances | 730,280 | 1,609,895 |
| Change due to exercise / redemptions | (67,350) | (455,576) |
| Change in fair value | (4,821) | (1,257,473) |
| Balance at end | $ 968,751 | $ 310,641 |
Convertible Loans Payable (Details 2) - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Debt Instrument [Line Items] | ||
| Stock price | $ 0.10 | |
| Risk-free rate | 0.07% | |
| Minimum [Member] | ||
| Debt Instrument [Line Items] | ||
| Stock price | $ 0.07 | |
| Exercise price | $ 0.04 | $ 0.04 |
| Contractual term (in years) | 4 months 24 days | 3 days |
| Volatility (annual) | 501.00% | 125.00% |
| Risk-free rate | 0.08% | |
| Maximum [Member] | ||
| Debt Instrument [Line Items] | ||
| Stock price | $ 1.20 | |
| Exercise price | $ 0.07 | $ 0.20 |
| Contractual term (in years) | 7 months 6 days | 1 year |
| Volatility (annual) | 576.00% | 424.00% |
| Risk-free rate | 1.46% |
Convertible Loans Payable (Details 3) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Derivative liability | $ 968,751 | $ 310,461 |
| Warrants and derivative liabilities | 968,751 | 310,461 |
| Fair Value, Inputs, Level 1 [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Derivative liability | ||
| Warrants and derivative liabilities | ||
| Fair Value, Inputs, Level 2 [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Derivative liability | ||
| Warrants and derivative liabilities | ||
| Fair Value, Inputs, Level 3 [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Derivative liability | 968,751 | 310,641 |
| Warrants and derivative liabilities | $ 968,751 | $ 310,641 |
Lease (Details) |
Sep. 30, 2021
USD ($)
|
|---|---|
| Leases [Abstract] | |
| 2021 | $ 10,846 |
| 2022 | 43,383 |
| 2023 | 11,299 |
| Thereafter | |
| Total undiscounted lease payments | 65,528 |
| Less: Imputed interest | 3,944 |
| Present value of lease liabilities | $ 61,584 |
| Remaining lease term | 1 year 6 months |
Leases (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
| Borrowing rate | 8.00% | ||||
| Operating leases term | 1 year 6 months | 1 year 6 months | |||
| Weighted-average discount rate | 8.00% | 8.00% | |||
| Operating leases expense | $ 10,813 | $ 0 | $ 21,885 | $ 0 | |
| Cash lease payments | 10,813 | $ 0 | 21,885 | $ 0 | |
| Operating lease right-of-use asset | 61,583 | 61,583 | $ 0 | ||
| Operating lease liability | 40,389 | 40,389 | $ 0 | ||
| Net operating lease liability | 61,584 | 61,584 | |||
| Liability [Member] | |||||
| Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||||
| Net operating lease liability | $ 21,195 | $ 21,195 | |||
Stock Option Plan (Details) - $ / shares |
9 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Share-based Payment Arrangement [Abstract] | |||
| Number of Shares Outstanding beginning | 2,200,000 | 2,200,000 | |
| Weighted Average Exercise Price Outstanding beginning | $ 0.10 | $ 0.10 | |
| Weighted Average Remaining Contractual Term | 1 year | 2 years | |
| Issued | |||
| Issued | |||
| Exercised | |||
| Exercised | |||
| Expired | (2,200,000) | ||
| Expired | |||
| Number of Shares Outstanding ending | 2,200,000 | 2,200,000 | |
| Weighted Average Exercise Price Outstanding ending | $ 0.10 | $ 0.10 | |
Stock Option Plan (Details Narrative) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2021 |
Feb. 17, 2021 |
|
| Total awards authorized | 5,000,000 | ||
| Stock-based compensation expense | $ 0 | ||
| Shares issued | 1,000,000 | ||
| Warrant [Member] | |||
| Shares issued | 500,000 | ||
| Initial issuance | 500,000 |
Commitments and Contingencies (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Jul. 07, 2010 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Loss Contingencies [Line Items] | |||||
| Rent expense | $ 17,472 | $ 0 | $ 37,552 | $ 0 | |
| Coco Grove [Member] | |||||
| Loss Contingencies [Line Items] | |||||
| Damages sought | $ 84,393 | ||||
| Interest rate | 6.00% | ||||
| Accrued interest | 57,870 | $ 57,870 | |||
| Officer Ralph Hofmeier [Member] | |||||
| Loss Contingencies [Line Items] | |||||
| Salary | 125,000 | 125,000 | |||
| Salary second year | 150,000 | 150,000 | |||
| Officer Irma Velazquez [Member] | |||||
| Loss Contingencies [Line Items] | |||||
| Salary | 125,000 | 125,000 | |||
| Salary second year | $ 150,000 | $ 150,000 | |||
Subsequent Events (Details Narrative) - Subsequent Event [Member] |
Nov. 10, 2021
USD ($)
shares
|
Nov. 04, 2021
USD ($)
shares
|
Oct. 13, 2021
USD ($)
investors
shares
|
|---|---|---|---|
| Subsequent Event [Line Items] | |||
| Sale of stock | shares | 33,333 | ||
| Number of investors | investors | 1 | ||
| Investor raising amount | $ 5,000 | ||
| Convertible debt outstanding | $ 163,110 | $ 163,110 | |
| Convertible debt amount | 154,000 | 154,000 | |
| Debt interest | $ 9,110 | $ 9,110 | |
| Common stock shares | shares | 3,908,385 | 3,908,385 |