UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September~~March 3031, ~~2019~~ 2020

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

Commission File No. 000-55825

WATER NOW, INC.

(Exact name of registrant as specified in its charter)

Texas		81-1419236
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5000 South Freeway, Suite 110, Fort Worth, Texas		76115
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (817) 900-9184

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

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, and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 [ ]

Non-accelerated filer [ ]	Smaller reporting company [X]
Emerging growth company [X]

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. [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

At ~~November~~ ~~15,~~July ~~2019~~13, 2020, there were 5273,~~410~~746,~~817~~368 shares outstanding of Common Stock, no par value.

IMPORTANT INFORMATION REGARDING THIS FORM 10-Q

Unless otherwise indicated, references to “we,” “us,” and “our” in this Quarterly Report on Form 10-Q (“Report”) refer collectively to Water Now, Inc., a Texas corporation, ~~and its wholly-owned subsidiary~~ (“Water Now”).

Readers should consider the following information as they review this Report:

Forward-Looking Statements

There are statements in this Report that are not historical facts. These “forward-looking statements” can be identified by use of terminology suggesting a belief in future performance and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire Report carefully. Although management believes that the assumptions underlying the forward-looking statements included in this Report are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward-looking statements. The assumptions used for purposes of the forward-looking statements represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this Report will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We do not undertake any obligation to update or revise any forward-looking statements.

Document Summaries

Descriptions of documents and agreements contained in this Report are provided in summary form only, and such summaries are qualified in their entirety by reference to the actual documents and agreements filed as exhibits to our Registration Statement on Form 10 filed on October 13, 2017, other periodic and current reports we have filed with the SEC, or this Report.

Access to Filings

Access to our reports and amendments thereto, filed with or furnished to the SEC pursuant to Section 13(a) of the Exchange Act, as well as reports filed electronically pursuant to Section 16(a) of the Exchange Act, may be obtained through our website (http://www.waternowinc.com) as soon as reasonably practicable after we have filed or furnished such material with the SEC. The contents of our website are not, and shall not be deemed to be, incorporated into this Report.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

		Page No.
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	4
	Condensed Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019	4
	Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2019 and 2018	5
	Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the nine months ended September 30, 2019 and 2018	6
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2020 and 2019	7
	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2019 and 2018	7
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2020 and 2019	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2116
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2726
Item 4.	Controls and Procedures	2827
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	2928
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2928
Signatures		3029
Index to Exhibits		3130

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Water Now, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

	September 30,			December 31,
	March 31,			December 31,
	2019			2018
	2020			2019
		(Unaudited)
ASSETS
Current Assets
Cash	$	~~127,129~~405		$	5366,~~106~~042
Accounts receivable		~~297~~118,~~050~~250			1118,250
Other receivables		30,000			—
Inventory		515,722			517,849
Inventory		521,019			506,845
Prepaid expenses		4,333			21,264
Prepaid expenses		5,663			—
Total Currents Assets		638,710			723,405
Total Currents Assets		980,861			561,201
Property and equipment - net		2,205,709			2,137,272
Property and equipment - net		1,935,066			382,551
Operating lease right-of-use assets		632,930			753,432
Operating lease right-of-use assets		813,393			—
Distributorship agreement, net		716,667			766,667
Distributorship agreement, net		816,667			966,667
Security deposit		23,481			34,330
Security deposit		34,330			10,849
Total Assets	$	4,217,497		$	4,415,106
Total Assets	$	4,580,317		$	1,921,268
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	1,~~265~~315,~~916~~513		$	~~417~~1,~~972~~285,214
Accrued expenses		~~462~~552,~~133~~116			~~598~~532,~~564~~512
Distributorship accrued expense		250,000			~~650~~250,000
Derivative liability		1,~~004~~201,~~199~~258			—508,323
Advances from related parties		20224,~~000~~743			~~302~~4,~~497~~407
Current portion of operating lease liabilities		~~277~~178,~~309~~116			—247,070
Current portion of convertible notes payable		2,346,196			428,257
Current portion of convertible notes payable, net of debt discounts		1,833,352			2,143,369
Notes payable – stockholders		200,000			—
Current portion of notes payable		553,567			504,000
Total Current Liabilities		5,825,753			2,397,290
Current portion of revenue sharing liabilities		3,057,708			—
Long-term convertible notes payable		—			82,519
Total Current Liabilities		9,166,373			5,474,895
Operating lease liabilities		550,308			—
Long-term notes payable		114,292			—
Revenue sharing liabilities		3,517,777			319,500
Operating lease liabilities		473,932			520,137
Total Liabilities		9,893,838			2,799,309
Long-term revenue sharing liabilities		2,249,478			5,042,455
Total Liabilities		12,004,075			11,037,487
Commitments and Contingencies		—			—
Stockholders' Deficit
Preferred stock – no par value, 10,000,000 shares authorized, zero issued and outstanding at September 30, 2019 and December 31, 2018		—			—
Preferred stock – no par value, 10,000,000 shares authorized, zero issued and outstanding at March 31, 2020 and December 31, 2019		—			—
Common stock - no par value, 90,000,000 shares authorized, 46,682,976 and 36,013,000 shares issued and 46,486,784 and 35,816,808 shares outstanding as of September 30, 2019 and December 31, 2018, respectively		8,877,325			6,463,705
Common stock - no par value, 90,000,000 shares authorized, 73,942,560 and 55,663,191 shares issued and 73,746,368 and 55,466,999 shares outstanding as of March 31, 2020 and December 31, 2019, respectively		9,475,224			9,071,943
Additional paid-in capital		13,~~408~~436,~~474~~245			~~687~~2,~~431~~813,464
Subscription receivable		(50,000	)		(50,000	)
Accumulated deficit		(15,549,320	)		(7,979,177	)
Treasury stock, at cost (100,000 shares held as of March 31, 2020 and December 31, 2019)		(10,000	)		(10,000	)
Total Stockholders' Deficit		(5,313,521	)		(878,041	)
Accumulated deficit		(20,638,047	)		(18,447,788	)
Total Liabilities and Stockholders' Deficit	$	4,580,317		$	1,921,268
Total Stockholders' Deficit		(7,786,578	)		(6,622,381	)
Total Liabilities and Stockholders' Deficit	$	4,217,497		$	4,415,106

The accompanying notes are an integral part of these condensed consolidated financial statements.

Water Now, Inc. and Subsidiary

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended						~~For the Nine Months Ended~~
		September 30,			September 30,			September 30,			September 30,
		March 31,			March 31,
		2019			2018			2019			2018
		2020			2019
Revenues, net	$	202,~~092~~995		$	~~(19~~78,~~995~~552	)	$	~~334,393~~		$	~~39,200~~
Cost of goods sold		162,~~553~~127			~~(10~~68,~~742~~880	)		~~281,080~~			~~25,935~~
Gross Profit (Loss)		3,539			(9,253	)		53,313			13,265
Gross Profit		868			9,672
Operating expenses
Salaries and wages		~~398~~316,~~579~~067			~~586~~322,~~486~~628			~~1,310,049~~			~~1,205,421~~
Professional fees		~~271~~69,~~661~~976			~~170~~293,~~206~~644			~~812,417~~			~~959,196~~
Selling, general and administrative		~~385~~240,~~772~~029			~~130~~365,~~264~~881			~~1,087,673~~			~~528,896~~
Gain on sale of assets		—			—			(4,070	)		—
(Gain) Loss on sale of assets		19,988			(4,070	)
Total operating expenses		1646,~~056,012~~060			~~886~~978,~~956~~083			~~3,206,069~~			~~2,693,513~~
Loss from operations		(1645,~~052,473~~192	)		(~~896~~968,~~209~~411	)		~~(3,152,756~~	)		~~(2,680,248~~	)
Other expense
Other income (expense)
Interest expense		(3995,~~760,191~~236	)		(89605,~~272~~595	)		~~(4,885,981~~	)		~~(96,608~~	)
Change in fair value of derivative liability		832,566			—			646,557			—
Gain (Loss) on derivative liability		(550,726	)		—
Loss on extinguishment of debt		(130,052	)		—			(182,877	)		—
Other income		895			—
Total other expense		(3,057,677	)		(89,272	)		(4,422,301	)		(96,608	)
Loss on extinguishment of debt		—			(21,563	)
Loss before provision for income taxes		(4,110,150	)		(985,481	)		(7,575,057	)		(2,776,856	)
Total other expense		(1,545,067	)		(627,158	)
Provision for income taxes		—			—			—			—
Loss before provision for income taxes		(2,190,259	)		(1,595,569	)
Net Loss	$	(4,110,150	)	$	(985,481	)	$	(7,575,057	)	$	(2,776,856	)
Provision for income taxes		—			—
Loss per share
Net Loss	$	(2,190,259	)	$	(1,595,569	)
basic and fully diluted	$	(0.10	)	$	(0.03	)	$	(0.20	)	$	(0.09	)
Loss per share
Weighted-average number of shares of common stock
basic and fully diluted	$	(0.04	)	$	(0.04	)
basic and fully diluted		41,444,725			33,572,678			38,469,731			32,563,861
Weighted-average number of shares of common stock
basic and fully diluted		58,753,418			35,962,919

The accompanying notes are an integral part of these condensed consolidated financial statements.

WATER NOW, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
	Common Stock						Additional									Total
							Paid-In			Retained			Subscription			Stockholders'
	Number of Shares			Amount			Capital			Earnings			Receivable			Equity (Deficit)
Balance at December 31, 2018		35,816,808		$	6,463,705		$	687,431		$	(7,979,177	)	$	(50,000	)	$	(878,041	)
Common stock issuances for cash		1,180,000			299,387			—			—			—			299,387
Common stock issuances for services and compensation		1,125,000			370,275			—			—			—			370,275
Common stock issued for conversion of debt		5,672,203			585,168												585,168
Adoption of lease accounting		—			—			—			4,914			—			4,914
Reduction of derivative liability from conversion/redemption		—			—			1,114,472			—			—			1,114,472
Shares issued in settlement claim		1,502,389			585,932			—			—			—			585,932
Beneficial conversion feature		—			—			(393,429	)		—			—			(393,429	)
Shares issued for debt issuance costs		1,190,384			572,858									—			572,858
Net loss		—			—			—			(7,575,057	)		—			(7,575,057	)
Balance at September 30, 2019		46,486,784		$	8,877,325		$	1,408,474		$	(15,549,320	)	$	(50,000	)	$	(5,313,521	)
Balance at December 31, 2017		30,325,808		$	3,831,205		$	—		$	(3,609,121	)	$	—		$	222,084
Common stock issuances for cash		2,941,000			1,470,500			—			—			—			1,470,500
Common stock issuances for services, compensation and distributorship agreement		2,310,000			1,453,781			—			—			—			1,453,781
Common stock cancelled as payment for legal services		(1,250,000	)		(625,000	)		—			—			—			(625,000	)
Shares subscribed for services		—			50,000			—			—			(50,000	)		—
Net loss		—			—			—			(2,776,856	)		—			(2,776,856	)
Balance at September 30, 2018		34,326,808		$	6,180,486		$	—		$	(6,385,977	)	$	(50,000	)	$	(255,491	)

Water Now, Inc.

~~The~~Consolidated ~~accompanying notes~~Statements ~~are an integral part~~ of ~~these~~Changes in ~~condensed~~Stockholders’ ~~consolidated~~Equity ~~financial statements.~~(Deficit)

For the three months ended March 31, 2020 and 2019

					Additional											Total
	Common Stock				Paid-In		Subscription			Treasury			Accumulated			Stockholders'
	Shares		Amount		Capital		Receivable			Stock			Deficit			Equity (Deficit)

Balance, December 31, 2019		55,466,999	$	9,071,943	$	2,813,464	$	(50,000	)	$	(10,000	)		(18,447,788	)	$	(6,622,381	)

Common stock issuances as payment for services and compensation		385,000		24,600		—		—			—			—			24,600
Common stock issued for conversion of debt		16,894,369		378,681		—		—			—			—			378,681
Reduction of derivative liability from conversion/ redemption		—		—		622,781		—			—			—			622,781
Common stock issued as collateral for loan		1,000,000		—		—		—			—			—			—
Net loss		—		—		—		—			—			(2,190,259	)		(2,190,259	)
Balance, March 31, 2020		73,746,368	$	9,475,224	$	3,436,245	$	(50,000	)	$	(10,000	)		(20,638,047	)		(7,786,578	)

Balance, December 31, 2018		35,816,808	$	6,463,705	$	687,431	$	(50,000	)	$	—			(7,979,177	)	$	(878,041	)
Common stock issuances for debt issuance costs		465,384		491,608		—		—			—			—			491,608
Common stock issued for conversion of debt		200,000		100,000		—		—			—			—			100,000
Beneficial conversion feature		—		—		874,204		—			—			—			874,204
Net loss		—		—		—		—			—			(1,595,569	)		(1,595,569	)
Balance, March 31, 2019		36,482,192	$	7,055,313	$	1,561,635	$	(50,000	)	$	—			(9,574,746	)		(1,007,798	)

The accompanying notes are an integral part of these consolidated financial statements.

Water Now, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended
	For the Three Months Ended
	September 30,
	March 31,
	2019			2018
	2020			2019
Cash flows from operating activities:
Net loss	$	(72,~~575~~190,~~057~~259	)	$	(21,~~776~~595,~~856~~569	)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued as payment for services and employees’ compensation		~~370~~24,~~275~~600			~~1,005,000~~—
Depreciation and amortization		~~192~~74,~~338~~436			2063,~~705~~403
Non-cash interest expense		4,626,988			77,827
Lease expense		5,343			—
Gain on sale of assets		(4,070	)		—
Amortization of discounts		124,769			363,296
Change in fair value of derivative liability		(646,557	)
Derivative expense at issuance		514,990			—
Loss on extinguishment of debt		182,877			—
Amortization of interest for revenue sharing agreements		264,731			117,000
Interest converted to common shares		32,395			—
Loss (Gain) on sale of assets		19,988			(4,070	)
Change in fair value of derivative liability		550,726			—
Loss on extinguishment of debt		—			21,563
Changes in operating working capital items:
Accounts receivable		~~(295,800~~—	)		(569,~~250~~671	)
Other receivables		~~(30,000~~—	)		—(6,000	)
Inventory		~~(14~~2,~~174~~127	)		(898,~~037~~548	)
Prepaid expenses		(516,~~663~~931	)		—(49,522	)
Security deposit		~~(23~~10,~~481~~849	)		(123,~~700~~481	)
Accounts payable		~~847~~30,~~944~~299			(14243,~~078~~797	)
Accrued expenses		~~(136~~19,~~581~~604	)		~~257~~(277,~~360~~986	)
Net cash used in operating activities		(2498,~~505,897~~471	)		(1,~~526~~713,~~029~~382	)
Cash flows from investing activities:
Purchases of property and equipment		(130,~~650,783~~000	)		—(720,783	)
Proceeds from sale of assets		6059,~~000~~500			—30,000
Payment for distributorship agreement		~~(400,000~~—	)		—(400,000	)
Net cash used in investing activities		(1,990,783	)		—
Net cash provided by (used in) investing activities		29,500			(1,090,783	)
Cash flows from financing activities:
Outstanding checks in excess of bank balance		—			(6,597	)
Cash advances from related parties		322,036			10,000
Repayments on notes payable stockholders		(430,000	)		—
Cash repayments from related parties		(101,700	)		(270,000	)
Net borrowings on notes payable stockholders		630,000			—
Borrowings on notes payable		25,000			300,000
Net advances (repayments) to related party		(282,497	)		20,386
Payments on notes payable		(3,502	)		—
Borrowings on convertible notes payable		2241,~~562,935~~500			~~583~~1,~~600~~041,500
Payments on convertible notes payable		(~~945~~80,~~122~~000	)		—(310,500	)
Issuances of common stock		299,387			1,470,500
Borrowings on revenue sharing liabilities		—			2,046,000
Repurchase of common stock		—			(525,000	)
Net cash provided by financing activities		403,334			2,817,000
Borrowings on revenue sharing liabilities		2,736,000			—
Net increase (decrease) in cash		(65,637	)		12,835
Net cash provided by financing activities		4,570,703			1,542,889
Cash at beginning of period		66,042			53,106
Net increase in cash		74,023			16,860
Cash at end of period	$	405		$	65,941
Cash at beginning of period		53,106			2,049
Cash at end of period	$	127,129		$	18,909
Supplemental Disclosure of Interest and Income Taxes Paid:
Interest paid during the period	$	~~132~~22,~~507~~209		$	1599,~~705~~632
Income taxes paid during the period	$	—		$	—
Non-cash disclosures:
Conversion of convertible notes payable into common shares	$	~~585~~346,~~168~~286		$	—100,000
Issuance of common stock for debt issuance costs	$	—		$	53,400
Purchase of property and equipment through issuance of notes payable	$	142,361		$	—
Reclass of derivative upon settlement	$	1622,~~114,472~~781		$	—
Original Issue Discount	$	231,565			—
Issuance of common stock for debt issuance costs	$	—		$	491,608
Discount from derivative	$	145,000			—
Beneficial debt conversion feature	$	—		$	959,467
Discount from shares issued for issuance costs	$	572,858			—

The accompanying notes are an integral part of these condensed consolidated financial statements.

Water Now, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements (unaudited)

~~September 30~~March 31, ~~2019~~2020 and ~~2018~~2019

1. Basis of Presentation ~~and Summary of Significant Accounting Policies~~

The accompanying unaudited financial statements of Water Now, Inc. and subsidiary (collectively, the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements for the year ended December 31, ~~2018~~2019.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month period have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms “Company”, “we”, “us” or “our” mean Water Now, Inc. and subsidiary.

Certain amounts in our Condensed Consolidated Statement of Operations for the period ended September 30, 2018 have been reclassified to conform with the current period presentation.

Fair Value Measurements

ASC Topic 820, “ Fair Value Measurement”, requires that certain financial instruments be recognized at their fair values at our balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance sheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive income. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Financial Instruments.”

Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’ s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred.

The Company did not have any Level 1 or Level 2 assets and liabilities at ~~September~~March 3031, ~~2019~~2020 and ~~2018~~2019. The derivative liabilities are Level 3 fair value measurements.

The ~~Derivative liabilities~~following ~~are~~is a summary of activity of Level 3 ~~fair~~liabilities during ~~value~~the ~~measurements.~~three months ended March 31, 2020:

The following is a summary of activity of Level 3 liabilities during the nine months ended September 30, 2019:

Derivative liability balance at December 31, 2019	$	508,323
Additions to derivative liability for new debt		764,990
Reclass to equity upon conversion/cancellation		(622,781	)
Change in fair value		(550,726	)
Balance at March 31, 2020	$	1,201,258

Derivative liability balance at December 31, 2018	$	—
Additions to derivative liability for new debt		2,765,228
Reclass to equity upon conversion/cancellation		(1,114,472	)
Change in fair value		(646,557	)
Balance at September 30, 2019	$	1,004,199

At March 31, 2020, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.02, a risk-free interest rate of 0.15%, and expected volatility of the Company’s common stock of 242.48%, and the various estimated reset exercise prices weighted by probability.

At September 30, 2019, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.16, a risk-free interest rate of 1.88%, and expected volatility of the Company’s common stock of 213.76%, and the various estimated reset exercise prices weighted by probability.

Recently Adopted Accounting Pronouncements

Effective January 1, 2019, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases, which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The original guidance required application on a modified retrospective basis with the earliest period presented. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which included an option to not restate comparative periods in transition and elect to use the effective date of ASC 842, Leases, as the date of initial application of transition, which we elected. As a result of the adoption of ASC 842 on January 1, 2019, we recorded both operating lease right-of-use (“ROU”) assets of $159,433 and lease liabilities of $154,518. The adoption of ASC 842 had an immaterial impact on our Condensed Consolidated Statement of Operations and Condensed Consolidated Statement of Cash Flows for the nine-month period ended September 30, 2019. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard which allowed us to carry forward the historical lease classification.

Additional information and disclosures required by this new standard are contained in Note 10.

2. Going Concern

At ~~September 30~~March 31, ~~2019~~2020, the Company had approximately $~~127,000~~405 in cash and had net working capital deficit of approximately $48,~~845~~528,000. The Company, which generated a net loss of approximately $72,~~575~~190,000 and $21,~~777~~596,000 for the ~~nine~~three months ended ~~September~~March 3031, ~~2019~~2020 and ~~2018~~ 2019, respectively, may not have sufficient cash to fund its current and future operations. There is no assurance that future operations will result in profitability. No assurance can be given that management will be successful in its efforts to raise additional capital. The failure to raise additional capital needed to achieve its business plans will have a material adverse effect on the Company’s financial position, results of operations, and ability to continue as a going concern.

3. Revenues

The Company’s ~~revenues~~ revenues are generated from the sales of water purification products and the sales of hydrocarbons derived from the deployment and operation of Company owned oil recovery systems. The Company obtains purchase orders from its water purification customers for the sale of its products which sets forth the general terms and conditions including line item pricing and payment terms (generally due upon receipt). The Company recognizes revenue when its customers obtain control over the assets (generally when the title passes upon shipment) and it is probable that the Company will collect substantially all the amounts due. Individual promised goods are the Company’ s only performance obligation.

The Company earns revenue each month that the oil recovery systems are in place and operating. The Company generally receives 50% of the proceeds of the sales of oil recovered using its systems.

Water purification ~~products~~ products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are probable and reasonably estimated. The Company’s management reduces revenue to account for estimates of the Company’ s credits and refunds.

The Company included shipping and handling fees in net revenues. Shipping and handling costs are associated with outbound freight after control over a product has transferred to a customer. These costs are accounted for as a fulfillment cost and are included in cost of goods sold.

Revenues, as disaggregated by revenue type and reportable segment (see Note 12), are shown below.

	For the three months ended					For the nine months ended
	For the Three Months
	September 30,					September 30,
	Ended March 31,
	2019		2018			2019		2018
	2020		2019
Revenues
Water purification products	$	—2,995	$	~~(19~~78,~~995~~552	)	$	~~308,744~~	$	~~39,200~~
Oil recovery systems		20,092		—			25,649		—
Oil recovery machines		—		—
	$	202,~~092~~995	$	~~(19~~78,~~995~~552	)	$	~~334,393~~	$	~~39,200~~

4. Distributorship Agreement

On October 31, 2018, the Company entered into an Exclusive Sales Distribution Agreement (the “Agreement”) with African Horizon Technologies (Pty) Ltd (“AHT”) whereby the Company ~~serves~~will asbe AHT’s exclusive distributor of the Hydraspin Hydro Cyclone technology in the United States of America. The Company ~~was~~paid ~~obligated to pay~~ AHT $500,000 in cash and ~~issue~~issued AHT 500,000 shares valued at $250,000 based on the closing price of the Company’s shares of $0.50 on the date of the Agreement. In addition, the Company will issue AHT 500,000 shares at the earlier of 24 months from the commencement date of the Agreement or the sale of 50 units to the Company. The Company will also pay AHT a royalty of 2% of total net profits generated by the Company from the sale of oil generated using the Hydraspin units. The term of the Agreement is for five years with an automatic renewal term of five years unless terminated ~~prior~~ ~~to the expiration of the current term~~earlier. The Company recorded the value of the Agreement of $1,000,000 as an other asset and is amortizing the asset to expense over the life of the Agreement of five years. As of ~~September~~March 3031, ~~2019~~2020, ~~$500,000 was paid and~~ the ~~remaining~~ 500,000 shares remaining to be issued isare ~~included~~recorded as andistributorship accrued expense. in the amount

~~5. Notes Payable – Stockholders~~9

~~The~~of ~~Company borrowed~~ $~~200~~250,000 and ~~$100,000~~are ~~from~~required ~~two~~to ~~stockholders~~be onissued ~~March~~prior to 25October 31, ~~2019~~2020. ~~The~~Amortization ~~notes~~expense ~~bear~~amounted ~~interest~~to ~~at 18% and are payable beginning on April 25~~$50,000 ~~2019, at which time the entire amount of principal~~ and ~~any accrued interest was due and payable. The notes are unsecured, and the~~ $~~200~~50,000 ~~note~~for ~~is guaranteed by~~ the ~~Company’s~~three ~~Chief~~months ~~Executive~~ended ~~Officer.~~March ~~As of September 30~~31, ~~2019,~~2020 ~~the $100,000 note was paid~~ and ~~the $200~~2019,~~000~~ ~~note remains outstanding~~respectively.

5. Notes Payable

During 2020 the Company entered into an additional short-term loan with a lender. Total principal borrowed during 2020 was $25,000. No repayments were made during the three months ended March 31, 2020. The remaining $529,000 of principal was repaid or extended as of July 13, 2020. The notes are generally unsecured.

6. Convertible Notes Payable

The Company borrowed $6850,000 from a lender on ~~September~~January 414, ~~2018~~2020. The note bears interest at 818% and ~~matures~~is payable in one lump sum on ~~September~~June 414, ~~2019~~2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock ~~beginning~~at ~~170~~any ~~days~~time ~~after the issuance date and~~ prior to the maturity date at ~~a price per share equal to sixty-five percent of~~ the ~~average~~conversion ofprice ~~the lowest two~~of ~~trading~~$0.50 ~~prices~~per ~~of the Company’s common stock for the twenty trading days prior to the conversion date~~share. The ~~This~~principal ~~note~~balance ~~was~~at ~~paid in~~March ~~full on January 3~~31, ~~2019~~2020 ~~and~~is ~~the Company recorded a gain on extinguishment of this debt of~~ $1950,~~114~~000. ~~The Company has no further obligations with respect to this loan.~~

The Company ~~borrowed~~ borrowed $~~200~~37,~~000~~500 from a lender on ~~September~~February 175, ~~2018~~2020. The note ~~does~~is ~~not~~an ~~bear~~extension ~~interest~~of the existing Amended and ~~matures~~Restated ~~September~~Secured 17Convertible Promissory Note dated June 18, ~~2021~~2018. The total principal due under the note is $100,000. The note bears interest at ~~which~~18% and is payable in ~~time~~one lump sum on May 5, 2020. In the ~~entire~~event ~~amount~~50% or more of the principal balance is ~~due~~paid prior to May 5, 2020 and ~~payable~~the note is not in default, then the maturity date is extended to August 5, 2020. The ~~note~~required payment was not made by May 5, 2020 and the note is ~~unsecured~~currently in default and outstanding. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock at any time prior to the maturity date at a price per share equal to ~~$0.75~~fifty ~~per share if before 180 days after the issuance date, or if 180 days after the issuance date, the lesser of $0.75 per share or seventy~~ percent of the ~~second~~average closing ~~lowest trading~~ price of the Company’s common stock for the ~~twenty~~ten trading days prior to the conversion date. The Inconversion feature ~~addition,~~meets the ~~Company~~definition ~~granted~~of ~~60,000~~a ~~shares~~derivative ofand ~~the~~therefore ~~Company’s~~requires ~~common~~bifurcation ~~stock~~and ~~valued~~is ataccounted ~~$53,400~~for ~~based on~~as ~~the~~a ~~Company’s~~derivative ~~share~~liability. The ~~price~~Company onestimated the ~~date~~aggregate fair value of the ~~note~~conversion ~~agreement,~~feature ~~paid~~derivatives ~~$34,400~~embedded asin athe ~~discount~~debenture ~~for~~at ~~interest~~the ondate the debt ~~note,~~becomes ~~and paid~~convertible at $552,000, ~~for~~based ~~debt~~on ~~issuance~~weighted ~~costs.~~probabilities ~~Through~~of ~~September~~assumptions ~~30,~~used ~~2019,~~in the ~~Company~~Black ~~paid~~Scholes ~~$142,000~~pricing ofmodel. ~~principal~~The key ~~and~~valuation ~~prepayment~~assumptions ~~penalties of~~used ~~$58~~consist,~~000~~ ~~recorded~~in aspart, ~~interest~~of ~~expense.~~the ~~The~~price ~~lender~~of ~~converted~~ the ~~remaining~~Company’s common stock of $580.05,~~000~~ a risk-free interest rate of ~~principal~~1.57% ~~into~~and ~~332,500~~expected ~~shares~~volatility of the Company’s common stock of 232.73%, ~~The~~and ~~Company~~the ~~has~~various noestimated ~~further~~reset ~~obligations~~exercise prices ~~with~~weighted ~~respect~~by toprobability. ~~this~~The ~~loan~~principal balance at March 31, 2020 is $100,000.

The Company borrowed $~~100~~175,000 from a ~~shareholder~~ lender on ~~August~~March 304, ~~2018~~2020. The note bears interest at 1012% and is payable in one lump sum on ~~March~~ September 4, ~~2019~~2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the second lowest trade price of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $17,500 as a discount on the note and paid $3,500 for debt issuance costs. The principal balance at March 31, 2020 is $175,000.

10During the quarter ended March 31, 2020, the Company issued 1,000,000 shares to a lender as collateral held in escrow, to be cancelled upon payment of the debt.

due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock at any time prior to the maturity date at the conversion price of $0.50 per share. This note was converted into 200,000 shares of the Company’s common stock on March 28, 2019. The Company has no further obligations with respect to this loan.

The Company borrowed $42,500 from a lender on October 15, 2018. The note bears interest at 8% and is payable in one lump sum on October 15, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 170 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on March 26, 2019 and the Company recorded a loss on extinguishment of this debt of $17,841. The Company has no further obligations with respect to this loan.

The Company borrowed $86,500 from a lender on January 2, 2019. The note bears interest at 8% and is payable in one lump sum on January 2, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on July 8, 2019 and the Company recorded a loss on extinguishment of this debt of $32,592. The Company has no further obligations with respect to this loan.

The Company borrowed $102,500 from a lender on February 14, 2019. The note bears interest at 8% and is payable in one lump sum on February 14, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on August 20, 2019 and the Company recorded a gain on extinguishment of this debt of $38,143. The Company has no further obligations with respect to this loan.

The Company borrowed $100,000 from a lender on February 20, 2019. The note bears interest at 10%, and is payable in one lump sum on February 20, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal amount is convertible by the holder into shares of the Company’s common stock beginning six months after the issuance date and prior to the maturity date at a price per share equal to sixty percent of the lowest trading price of the Company’s common stock for the fifteen trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $164,490, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.23, a risk-free interest rate of 2.00% and expected volatility of the Company’s common stock of 178.56%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $64,490 was immediately expensed as financing costs. In addition, the Company paid $5,000 for debt issuance costs. Through September 30, 2019, the Company paid $85,000 of principal, prepayment penalties and accrued interest totaling $45,000 recorded as interest expense, and recorded a loss on extinguishment of this debt of $42,629. The lender also converted $15,748 of principal and interest into 159,070 shares of the Company’s common stock. The Company has no further obligations with respect to this loan.

The Company borrowed $560,000 from a lender on February 21, 2019. The note bears interest at 12% and is payable in one lump sum on August 21, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity

date at a price per share equal to sixty-five percent of the second lowest trade price of the Company’s common stock for the twenty trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $1,185,397, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.18, a risk-free interest rate of 1.88% and expected volatility of the Company’s common stock of 213.76%, and the various estimated reset exercise prices weighted by probability. In addition, the Company granted the lender 450,000 shares of the Company’s common stock, paid $56,000 as a discount on the note, and paid $4,000 for debt issuance costs. The shares granted must be returned if the note is fully repaid and satisfied prior to 180 days after the issuance date. The Company recorded the value of the shares at $400,455, based on the Company’s share price on the date of the note agreement, as interest expense. During the third quarter of 2019, in two separate conversions, the holder converted $151,000 of principal and interest into 2,106,044 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall increase in the fair value of $615,000 recognized, with the fair value of the derivative liability related to the converted portion of $287,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.20 and $0.23, a risk-free interest rate of 1.88% and expected volatility of the Company’s common stock, of 213.76%, and the various estimated reset exercise prices weighted by probability. The principal balance at September 30, 2019 is $448,000.

The Company borrowed $42,500 from a lender on March 11, 2019. The note bears interest at 8% and is payable in one lump sum on March 11, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on September 9, 2019 and the Company recorded a loss on extinguishment of this debt of $16,689. The Company has no further obligations with respect to this loan.

The Company borrowed $150,000 from a lender on March 18, 2019. The note bears interest at 12% and is payable in one lump sum on September 18, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the second lowest trade price of the Company’s common stock for the twenty trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $433,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.28, a risk-free interest rate of 1.87% and expected volatility of the Company’s common stock of 167.00%, and the various estimated reset exercise prices weighted by probability. During the third quarter of 2019, the holder converted $56,000 of principal and interest into 1,000,000 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversion with an overall decrease in the fair value of $91,000 recognized, with the fair value of the derivative liability related to the converted portion, of $99,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the date of conversion, of $0.19; a risk-free interest rate of 1.88% and expected volatility of the Company’s common stock, of 213.76%, and the various estimated reset exercise prices weighted by probability. In addition, the Company granted 115,384 shares of the Company’s common stock and paid $15,000 as a discount on the note. The shares granted must be returned if the note is fully repaid and satisfied prior to 180 days after the issuance date. The Company recorded the value of the shares at $91,153, based on the Company’s share price on the date of the note agreement, as interest expense. The principal balance at September 30, 2019 is $95,650.

The Company borrowed $45,000 from a lender on November 6, 2018. The note bears interest at 8% and is payable

in one lump sum on November 6, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 170 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on April 5, 2019 and the Company recorded a loss on extinguishment of this debt of $15,870. The Company has no further obligations with respect to this loan.

The Company borrowed $82,500 from a shareholder on October 11, 2018. The note bears interest at 8% and is payable in one lump sum on April 11, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock at any time prior to the maturity date at the conversion price of $0.50 per share. In addition, the Company paid $13,500 for debt issuance costs. This note was paid in full on April 12, 2019 and the Company recorded additional interest expense of $38,940. The Company has no further obligations with respect to this loan.

The Company borrowed $100,000 from a lender on December 13, 2018. The note bears interest at 10%, and is payable in one lump sum on December 13, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning six months after the issuance date and prior to the maturity date at a price per share equal to sixty percent of the lowest trading price of the Company’s common stock for the fifteen trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $150,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.29, a risk-free interest rate of 2.40% and expected volatility of the Company’s common stock of 156.33%, and the various estimated reset exercise prices weighted by probability. During June and July 2019, in two separate conversions, the holder converted $36,000 of principal and interest into 333,535 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall decrease in the fair value of $32,000 recognized, with the fair value of the derivative liability related to the converted portion, of $117,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.32 and $0.22; a risk-free interest rate of 2.00% and expected volatility of the Company’s common stock, of 146.06%, and the various estimated reset exercise prices weighted by probability. In addition, the Company paid $5,000 for debt issuance costs. Through September 30, 2019, the Company paid the remaining $65,745 of principal and prepayment penalties of $29,255 recorded as interest expense. The Company has no further obligations with respect to this loan.

The Company borrowed $77,000 from a lender on October 12, 2018. The note allows borrowing up to $231,000, bears interest at 12%, and is payable in one lump sum on October 12, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock prior to the maturity date at a price per share equal to sixty-five percent of the lowest trading price of the Company’s common stock for the twenty trading days prior to the conversion date. If at any time while this note is outstanding, the conversion price is equal to or lower than $0.50, then an additional fifteen percent discount shall be factored into the conversion price until the note is no longer outstanding. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $115,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.33, a risk-free interest rate of 2.56% and expected volatility of the Company’s common stock of 172.94%, and the various estimated reset exercise prices weighted by probability. From April through August 2019, in several separate conversions, the holder converted $89,000 of principal and interest into 921,346 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured

immediately prior to the conversions with an overall decrease in the fair value of $115,000 recognized, with the fair value of the derivative liability related to the converted portion of $150,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.27 to $0.40, a risk-free interest rate of 1.88% and expected volatility of the Company’s common stock, of 213.76%, and the various estimated reset exercise prices weighted by probability. In addition, the Company paid $2,000 for debt issuance costs. On May 20, 2019, the Company borrowed an additional $51,500 on this note. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $149,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.40, a risk-free interest rate of 2.37% and expected volatility of the Company’s common stock of 154.69%, and the various estimated reset exercise prices weighted by probability. In addition, the Company paid $1,500 for debt issuance costs. The principal balance at September 30, 2019 is $51,500.

The Company borrowed $80,000 from a lender on December 17, 2018. The note bears interest at 10%, and is payable in one lump sum on December 17, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock prior to the maturity date at a price per share equal to sixty-five percent of the lowest trading price of the Company’s common stock for the fifteen trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $160,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.39, a risk-free interest rate of 2.40% and expected volatility of the Company’s common stock of 156.33%, and the various estimated reset exercise prices weighted by probability. From June through August 2019, in several separate conversions, the holder converted $84,000 of principal and interest into 696,503 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall decrease in the fair value of $91,000 recognized, with the fair value of the derivative liability related to the converted portion, of $101,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.19 to $0.35, a risk-free interest rate of 2.00% and expected volatility of the Company’s common stock of 145.37% to 156.33%, and the various estimated reset exercise prices weighted by probability. In addition, the Company paid $4,000 for debt issuance costs. The Company has no further obligations with respect to this loan.

The Company borrowed $175,000 from a lender on April 9, 2019. The note bears interest at 12%, and is payable in one lump sum on January 9, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to the lesser of the lowest trading price of the Company’s common stock for the twenty-five trading days prior to the note issuance date, and the variable conversion price equal to fifty-five percent of the lowest trading price of the Company’s common stock for the twenty-five trading days prior to the conversion date. If at any time while this note is outstanding a 3rd party has the right to convert at a discount to market greater than the conversion price in effect at that time, the lender may utilize such greater discount percentage until the note is no longer outstanding. If at any time while this note is outstanding a 3rd party has a look back period greater than the look back period in effect at that time, the lender may utilize such greater number of look back days until the note is no longer outstanding. In addition, the Company paid $16,250 for debt issuance costs. The principal balance at September 30, 2019 is $175,000.

The Company borrowed $102,500 from a lender on April 10, 2019. The note bears interest at 8% and is payable in one lump sum on April 10, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. The principal balance at September 30, 2019 is $102,500.

The Company borrowed $400,000 from five lenders on May 20, 2019. The notes bear interest at 10% and are payable in one lump sum on May 20, 2020, at which time the entire amount of principal and accrued interest is due and payable. The notes are unsecured. The outstanding principal and interest amount is convertible by the holders into shares of the Company’s common stock at any time after the closing price of the Company’s common stock exceeds $0.75 for 10 consecutive trading days at a price equal to $0.50 per share. There was no value assigned to the beneficial conversion feature on the issuance date of the notes due to the Company’s common stock price being less than $0.75 per share. The principal balance at September 30, 2019 is $400,000.

The Company borrowed $88,500 from a lender on July 8, 2019. The note bears interest at 8% and is payable in one lump sum on July 8, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. The principal balance at September 30, 2019 is $88,500.

The Company borrowed $103,000 from a lender on July 24, 2019. The note bears interest at 10% and is payable in one lump sum on July 24, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to the lesser of (1) $0.22 and (2) sixty-five percent of the lowest trading price of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $15,315 for debt issuance costs. The principal balance at September 30, 2019 is $103,000.

The Company borrowed $100,000 from two lenders on July 26, 2019. The notes bear interest at 10% and are payable in one lump sum on May 20, 2020, at which time the entire amount of principal and accrued interest is due and payable. The notes are unsecured. The outstanding principal and interest amount is convertible by the holders into shares of the Company’s common stock at any time after the closing price of the Company’s common stock exceeds $0.75 for 10 consecutive trading days at a price equal to $0.50 per share. There was no value assigned to the beneficial conversion feature on the issuance date of the notes due to the Company’s common stock price being less than $0.75 per share. The principal balance at September 30, 2019 is $100,000.

The Company borrowed $175,000 from a lender on August 26, 2019. The note bears interest at 12% and is payable in one lump sum on February 26, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the second lowest trade price of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company granted the lender 625,000 shares of the Company’s common stock, paid $17,500 as a discount on the note, and paid $3,000 for debt issuance costs. The shares granted must be returned if the note is fully repaid and satisfied prior to 180 days after the issuance date. The Company recorded the value of the shares at $81,250, based on the Company’s share price on the date of the note agreement, as debt issuance costs. The principal balance at September 30, 2019 is $175,000.

The Company borrowed $295,000 from a lender on September 4, 2019. The note does not bear interest and matures September 4, 2020, at which time the entire amount of principal is due and payable. The note is unsecured. The outstanding principal amount is convertible by the holder into shares of the Company’s common stock at any time after the closing price of the Company’s common stock exceeds $0.75 for 10 consecutive trading days at a price equal to $0.50 per share. There was no value assigned to the beneficial conversion feature on the issuance date of the notes due to the Company’s common stock price being less than $0.75 per share. The principal balance at September 30, 2019 is $295,000. The Company paid $45,000 as a discount for interest on the note.

The Company borrowed $262,500 from a lender on September 10, 2019. The note bears interest at 10%, and is payable in one lump sum on September 10, 2020, at which time the entire amount of principal and accrued interest

is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning on the sixth month anniversary of the note and prior to the maturity date at a price per share equal to sixty percent of the lowest trading price of the Company’s common stock for the fifteen trading days prior to the conversion date. The principal balance at September 30, 2019 is $262,500.

7. Advances From Related Parties

The Company has received non-interest bearing advances without a specified maturity date from ~~certain~~two stockholders of the Company. The Company owed approximately $20225,000 and $~~302~~4,000, ~~respectively,~~ at ~~September~~March 3031, ~~2019~~2020 and December 31, ~~2018~~2019, respectively, to the stockholders.

8. Revenue Sharing Agreements

~~The~~No ~~Company borrowed~~additional ~~$50,000~~revenue ~~from~~sharing aagreements ~~lender on November 29, 2018, whereby the proceeds are to be used to purchase a certain HydraSpin unit~~were ~~in exchange for the lender to receive five percent of the revenues net of costs generated from the HydraSpin unit. On March 3, 2019, the Company cancelled this original agreement and~~ entered into aduring ~~new agreement whereby~~ the ~~lender~~three ismonths toended ~~receive fifty percent of the revenues net of costs and has guaranteed that the lender would receive $150,000 in net revenues by~~ March ~~3, 2021, or the Company would pay the lender the difference between the $150,000 and the purchase price of $50,000 on or before March~~ 31, ~~2021~~2020. On ~~August~~The ~~19, 2019, the~~ Company ~~cancelled~~recorded ~~the March 3, 2019 agreement and entered into a new agreement to borrow~~ an additional $~~230~~265,000, ~~whereby the proceeds will be used to purchase a certain HydraSpin unit~~ in ~~exchange~~interest ~~for~~expense ~~the lender to receive fifty percent~~during of the ~~revenues~~three ~~net~~months of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $495,000 in net revenues by November 4, 2021, or the Company would pay the lender the difference between the $495,000 and the purchase price of $330,000 on or before November 30, 2021. For the nine-month period ended ~~September~~March 3031, ~~2019,~~2020 ~~the Company recorded $27,569 of interest expense~~ related to the ~~value~~existing ~~of the~~ revenue sharing ~~liability~~agreements. ~~The~~No ~~agreement~~payments ~~remains~~have inbeen ~~full~~made ~~force~~on ~~and effect until~~existing ~~the~~revenue ~~earlier~~sharing of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the unit, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the partiesagreements.

~~The~~As ~~Company borrowed~~of ~~$264,000~~July ~~from a lender on December~~ 13, ~~2018~~2020, ~~whereby~~ the ~~proceeds~~Company ~~are~~is obligated to ~~be used to~~ purchase ~~certain~~seven HydraSpin units~~. On~~ ~~February~~with ~~27, 2019, the Company cancelled this original agreement and entered into a new agreement to borrow~~ an ~~additional~~aggregate ~~$66,000, whereby~~cost ~~the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive fifty percent~~ of ~~the revenues~~approximately ~~net~~$2 ofmillion ~~costs~~awaiting ~~generated~~shipment from ~~the~~Africa ~~HydraSpin~~to ~~unit. The Company has guaranteed that~~ the ~~lender would receive $495,000 in net revenues by March 3, 2021, or the~~ Company ~~would pay the lender the difference between the $495,000~~ and ~~the~~there ~~purchase~~is ~~price of~~approximately $~~330,000~~1 onmillion orincluded ~~before~~in ~~March~~accounts ~~31,~~payable ~~2021.~~for ~~For~~unpaid ~~the~~amounts ~~nine-month~~on ~~period~~other ~~ended September 30, 2019, the Company recorded $42,625 of interest expense related to the value of the revenue sharing liability~~units. ~~The~~No ~~agreement~~payment ~~remains~~has inbeen ~~full force and effect until the earlier~~made ofon ~~(a)~~these the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the unit, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the partiesunits.

The Company borrowed $660,000 from a lender on January 2, 2019, whereby the proceeds were used to purchase certain HydraSpin units in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin units. The Company has guaranteed that the lender would receive $990,000 in net revenues by January 2, 2021, or the Company would pay the lender the difference between the $990,000 and the purchase price of $660,000 on or before January 15, 2021. For the nine-month period ended September 30, 2019, the Company recorded $123,750 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the units, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties.

The Company borrowed $660,000 from a lender on January 16, 2019, whereby the proceeds were used to purchase certain HydraSpin units in exchange for the lender to receive fifty percent of the revenues net of costs generated

from the HydraSpin units. The Company has guaranteed that the lender would receive $990,000 in net revenues by January 15, 2021, or the Company would pay the lender the difference between the $990,000 and the purchase price of $660,000 on or before January 17, 2021. For the nine-month period ended September 30, 2019, the Company recorded $116,875 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the units, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties.

The Company borrowed $330,000 from a lender on January 30, 2019, whereby the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive sixty percent of the revenues net of forty percent of costs generated from the HydraSpin unit until the lender receives revenue equal to 120% of the $330,000 investment, then the lender shall receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $495,000 in net revenues by January 30, 2021, or the Company would pay the lender the difference between the $495,000 and the purchase price of $330,000 on or before February 6, 2021. For the nine-month period ended September 30, 2019, the Company recorded $55,000 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the unit, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties.

The Company borrowed $330,000 from a lender on April 1, 2019, whereby the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $495,000 in net revenues by April 8, 2021, or the Company would pay the lender the difference between the $495,000 and the purchase price of $330,000 on or before April 30, 2021. For the nine-month period ended September 30, 2019, the Company recorded $41,250 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the units, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties.

The Company borrowed $60,000 from a lender on June 25, 2019, whereby the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $90,000 in net revenues by June 25, 2021, or the Company would pay the lender the difference between the $90,000 and the purchase price of $60,000 on or before July 25, 2021. On August 15, 2019, the Company borrowed an additional $70,000 from the lender. During the quarter, the lender requested the agreement be terminated and $130,000 be returned to the lender. The Company intends to return the amount borrowed during the period ending December 31, 2019. For the nine-month period ended September 30, 2019, the Company recorded $208 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the units, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties.

9. Equity Transactions

From January 1, ~~2018~~2019 to March 31, ~~2018~~2019, the Company issued 1200,~~656,~~000 shares to ~~investors~~a atlender ~~$0.50~~upon ~~per~~receipt ~~share for cash, with total proceeds~~ of ~~$828,000,~~ ~~including~~a ~~subscription~~conversion ~~receivable of $50,000~~notice. InThe ~~addition, the~~ Company also issued ~~610~~465,~~000~~384 shares to ~~executives, employees~~lenders ~~working~~for indebt ~~research~~issuance ~~and development at the Company, and consultants~~costs. ~~The value of these shares at $0.50 per share was $305,000.~~

From April 1, 2018 to June 30, 2018, the Company issued 625,000 shares to investors at $0.50 per share for cash, with total proceeds of $312,500. In addition, the Company issued 770,000 shares to executives, employees working in research and development at the Company and consultants. The value of these shares at $0.50 per share was $385,000. The Company had 1,250,000 shares returned during June 2018 as a result of a lawsuit settlement.10

From ~~July~~January 1, ~~2018~~2020 to ~~September~~March 3031, ~~2018~~2020, the Company issued ~~660~~16,~~000~~894,369 shares to ~~investors~~lenders atupon ~~$0.50~~receipt ~~per~~of ~~share~~conversion notices for ~~cash~~total principal, ~~with~~interest ~~total~~and ~~proceeds~~ fees of $~~330~~378,~~000~~681. InThe ~~addition, the~~ Company ~~granted~~also ~~705~~issued 385,000 shares to ~~executives,~~ employees ~~working in research and development at the~~ ~~Company~~ and consultants. ~~The~~valued ~~value of these shares~~ at $~~0.50~~24,600 ~~per~~and ~~share~~issued ~~was $352~~1,~~500.~~000,000 ~~Also~~shares ~~see~~as ~~Note~~collateral 5held ~~regarding~~in ~~shares~~escrow, ~~issued for~~to ~~debt~~be ~~issuance~~cancelled ~~costs~~upon inpayment ~~September~~of ~~2018~~the debt.

From January 1, 2019 to March 31, 2019, the Company issued 200,000 shares to a lender upon receipt of a conversion notice. The Company also issued 565,384 shares to lenders for debt issuance costs. See Note 5.

From April 1, 2019 to June 30, 2019, the Company issued 1,289,051 shares to lenders upon receipt of conversion notices. See Note 5. In addition, the Company issued 825,000 shares to employees and consultants valued at the share price on the date the services were performed.

From July 1, 2019 to September 30, 2019, the Company issued 4,183,152 shares to lenders upon receipt of conversion notices. The Company also issued 625,000 shares to a lender for debt issuance costs and 1,502,389 shares to a lender for settlement of a claim. See Note 5. In addition, the Company issued 400,000 shares to employees and consultants valued at the share price on the date the services were performed and issued 1,180,000 shares to investors for total cash proceeds of $294,900.

10. Operating Leases – Right of Use Assets

The Company has an operating ~~leases~~lease for office and warehouse space that expires in ~~2020 and~~ 2023. Below is a summary of the Company’s right of use assets and liabilities as of ~~September 30~~March 31, ~~2019~~2020:

Right-of-use assets	$	~~813~~632,~~393~~930
Lease liability obligations, current	$	~~277~~178,~~310~~116
Lease liability obligations, less current portion		~~550~~473,~~308~~932
Total lease liability obligations	$	~~827~~652,~~618~~048
Weighted-average remaining lease term		3.52 years
Weighted-average discount rate		10	%

During the ~~nine~~ three months ended ~~September~~March 3031, ~~2019~~2020, the Company recognized approximately $~~164~~40,000 in operating lease costs and are included in selling, general and administrative expenses in our consolidated statement of operations. During the ~~nine~~three months ended ~~September~~ 30March 31, ~~2019~~2020, operating cash flows from operating leases was $~~144~~57,~~847~~000.

Approximate future minimum lease payments for the Company’s right of use assets over the remaining lease periods as of ~~September 30~~March 31, ~~2019~~2020, are as follows:

Year ending December 31,
	2020	$	176,000
	2021		240,000
	2022		246,000
	2023		103,000
	Total minimum payments	$	765,000

Year ending December 31,
	2019	$	81,000
	2020		312,000
	2021		240,000
	2022		246,000
	2023		103,000
	Total minimum payments	$	982,000

11. Income Taxes

The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

The Company’s tax provision is determined using an estimate of an annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The ~~2019~~2020 and ~~2018~~2019 annual effective tax rate ~~was~~is estimated to be 0% for the U.S. federal and state statutory tax rates because the Company is in a net operating loss position. The Company reviews tax uncertainties in light of changing facts and circumstances and ~~adjusts~~ adjust them accordingly. As of ~~September~~March 3031, ~~2019~~2020 and December 31, ~~2018~~2019, there were no tax contingencies recorded.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes.

The Company has a net operating loss carry-forward for federal and state tax purposes of approximately $15,549,000 at September 30, 2019, that is potentially available to offset future taxable income. The TCJA (Tax Cut and Jobs Act) changes the rules on NOL carryforwards. The 20-year limitation was eliminated, giving the taxpayer the ability to carry forward losses indefinitely. However, NOL carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income.11

~~For financial~~The ~~reporting~~Company ~~purposes,~~had noa ~~deferred~~net ~~tax~~operating ~~asset~~loss carry-forward ~~was~~for ~~recognized~~federal atand ~~September~~state ~~30,~~tax ~~2019~~purposes ~~and~~of ~~December~~approximately 31$14,243,000 ~~2018~~at ~~because~~March ~~management estimates~~31, 2020, that it is ~~more~~potentially ~~likely~~available to ~~than~~offset ~~not~~future ~~that~~taxable ~~substantially~~income. ~~all~~The ofTCJA ~~the~~(Tax ~~net~~Cut ~~operating~~and ~~losses~~Jobs ~~will~~Act) ~~expire~~changes ~~unused.~~the Asrules aon ~~result, the~~NOL ~~amount~~carryforwards. ofThe ~~the~~20-year ~~deferred~~limitation was ~~tax~~eliminated, ~~assets~~giving ~~considered~~the ~~realizable~~taxpayer ~~was~~the ~~reduced~~ability ~~100%~~to bycarry aforward ~~valuation~~losses ~~allowance~~indefinitely. ~~The~~However, ~~change~~NOL incarry ~~the~~forward ~~valuation~~arising after ~~allowances~~January ~~were approximately $~~1,~~590,000~~ ~~and $583~~2018,~~000~~ ~~for~~will ~~the~~now ~~nine-months~~be ~~ended~~limited ~~September~~to ~~30,~~80 ~~2019~~percent ~~and~~of ~~2018,~~taxable ~~respectively~~income.

For financial reporting purposes, no deferred tax asset was recognized at March 31, 2020 and December 31, 2019 because management estimates that it is more likely than not that substantially all of the net operating losses will expire unused. As a result, the amount of the deferred tax assets considered realizable was reduced 100% by a valuation allowance. The change in the valuation allowance was approximately $236,000 and $334,000 for the three-months ended March 31, 2020 and 2019, respectively.

12. Segment Information

The Company sells water purification products and operates oil recovery systems. The Company has identified such reportable segments based on management responsibility and the nature of the Company’s products, services, and costs. To date, the Company primarily sells its water purification products internationally and operates its oil recovery systems in the United States. The Company measures segment profit (loss) as income (loss) from operations. Segment assets are those assets controlled by each reportable segment.

Below is the financial information related to the Company’s segments:

		For the Three Months
		Ended March 31,
	2020		2019
Revenues
Water purification products	$	2,995	$	78,552
Oil recovery machines		—		—
	$	2,995	$	78,552
Loss from operations
Water purification products	$	201,304	$	722,554
Oil recovery machines		268,909		96,581
General corporate		174,979		149,276
	$	645,192	$	968,411
Capital expenditures
Water purification products	$	—	$	92,158
Oil recovery machines		30,000		628,625
General corporate		—		—
	$	30,000	$	720,783
		March 31, 2020		December 31, 2019
Total assets
Water purification products	$	666,823	$	749,536
Oil recovery machines		2,691,613		2,576,758
General corporate		859,061		1,088,812
	$	4,217,497	$	4,415,106

	For the three months ended					For the nine months ended
	September 30,					September 30,
	2019		2018			2019		2018
Revenues
Water purification products	$	—	$	(19,995	)	$	308,744	$	39,200
Oil recovery systems		20,092		—			25,649		—
	$	20,092	$	(19,995	)	$	334,393	$	39,200
Loss from operations
Water purification products	$	608,469	$	732,123		$	1,936,762	$	2,130,811
Oil recovery systems		196,485		—			541,599		—
General corporate		247,519		164,086			674,395		549,437
	$	1,052,473	$	896,209		$	3,152,756	$	2,680,248
Capital expenditures
Water purification products	$	—	$	—		$	92,158	$	—
Oil recovery systems		—		—			1,558,625		—
General corporate		—		—			—		—
	$	—	$	—		$	1,650,783	$	—

	September 30, 2019		December 31, 2018
Total assets
Water purification products	$	937,704	$	612,498
Oil recovery systems		2,632,098		1,244,814
General corporate		1,010,515		63,956
	$	4,580,317	$	1,921,268

General corporate expenses include corporate salaries, health insurance and social security taxes for officers and corporate employees, corporate insurance, legal and accounting fees, and other corporate costs such as transfer agent and travel costs. Management considers these to be non-allocable costs for segment purposes.

13. Subsequent Events

~~The Company~~ Paycheck ~~has~~Protection ~~evaluated~~Program ~~all material events or transactions that occurred after September 30, 2019 up to November 19, 2019, the date these financial statements were available to be issued.~~Loan

On ~~November 12~~April 20, ~~2019~~2020, the Company, ~~through~~obtained a ~~its~~Paycheck ~~HydraSpin~~Protection ~~subsidiary,~~Program ~~signed an Exclusive Distributor Agreement~~ (~~the “Agreement”~~PPP) in ~~which~~loan ~~the~~from ~~other~~a ~~party~~commercial tobank ~~the~~in ~~agreement (~~the ~~“Distributor”)~~amount ~~agrees to become the exclusive distributor~~ of ~~HydraSpin products in certain Texas and New Mexico territories~~$290,400. ~~HydraSpin~~The ~~shall~~loan ~~provide~~is ~~the~~unsecured, ~~products~~bears ~~to the Distributor~~ interest at ~~no cost but HydraSpin will receive certain net revenues from the sale of hydrocarbons produced by the products~~1.0% ~~HydraSpin’s~~interest ~~share~~and ofis ~~net~~payable ~~revenues will~~beginning beNovember ~~92% of Net Revenues~~20, as2020 ~~defined~~in ~~for~~18 ~~the~~equal ~~first~~installments. 10Interest ~~installed~~accrues ~~products~~during ~~and 85% for~~ the ~~eleventh~~deferment ~~product installed and those~~period. ~~products~~The ~~installed~~loan ~~subsequently.~~is Insubject ~~order for the Distributor~~ to ~~maintain~~potential ~~the~~forgiveness ~~exclusivity granted~~ in ~~the~~part ~~agreement~~or total, itdepending ~~must~~on ~~deploy products in 25 new locations during each 12-month period following~~ the ~~effective~~amount ~~date~~of ~~and~~certain ~~all~~costs ~~customer~~incurred ~~locations~~by in the ~~aggregate~~Company ~~must~~over ~~generate~~ an ~~average~~8-week ofperiod ~~7,500~~after ~~barrels of water with at least 2% oil content in each per day. If~~ the ~~Agreement~~loan’s isdisbursement ~~extended beyond~~date, ~~the~~including ~~initial~~payroll ~~term of five years~~costs, ~~the~~payment ~~number~~ of ~~customer~~interest ~~locations~~on toa becovered ~~secured to maintain exclusivity shall be increased~~obligation, torent 50and ~~per year~~utilities.

~~Stock Issuances~~13

~~During~~ITEM ~~October~~2. ~~2019~~MANAGEMENT’S ~~and~~DISCUSSION ~~through~~AND ~~November 19,~~ANALYSIS ~~2019,~~OF ~~the~~FINANCIAL ~~Company~~CONDITION ~~has~~AND ~~converted~~RESULTS ~~$123,000~~OF ~~of its convertible debt into 4,927,841 shares of common stock.~~OPERATIONS

~~Settlement~~The ~~Agreements~~following discussion should be read in conjunction with our consolidated financial statements and related notes thereto included in this quarterly report, and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019.

On November 15, 2019, the Company reached an amicable resolution of any and all obligations owed by it to Auctus Funds, LLC (“AF”) with respect to the Securities Purchase Agreement dated April 9, 2019 and the related Convertible Promissory Note dated April 9, 2019. The Company has agreed to pay AF $270,000 in three installments. The first payment of $50,000 was paid on November 15, 2019. The second payment of $100,000 will be paid to AF on November 22, 2019. The final payment of $120,000 will be paid to AF on November 29, 2019.Overview

OnWater ~~November 15~~Now, ~~2019,~~ ~~the~~Inc. ~~Company~~was ~~reached~~incorporated in anTexas ~~amicable~~on ~~resolution~~February of10, ~~any~~2016 ~~and~~to ~~all~~develop ~~obligations~~and ~~owed~~commercialize bya itgas/diesel toand ~~Crown~~electric ~~Bridge Partners~~powered, ~~LLC~~portable ~~(“CBP”) with~~device ~~respect to~~ that ~~certain~~processes ~~securities purchase agreement~~ and purifies ~~outstanding~~contaminated ~~convertible~~water. ~~note~~Our ~~with~~water ~~CBP.~~purification ~~The~~product ~~Company~~lines ~~made~~consist ~~a payment~~ of ~~$120,000~~portable tounits ~~CBP~~capable onof ~~November~~providing ~~15,~~a ~~2019~~cost-effective, safe ~~thereby fulfilling any~~ and ~~all~~efficient ~~obligations~~method toof ~~CBP~~water purification.

20We have also developed a flameless heating technology that allows us to manufacture an electronically powered portable heating platform. The platform uses no combustion or electronic heating elements. By avoiding traditional heating elements, the product is ideal for facilities that generate vapors or dust, such as paint and body shops, furniture manufacturers, fuel depots and grain elevators. Our technology is anticipated to allow for the efficient heating of large spaces such as warehouses and garages. We introduced to the market our initial product offering, HydraHeat, in June 2019, but have yet to generate revenue. The first product that we will make available to the market will heat approximately 1,000 square feet. We are currently in negotiations with potential third party manufactures of the product and hope to finalize an OEM agreement in late Q4 2020 or early Q1 2021. Thereafter, we will begin final testing of the retail product offering in hopes of making the product available to the public in the third quarter of 2021.

~~ITEM~~On 2October 23, 2018, the Company formed HydraSpin USA, Inc., ~~MANAGEMENT’S~~a Texas corporation (“HydraSpin”), as a wholly-owned ~~DISCUSSION~~subsidiary. ~~AND~~HydraSpin ~~ANALYSIS~~is OFengaged ~~FINANCIAL~~in ~~CONDITION~~the ~~AND~~installation ~~RESULTS~~and OFoperation ~~OPERATIONS~~of oil recovery systems deployed at saltwater disposal wells associated with the oil industry. The utilized technology developed by African Horizon Technologies (Pty) Ltd (“AHT”) allows for the separation of residual oil from water contained in the disposal sites so as to minimize environmental contamination from the fluids containing oil.

~~The~~On ~~following~~October 31, 2018, the Company entered into ~~discussion~~an ~~should~~Exclusive beSales ~~read~~Distribution inAgreement ~~conjunction~~(the “AHT Agreement”) with ~~our~~AHT ~~consolidated~~whereby ~~financial~~the ~~statements~~Company ~~and~~serves ~~related~~as ~~notes~~AHT ~~thereto~~s ~~included~~exclusive distributor of the Hydraspin Hydro Cyclone technology in ~~this quarterly~~the ~~report,~~United ~~and~~States of America. Pricing is established in accordance with the ~~audited~~AHT ~~consolidated~~Agreement. ~~financial~~Products ~~statements~~are ~~and~~paid ~~related~~50% ~~notes~~upon ~~included~~order inand ~~our~~the ~~Annual~~balance ~~Report~~being ondue ~~Form~~FOB 10the port. Typical lead-Ktime to have a machine ready for ~~the~~deployment ~~year~~after ~~ended~~it ~~December~~is ~~31,~~ordered ~~2018~~is sixty (60) days.

~~Overview~~The Company, through HydraSpin, contracts with owners of saltwater injection wells to reclaim oil using systems manufactured by AHT but owned and operated by HydraSpin. We derive revenue from sharing the proceeds of the oil recovered and sold with the owner of the applicable disposal location, typically on a 50/50 basis. As of the current date, we have ordered 13 systems from AHT, of which we have received six units. These units are currently in operation. The remaining seven units are expected to be received and placed in operation during 2020.

~~Water~~On ~~Now~~November 12, ~~Inc.~~2019, the Company, ~~was~~through ~~incorporated~~its HydraSpin subsidiary, signed an Exclusive Distributor Agreement (the “Agreement”) in ~~Texas~~which onthe ~~February~~other ~~10,~~party ~~2016~~to the agreement (the “Distributor”) agrees to ~~develop~~become ~~and~~the ~~commercialize~~exclusive adistributor ~~gas/diesel~~of orHydraSpin ~~electric~~products ~~powered,~~in ~~portable~~certain ~~device~~Texas and New Mexico territories. HydraSpin shall provide ~~that~~the ~~processes~~products ~~and~~to ~~purifies~~the ~~contaminated~~Distributor ~~water~~at no cost but HydraSpin will receive certain net revenues from the sale of hydrocarbons produced by the deployed units. ~~Our~~HydraSpin ~~business~~s ~~strategy~~share ~~was~~will ~~conceived~~be 92% of Net Revenues, as athat ~~result~~term ofis defined in the ~~growing~~Agreement, ~~global~~for ~~water~~the ~~crisis~~first 10 installed products and 85% for the eleventh product installed and those products installed subsequently. In ~~Today~~order for the Distributor to maintain the exclusivity granted in the Agreement, ~~many~~it ~~countries~~must ~~and~~deploy ~~regions~~products ~~are~~in ~~experiencing~~25 ~~acute~~new ~~water~~locations during ~~shortages~~each ~~and~~12-month weperiod ~~believe~~following ~~our~~the ~~technology~~effective date and ~~products~~all ~~are~~customer ~~capable~~locations in the aggregate must generate an average of 7,500 barrels of ~~generating~~water ~~safe~~with ~~drinking~~at ~~water~~least ~~from~~2% ~~many~~oil ~~available~~content ~~water~~in ~~sources~~each per day. WeIf ~~have~~the ~~two~~Agreement is ~~principal~~extended ~~reportable~~beyond ~~segments:~~the ~~water~~initial ~~purification~~term of five years, the number of customer locations to be secured to maintain exclusivity shall ~~products~~be ~~and~~increased ~~oil~~to ~~recovery~~50 ~~systems~~per year.

~~Our~~Oil ~~water~~prices ~~purification product~~have ~~lines~~fallen ~~consist of portable units capable of providing a cost-effective, safe and efficient method of water purification.~~dramatically ~~Our~~in ~~products require no pre- or post-treatment of the source water~~2020, nocausing ~~filters,~~many noproducers ~~membranes~~to ~~and~~stop noexploration ~~chemicals~~activities. ~~The~~This ~~quality of water purified by our products has been tested to meet or exceed the World Health Organization’s (“WHO”) drinking water standards.~~situation

We have also developed a flameless heating technology that allows us to manufacture an electronically powered portable heating platform. The platform uses no combustion or electronic heating elements. By avoiding traditional heating elements, the product is ideal for facilities that generate vapors or dust, such as paint and body shops, furniture manufacturers, fuel depots and grain elevators. Our technology is anticipated to allow for the efficient heating of large spaces such as warehouses and garages. We introduced to the market our initial product offering, HydraHeat, in June 2019, but have yet to generate revenue. The first product that we will make available to the market will heat approximately 1,000 square feet.14

~~On October 23, 2018, the Company formed HydraSpin USA, Inc., a Texas corporation (“HydraSpin”), as a wholly-owned subsidiary. HydraSpin is engaged in the installation~~ and ~~operation of oil recovery systems deployed at salt water disposal wells associated with~~ the ~~oil~~ ~~industry.~~global ~~The~~pandemic ~~utilized~~have ~~technology developed by African Horizon Technologies (Pty) Ltd (“AHT”) allows for the separation~~effectively oftemporarily ~~residual~~eliminated ~~oil~~our ~~from~~ability ~~water contained in the disposal sites so as~~ to ~~minimize~~produce ~~environmental~~revenues ~~contamination~~ from ~~the~~our ~~fluids~~HydraSpin ~~containing oil~~activities.

OnFinancial October 31, 2018, the Company entered into an Exclusive Sales Distribution Agreement (the “AHT Agreement”) with AHT whereby the Company serves as AHT’s exclusive distributor of the Hydraspin Hydro Cyclone technology in the United States of America. Pricing is established in accordance with the AHT Agreement. Products are paid 50% upon order and the balance being due FOB the port. Typical lead time to have a machine ready for deployment after it is ordered is sixty (60) days.Overview

OnRevenue November 12, 2019, the Company, through its HydraSpin subsidiary, signed an Exclusive Distributor Agreement (the “Agreement”) in which the other party to the agreement (the “Distributor”) agrees to become the exclusive distributor of HydraSpin products in certain Texas and New Mexico territories. HydraSpin shall provide the products to the Distributor at no cost but HydraSpin will receive certain net revenues from the sale of hydrocarbons produced by the products. HydraSpin’s share of net revenues will be 92% of Net Revenues, as defined for the first 10 installed products and 85% for the eleventh product installed and those products installed subsequently. In order for the Distributor to maintain the exclusivity granted in the agreement, it must deploy products in 25 new locations during each 12-month

21For the three months ended March 31, 2020, we generated revenues of approximately $3,000. Our ability to increase revenues will depend on the successful manufacturing and commercialization of our water purification and heater units and the continued development of contracts with our Hydraspin customers.

~~period~~Research ~~following the effective date~~ and ~~all~~Development ~~customer~~Expenses locations in the aggregate must generate an average of 7,500 barrels of water with at least 2% oil content in each per day. If the Agreement is extended beyond the initial term of five years, the number of customer locations to be secured to maintain exclusivity shall be increased to 50 per year.

The Company ~~and~~ ~~the~~expenses ~~Distributor~~R&D ~~estimate~~costs ~~that~~as ~~the~~incurred. The ~~first~~Company’s 25R&D ~~products~~activities ~~deployed~~related ~~will~~to ~~produce~~activities ~~approximately~~undertaken ~~$40~~to ~~million~~commercialize inour ~~gross~~water ~~revenue~~purification ~~annually to~~and ~~HydraSpin~~heater products.

~~The~~General ~~Company, through HydraSpin, contracts with owners of saltwater injection wells to reclaim oil using systems manufactured by AHT but owned~~ and ~~operated~~Administrative byExpenses HydraSpin. We derive revenue from sharing the proceeds of the oil recovered and sold with the owner of the applicable disposal location, typically on a 50/50 basis. As of the current date, we have ordered 13 systems from AHT, of which we have received six units. Three of these units are currently in operation and three are expected to be in operation by the end of November 2019. The remaining seven units are expected to be received and placed in operation in the 1st quarter of 2020.

~~Financial~~General and administrative (“G&A”) ~~Overview~~expenses consist primarily of salaries and related costs for personnel, including stock-based compensation expense. Subsequent to the active trading date of our common stock on August 14, 2018, we have based the fair value of awards on the quoted closing bid price of our common stock on the OTC Markets on the date of grant. Other G&A expenses include professional fees for legal, finance, accounting, and consulting services, insurance and rent.

~~Revenue~~We anticipate that our G&A expenses will increase in future periods to support increases in our research and development activities and as a result of increased headcount, expanded infrastructure, increased legal, compliance, accounting and investor and public relations expenses associated with being a public company and increased insurance premiums, among other factors.

~~From~~Interest February 10, 2016 (date of inception) through September 30, 2019, we had generated revenues of approximately $533,000. Our ability to increase revenues will depend on the successful manufacturing and commercialization of our water purification and heater units and the continued development of contracts with our Hydraspin customers.Expense

~~Research~~Interest expense consists of interest incurred on borrowings including amortization of beneficial conversation features and ~~Development~~debt ~~Expenses~~issue costs.

~~The~~Critical ~~Company expenses~~Accounting ~~R&D~~Policies ~~costs as incurred. The Company’s R&D activities related to activities undertaken to commercialize our water purification~~ and ~~heater products.~~Estimates

~~General~~The preparation of the unaudited consolidated financial statements requires our management to make estimates and ~~Administrative~~assumptions ~~Expenses~~that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates, including investment impairment. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

~~General~~For ~~and administrative~~a ~~(“G&A”)~~description ~~expenses consist primarily~~ of ~~salaries~~the ~~and~~accounting ~~related costs for personnel~~policies that, ~~including~~in ~~stock-based compensation~~management’s ~~expense. To date~~opinion, weinvolve ~~have estimated~~ the ~~fair~~most ~~value~~significant application of ~~stock-based~~judgment ~~awards~~or ~~issued~~involve tocomplex ~~employees,~~estimation ~~directors~~ and ~~non-employees~~which ~~based~~could, onif ~~prices~~different ~~paid~~judgment byor ~~unrelated~~estimates ~~third-parties~~were ~~for~~made, ~~the~~materially ~~purchases~~affect of our ~~common~~reported ~~stock.~~financial ~~Subsequent~~position, toresults ~~the active trading date~~ of operations, ~~our~~or ~~common~~cash ~~stock on August 14~~flows, ~~2018,~~see we“Management’s ~~have~~Discussion ~~based~~and ~~the~~Analysis ~~fair value~~ of ~~awards~~Financial onCondition ~~the~~and ~~quoted~~Results ~~closing bid price~~ of ~~our~~Operations ~~common~~– ~~stock~~Significant onAccounting ~~the~~Policies ~~OTC~~and ~~Markets~~Recent onAccounting ~~the~~Pronouncements” ~~date~~in ofour ~~grant.~~Annual ~~Other~~Report ~~G&A~~on ~~expenses~~Form ~~include~~10-K ~~patent~~for ~~costs,~~the ~~and~~fiscal ~~professional~~year ~~fees~~ended ~~for legal~~December 31, ~~finance, accounting~~2019 ~~services,~~filed ~~and~~with athe ~~legal~~SEC ~~settlement~~on inJune ~~2018~~16, 2020.

WeDuring ~~anticipate that~~the ~~our~~three ~~G&A~~months ~~expenses~~ended ~~will~~March ~~increase~~31, in2020, there ~~future~~were ~~periods~~no tosignificant ~~support~~changes ~~increases~~ in our ~~research~~accounting ~~and~~policies ~~development activities~~ and as aestimates ~~result~~other ofthan ~~increased~~the ~~headcount,~~newly ~~expanded~~adopted ~~infrastructure, increased legal, compliance,~~ accounting ~~and~~standards ~~investor and public relations~~that ~~expenses~~are ~~associated~~disclosed ~~with~~in ~~being~~Note a1 ~~public~~to ~~company~~our ~~and~~consolidated ~~increased~~financial ~~insurance premiums, among other factors~~statements.

~~Interest Expense~~Results of Operations

~~Interest expense consists of interest incurred on borrowings including amortization of debt issue costs.~~15

22For the three months ended March 31, 2020 and 2019 (unaudited)

~~Critical Accounting Policies and Estimates~~Revenue

~~The~~We ~~preparation of~~generated ~~the~~revenues ~~unaudited~~of ~~consolidated~~$3,000 ~~financial~~and $79,000 ~~statements~~for ~~requires~~the ~~our~~three ~~management~~months toended ~~make~~March ~~estimates~~31, 2020 and ~~assumptions~~2019, ~~that~~respectively, ~~affect~~all ~~the~~from ~~reported amounts~~our ofwater ~~assets,~~purification ~~liabilities,~~products ~~revenues~~segment. ~~and~~During the ~~expenses,~~three ~~and~~months ~~related~~ended ~~disclosure~~March of31, ~~contingent~~2020 ~~assets~~ and ~~liabilities. On a regular basis~~2019, we ~~evaluate~~did ~~these~~not ~~estimates,~~generate ~~including~~any ~~investment~~revenues ~~impairment.~~from ~~These~~our ~~estimates~~oil ~~are~~recovery ~~based~~systems onsegment. ~~management’s~~We ~~historical~~continue ~~industry~~to ~~experience~~aggressively ~~and~~market onour ~~various~~water ~~other~~purification ~~assumptions~~products ~~that~~and ~~are~~oil ~~believed~~recovery tosystems beand ~~reasonable~~believe ~~under~~that ~~the~~demand ~~circumstances.~~will ~~Actual~~increase ~~results~~as current ~~may~~customers ~~differ~~reorder ~~from~~and ~~these~~new ~~estimates~~customers are acquired.

~~For~~Operating a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Significant Accounting Policies and Recent Accounting Pronouncements” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on April 1, 2019.expenses

~~During~~Below ~~the~~is ~~nine months~~a ~~ended~~summary ~~September~~of ~~30, 2019, there were no significant changes in~~ our ~~accounting~~operating ~~policies~~expenses for ~~and estimates other than~~ the ~~newly adopted~~three ~~accounting~~months ~~standards~~ended ~~that~~March ~~are~~31, ~~disclosed~~2020 inand ~~Note 1 to our consolidated financial statements.~~2019:

Results of Operations

		For the three months ended
		March 31,
	2020		2019			2020 vs. 2019
						$		%
Salaries and wages	$	316,067	$	322,628		(6,561	)	(2	)%
Professional fees		69,976		293,644		(223,668	)	(76	)%
Selling, general and administrative		240,029		365,881		(125,852	)	(34	)%
(Gain) Loss on sale of assets		19,988		(4,070	)	24,058		591	%
Total	$	646,060	$	978,083		(332,023	)	(34	)%

~~For~~Salaries and wages decreased during the three months ended ~~September~~March 3031, ~~2019~~2020 primarily related to decreases in the salaries, payroll taxes and ~~2018~~benefits ~~(unaudited)~~due to a decrease in number of employees.

~~Revenue~~Professional fees decreased during the three months ended March 31, 2020 primarily related to a decrease in accounting, consulting, and legal fees.

~~We generated revenues of $20~~Selling,~~092~~ ~~and~~general ~~$(19,995) for the three months ended September 30, 2019~~ and ~~2018,~~administrative ~~respectively. We generated revenues~~decreased ofduring ~~$0 and $20,092 from our water purification products and oil recovery systems segments, respectively, for~~ the three months ended ~~September~~ ~~30,~~March ~~2019. During the three months ended September 30~~31, ~~2019,~~2020 weprimarily ~~did~~related ~~not generate any revenues from the sale of our water purification products as no orders were filled during the period. We continue~~ to ~~aggressively~~decreases ~~market our~~in ~~water~~advertising ~~purification~~and ~~products~~marketing and ~~believe~~supplies ~~that demand will increase as current customers reorder~~ and ~~new customers are acquired.~~parts Weoffset ~~had~~by aan ~~reversal~~increase ofin ~~a sale totaling $23,995 during the three months ended September 30, 2018 due to writing off the sale as a charitable donation~~rent.

~~Operating~~We recorded a loss on sale of assets during ~~expenses~~ the three months ended March 31, 2020 from the sale of our trucks and recorded a gain on sale of assets during the three months ended March 31, 2019 from the sale of our equipment.

~~Below~~Segment ~~is a~~contribution ~~summary~~to ofloss ~~our~~from ~~operating~~operations is ~~expenses~~presented ~~for~~in the ~~three~~table ~~months ended September 30, 2019 and 2018~~below:

	For the three months ended
		For the Three Months
	September 30,
		Ended March 31,
	2019		2018		2019 vs. 2018
	2020		2019
						$		%
Water purification products	$	201,304	$	722,554
Salaries and wages	$	398,579	$	586,486	$	(187,907	)	(32)	%
Oil recovery machines		268,909		96,581
Professional fees		271,661		170,206		101,455		60	%
General corporate		174,979		149,276
Selling, general and administrative		385,772		130,264		255,508		196	%
	$	645,192	$	968,411
Total	$	1,056,012	$	886,956	$	169,056		19	%

~~Salaries~~Water purification ~~and~~products ~~wages~~loss ~~decreased~~from operations during the three months ended ~~September~~March 3031, ~~2019~~2020 decreased primarily due ~~related~~ to a ~~decrease~~shift in ~~stock-based~~our ~~compensation~~focus to the oil recovery systems segment of operations. The increase in oil recovery machines loss from operations during the three months ended March 31, 2020 was due to the HydraSpin units being received during the latter part of 2019 and expenses for setting up the units, which mainly included payroll, supplies, and travel expenses. The increase in general corporate loss from operations during the three months ended March 31, 2020 was due to increases in depreciation of our corporate facility and insurance.

~~Professional fees~~Other ~~increased during the three months ended September 30, 2019 primarily related to an increase in consulting and legal fees.~~Expense

~~Selling, general and administrative increased during the three months ended September 30, 2019 primarily related to an increase in insurance, rent, shipping, and travel expenses.~~16

23Below is a summary of our other expense for the three months ended March 31, 2020 and 2019:

Segment contribution to loss from operations is presented in the table below:

		For the three months ended
		March 31,
	2020			2019		2020 vs. 2019
							$		%
Interest expense	$	995,236		$	605,595		389,641		64	%
(Gain) Loss on derivative liability		550,726			—		550,726		100	%
Other income		(895	)		—		(895	)	(100	)%
Loss - debt extinguishment		—			21,563		(21,563	)	(100	)%
Total	$	1,545,067		$	627,158		917,909		146	%

	For the Three Months
	Ended September 30,
	2019		2018
Water purification products	$	608,469	$	732,123
Oil recovery systems		196,485		—
General corporate		247,519		164,086
	$	1,052,473	$	896,209

Interest expense increased primarily related to amortization of debt issuance costs on the convertible debt issued during the periods. We recorded a gain / (loss) on the change in fair value of derivative liability based on the value of the derivatives as of March 31, 2020. We recorded a loss on extinguishment of debt during the period due to paying off the convertible notes prior to maturity.

~~Water purification~~Net products loss from operations during the three months ended September 30, 2019 decreased mainly due to the decrease in payroll, consulting and supplies. The increase in oil recovery systems loss from operations during the three months ended September 30, 2019 was due to an increase in expenses for payroll, supplies, and travel expenses. General corporate loss from operations during the three months ended September 30, 2019 increased mainly due to the increase in selling, general and administrative expenses noted above.Losses

~~Other~~We ~~Expense~~incurred net losses of $2,190,259 and $1,595,569 for the three months ended March 31, 2020 and 2019, respectively, because of the factors discussed above.

~~Below~~Net ~~is a~~loss ~~summary~~per ofshare ~~our other expense~~ for the three months ended ~~September~~March 3031, 2020 and 2019 was $(0.04) and ~~2018:~~$(0.04), respectively, based on the weighted-average number of shares issued and outstanding during the period.

	For the three months ended
	September 30,
	2019			2018		2019 vs. 2018
							$		%
Interest expense	$	3,760,191		$	89,272	$	3,670,919		4,112	%
Change in fair value of derivative liability		(832,566	)		—		(832,566	)	0	%
Loss on extinguishment of debt		130,052			—		130,052		100	%
Total	$	3,057,677		$	89,272	$	2,968,405		3,325	%

Liquidity and Capital Resources

~~Interest expense~~Sources ~~increased primarily related to amortization~~ of ~~debt~~Liquidity issue costs on the convertible debt issued during the period. We recorded a gain on the change in fair value of derivative liability during the period based on the value of the derivatives as of September 30, 2019. We recorded a loss on extinguishment of debt during the period due to paying off the convertible notes prior to maturity. See Note 5 of the Notes to Condensed Consolidated Financial Statements (unaudited) for the period ended September 30, 2019 and 2018.

~~Net~~Through March 31, 2020, we have generated revenues ~~Losses~~of $552,000. From February 10, 2016 (inception) through March 31, 2020, we have incurred losses aggregating $20.2 million. As of March 31, 2020, we had cash and cash equivalents of $405. Our auditors issued a going concern opinion with respect to our financial statements as of and for the year ended December 31, 2019 due to the incurrence of significant operating losses, which raise substantial doubt about our ability to continue as a going concern.

We ~~incurred~~have financed our operations to date primarily ~~net~~through ~~losses~~private placements of $4our common stock and borrowings. As of March 31,~~110~~ 2020,~~150~~ ~~and~~we had total liabilities of approximately $~~985,481~~12 ~~for~~million. ~~the~~We ~~three~~expect ~~months~~to ~~ended~~continue ~~September~~to ~~30,~~utilize ~~2019~~debt and ~~2018,~~equity ~~respectively,~~to ~~because~~finance ofour ~~the~~operations ~~factors discussed~~until ~~above~~we become profitable.

~~Net loss~~Cash ~~per~~Flows ~~share for the three months ended September 30, 2019 and 2018 was $(0.10) and $(0.03), respectively, based on the weighted-average number of shares issued and outstanding during the period.~~

~~For the~~The ~~nine~~following ~~months~~table ~~ended~~sets ~~September~~forth ~~30,~~the ~~2019~~primary sources and ~~2018~~uses ~~(unaudited)~~of cash for the period set forth below.

Revenue

		Three months ended March 31,
	2020			2019
Net cash used in operating activities	$	(498,471	)	$	(1,713,382	)
Net cash provided by (used in) investing activities	$	29,500		$	(1,090,783	)
Net cash provided by financing activities	$	403,334		$	2,817,000
Net increase (decrease) in cash	$	(65,637	)	$	12,835

WeOperating ~~generated revenues~~activities. ofOur ~~$334,393~~use ~~and~~of ~~$39,200~~cash in ~~for~~operating ~~the~~activities ~~nine~~resulted ~~months~~primarily ~~ended~~from ~~September~~our 30net loss, ~~2019~~as ~~and~~adjusted ~~2018,~~for ~~respectively.~~certain Wenon-cash ~~generated~~items ~~$308,744~~ and ~~$25,649~~ ~~from~~changes ~~our~~in ~~water~~operating ~~purification products~~ assets and ~~oil~~liabilities. ~~recovery~~For ~~systems segments, respectively, for~~ the ~~nine~~three months ended ~~September 30~~March 31, ~~2019.~~2020,

~~Operating expenses~~ 17

~~Below~~non-cash ~~is a~~items ~~summary~~mainly consisted of ~~our~~non-cash interest ~~operating~~expense, ~~expenses~~changes ~~for~~in ~~the~~derivative ~~nine~~liabilities, ~~months~~and ~~ended~~depreciation ~~September~~and 30amortization, ~~2019~~and changes in operating assets and ~~2018:~~liabilities mainly consisted of increases in accounts payable and accrued expenses.

24Investing activities. Cash provided by investing activities for the three months ended March 31, 2020 consisted of additions to property and equipment and proceeds from sale of assets.

	For the nine months ended
	September 30,
	2019			2018		2019 vs. 2018
							$		%
Salaries and wages	$	1,310,049		$	1,205,421	$	104,628		9	%
Professional fees		812,417			959,196		(146,779	)	(15)	%
Selling, general and administrative		1,087,673			528,896		558,777		106	%
Gain on sale of assets		(4,070	)		—		(4,070	)	(100)	%
Total	$	3,206,069		$	2,693,513	$	512,556		19	%

Financing activities. Cash provided by financing activities for the three months ended March 31, 2020 consisted primarily of proceeds from the issuance of our note agreements and advances from related parties, offset by payments on notes payable and repayments from related parties.

~~Salaries and~~Funding ~~wages~~Requirements ~~increased during the nine months ended September 30, 2019 primarily related to increases in the salaries, payroll taxes and benefits due to an increase in number of employees.~~

~~Professional fees~~We ~~decreased~~expect ~~during~~to ~~the~~continue ~~nine~~to ~~months~~incur ~~ended~~significant expenses ~~September~~and ~~30,~~increasing ~~2019~~operating ~~primarily~~losses ~~related~~for tothe aforeseeable ~~decrease~~future. inWe ~~consulting~~anticipate ~~fees~~that ~~and~~our aexpenses ~~2018~~will ~~settlement of lawsuit offset by an~~ increase insubstantially if ~~audit~~and ~~fees.~~as we:

~~Selling~~• establish a sales, ~~general~~ marketing and ~~administrative~~distribution ~~increased~~infrastructure ~~during~~to ~~the~~commercialize ~~nine~~our ~~months~~water ~~ended~~purification ~~September~~units 30and our other products; • maintain, ~~2019~~expand ~~primarily~~and ~~related~~protect toour anintellectual ~~increase~~property inportfolio; ~~advertising~~ and ~~marketing,~~• ~~rent,~~add ~~shipping,~~operational and ~~insurance~~financial ~~offset~~personnel byto ahandle ~~decrease~~the inpublic ~~supplies~~company reporting and ~~parts~~other requirements to which we will be subject.

We ~~recorded a~~expect ~~gain~~that onwe ~~sale~~will ofrequire ~~assets~~additional ~~during~~capital to ~~the~~fund ~~nine~~operations, ~~months~~including ~~ended~~hiring ~~September~~additional ~~30,~~employees ~~2019~~and ~~from~~increasing inventory levels, during the ~~sale~~next oftwelve ~~our~~(12) ~~equipment~~month period.

~~Segment~~Because ~~contribution~~of the numerous risks and uncertainties toassociated ~~loss~~with ~~from~~the ~~operations~~development isand ~~presented~~commercialization inof our products, we are unable to estimate the ~~table~~amounts ~~below~~of increased capital outlays and operating expenses associated with successfully commercializing such products. Our future capital requirements will depend on many factors, including:

	For the Nine Months
	Ended September 30,
	2019		2018
Water purification products	$	1,936,762	$	2,130,811
Oil recovery systems		541,599		—
General corporate		674,395		549,437
	$	3,152,756	$	2,680,248

	•	the costs and timing of commercialization activities for our products, including manufacturing, sales, marketing and distribution;
	•	revenues received from sales of our products;
	•	the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and
	•	our ability to maintain manufacturing and distribution relationships on favorable terms, if at all.

~~Water~~Until such time, if ever, as we can generate ~~purification~~substantial ~~products~~product ~~loss~~revenues, ~~from~~we ~~operations~~expect ~~during~~to ~~the~~finance ~~nine~~our ~~months~~cash ~~ended~~needs ~~September~~through ~~30, 2019~~a ~~remained~~combination ~~consistent~~of ~~with~~equity ~~prior~~offerings, ~~period~~debt financings, and strategic alliances. ~~The~~We ~~increase~~do innot ~~oil~~have ~~recovery~~any ~~systems~~committed ~~loss~~external ~~from~~source ~~operations~~of ~~during~~funds. To the ~~nine~~extent ~~months~~that ~~ended~~we raise additional capital through ~~September~~the ~~30,~~sale ~~2019~~of ~~was~~equity ~~due~~or toconvertible debt securities, the ~~HydraSpin~~ownership ~~units~~interest ~~being~~of ~~received~~our ~~during~~shareholders ~~the~~will ~~period~~be diluted, and ~~expenses~~the terms of ~~for~~these ~~setting~~securities upmay include liquidation or other preferences that adversely affect the ~~unit~~rights of common shareholders. Debt financing, if ~~which~~available, ~~mainly~~may ~~included~~involve ~~payroll~~agreements that include covenants limiting or restricting our ability to take specific actions, ~~supplies~~such as incurring additional debt, ~~and~~making ~~travel~~capital ~~expenses~~expenditures or declaring dividends. ~~General~~If ~~corporate~~we ~~loss~~raise ~~from~~additional ~~operations~~funds through strategic ~~during~~alliances ~~the~~or ~~nine~~licensing ~~months~~arrangements ~~ended~~with ~~September~~third 30parties, ~~2019~~we ~~increased~~may ~~mainly~~have ~~due~~to relinquish valuable rights to ~~increases~~our intechnologies ~~consulting~~and future revenue streams or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to commercialize products that we would otherwise prefer to develop and ~~payroll~~market ourselves.

~~Other Expense~~18

~~Below~~Quantitative ~~is a~~and ~~summary~~Qualitative ofDisclosures ~~our~~About ~~other~~Market ~~expense for the nine months ended September 30, 2019 and 2018:~~Risk

	For the nine months ended
	September 30,
	2019			2018		2019 vs. 2018
							$		%
Interest expense	$	4,885,981		$	96,608	$	4,789,373		4,958	%
Change in fair value of derivative liability		(646,557	)		—		(646,557	)	0	%
Loss on extinguishment of debt		182,877			—		182,877		100	%
Total	$	4,422,301		$	96,608	$	4,325,693		4,478	%

We have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. We do not have any borrowings and, consequently, we are not affected by changes in market interest rates. We do not currently have any sales or own assets and operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations or exchange rate changes. Overall, at this time, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.

~~Interest expense~~Off-Balance ~~increased~~Sheet primarily related to amortization of debt issue costs on the convertible debt issued during the period. We recorded a gain on the change in fair value of derivative liability during the period based on the value of the derivatives as of September 30, 2019. We recorded a loss on extinguishment of debt during the period due to paying off the convertible notes prior to maturity. See Note 5 of the Notes to Condensed Consolidated Financial Statements (unaudited) for the periodArrangements

25We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

~~ended~~Tax ~~September 30,~~Loss ~~2019~~Carryforwards ~~and 2018.~~

~~Net~~We had a net operating loss carry-forward for ~~Losses~~federal and state tax purposes of approximately $14,243,000 at March 31, 2020, that is potentially available to offset future taxable income. For financial reporting purposes, no deferred tax asset was recognized because at March 31, 2020 and December 31, 2019 management estimates that it is more likely than not that substantially all of the net operating losses will expire unused. As a result, the amount of the deferred tax assets considered realizable was reduced 100% by a valuation allowance.

~~We incurred~~ITEM ~~net~~3. ~~losses~~Quantitative ~~of $7,575,057~~ and ~~$2,776,856~~Qualitative ~~for~~Disclosures ~~the~~About ~~nine~~Market ~~months ended September 30, 2019 and 2018, respectively, because of the factors discussed above.~~ Risk

~~Net loss~~No ~~per share for the nine months ended September 30, 2019 and 2018 was $(0.20) and $(0.09), respectively, based on the weighted-average number of shares issued and outstanding during the period.~~Applicable

~~Liquidity and Capital Resources~~ 19

~~Sources of~~ITEM ~~Liquidity~~4. CONTROLS AND PROCEDURES

ToEvaluation ~~date,~~of weDisclosure Controls ~~have~~and ~~generated~~Procedures. The ~~revenues~~Company’s ofdisclosure ~~$533,000.~~controls ~~For~~and ~~fiscal~~procedures ~~2018,~~are wedesigned ~~had~~to aensure ~~net~~that ~~loss~~such ofinformation required ~~$4,370,056,~~to ~~resulting~~be indisclosed anby ~~accumulated~~the ~~deficit~~Company ~~as of~~in ~~December~~reports ~~31,~~filed ~~2018~~or ofsubmitted ~~$7,979,177.~~under Asthe ofExchange ~~September 30~~Act, ~~2019~~as amended, weis ~~had~~recorded, ~~cash~~processed, summarized and ~~cash~~reported ~~equivalents~~within ofthe ~~$127,129.~~time ~~Our~~periods ~~auditors~~specified ~~issued a~~in ~~going~~the ~~concern~~SEC’s ~~opinion~~rules ~~with~~and ~~respect~~forms. toThe ~~our~~Company’s ~~financial~~disclosure ~~statements~~controls and asprocedures ofare ~~and~~also ~~for~~designed ~~the~~to ~~fiscal~~ensure ~~year~~that ~~ended~~such ~~December~~information ~~31,~~is ~~2018~~accumulated ~~due~~and communicated to ~~the~~ ~~incurrence~~management, ofincluding ~~significant~~the ~~operating~~principal executive ~~losses,~~and ~~which~~the ~~raise~~principal ~~substantial~~financial ~~doubt~~officer, ~~about~~as ~~our~~appropriate ~~ability~~ to ~~continue~~allow astimely adecisions ~~going~~regarding ~~concern~~required disclosures. We ~~have~~There ~~financed~~are inherent ~~our~~limitations ~~operations~~ to ~~date~~the ~~primarily~~effectiveness ~~through~~of ~~private~~any ~~placements~~system of ~~our~~disclosure ~~common~~controls ~~stock~~ and ~~borrowings.~~procedures, ~~For~~including the ~~nine months~~possibility ~~ended~~of ~~September~~human error ~~30,~~and ~~2019,~~the wecircumvention ~~received~~or ~~$3,192,935~~overriding inof ~~net~~controls ~~proceeds~~and ~~from~~procedures. ~~borrowings~~Accordingly, oneven ~~notes~~effective ~~payable~~disclosure controls and ~~$2,736,000 in net~~procedures ~~proceeds~~can ~~from~~only ~~borrowings~~provide onreasonable ~~revenue~~assurance ~~sharing~~that ~~agreements.~~control Asobjectives ofare ~~September~~attained. ~~30,~~The ~~2019,~~Company’s wedisclosure ~~had~~controls ~~total~~and ~~liabilities of approximately $9,894,000.~~procedures Weare ~~expect~~designed to ~~continue~~provide tosuch ~~utilize~~reasonable ~~debt and equity to finance our operations until we become profitable~~assurance.

~~Cash~~The ~~Flows~~Company’s management, with the participation of the principal executive and principal financial officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2020, as required by Rule 13a-15(e) of the Exchange Act. Based upon that evaluation, the principal executive and the principal financial officer have concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2020.

Management’s Report on Internal Control Over Financial Reporting. The ~~following~~Company’s management is responsible for establishing ~~table~~and ~~sets~~maintaining ~~forth~~adequate internal controls over financial reporting, as defined in Rule 13a-15(f) of the ~~primary~~Exchange ~~sources~~Act. Although the internal controls over financial reporting were not audited, the Company’s management, including the principal executive and ~~uses~~principal financial officer, assessed the effectiveness of ~~cash~~internal ~~for~~controls over financial reporting as of March 31, 2019, based on criteria issued in 2013 by the ~~period~~Committee ~~set~~of ~~forth~~Sponsoring ~~below~~Organizations of the Treadway Commission (COSO) entitled “Internal Control-Integrated Framework.” Upon evaluation, the Company’s management has concluded that the Company’s internal controls over financial reporting were not effective as of March 31, 2020.

	Nine months ended September 30,
	2019			2018
Net cash used in operating activities	$	(2,505,897	)	$	(1,526,029	)
Net cash used in investing activities	$	(1,990,783	)	$	—
Net cash provided by financing activities	$	4,570,703		$	1,542,889
Net increase in cash	$	74,023		$	16,860

Changes in Internal Control Over Financial Reporting. The Company’s management, with the participation of the principal executive and principal financial officer, have concluded there were no changes in internal control during the fiscal quarter ended March 31, 2020.

Operating activities. Our use of cash in operating activities resulted primarily from our net loss, as adjusted for certain non-cash items and changes in operating assets and liabilities. For the nine months ended September 30, 2019, non-cash items mainly consisted of common stock issued as payment for services and employee compensation, non-cash interest expense, change in fair value of derivative liability and depreciation and amortization, and changes in operating assets and liabilities mainly consisted of an increase in accounts receivable, other receivables, security deposit, and accounts payable offset by a decrease in accrued expenses.20

~~Investing activities~~PART II. ~~Cash~~– ~~used~~OTHER ~~in investing activities consisted of additions to property and equipment, proceeds from sale of assets, and a payment on the distributorship agreement with AHT.~~INFORMATION

~~Financing activities~~ITEM 1. ~~Cash~~LEGAL ~~provided by financing activities consisted primarily of proceeds from the issuance of our note agreements, common stock, and revenue sharing liabilities offset by payments on notes payable.~~PROCEEDINGS

~~Funding~~We may become involved in, or have been involved ~~Requirements~~in, arbitrations or various other legal proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these claims and other proceedings. The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material negative impact on our results of operations, balance sheets and cash flows due to defense costs, and divert management resources. Currently, except as set forth below, we are not involved in any arbitration and/or other legal proceeding that could have a material effect on our business, financial condition, results of operations and cash flows.

WeITEM ~~expect to continue to incur significant expenses and increasing operating losses for the foreseeable future~~2. WeUNREGISTERED ~~anticipate~~SALES ~~that~~OF ~~our~~EQUITY ~~expenses will~~SECURITIES ~~increase~~AND ~~substantially~~USE ifOF ~~and as we:~~PROCEEDS

•The ~~establish~~following is a ~~sales,~~summary ~~marketing~~of ~~and distribution infrastructure to commercialize~~ our ~~water~~issuances ~~purification~~of ~~units~~common ~~and~~stock ~~our~~during ~~other products; • maintain, expand and protect our intellectual property portfolio; and • add operational and financial personnel to handle~~ the ~~public~~quarter ~~company~~ended ~~reporting~~March ~~and~~31, ~~other requirements to which we will be subject.~~2020:

26During the quarter ended March 31, 2020 the Company issued a total of 21,279,369 shares of common stock. Of this amount, 385,000 shares were issued to employees and consultants, 16,894,369 shares for conversion of debt, and 1,000,000 shares as collateral for a loan. The Company relied on Section 4(a)(2) of the Securities Act. We believe that the exemption afforded by Section 4(a)(2) was available because none of such issuances involved underwriters, underwriting discounts or commissions; restrictive legends were placed on the certificates representing the shares issued; and none of such sales were made by general solicitation.

~~We expect that we will require additional capital to fund operations, including hiring additional employees and increasing inventory levels, during the next twelve (12) month period.~~21

Because of the numerous risks and uncertainties associated with the development and commercialization of our products, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with successfully commercializing such products. Our future capital requirements will depend on many factors, including:SIGNATURES

•Pursuant to the ~~costs~~requirements ~~and timing~~ of ~~commercialization~~the ~~activities~~Securities ~~for~~Exchange ~~our~~Act ~~products, including manufacturing, sales, marketing and distribution; • revenues received from sales~~ of ~~our products; •~~ 1934, the ~~costs~~Registrant ofhas ~~preparing,~~duly ~~filing~~caused ~~and~~this ~~prosecuting~~report ~~patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and • our ability~~ to ~~maintain~~be ~~manufacturing~~signed ~~and~~on ~~distribution~~its ~~relationships~~behalf onby ~~favorable~~the ~~terms~~undersigned, ifthereunto atduly ~~all~~authorized.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, and strategic alliances. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common shareholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies and future revenue streams or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to commercialize products that we would otherwise prefer to develop and market ourselves.

		WATER NOW, INC.
		(Registrant)

Date: July 17, 2020	By:	/s/ David King
		David King
		Chief Executive Officer and Chief Financial Officer

~~Off-Balance Sheet Arrangements~~22

WeINDEX ~~have~~TO not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.EXHIBITS

~~Tax~~31.1* ~~Loss~~Certification ~~Carryforwards~~of David King, Chief Executive Officer and Chief Financial Officer, furnished pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

We32.1* ~~had~~Statement ~~a net operating loss carry-forward for federal and state tax purposes~~ of ~~approximately~~David ~~$15~~King,~~549,000~~ atChief ~~September~~Executive 30Officer, ~~2019,~~furnished ~~that~~pursuant ~~is potentially available~~ to ~~offset~~18 ~~future~~U.S.C. ~~taxable~~Section ~~income~~1350, ~~which~~as ~~will~~adopted ~~begin~~pursuant to ~~expire~~Section in906 the year 2036. For financial reporting purposes, no deferred tax asset was recognized because at September 30, 2019 and December 31, 2018 management estimates that it is more likely than not that substantially all of the ~~net~~Sarbanes-Oxley ~~operating~~Act ~~losses will expire unused. As a result, the amount~~ of ~~the deferred tax assets considered realizable was reduced 100% by a valuation allowance~~.

~~ITEM~~_______* XBRL 3.Instance ~~Quantitative and Qualitative Disclosures About Market Risk~~Document

~~We do not have~~_______* XBRL ~~any~~Schema borrowings that are affected by changes in market interest rates. We do not currently have any sales or own assets and operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations or exchange rate changes. Overall, at this time, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.Document

27_______* XBRL Calculation Linkbase Document

~~ITEM~~_______* XBRL 4.Definition ~~CONTROLS~~Linkbase ~~AND PROCEDURES~~ Document

~~Evaluation~~_______* XBRL ofLabel ~~Disclosure~~Linkbase ~~Controls and Procedures.~~ Document

~~Under the supervision~~_______* XBRL ~~and~~Presentation ~~with~~Linkbase the participation of the Company’s chief executive officer and chief financial officer, the Company conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control—Integrated Framework (2013).” Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded as of March 31, 2017 that the Company’s disclosure controls and procedures were not effective such that the information relating to the Company, including consolidated subsidiaries, required to be disclosed in the Company’s Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including the Company’s chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.Document

Changes in Internal Control Over Financial Reporting. The Company’s principal executive and principal financial officer has concluded there were no changes in internal control during the fiscal quarter ended September 30, 2019.______________________________

28* Filed or furnished herewith.

~~PART II. – OTHER INFORMATION~~23

~~ITEM 1.~~Exhibit ~~LEGAL PROCEEDINGS~~31.1

WeCERTIFICATION may become involved in, or have been involved in, arbitrations or various other legal proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these claims and other proceedings. The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material negative impact on our results of operations, balance sheets and cash flows due to defense costs, and divert management resources. Currently, except as set forth below, we are not involved in any arbitration and/or other legal proceeding that could have a material effect on our business, financial condition, results of operations and cash flows.

~~ITEM~~I, ~~2. UNREGISTERED SALES~~David OFKing, ~~EQUITY~~certify ~~SECURITIES AND USE OF PROCEEDS~~that:

~~The following~~1. isI ahave ~~summary~~reviewed ofthis ~~our~~Quarterly ~~issuances~~Report on Form 10-Q of ~~common~~Water ~~stock~~Now, ~~during~~Inc. (the ~~quarter~~“registrant”) for the quarterly period ended ~~September 30~~March 31, ~~2019:~~2020;

~~On various dates~~2. Based ~~from~~on ~~January~~my 1knowledge, ~~2019~~this toreport ~~September~~does ~~30,~~not ~~2019,~~contain ~~the~~any ~~Company~~untrue ~~issued~~statement ~~5,672,203 shares to lenders upon receipt~~ of ~~conversion~~a ~~notices, issued~~material ~~1,190,384~~fact ~~shares~~or toomit ~~lenders for debt issuance costs, issued 1,502,389~~ to astate ~~lender upon exercise of~~ a ~~warrant,~~material ~~issued~~fact ~~1,225,000~~necessary ~~shares~~ to ~~executives,~~make ~~employees~~the ~~and~~statements ~~consultants~~made, ~~and~~in ~~issued~~light ~~1,180,000 shares to investors for proceeds~~ of ~~$294,900.~~the ~~The~~circumstances ~~issuance of~~under which such ~~shares~~statements ~~was~~were inmade, ~~reliance~~not onmisleading ~~Section~~with ~~3(a)(9)~~respect ~~and Section 4(a)(2) of~~ to the ~~Securities~~period ~~Act~~covered ofby ~~1933.~~this report;

293. 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;

~~SIGNATURES~~4. As the sole certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

~~Pursuant~~a) toDesigned ~~the~~such ~~requirements~~disclosure ofcontrols ~~the Securities~~and ~~Exchange~~procedures, ~~Act~~or ofcaused ~~1934,~~such ~~the~~disclosure ~~Registrant~~controls ~~has~~and ~~duly~~procedures ~~caused~~to ~~this~~be ~~report~~designed under our supervision, to beensure ~~signed~~that onmaterial information relating to the registrant, including its ~~behalf~~consolidated subsidiaries, is made known to us by ~~the~~others ~~undersigned~~within those entities, ~~thereunto duly~~particularly ~~authorized.~~during the period in which this report is being prepared;

		WATER NOW, INC.
		(Registrant)
Date: November 19, 2019	By:	/s/ David King
		David King
		Chief Executive Officer and Chief Financial Officer

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;

30c) 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

~~INDEX~~d) Disclosed TOin ~~EXHIBITS~~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

105.12* As the ~~Exclusive~~sole ~~Distributor~~certifying ~~Agreement~~officer, byI ~~and~~have ~~among~~disclosed, ~~Water~~based ~~Now,~~on ~~Inc.,~~my ~~HydraSpin~~most ~~USA,~~recent ~~Inc.~~evaluation of internal control over financial reporting, to the registrant's auditors and ~~BESTEV~~the ~~Management,~~audit ~~LLC,~~committee ~~dated~~of ~~effective~~the asregistrant's board of ~~November~~directors ~~12,~~(or ~~2019.~~persons performing the equivalent functions):

31.1*a) All ~~Certification~~significant ofdeficiencies ~~David~~and ~~King,~~material ~~Chief~~weaknesses ~~Executive~~in ~~Officer~~the ~~and~~design ~~Chief~~or ~~Financial~~operation ~~Officer,~~of ~~furnished~~internal ~~pursuant~~control toover ~~Rules~~financial ~~13a-14(a)~~reporting ~~and~~which are ~~15d-14(a)~~reasonably oflikely to adversely affect the ~~Securities~~registrant's ~~Exchange~~ability ~~Act~~to ofrecord, ~~1934~~process, assummarize ~~amended.~~and report financial information; and

32.1*b) Any fraud, ~~Statement~~whether ofor ~~David~~not ~~King~~material, ~~Chief~~that ~~Executive~~involves ~~Officer,~~management ~~furnished~~or ~~pursuant~~other toemployees 18who ~~U.S.C.~~have ~~Section~~a ~~1350,~~significant asrole ~~adopted~~in ~~pursuant to Section 906 of~~ the ~~Sarbanes-Oxley~~registrant's ~~Act~~internal control ofover ~~2002~~financial reporting.

_______* XBRL Instance Document

Date: July 17, 2020

	By:	/s/ David King
		David King
		Chief Executive Officer and Chief Financial Officer

~~_______* XBRL Schema Document~~25

~~_______* XBRL~~Exhibit ~~Calculation Linkbase Document~~32

~~_______* XBRL Definition~~CERTIFICATION ~~Linkbase~~PURSUANT ~~Document~~TO

~~_______* XBRL Label~~18 ~~Linkbase~~U.S.C. ~~Document~~SECTION 1350,

~~_______* XBRL Presentation~~AS ~~Linkbase~~ADOPTED ~~Document~~PURSUANT TO

~~______________________________~~ SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

*In ~~Filed~~connection orwith ~~furnished~~the ~~herewith~~Quarterly Report of Water Now, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, David King, Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

31(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

~~Exhibit 31~~(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.1

CERTIFICATION

Date: July 17, 2020

	By:	/s/ David King
		David King
		Chief Executive Officer and Chief Financial Officer

I, David King, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Water Now, Inc. (the “registrant”) for the quarterly period ended September 30, 2019;

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

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under 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;

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

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

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

Date: November 19, 2019
	By:	/s/ David King
		David King
		Chief Executive Officer and Chief Financial 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 Water Now, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, David King, Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 19, 2019
	By:	/s/ David King
		David King
		Chief Executive Officer and Chief Financial Officer

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