What changed in this filing

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Item 1. Financial Statements

2018-02-20 compared with 2017-11-20 · 423 added, 544 removed, 598 unchanged (62% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEET

September 30, 2017

December 31, 2017

March 31, 2017

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Accounts payable

Revolving financing

portion of capital leases

Advance by related party

Current portion of

capital leases

Derivative liability

2 unchanged sentences

Capitalized leases

Convertible notes payable, net of debt discount

Total long-term

1 unchanged sentence

Stockholders' equity

stock, $0.001 par value, 100,000,000 shares authorized, Series A issued

issued 1,500,000, Series D issued 3,000,000

stock, Class A - $0.001 par value, 200,000,000 shares authorized

shares issued and outstanding at September 30, 2017 and March 31, 2017

Preferred stock,

$0.001 par value, 100,000,000 shares authorized, Series C issued

1,500,000, Series

D issued 3,800,000 at

December 31, 2017 and Series A issued 20,000,000, Series C issued

3,000,000 at March 31, 2017

Common stock,

Class A - $0.001 par value, 200,000,000 shares authorized 22,091,346 and

17,532,451 shares issued and outstanding at

December 31, 2017 and March 31, 2017 respectively

Additional paid in

Accumulated deficit

stockholders' equity

Total stockholders' equity

Total liabilities and stockholders' equity

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For the Three Months

For the Six Months

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

For the Nine Months

December 31, 2017

December 31, 2016

December 31, 2017

December 31, 2016

Cost of Goods Sold

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Interest expense

Amortization of debt

discount and accretion

Amortization of debt discount

and accretion

Change in derivative liability

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THE ALKALINE WATER COMPANY INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Six Months

September 30, 2017

September 30, 2016

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the Nine Months

December 31, 2017

December 31, 2016

CASH FLOWS FROM OPERATING ACTIVITIES

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Proceeds from sale of common stock, net

Proceeds from the exercise of warrants, net

Proceeds from the exercise

of warrants, net

Proceeds from advance by related party

Repayment of notes payable

Repayment of capital lease

CASH PROVIDED BY FINANCING

CASH PROVIDED BY FINANCING ACTIVITIES

NET CHANGE IN CASH

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representing a vote against, abstention or broker non-vote with respect to the

Our authorized preferred stock was not affected by the reverse

stock split and continues to be 100,000,000 shares of preferred stock, with a

par value of $0.001 per share.

In addition, the number of issued and outstanding

shares of Series A Preferred Stock continues to be 20,000,000.

However, holders

of Series A Preferred Stock had 0.2 vote per share of Series A Preferred Stock,

instead of 10 votes per share of Series A Preferred Stock, as a result of the

reverse stock split.

On January 22, 2016, the Company amended the certificate of

designation for our Series A Preferred Stock by filing an amendment to

certificate of designation with the Secretary of State of the State of Nevada.

The Company amended the certificate of designation for our Series A Preferred

Stock by deleting Section 2.2 of the certificate of designation, which

proportionately increases or decreases the number of votes per share of Series A

Preferred Stock in the event of any dividend or other distribution on our common

stock payable in its common stock or a subdivision or consolidation of the

outstanding shares of its common stock.

Accordingly, holders of Series A

Preferred Stock will have 10 votes per share of Series A Preferred Stock,

Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share.

In addition, the number of issued and outstanding shares of Series A

Preferred Stock continues to be 20,000,000.

However, holders of Series A Preferred Stock had 0.2 vote per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse stock split.

On January 22, 2016, the Company amended the certificate of designation for our Series A Preferred Stock by filing an amendment to certificate of designation with the Secretary of State of the State of Nevada.

The Company amended the certificate of

designation for our Series A Preferred Stock by deleting Section 2.2 of the certificate of designation, which proportionately increases or decreases the number of votes per share of Series A Preferred Stock in the event of any dividend or other

distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock.

Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock,

instead of 0.2 votes per share of Series A Preferred Stock.

On March 30, 2016, the Company designated 3,000,000 shares of

the authorized and unissued preferred stock of our company as Series C

Preferred Stock by filing a Certificate of Designation with the Secretary of

State of the State of Nevada.

Each share of the Series C Preferred Stock will be

convertible, without the payment of any additional consideration by the holder

and at the option of the holder, into one fully paid and non-assessable share of

our common stock at any time after (i) the Company achieves consolidated revenue

equal to or greater than $15,000,000 in any 12 month period, ending on the last

day of any quarterly period of our fiscal year;

or (ii) a Negotiated Trigger

Event, defined as an event upon which the Series C Preferred Stock will be

convertible as may be agreed by our company and the holder in writing from time

On May 3, 2017, we designated 3,000,000 shares of the

authorized and unissued preferred stock of our company as Series D Preferred

Stock by filing a Certificate of Designation with the Secretary of State of the

State of Nevada.

On November 2, 2017, we increased the number of authorized

shares of Series D Preferred Stock in our company to 5,000,000 shares by filing

an Amendment to the foregoing Certificate of Designation with the Secretary of

State of the State of Nevada.

Each share of the Series D Preferred Stock will be

convertible, without the payment of any additional consideration by the holder

and at the option of the holder, into one fully paid and non-assessable share of

our common stock at any time after (i) we achieve the consolidated revenue of

our company and all of its subsidiaries equal to or greater than $40,000,000 in

any 12 month period, ending on the last day of any quarterly period of our

or (ii) a Negotiated Trigger Event, defined as an event upon which

the Series D Preferred Stock will be convertible as may be agreed by our company

and the holder in writing from time to time.

On November 14, 2017, we withdrew the Certificate of Designation establishing Series A Preferred Stock.

There were no shares of Series A Preferred Stock outstanding immediately prior to the

On March 30, 2016, the Company designated 3,000,000 shares of the authorized and unissued preferred stock of our company as “Series C Preferred Stock”

by filing a Certificate of Designation with the Secretary of State of the State of

Each share of the Series C Preferred Stock will be convertible, without the payment of any additional consideration by the holder and at the option of the holder, into one fully paid and non-assessable share of our common stock at any time

after (i) the Company achieves consolidated revenue equal to or greater than $15,000,000 in any 12 month period, ending on the last day of any quarterly period of our fiscal year;

or (ii) a Negotiated Trigger Event, defined as an event upon

which the Series C Preferred Stock will be convertible as may be agreed by our company and the holder in writing from time to time.

On May 3, 2017, we designated 3,000,000 shares of the authorized and unissued preferred stock of our company as “Series D Preferred Stock”

by filing a Certificate of Designation with the Secretary of State of the State of Nevada.

November 2, 2017, we increased the number of authorized shares of Series D Preferred Stock in our company to 5,000,000 shares by filing an Amendment to the foregoing Certificate of Designation with the Secretary of State of the State of Nevada.

share of the Series D Preferred Stock will be convertible, without the payment of any additional consideration by the holder and at the option of the holder, into one fully paid and non-assessable share of our common stock at any time after (i) we

achieve the consolidated revenue of our company and all of its subsidiaries equal to or greater than $40,000,000 in any 12 month period, ending on the last day of any quarterly period of our fiscal year;

or (ii) a Negotiated Trigger Event,

defined as an event upon which the Series D Preferred Stock will be convertible as may be agreed by our company and the holder in writing from time to time.

Use of Estimates

The preparation of financial statements in conformity with

accounting principles generally accepted in the United States of America

requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and

liabilities at the date of the financial statements and the reported amounts of

revenues and expenses during the reporting period.

Actual results could differ

significantly from those estimates.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ significantly from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an

original maturity of three months or less to be considered cash equivalents.

carrying value of these investments approximates fair value.

The Company had

$481,831 and $603,805 in cash and cash equivalents at September 30, 2017 and

March 31, 2017, respectively.

The Company considers all highly liquid instruments with an original maturity of three months or less to be considered cash equivalents.

The carrying value of these investments approximates fair value.

The Company had $425,409 and $603,805

in cash and cash equivalents at December 31, 2017 and March 31, 2017, respectively.

Accounts receivable and allowance for doubtful accounts

The Company generally does not require collateral, and the

majority of its trade receivables are unsecured.

The carrying amount for

accounts receivable approximates fair value.

The Company generally does not require collateral, and the majority of its trade receivables are unsecured.

The carrying amount for accounts receivable approximates fair value.

Accounts receivable are periodically evaluated for

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defined as the lower of replacement cost or realizable value.

As of September 30, 2017 and March, 31 2017, inventory

consisted of the following:

September 30, 2017

As of December 31, 2017 and March, 31 2017, inventory consisted

of the following:

December 31, 2017

March 31, 2017

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An embedded derivative is a derivative instrument that is embedded within

another contract, which under the convertible note (the host contract) includes

the right to convert the note by the holder, certain default redemption right

premiums and a change of control premium (payable in cash if a fundamental

another contract, which under the convertible note (the host contract)

includes the right to convert the note by the holder, certain default redemption

right premiums and a change of control premium (payable in cash if a fundamental

change occurs).

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The ASU includes provisions intended to

simplify various provisions related to how share-based payments are

accounted for and presented in the financial statements.

Compensation cost is

ultimately only recognized for awards with performance and/or service conditions

that vest (or for awards with market conditions for which the requisite service

period is satisfied).

Under the new guidance, entities are permitted to make an

accounting policy election related to how forfeitures will impact the

recognition of compensation cost.

Currently entities are required to develop an

assumption regarding the forfeiture rate on the grant date, which impacts the

estimated amount of compensation cost recorded over the requisite service

The forfeiture estimates are updated throughout the service period so

that compensation cost is ultimately only recognized for awards that vest.

simplify various provisions related to how share-based payments are accounted

for and presented in the financial statements.

Compensation cost is ultimately

only recognized for awards with performance and/or service conditions that vest

(or for awards with market conditions for which the requisite service period is

Under the new guidance, entities are permitted to make an accounting

policy election related to how forfeitures will impact the recognition of

compensation cost.

Currently entities are required to develop an assumption

regarding the forfeiture rate on the grant date, which impacts the estimated

amount of compensation cost recorded over the requisite service period.

forfeiture estimates are updated throughout the service period so that

compensation cost is ultimately only recognized for awards that vest.

Under the new guidance, entities are permitted to make an

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The Company has evaluated other recent accounting

pronouncements through September 2017 and believes that none of them will have a

pronouncements through December 2017 and believes that none of them will have a

material effect on our financial statements.

8 unchanged sentences

As a result, the Company incurred accumulated net losses from Inception (June

19, 2012) through the period ended September 30, 2017 of ($26,269,516).

addition, the Companys development activities since inception have been

financially sustained through debt and equity financing.

19, 2012) through the period ended December 31, 2017 of ($28,927,208).

In addition, the Companys

development activities since inception have been financially sustained through

debt and equity financing.

The ability of the Company to continue as a going concern is

6 unchanged sentences

Fixed assets consisted of the following at:

September 30, 2017

December 31, 2017

March 31, 2017

6 unchanged sentences

Fixed Assets, net

Depreciation expense for the six months ended September 30, 2017 and

September 30 2016 was $193,221and $180,397, respectively.

Depreciation expense for the nine months ended December 31,

2017 and December 31 2016 was $286,482 and $270,860, respectively.

NOTE 4 REVOLVING FINANCING

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an unused line fee in amount equal to 0.083% per month of the difference derived

by subtracting (i) the average daily outstanding balance under the Revolving

Facility during the preceding month, from (ii) the Revolving Loan Commitment

by subtracting (i) the average daily outstanding balance under

the Revolving Facility during the preceding month, from (ii) the Revolving Loan

Commitment Amount.

The unused line fee will be payable monthly in arrears.

The Company also

agreed to pay the Lender as additional interest a monthly collateral management

fee equal to 0.35% per month calculated on the basis of the average daily

balance under the Revolving Facility outstanding during the preceding month.

collateral management fee will be payable monthly in arrears.

Upon a termination

of the Revolving Facility, the Company agreed to pay the Lender a termination

fee in an amount equal to 2% of the Revolving Loan Commitment Amount if the

termination occurs before February 1, 2020.

The Company must also pay certain

fees in the event that receivables are not properly deposited in the appropriate

lockbox account.

Company also agreed to pay the Lender as additional interest a monthly

collateral management fee equal to 0.35% per month calculated on the basis of

the average daily balance under the Revolving Facility outstanding during the

preceding month.

The collateral management fee will be payable monthly in

Upon a termination of the Revolving Facility, the Company agreed to pay

the Lender a termination fee in an amount equal to 2% of the Revolving Loan

Commitment Amount if the termination occurs before February 1, 2020.

must also pay certain fees in the event that receivables are not properly

deposited in the appropriate lockbox account.

The interest rate will be increased by 5% in the event of a

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ASC 815 Derivatives and Hedging to determine the derivative liability as of

September 30, 2017 was $3,407.

December 31, 2017 was $3,407.

NOTE 6 STOCKHOLDERS EQUITY

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Grant of Series A Preferred Stock

On October 8, 2013, the Company issued a total of 20,000,000

shares of non-convertible Series A Preferred Stock to Steven P.

Wright (10,000,000 shares to each), our directors and executive

officers, in consideration for the past services, at a deemed value of $0.001

The Company valued these shares based on the cost considering the

time and average billing rate of these individuals and recorded a $20,000 stock

compensation cost for the year ended March 31, 2014.

Our authorized preferred stock was not affected by the reverse

stock split and continues to be 100,000,000 shares of preferred stock, with a

par value of $0.001 per share.

In addition, the number of issued and outstanding

shares of Series A Preferred Stock continues to be 20,000,000.

However, holders

of Series A Preferred Stock had 0.2 vote per share of Series A Preferred Stock,

instead of 10 votes per share of Series A Preferred Stock, as a result of the

reverse-stock split.

On January 22, 2016, the Company amended the certificate of

designation for our Series A Preferred Stock by filing an amendment to

certificate of designation with the Secretary of State of the State of Nevada.

The Company amended the certificate of designation for our Series A Preferred

Stock by deleting Section 2.2 of the certificate of designation, which

proportionately increases or decreases the number of votes per share of Series A

Preferred Stock in the event of any dividend or other distribution on our common

stock payable in its common stock or a subdivision or consolidation of the

outstanding shares of its common stock.

Accordingly, holders of Series A

Preferred Stock will have 10 votes per share of Series A Preferred Stock,

On October 8, 2013, the Company issued a total of 20,000,000 shares of non-convertible Series A Preferred Stock to Steven P.

Nickolas and Richard A.

Wright (10,000,000 shares to each), our directors and executive officers, in consideration for the

past services, at a deemed value of $0.001 per share.

The Company valued these shares based on the cost considering the time and average billing rate of these individuals and recorded a $20,000 stock compensation cost for the year ended

March 31, 2014.

Our authorized preferred stock was not affected by the reverse stock split and continues to be 100,000,000 shares of preferred stock, with a par value of $0.001 per share.

In addition, the number of issued and outstanding shares of Series A

Preferred Stock continues to be 20,000,000.

However, holders of Series A Preferred Stock had 0.2 vote per share of Series A Preferred Stock, instead of 10 votes per share of Series A Preferred Stock, as a result of the reverse-stock split.

The Company amended the certificate of

distribution on our common stock payable in its common stock or a subdivision or consolidation of the outstanding shares of its common stock.

Accordingly, holders of Series A Preferred Stock will have 10 votes per share of Series A Preferred Stock,

instead of 0.2 votes per share of Series A Preferred Stock.

On November 14, 2017, we withdrew the Certificate of Designation establishing Series A Preferred Stock.

There were no shares of Series A Preferred Stock outstanding immediately prior to the withdrawal.

Grant of Series C Convertible Preferred Stock

On March 30, 2016, the Company designated 3,000,000 shares of

the authorized and unissued preferred stock of our company as Series C

Preferred Stock by filing a Certificate of Designation with the Secretary of

State of the State of Nevada.

Each share of the Series C Preferred Stock will be

convertible, without the payment of any additional consideration by the holder

and at the option of the holder, into one fully paid and non-assessable share of

our common stock at any time after (i) the Company achieves consolidated revenue

equal to or greater than $15,000,000 in any 12 month period, ending on the last

day of any quarterly period of our fiscal year;

or (ii) a Negotiated Trigger

Event, defined as an event upon which the Series C Preferred Stock will be

convertible as may be agreed by our company and the holder in writing from time

Effective March 31, 2016, the Company issued a total of

3,000,000 shares of our Series C Preferred Stock to Steven P.

Wright (1,500,000 shares to each), pursuant to their employment

agreements dated effective March 1, 2016.

On March 30, 2016, the Company designated 3,000,000 shares of the authorized and unissued preferred stock of our company as “Series C Preferred Stock”

by filing a Certificate of Designation with the Secretary of State of the State of

after (i) the Company achieves consolidated revenue equal to or greater than $15,000,000 in any 12 month period, ending on the last day of any quarterly period of our fiscal year;

or (ii) a Negotiated Trigger Event, defined as an event upon

which the Series C Preferred Stock will be convertible as may be agreed by our company and the holder in writing from time to time.

Effective March 31, 2016, the Company issued a total of 3,000,000 shares of our Series C Preferred Stock to Steven P.

Nickolas and Richard A.

Wright (1,500,000 shares to each), pursuant to their employment agreements dated effective March 1, 2016.

On August 17, 2017, Steven P.

converted his 1,500,000 shares of Series C Preferred Stock to 1,500,000 shares

of Common Stock.

Nickolas converted his 1,500,000 shares of Series C Preferred Stock to 1,500,000 shares of Common Stock.

Grant of Series D Convertible Preferred Stock

On May 3, 2017, the Company designated 3,000,000 shares of the

authorized and unissued preferred stock of our company as Series D Preferred

Stock by filing a Certificate of Designation with the Secretary of State of the

State of Nevada.

On November 2, 2017, we increased the number of authorized

shares of Series D Preferred Stock in our company to 5,000,000 shares by filing

an Amendment to the foregoing Certificate of Designation with the Secretary of

State of the State of Nevada.

Each share of the Series D Preferred Stock will be

convertible, without the payment of any additional consideration by the holder

and at the option of the holder, into one fully paid and non-assessable share of

our common stock at any time after (i) we achieve the consolidated revenue of

our company and all of its subsidiaries equal to or greater than $40,000,000 in any 12

month period, ending on the last day of any quarterly period of our fiscal year;

or (ii) a Negotiated Trigger Event, defined as an event upon which the Series D

Preferred Stock will be convertible as may be agreed by our company and the

holder in writing from time to time.

The company then issued a total of

3,000,000 shares of our Series D Preferred Stock to our directors, officers,

On May 3, 2017, the Company designated 3,000,000 shares of the authorized and unissued preferred stock of our company as “Series D Preferred Stock”

by filing a Certificate of Designation with the Secretary of State of the State of

On November 2, 2017, we increased the number of authorized shares of Series D Preferred Stock in our company to 5,000,000 shares by filing an Amendment to the foregoing Certificate of Designation with the Secretary of State of the State of

Each share of the Series D Preferred Stock will be convertible, without the payment of any additional consideration by the holder and at the option of the holder, into one fully paid and non-assessable share of our common stock at any time

after (i) we achieve the consolidated revenue of our company and all of its subsidiaries equal to or greater than $40,000,000 in any 12 month period, ending on the last day of any quarterly period of our fiscal year;

or (ii) a Negotiated Trigger

Event, defined as an event upon which the Series D Preferred Stock will be convertible as may be agreed by our company and the holder in writing from time to time.

In May, 2017, the company issued a total of 3,000,000 shares of our Series D

Preferred Stock to our directors, officers,

consultants and employees.

We issued these shares relying on the registration

exemption provided for in Section 4(a)(2) of the Securities Act of 1933.

The Company was authorized to issue 1,125,000,000 shares of

$0.001 par value common stock.

On May 31, 2013, the Company effected a 15-for-1

forward stock split of our $0.001 par value common stock.

All shares and per

share amounts have been retroactively restated to reflect such split.

the acquisition of Alkaline Water Corp., the Company had 109,500,000 shares of

common stock issued and outstanding.

On May 31, 2013, the Company issued

43,000,000 shares in exchange for a 100% interest in Alkaline Water Corp.

accounting purposes, the acquisition of Alkaline Water Corp.

by The Alkaline

Water Company Inc.

has been recorded as a reverse acquisition of a company and

recapitalization of Alkaline Water Corp.

based on the factors demonstrating that

Alkaline Water Corp.

In November, 2017, the company issued an additional 800,000 shares of our Series D Preferred Stock as follows:

(a) 300,000 shares to Steve Nickolas pursuant to the Settlement Agreement detailed below;

and (b) 500,000

shares to Richard A.

Wright pursuant to the Exchange Agreement and stock option forfeitures detailed below.

We issued these shares relying on the registration exemption provided for in Section 4(a)(2) of the Securities Act of 1933.

The Company was authorized to issue 1,125,000,000 shares of $0.001 par value common stock.

On May 31, 2013, the Company effected a 15-for-1 forward stock split of our $0.001 par value common stock.

All shares and per share amounts have been

retroactively restated to reflect such split.

Prior to the acquisition of Alkaline Water Corp., the Company had 109,500,000 shares of common stock issued and outstanding.

On May 31, 2013, the Company issued 43,000,000 shares in exchange for a 100%

interest in Alkaline Water Corp.

For accounting purposes, the acquisition of Alkaline Water Corp.

by The Alkaline Water Company Inc.

has been recorded as a reverse acquisition of a company and recapitalization of Alkaline Water Corp.

factors demonstrating that Alkaline Water Corp.

represents the accounting acquirer.

Consequently, after the

closing of this agreement the Company adopted the business of Alkaline Water

Corp.s wholly-owned subsidiary, Alkaline 88, LLC.

As part of the acquisition,

the former management of the Company agreed to cancel 75,000,000 shares of

common stock.

On December 30, 2015, the Company effected a fifty for one

reverse stock split of its authorized and issued and outstanding shares of

common stock.

As a result, the authorized common stock has decreased from

1,125,000,000 shares of common stock, with a par value of $0.001 per share, to

22,500,000 shares of common stock, with a par value of $0.001 per share.

shares and per share amounts have been retroactively restated to reflect such

On January 21, 2016, stockholders of our company approved, by

written consents, an amendment to the articles of incorporation of our company

to increase the number of authorized shares of our common stock from 22,500,000

to 200,000,000.

The Company received written consents representing 20,776,000

votes from the holders of shares of its common stock and our Series A Preferred

Stock voting as a single class, representing approximately 61% of the voting

power of its outstanding common stock and its outstanding Series A Preferred

Stock voting as a single class as of the record date (January 12, 2016).

January 21, 2016, there were no written consents received by the Company

representing a vote against, abstention or broker non-vote with respect to the

Consequently, after the closing of this agreement the Company adopted the business of Alkaline Water Corp.’s wholly-owned subsidiary, Alkaline 88, LLC.

of the acquisition, the former management of the Company agreed to cancel 75,000,000 shares of common stock.

On December 30, 2015, the Company effected a fifty for one reverse stock split of its authorized and issued and outstanding shares of common stock.

As a result, the authorized common stock has decreased from 1,125,000,000 shares of common stock,

with a par value of $0.001 per share, to 22,500,000 shares of common stock, with a par value of $0.001 per share.

All shares and per share amounts have been retroactively restated to reflect such split.

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

The Company received written consents representing 20,776,000 votes from the holders of shares of its common stock and our Series A Preferred Stock voting as a single class, representing approximately 61% of the voting power of its outstanding

common stock and its outstanding Series A Preferred Stock voting as a single class as of the record date (January 12, 2016).

On January 21, 2016, there were no written consents received by the Company representing a vote against, abstention or

broker non-vote with respect to the proposal.

Common Stock Issued for Services

Effective April 28, 2017, we issued 610,000 shares of common

stock to six persons, one of whom is a director and officer of our company.

these shares, 560,000 are restricted from transfer for a period of two years.

In consideration for services rendered and to be rendered to

our company pursuant to a services agreement dated July 26, 2016, we issued

consultant 262,596 shares of our common stock on August 23, 2017.

NOTE 7 OPTIONS AND WARRANTS

Stock Option Awards

Effective April 28, 2017, we granted a total of 1,790,000 stock

options to our directors, officers, consultants employees.

The stock options are

exercisable at the exercise price of $1.29 per share for a period of six and

one-half years from the date of grant.

360,000 of the stock options vest as

Effective April 28, 2017, we issued 610,000 shares of common stock to six persons, one of whom is a director and officer of our company.

Of these shares, 560,000 are restricted from transfer for a period of two years.

In consideration for services rendered and to be rendered to our company pursuant to a services agreement dated July 26, 2016, we issued consultant 262,596 shares of our common stock on August 23, 2017.

Common Stock Issued to Insiders

On or about October 31, 2017, the Company issued Steve Nickolas 700,000 shares of common stock pursuant to the Settlement Agreement (see Note 8 –

Related Party Transactions)..

On or about November 8, 2017, the Company issued Richard Wright 700,000 shares of common stock pursuant to the Exchange Agreement (see Note 8 –

Related Party Transactions).

NOTE 7 –

STOCK OPTIONS

Effective April 28, 2017, we granted a total of 1,790,000 stock options to our directors, officers, consultants employees.

The stock options are exercisable at the exercise price of $1.29 per share for a period of six and one-half years from the

date of grant.

360,000 of the stock options vest as follows:

(i) 120,000 upon the date of grant;

and (ii) 120,000 on each

anniversary date of grant.

and (ii) 120,000 on each anniversary date of grant.

1,430,000 of the stock options vest as follows:

357,500 upon the date of grant;

and (ii) 357,500 on each anniversary date of

(i) 357,500 upon the date of grant;

and (ii) 357,500

on each anniversary date of grant.

We granted the stock options to 12 U.S.

Persons and 3 non U.S.

(as that term is defined in Regulation S of the Securities Act of 1933) and in

issuing securities we relied on the registration exemption provided for in Regulation

S and/or Section 4(a)(2) of the Securities Act of 1933.

In June 2017, two option holders elected to exercise their

stock options.

A total of 181,000 stock options were surrendered in exchange for

121,288 common stock shares.

NOTE 8 RELATED PARTY TRANSACTIONS

Persons (as that term is defined in Regulation S of the Securities Act of 1933) and in issuing securities we relied on the registration exemption

provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933.

In June 2017, two option holders elected to exercise their stock options.

A total of 181,000 stock options were surrendered in exchange for 121,288 common stock shares.

On October 25, 2017, Richard Wright forfeited stock options to purchase a total of 148,000 shares of the Company’s common stock at prices ranging from $5.75 and $7.50.

On October 31, 2017, Steven Nickolas acknowledged and agreed that 1,500,000 stock options with an exercise price of $0.52 issued to Mr.

Nickolas on or about March 1, 2016 has expired (See Note 8 –

Related Party Transactions).

On November 8, 2017, Richard Wright forfeited stock options to purchase 1,500,000 shares of the Company’s common stock at $0.52 per share.

NOTE 8 –

RELATED PARTY TRANSACTIONS

On November 18, 2016, our company provided notice to Steven P.

Nickolas, our then-president and chief executive officer, of our board of

directors finding that there was just cause for termination of Mr.

employment and of our companys intent to terminate the employment of Mr.

Nickolas for just cause pursuant to the provision of the Employment Agreement

Nickolas, our then-president and chief executive officer, of our board of directors’

finding that there was “just cause”

for termination of Mr.

Nickolas’s

employment and of our company’s intent to terminate the employment of Mr.

Nickolas for “just cause”

pursuant to the provision of the Employment Agreement with Mr.

Nickolas dated March 1, 2016.

Under the Employment Agreement, Mr.

Nickolas had 30 days to cure the failures and breaches creating just cause for

Nickolas failed to cure such failure and breaches and, on April

7, 2017, our company terminated the employment of Mr.

Nickolas had 30 days to cure the failures and breaches creating “just cause”

for termination.

Nickolas failed to cure such failure and breaches and, on April 7, 2017, our company terminated the employment of Mr.

Nickolas for cause.

addition, our company removed Mr.

Nickolas as the president and chief executive

officer of our company.

In addition, our company removed Mr.

Nickolas as the president and chief executive officer of our company.

On April 7, 2017, our board of directors appointed Richard A.

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On April 28, 2017, Mr.

Wright resigned as

the secretary and treasurer of our company and he was appointed as the chief

executive officer of our company.

On April 28, 2017, our board of directors appointed David

Guarino as chief financial officer, treasurer, secretary president of our

On May 3, 2017, the Company designated 3,000,000 shares of the

authorized and unissued preferred stock of our company as Series D Preferred

Stock by filing a Certificate of Designation with the Secretary of State of the

State of Nevada.

Wright resigned as the secretary and treasurer of our company and he was appointed as the chief executive officer of our

On April 28, 2017, our board of directors appointed David Guarino as chief financial officer, treasurer, secretary president of our company.

On May 3, 2017, the Company designated 3,000,000 shares of the authorized and unissued preferred stock of our company as “Series D Preferred Stock”

by filing a Certificate of Designation with the Secretary of State of the State of

On April 28, 2017, Mr.

Wright and Mr.

Guarino were each issued 1,000,000 shares

each of the Series D Preferred Stock.

On September 14, 2017, Wright Investment Group LLC, an entity

controlled by Richard A.

Wright, chief executive officer, president and

director, advanced $200,000 to the Company.

NOTE 9 CAPITAL LEASE

On October 22, 2014, the Company entered into a master lease

agreement with Veterans Capital Fund, LLC (the Lessor) for the secured lease

line of credit financing in an amount not to exceed $600,000.

expected to be secured by three new alkaline generating electrolysis system

Our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering

Solutions, LLC acted as co-lessees.

Water Engineering Solutions, LLC is an

entity that is controlled and owned by our former president and chief executive

officer, Steven P.

Nickolas, and our current president and chief executive

officer, Richard A.

Pursuant to the master lease agreement, the Lessor

agreed to lease to us the equipment described in any equipment schedule signed

by us and approved by the Lessor.

It is expected that any lease under the master

lease agreement will be structured for a three year lease term with fixed

monthly lease rental payments based on a monthly lease rate factor of 3.4667% of

the Lessors capital cost.

In connection with the entering into the master lease

agreement, the Company also entered into a warrant agreement with the Lessor,

pursuant to which the Company agreed to issue a warrant to purchase 72,000

shares of our common stock to the Lessor and/or its affiliates at an exercise

25 per share for a period of five years, 18,000 shares vested.

On February 25, 2015, the Company amended the master lease

agreement with Veterans Capital Fund, LLC for the increase in the secured lease

line of credit financing to an amount not to exceed $800,000.

The lease was

secured by new alkaline generating electrolysis system machines by our

wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC.

Water Engineering Solutions, LLC is an entity that is controlled and owned by

our former president and chief executive officer, Steven P.

Nickolas, and our

current president and chief executive officer, Richard A.

the master lease agreement, the Lessor agreed to lease to us the equipment

described in any equipment schedule signed by us and approved by the Lessor.

is expected that any lease under the master lease agreement will be structured

for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate factor of 3.4667% of the Lessors

capital cost.

In connection with the entering into the master lease agreement,

the Company entered into a warrant agreement with the Lessor, pursuant to which

the Company agreed to cancel the previously issued warrant certificate for

72,000 warrants and issue a warrant certificate for warrants to purchase 102,000

shares of our common stock to the Lessor and/or its affiliates at an exercise

price of $5.00 per share for a period of five years.

18,000 shares vested on

October 22, 2014, 13,316 shares on October 28, 2014, 13,606 shares on December

22, 2014, 6,945 shares on February 3, 2015 and 15,799 shares on March 5, 2015.

The remaining 18,105 shares will vest on a pro rata basis according to any

mounts the Lessor funds pursuant to any lease schedules under the master lease

agreement, provided that if the Company draws on 90% or more of the total lease

line under the master lease agreement, then all such shares will be deemed to be

The Company recorded the bifurcated value of $309,028 of the warrants

issued as additional paid in capital, the value was determine using a

Black-Scholes, a level 3 valuation measure.

During the year ended March 31, 2015 the Company agreed to

lease specialized equipment used to make our alkaline water with a value of

$735,781 under the above master lease agreement.

The Company evaluated this

lease under ASC 840-30 Leases-Capital Leases and concluded that the lease is a

capital asset.

As of September 30, 2017 the balance owed to Veterans Capital

Fund, LLC under the lease is $112,752.

NOTE 10 NOTES PAYABLE

On September 20, 2016, we entered into a loan facility

agreement (the Loan Agreement) with Turnstone Capital Inc., whereby Turnstone

agreed to make available to our company a loan in the aggregate

principal amount of $1,500,000 (the Loan Amount).

In June, 2017, the Loan

Agreement was amended to increase the Loan amount to $1,700,000.

Pursuant to the

Loan Agreement, Turnstone Capital Inc.

agreed to make one or more advances of

the Loan Amount to our company as requested from time to time by our company in

an amount to be agreed upon by our company and the Lender (each, an Advance).

During the year ended March 31, 2017, Turnstone Capital Inc.

made advances totaling $1,000,000.

This amount together with accrued interest of

$30,000 was converted to 1,030,000 shares of our common stock on March 31, 2017.

In June, 2017, Turnstone Capital Inc.

advanced an additional

$500,000 under the Loan Agreement.

The Company evaluated this transaction under

ASC 470-20-30 Debt liability and equity component and determined that

a debt discount of $295,000 was provided and will be amortized over the

remaining term of the Loan Agreement.

On September 29, 2017, Turnstone Capital Inc.

converted the

$500,000 plus accrued interest of 14,583 to 514,583 common shares.

NOTE 11 SUBSEQUENT EVENTS

On October 17, 2017, Wright Investment Group LLC, an entity

controlled by Richard A.

Wright, advanced $400,000 to the Company.

On October 25, 2017, Richard A.

Wright forfeited stock options

to purchase a total of 148,000 shares of the Companys common stock at prices

ranging between $5.75 and $7.50.

On October 31, 2017, our company and its subsidiaries entered

into a Settlement Agreement and Mutual Release of Claims (the Settlement

Agreement ) with Steven P.

Nickolas, the Nickolas Family Trust, Water

Engineering Solutions, LLC and Enhanced Beverages, LLC, companies and trust that

are controlled or owned by Mr.

Nickolas, (collectively, the Nickolas

Parties ) and McDowell 78, LLC and Wright Investments Group, LLC, a

company controlled or owned by Richard A.

Wright, (collectively,

Wright/McDowell).

The Settlement Agreement provides, among other things, the

a) simultaneous with the full execution of the Settlement Agreement,

we agreed to pay Mr.

Guarino were each issued 1,000,000 shares each of the Series D Preferred Stock.

On October 25, 2017, Mr.

Wright and the Company entered into a stock option forfeiture and general release agreement whereby Mr.

Wright forfeited stock options to purchase 148,000 shares of the Company’s common stock.

On October 31, 2017, our company and its subsidiaries entered into a Settlement Agreement and Mutual Release of Claims (the “

Settlement Agreement ”

) with Steven P.

Nickolas, the Nickolas Family Trust, Water Engineering

Solutions, LLC and Enhanced Beverages, LLC, companies and trust that are controlled or owned by Mr.

Nickolas, (collectively, the “

Nickolas Parties ”

) and McDowell 78, LLC and Wright Investments Group, LLC, a company

controlled or owned by Richard A.

Wright, (collectively, “Wright/McDowell”).

The Settlement Agreement provides, among other things, the following:

a) simultaneous with the full execution of the Settlement Agreement, we agreed to pay Mr.

Nickolas $110,000 in one lump sum (paid);

b) in exchange of

700,000 shares of our common stock and 300,000 shares of our Series D Preferred

Stock described above, Mr.

Nickolas forfeited his 10,000,000 shares of our

Series A Preferred Stock, to be cancelled for no further consideration;

the full execution of the

Settlement Agreement, Mr.

Nickolas and our company agreed to file the stipulations to dismiss the complaints and counterclaim filed by each of them with prejudice, with each side to bear its own costs and attorney’s fees.

In addition, our

company and Wright/McDowell agreed that they will effectuate the dismissal of an arbitration proceeding against the Nickolas Parties with prejudice, with each side to bear its own attorneys’

b) in exchange of 700,000 shares of our common stock and 300,000 shares of our Series D Preferred Stock described above, Mr.

Nickolas forfeited his 10,000,000 shares of our Series A Preferred Stock, to

be cancelled for no further consideration;

c) upon the full execution of the Settlement Agreement, Mr.

Nickolas and our company agreed to file the stipulations to dismiss the complaints and counterclaim filed by each of them with prejudice, with

each side to bear its own costs and attorney’s fees.

addition, our company and Wright/McDowell agreed that they will effectuate the dismissal of an arbitration proceeding against the Nickolas Parties with prejudice, with each side to bear its own attorneys’

fees and costs;

Nickolas acknowledged and

agreed that the employment agreement between Mr.

acknowledged and agreed that the employment agreement between Mr.

Nickolas and our company was terminated as of April 7, 2017 and no further amounts are owed to Mr.

Nickolas under the employment agreement and we agreed to waive restrictive covenants set out in the

employment agreement;

Nickolas under the employment agreement and we agreed to waive restrictive covenants

set out in the employment agreement;

f) we agreed to assume financial responsibility for certain obligations owed by Mr.

Nickolas acknowledged and agreed that 1,500,000 stock options with an exercise price of $0.52 issued to Mr.

Nickolas on or

about March 1, 2016 has expired and a total of 148,000 stock options issued to Mr.

Nickolas on or about March 1, 2016 has expired and a total of 148,000 stock options issued to Mr.

Nickolas before 2016 will automatically expire 90 days from October 6, 2017, the date Mr.

Nickolas ceased being a director of our company;

and h) the parties also

agreed to mutual release of claims.

the parties also agreed to mutual release of claims.

On November 8, 2017, Richard A.

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Wright an additional 200,000 shares of Series D Preferred Stock.

On November 14, 2017, we withdrew the Certificate of Designation establishing Series A Preferred Stock.

There were no shares of Series A Preferred Stock outstanding immediately prior to the withdrawal.

On September 14, 2017, October 17, 2017 and November 22, 2017 Wright Investment Group LLC, an entity controlled by Richard A.

Wright, chief executive officer, president and director, advanced $200,000, $400,000 and $400,000,

respectively, to the Company for a total of $1,000,000 advanced.

NOTE 9 –

CAPITAL LEASE

On October 22, 2014, the Company entered into a master lease agreement with Veterans Capital Fund, LLC (the “Lessor”) for the secured lease line of credit financing in an amount not to exceed $600,000.

The lease is expected to be

secured by three new alkaline generating electrolysis system machines.

Our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC acted as co-lessees.

Water Engineering Solutions, LLC is an entity that is controlled and

owned by our former president and chief executive officer, Steven P.

Nickolas, and our current president and chief executive officer, Richard A.

Pursuant to the master lease agreement, the Lessor agreed to lease to us the equipment described

in any equipment schedule signed by us and approved by the Lessor.

It is expected that any lease under the master lease agreement will be structured for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate

factor of 3.4667% of the Lessor’s capital cost.

In connection with the entering into the master lease agreement, the Company also entered into a warrant agreement with the Lessor, pursuant to which the Company agreed to issue a warrant to

purchase 72,000 shares of our common stock to the Lessor and/or its affiliates at an exercise price of $6.

25 per share for a period of five years, 18,000 shares vested.

On February 25, 2015, the Company amended the master lease agreement with Veterans Capital Fund, LLC for the increase in the secured lease line of credit financing to an amount not to exceed $800,000.

The lease was secured by new alkaline

generating electrolysis system machines by our wholly-owned subsidiary, Alkaline 88, LLC, and Water Engineering Solutions, LLC.

Water Engineering Solutions, LLC is an entity that is controlled and owned by our former president and chief executive

officer, Steven P.

Nickolas, and our current president and chief executive officer, Richard A.

Pursuant to the master lease agreement, the Lessor agreed to lease to us the equipment described in any equipment schedule signed by us and

approved by the Lessor.

It is expected that any lease under the master lease agreement will be structured for a three year lease term with fixed monthly lease rental payments based on a monthly lease rate factor of 3.4667% of the Lessor’s

capital cost.

In connection with the entering into the master lease agreement, the Company entered into a warrant agreement with the Lessor, pursuant to which the Company agreed to cancel the previously issued warrant certificate for 72,000 warrants

and issue a warrant certificate for warrants to purchase 102,000 shares of our common stock to the Lessor and/or its affiliates at an exercise price of $5.00 per share for a period of five years.

18,000 shares vested on October 22, 2014, 13,316

shares on October 28, 2014, 13,606 shares on December 22, 2014, 6,945 shares on February 3, 2015 and 15,799 shares on March 5, 2015.

The remaining 18,105 shares will vest on a pro rata basis according to any mounts the Lessor funds

pursuant to any lease schedules under the master lease agreement, provided that if the Company draws on 90% or more of the total lease line under the master lease agreement, then all such shares will be deemed to be vested.

The Company recorded the

bifurcated value of $309,028 of the warrants issued as additional paid in capital, the value was determine using a Black-Scholes, a level 3 valuation measure.

During the year ended March 31, 2015 the Company agreed to lease specialized equipment used to make our alkaline water with a value of $735,781 under the above master lease agreement.

The Company evaluated this lease under ASC 840-30

“Leases-Capital Leases”

and concluded that the lease is a capital asset.

As of December 31, 2017 the balance owed to Veterans Capital Fund, LLC under the lease is $48,703.

On December 31, 2017, the Company exercised its purchase option with Lessor to purchase all four pieces of equipment leased under the above referenced master lease agreement for a total of $160,000 (the “Purchase Payment”).

Purchase Payment bears interest of 12% per annum and is payable in twelve equal monthly installments of $14,934.00 each, with the first installment due on February 1, 2018 and on the remaining eleven installments due on the first of each month

thereafter with the final installment due and payable on January 1, 2019.

NOTE 10 –

NOTES PAYABLE

On September 20, 2016, we entered into a loan facility agreement (the “Loan Agreement”) with Turnstone Capital Inc., whereby Turnstone Capital Inc.

agreed to make available to our company a loan in the aggregate principal amount of

$1,500,000 (the “Loan Amount”).

In June, 2017, the Loan Agreement was amended to increase the Loan amount to $1,700,000.

Pursuant to the Loan Agreement, Turnstone Capital Inc.

agreed to make one or more advances of the Loan

Amount to our company as requested from time to time by our company in an amount to be agreed upon by our company and the Lender (each, an “Advance”).

During the year ended March 31, 2017, Turnstone Capital Inc.

made advances totaling $1,000,000.

This amount together with accrued interest of $30,000 was converted to 1,030,000 shares of our common stock on March 31, 2017.

In June, 2017, Turnstone Capital Inc.

advanced an additional $500,000 under the Loan Agreement.

The Company evaluated this transaction under ASC 470-20-30 “Debt –

liability and equity component”

and determined that a

debt discount of $295,000 was provided and will be amortized over the remaining term of the Loan Agreement.

On September 29, 2017, Turnstone Capital Inc.

converted the $500,000 plus accrued interest of 14,583 to 514,583 common shares.

NOTE 11 –

SUBSEQUENT EVENTS

Managements Discussion and Analysis of Financial

31 unchanged sentences

inability to raise additional financing;

the fact that our accounting policies and methods are fundamental to how we

report our financial condition and results of operations, and they may require

our management to make estimates about matters that are inherently uncertain;

the fact that our accounting policies and methods are fundamental to how

we report our financial condition and results of operations, and they may

require our management to make estimates about matters that are inherently

deterioration in general or regional economic conditions;

adverse state or federal legislation or regulation that increases the costs

of compliance, or adverse findings by a regulator with respect to existing

adverse state or federal legislation or regulation that increases the

costs of compliance, or adverse findings by a regulator with respect to

existing operations;

inability to efficiently manage our operations;

7 unchanged sentences

Results of Operations

Our results of operations for the three months ended September

30, 2017 and September 30, 2016 are as follows:

Our results of operations for the three months ended

December 31, 2017 and December 31, 2016 are as follows:

For the three

September 30,

Cost of goods sold

Net Loss (after operating expenses and other expenses)

Net Loss (after operating expenses and

other expenses)

Revenue and Cost of Goods Sold

We had revenue from sales of our product for the three months

ended September 30, 2017 of $4,841,528, as compared to $3,007,538 for the three

months ended September 30, 2016, an increase of 61% generated by sales of our

ended December 31, 2017 of $3,816,661 as compared to $2,973,689 for the three

months ended December 31, 2016, an increase of 28% generated by sales of our

alkaline water.

1 unchanged sentence

products to additional retailers throughout the country.

As of September 30,

As of December 31,

2017, the product is now available in all 50 states at an estimated 34,000

retail locations.

As of June 30, 2017, the product was available in all 50

As of December 31, 2016, the product was available in all 50

states at an estimated 25,000 retail locations.

1 unchanged sentence

primarily through the addition of 5 of the top national grocery retailers as

customer during the year ended March 31, 2017.

We distribute our product through

several channels.

We sell through large national distributors (UNFI, KeHe,

C&S, and Core-Mark), which together represent over 150,000 retail outlets.

We also sell our product directly to retail clients, including convenience

stores, natural food products stores, large ethnic markets and national

customers during the year ended March 31, 2017.

We distribute our product

through several channels.

We sell through large national distributors (UNFI,

KeHe, C&S, and Core-Mark), which together represent over 150,000 retail

We also sell our product directly to retail clients, including

convenience stores, natural food products stores, large ethnic markets and

national retailers.

Some examples of retail clients are:

Albertsons, Safeway, Kroger,

Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas, Stater Bros.

Unified Grocers, Bristol Farms, Vallarta, Superior Foods, Ingles, HEB

Albertsons, Safeway,

Kroger, Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas, Stater Bros.

Markets, Unified Grocers, Bristol Farms, Vallarta, Superior Foods, Ingles, HEB

Brookshires, Publix, Shaws, Raleys, Food Lion, Harris Teeter, and Festival

1 unchanged sentence

and handling costs.

For the three months ended September 30, 2017, we had cost

of goods sold of $2,753,879, or 57% of revenue, as compared to cost of goods

sold of $1,896,112 or 63% of revenue, for the three months ended September 30,

For the three months ended December 31, 2017, we had cost of

goods sold of $2,091,258, or 55% of revenue, as compared to cost of goods sold

of $1,664,459 or 56% of revenue, for the three months ended December 31, 2016.

The increase in gross profit rate is a result of reduced raw material cost

through greater volume purchases from our suppliers.

Our operating expenses for the three months ended September 30,

2017 and September 30, 2016 are as follows:

Our operating expenses for the three months ended December 31,

2017 and December 31, 2016 are as follows:

For the three

September 30,

Sales and marketing expenses

2 unchanged sentences

Total operating expenses

For the three months ended September 30, 2017, our total

For the three months ended December 31, 2017, our total

operating expenses were $4,284,815, as compared to $1,639,720 for the three

months ended September 30, 2016.

For the three months ended September 30, 2017, the total

included $1,818,344 of sales and marketing expenses and $876,922 of general and

administrative expenses, consisting primarily of approximately $330,792 of stock

option compensation expense, and $273,001 of professional fees.

For the three months ended September 30, 2016 the total

months ended December 31, 2016.

For the three months ended December 31, 2017, the total

included $1,497,594 of sales and marketing expenses and $2,692,636 of general

and administrative expenses, consisting primarily of approximately $176,500 of

stock option compensation expense, and $370,118 of professional fees.

Our results of operations for the six months ended September

30, 2017 and September 30, 2016 are as follows:

For the six months

September 30,

and administrative expenses, consisting primarily of approximately $1,702,600

resulting stock compensation expense and $481,798 professional fees.

For the three months ended December 31, 2016 the total included

$998,525 of sales and marketing expenses and $550,732 of general and

administrative expenses, consisting primarily of approximately $195,899 of

professional fees.

Our results of operations for the nine months ended December

31, 2017 and December 31, 2016 are as follows:

Cost of goods sold

1 unchanged sentence

Revenue and Cost of Goods Sold

We had revenue from sales of our product for the six months

ended September 30, 2017 of $10,021,722 as compared to $5,954,287 for the six

months ended September 30, 2016, an increase of 68% generated by sales of our

We had revenue from sales of our product for the nine months

ended December 31, 2017 of $13,838,383 as compared to $8,927,976 for the nine

months ended December 31, 2016, an increase of 55% generated by sales of our

alkaline water.

1 unchanged sentence

products to additional retailers throughout the country.

As of September 30,

As of December 31,

2017, the product is now available in all 50 states at an estimated 34,000

retail locations.

As of September 30, 2016, the product was available in all 50

As of December 31, 2016, the product was available in all 50

states at an estimated 25,000 retail locations.

1 unchanged sentence

primarily through the addition of 5 of the top national grocery retailers as

customer during the year ended March 31, 2017.

We distribute our product through

several channels.

We sell through large national distributors (UNFI, KeHe, Tree

of Life, C&S, Core-Mark and Natures Best), which together represent over

150,000 retail outlets.

We also sell our product directly to retail clients,

including convenience stores, natural food products stores, large ethnic markets

and national retailers.

Some examples of retail clients are, Albertsons,

Safeway, Kroger, Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas,

Markets, Unified Grocers, Bristol Farms, Vallarta, Superior Foods,

Ingles, HEB Brookshires, Publix, Shaws, Raleys, Food Lion, Harris Teeter, and

Festival Foods.

customers during the year ended March 31, 2017.

We distribute our product

through several channels.

We sell through large national distributors (UNFI,

KeHe, C&S, and Core-Mark), which together represent over 150,000 retail

We also sell our product directly to retail clients, including

convenience stores, natural food products stores, large ethnic markets and

national retailers.

Some examples of retail clients are:

Albertsons, Safeway,

Kroger, Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas, Stater Bros.

Markets, Unified Grocers, Bristol Farms, Vallarta, Superior Foods, Ingles, HEB

Brookshires, Publix, Shaws, Raleys, Food Lion, Harris Teeter, and Festival

Cost of goods sold is comprised of production costs, shipping

and handling costs.

For the six months ended September 30, 2017, we had cost of

For the nine months ended December 31, 2017, we had cost of

goods sold of $7,797,081, or 56% of revenue, as compared to cost of goods sold

of $3,686,825 or 62% of revenue, for the six months ended September 30, 2016.

of $5,351,284 or 60% of revenue, for the nine months ended December 31, 2016.

The increase in gross profit rate is a result of reduced raw material cost

through greater volume purchases from our suppliers.

Our operating expenses for the six months ended September 30,

2017 and September 30, 2016 are as follows:

September 30,

Our operating expenses for the nine months ended December 31,

2017 and December 31, 2016 are as follows:

Sales and marketing expenses

2 unchanged sentences

Total operating expenses

For the six months ended September 30, 2017, our total

operating expenses were $6,648,896, as compared to $4,224,301 for the six months

ended September 30, 2016.

For the six months ended September 30, 2017, the total included

For the nine months ended December 31, 2017, our total

operating expenses were $10,953,911, as compared to $5,864,021for the nine

months ended December 31, 2016.

For the nine months ended December 31, 2017, the total included

$4,985,955 of sales and marketing expenses and $5,660,612 of general and

administrative expenses, consisting primarily of approximately $3,372,894 of

stock option compensation expense, and $572,348 of professional fees.

For the six months ended September 30, 2016 the total included

stock and stock option compensation expense, and $1,054,146 of professional

For the nine months ended December 31, 2016, the total included

$3,144,914 of sales and marketing expenses and $2,448,247 of general and

administrative expenses, consisting primarily of approximately $319,125 of stock

option compensation expense, and $649,881 of professional fees.

and stock option compensation expense, and $766,132 of professional fees.

Liquidity and Capital Resources

Working Capital

September 30, 2017

December 31, 2017

March 31, 2017

3 unchanged sentences

Current Assets

Current assets as of September 30, 2017 and March 31, 2017

Current assets as of December 31, 2017 and March 31, 2017

primarily relate to $425,409and $603,805 in cash, $1,211,375 and $1,419,281 in

1 unchanged sentence

Current Liabilities

Current liabilities as of September 30, 2017 and March 31, 2017

Current liabilities as of December 31, 2017 and March 31, 2017

primarily relate to $1,159,089 and $1,343,824 in accounts payable, revolving

financing of $1,846,026 and $1,436,083, current portion of capital leases of

$112,752 and $190,207 and accrued expenses of $611,833 and $455,916

respectively.

Our cash flows for the six months ended September 30, 2017 and

September 30, 2016 are as follows:

September 30,

financing of $1,495,049 and $1,436,083, advance from related party of $1,000,000

and $-, accrued expenses of $525,238 and $455,916 and current portion of capital

leases of $48,703 and $190,207 respectively.

Our cash flows for the nine months ended December 31, 2017 and

December 31, 2016 are as follows:

Net Cash used in operating activities

1 unchanged sentence

Net Cash provided by financing activities

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents

Operating Activities

Net cash used in operating activities was $668,505 for the six

months ended September 30, 2017, as compared to $1,650,263 used in operating

activities for the six months ended September 30, 2016.

Net cash used in operating activities was $1,262,887 for the

nine months ended December 31, 2017, as compared to $2,061,719 used in operating

activities for the nine months ended December 31, 2016.

The decrease in net cash

used in operating activities was primarily due to a $945,371 reduction of net

loss after adding back non cash adjustments in the six months ended September

30, 2017 compared to the six months ended September 30, 2016.

used in operating activities was primarily due to reduction of accounts payable

in the quarter ended December 31, 2017 compared to an increase of accounts

payable in the quarter ended December 31, 2016.

Investing Activities

Net cash used in investing activities was $226,446 for the six

months ended September 30, 2017, as compared to $184,315 used in investing

activities for the six months ended September 30, 2016.

The increase in net cash

used by investing activities was the result of an increase of purchase of fixed

Net cash used in investing activities was $264,876 for the nine

months ended December 31, 2017, as compared to $273,450 used in investing

activities for the nine months ended December 31, 2016.

The decrease in net cash

used by investing activities was the result of a decrease of purchase of fixed

assets and equipment deposits.

Financing Activities

Net cash provided by financing activities for the six months

ended September 30, 2017 was $772,977, as compared to $832,170 for the six

months ended September 30, 2016.

The decrease of net cash provided by financing

activities was mainly attributable to a decrease in proceeds received from financing activities of $412,975 offset by a decrease in repayment from financing activities of $353,782.

Net cash provided by financing activities for the nine months

ended December 31, 2017 was $1,349,367, as compared to $1,231,590 for the nine

months ended December 31, 2016.

The increase of net cash provided by financing

activities was mainly attributable to repayment of notes payable.

Cash Requirements

4 unchanged sentences

estimate that our capital needs over the next 12 months will be up to

We will require additional cash resources to, among other things,

expand broker network, increase manufacturing capacity, expand retail

distribution and add support staff.

If our own financial resources and future

cash-flows from operations are insufficient to satisfy our capital requirements,

we may seek to sell additional equity or debt securities or obtain additional

credit facilities.

The sale of additional equity securities will result in

dilution to our stockholders.

The incurrence of indebtedness will result in

increased debt service obligations and could require us to agree to operating

and financial covenants that could restrict our operations or modify our plans

to grow the business.

Financing may not be available in amounts or on terms

acceptable to us, if at all.

Any failure by us to raise additional funds on

terms favorable to us, or at all, will limit our ability to expand our business

operations and could harm our overall business prospects.

approximately $1,720,000.

We will require additional cash resources to, among

other things, expand broker network, increase manufacturing capacity, expand

retail distribution and add support staff.

If our own financial resources and

future cash-flows from operations are insufficient to satisfy our capital

requirements, we may seek to sell additional equity or debt securities or obtain

additional credit facilities.

The sale of additional equity securities will

result in dilution to our stockholders.

The incurrence of indebtedness will

result in increased debt service obligations and could require us to agree to

operating and financial covenants that could restrict our operations or modify

our plans to grow the business.

Financing may not be available in amounts or on

terms acceptable to us, if at all.

Any failure by us to raise additional funds

on terms favorable to us, or at all, will limit our ability to expand our

business operations and could harm our overall business prospects.

Off-Balance Sheet Arrangements

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements