What changed in this filing

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Item 1. Business

2018-06-29 compared with 2017-07-14 · 142 added, 228 removed, 251 unchanged (60% of the section changed)

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statements other than statements of historical fact are forward-looking

statements for purposes of federal and state securities laws, including, but

not limited to, any projections of earnings, revenue or other financial items;

any statements of the plans, strategies and objections of management for future

statements for purposes of applicable securities laws, including, but not

limited to, any projections of earnings, revenue or other financial items;

statements of the plans, strategies and objections of management for future

any statements concerning proposed new services or developments;

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Except as required by applicable law, including

the securities laws of the United States, we do not intend, and undertake no

obligation, to update any forward-looking statement.

the securities laws of the United States and Canada, we do not intend, and

undertake no obligation, to update any forward-looking statement.

Although we believe the expectations reflected in any of our

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are not limited to:

our current lack of working capital;

lack of working capital;

inability to raise additional financing;

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the unavailability of funds for capital expenditures.

Unless otherwise indicated, all reference to dollars, $,

USD or US$ are to United States dollars and all reference to CDN$ are to

Canadian dollars.

Our financial statements are stated in United States Dollars ($

(US$) unless otherwise stated and are prepared in accordance with United States

Generally Accepted Accounting Principles.

or US$) unless otherwise stated and are prepared in accordance with United

States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all

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us our, the Company and Alkaline refer to The Alkaline Water Company

Inc., a Nevada corporation, and its wholly-owned subsidiary, Alkaline Water

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

(formerly Alkaline 84, LLC), unless otherwise specified.

Inc., a Nevada corporation, and its wholly-owned subsidiary, Alkaline 88, LLC,

unless otherwise specified.

Corporate Overview

Our company offers retail consumers bottled alkaline water in

500ml, 700ml, 1-liter, 3-liter and 1-gallon sizes under the trade name

Alkaline88 ® .

Our product is produced through an electrolysis process

that uses specialized electronic cells coated with a variety of rare earth

minerals to produce our 8.8 pH drinking water without the use of any chemicals.

Our product also incorporates 84 trace minerals from Pink Himalayan Rock Salt.

Our product was designed to have a clean smooth taste using only purified water

and the Himalayan salt.

Consumers drink our water because of the taste profile

and the perceived health benefits.

We are now one of the largest (by sales

volume) alkaline water companies in the United States.

500-milliliter, 700-milliliter, 1-liter, 1.5 -liter, 3-liter and 1-gallon sizes

under the trade name Alkaline88 ® .

Our product is produced through an

electrolysis process that uses specialized electronic cells coated with a

variety of rare earth minerals to produce our 8.8 pH drinking water without the

use of any chemicals.

Our product also incorporates 84 trace minerals from

Himalayan salt.

Our product was designed to have a clean smooth taste using only purified

water and the Himalayan salt.

Consumers drink our water because of the taste

profile and the perceived health benefits.

We are now one of the largest (by

sales volume) alkaline water companies in the United States.

Our company, The Alkaline Water Company Inc., was incorporated

under the laws of the State of Nevada on June 6, 2011 under the name Global

Lines Inc. Our business model prior to the acquisition of Alkaline Water Corp.

on May 31, 2013 was to provide chauffeuring and transportation services to

residents within our local market, primarily providing transportation services

such as private school student transport, sightseeing trips, and elderly

transportation, and offering transportation to the airport and special events

such as proms and weddings.

However, as we had not successfully developed our

service and had no source of revenue from our business plan, we determined to

seek out a new business opportunity to increase value for our stockholders.

under the laws of the State of Nevada on June 6, 2011.

On February 20, 2013, The Alkaline Water Company Inc.

Global Lines Inc.) entered into a non-binding letter of intent with Alkaline 88,

LLC (formerly Alkaline 84, LLC), a wholly-owned subsidiary of Alkaline Water

Corp., for the acquisition of all of the issued and outstanding securities of

the capital of Alkaline 88, LLC.

Further to this letter of intent, on May 31,

2013, The Alkaline Water Company Inc.

entered into a share exchange agreement

with Alkaline Water Corp.

and all of its stockholders, and as a result of the

closing of this agreement on the same date, Alkaline Water Corp.

wholly-owned subsidiary of The Alkaline Water Company Inc.

Consequently, after

the closing of this agreement we adopted the business of Alkaline Water Corp.s

wholly-owned subsidiary, Alkaline 88, LLC.

Alkaline Water Corp.

was incorporated in the State of Arizona

on March 7, 2013, and it is the sole stockholder of Alkaline 88, LLC.

is the wholly-owned subsidiary of The Alkaline Water Company Inc.,

and Alkaline 88, LLC is Alkaline Water Corp.s wholly-owned subsidiary.

Prior to the closing of the share exchange agreement, on May

30, 2013, our company effected a name change by merging with its wholly-owned

Nevada subsidiary named The Alkaline Water Company Inc. with our company as

the surviving corporation under the new name The Alkaline Water Company Inc.

In addition, on May 30, 2013, our company effected a 15:1 forward stock split of

our authorized and issued and outstanding common stock.

On October 7, 2013, we amended our articles of incorporation to

create 100,000,000 shares of preferred stock by filing a Certificate of

Amendment to Articles of Incorporation with the Secretary of State of the State

The preferred stock may be divided into and issued in series, with

such designations, rights, qualifications, preferences, limitations and terms as

fixed and determined by our board of directors.

On October 8, 2013, we designated 20,000,000 shares of the

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

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

State of Nevada.

At the time, the Series A Preferred Stock had 10 votes per

The Series A Preferred Stock is not convertible into shares of our common

On November 5, 2013, we designated 1,000 shares of the

authorized and unissued preferred stock of our company as 10% Series B

Convertible Preferred Stock by filing a Certificate of Designation with the

Secretary of State of the State of Nevada.

The 10% Series B Convertible

Preferred Stock had, among other things, conversion rights, liquidation

preferences, dividend rights, redemption rights and conversion rights.

On December 30, 2015, we effected a 50-for-1 reverse stock

split of our authorized and issued and outstanding shares of common stock.

result of the reverse stock split, the number of authorized shares of common

stock of our company decreased from 1,125,000,000 to 22,500,000 and the number

of issued and outstanding shares of common stock of our company decreased

correspondingly.

As a result of the reverse stock split, holders of our Series A

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

On January 21, 2016, we amended our Articles of Incorporation

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

to 200,000,000 by filing a Certificate of Amendment to Articles of Incorporation

with the Secretary of State of the State of Nevada.

As a result, the aggregate

number of shares that we have the authority to issue is 300,000,000, of which

200,000,000 shares are common stock, with a par value of $0.001 per share, and

100,000,000 shares are preferred stock, with a par value of $0.001 per share.

On January 22, 2016, we 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.

We 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 divided or other distribution on our common stock payable in our common

stock or a subdivision or consolidation of the outstanding shares of our common

Accordingly, holders of Series A Preferred Stock now 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, we 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) we achieve the consolidated revenue of our company

and all of its subsidiaries 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;

(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 March 31, 2017, we withdrew the Certificate of Designation

establishing 10% Series B Convertible Preferred Stock.

The withdrawal was

required under the Credit and Security Agreement dated February 1, 2017 with SCM

Specialty Finance Opportunities Fund, L.P.

There were no shares of 10% Series B

Convertible Preferred Stock outstanding immediately prior to the withdrawal.

into a non-binding letter of intent with Alkaline 88, LLC, a wholly-owned

subsidiary of Alkaline Water Corp at the time., for the acquisition of all of

the issued and outstanding securities of the capital of Alkaline 88, LLC.

Further to this letter of intent, on May 31, 2013, The Alkaline Water Company

entered into a share exchange agreement with Alkaline Water Corp.

of its stockholders, and as a result of the closing of this agreement on the

same date, Alkaline Water Corp.

became a wholly-owned subsidiary of The Alkaline

Water Company Inc.

Consequently, after the closing of this agreement, we adopted

the business of Alkaline Water Corp.s wholly-owned operating subsidiary,

Alkaline 88, LLC.

On March 3, 2018, Alkaline Water Corp.

was merged into Alkaline

88, LLC with Alkaline88, LLC being the surviving entity.

Alkaline88, LLC is currently the sole wholly-owned subsidiary of The Alkaline

Water Company Inc.

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

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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;

(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 principal offices of our company are located at 7730 East

Greenway Road, Ste.

203, Scottsdale, AZ 85260.

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.

The principal offices of our company are located at 14646 N.

Kierland Blvd, Suite 255, Scottsdale, AZ 85254.

Our telephone number is (480)

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Alkaline 88, LLC has

entered into one-year agreement(s) with six different bottling companies in

entered into co-packing agreements with six different bottling companies in

Virginia, Georgia, California, Texas and Arizona to act as co-packers for our

Our current capacity at all plants exceeds $7,000,000 per month

Our branding is being coordinated through 602 Design, LLC and our component materials are readily available through multiple

Our principal suppliers are Plastipack Packaging, Vav Plastics Inc.,

and Packaging Corporation of America.

Our branding is being coordinated through 602 Design, LLC and our

component materials are readily available through multiple vendors.

principal suppliers are Vav Plastics Inc., Amcor Inc.

and Packaging Corporation

Our product is currently at the expansion phase of its

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our current sales are concentrated in the Southwest and Texas.

distribution agreements with large national distributors (UNFI, KeHe, and

distribution agreements with large national distributors (e.g., UNFI, KeHe, and

C&S), representing over 150,000 retail establishments.

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convenience stores, including 7-11s;

large national retailers, including Albertsons/Safeway, Kroger companies, and

regional grocery chains such as Schnucks, Smart & Final, Jewel-Osco,

Sprouts, Bashas, Bristol Farms, Vallarta, Superior Foods, Brookshires, HEB and

other companies throughout the United States.

In total we are now in 36 of the

top 75 (by sales) grocery retailers in the United States.

large national retailers, including Walmart, Albertsons/Safeway, Kroger

companies, and regional grocery chains such as Schnucks, Smart & Final,

Jewel-Osco, Sprouts, Bashas, Bristol Farms, Stater Brothers, Vallarta, Superior

Foods, Brookshires, HEB and other companies throughout the United States.

total we are now in more than half of the top 75 (by sales) grocery retailers in

the United States.

In April 2014, we entered into an exclusive territorial

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is a direct to store distributor

In the past fiscal year we have added a number of additional DSDs in the

Southwest and have expanded our product offering to include 500ml and 1 liter

In order to continue our expansion, we anticipate that we will

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twelve-month period, we have identified the following milestones that we expect

Expansion of Broker Network - We expect to continue to

develop our working relationship with our national broker network.

continually meet train and go on sales call with our national broker

network in order to take advantage of the momentum currently being created

by their efforts.

We anticipate a considerable amount of travel and

ongoing expenses at an estimated cost during that time of $300,000.

Increase Manufacturing Capacity We expect to add one or

two new co-packer facilities, strategically located to reduce freight

costs and meet future growth objectives.

Expand Retail Distribution - We are currently in

negotiations or have received the new item paperwork from retailers that

will introduce our Alkaline 88 product line to retailers representing

approximately 45,000 store locations throughout North America.

that by the end of fiscal year 2018, we will be in over 40,000 stores.

cost of this retail expansion is expected to be up to $2,000,000 during

Addition of Support Staff - In order to support expansion

efforts and to continue the training and support of our broker network, we

will need to hire approximately two more people on the corporate level,

which will be hired for the specific purpose of supporting the broker,

distributor and retailers and their logistical requirements.

We continue to seek and

interview candidates to fill our growing need for additional staffing.

additional cost of these new hires is expected to be approximately

$200,000 in salary and benefits over the next twelve months.

Capital Considerations Our business plan can be

adjusted based on the available capital to the business.

We anticipate

that approximately $2,000,000 is necessary in the near term in order to

build-out a national presence for our product and to allow for the

purchase of the necessary equipment and facilities over the next twelve

To fund our expansion in the longer term, we anticipate that we

need at least $3,000,000 during the next 12 months.

International Expansion- We expect to begin selling

internationally over the next 12 months and have budgeted $160,000 towards

our initial efforts.

Expansion of Broker Network We expect to continue to develop our

working relationship with our national broker network.

We continually meet,

train, and go on sales call with our national broker network in order to take

advantage of the momentum currently being created by their efforts.

anticipate a considerable amount of travel and ongoing expenses at an

estimated cost during that time of $300,000.

Increase Manufacturing Capacity We expect to add one or two new

co-packer facilities, strategically located to reduce freight costs and meet

current volumes and future growth objectives.

Expand Retail Distribution We believe that by the end of fiscal

year 2019, we will be in over 50,000 stores.

The cost of this retail expansion

is expected to be up to $2,000,000 during that time.

Addition of Support Staff In order to support expansion efforts

and to continue the training and support of our broker network, we will need

to hire approximately two more people on the corporate level, which will be

hired for the specific purpose of supporting the broker, distributor and

retailers and their logistical and accounting requirements.

We continue to

seek and interview candidates to fill our growing need for additional

The additional cost of these new hires is expected to be

approximately $200,000 in salary and benefits over the next twelve months.

Capital Considerations Our business plan can be adjusted based on

the available capital to the business.

We anticipate that approximately

$2,000,000 is necessary in the near term in order to build-out a national

presence for our product and to allow for the purchase of the necessary

equipment and facilities over the next twelve months.

To fund our expansion in

the longer term, we anticipate that we need at least $3,000,000 during the

next 12 months.

International Expansion We expect to begin selling internationally

over the next 12 months and have budgeted $160,000 towards our initial

We believe that cash flow from operations will not meet our

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and (e) the mass retail

Currently we have gained broker representation through the

Beacon United Group of brokers, which extend throughout the United States.

Across the country and in all categories of retail trade, we are aggressively

utilizing both DSD (direct to store deliveries) and warehouse opportunities in

the distribution of our products throughout the country.

We have recently gained broker representation through Advantage

Solutions for the continued expansion into our target retail markets.

We have distribution agreements with large national

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retail establishments.

Our current stores include convenience stores, natural

Our current retailers include convenience stores, natural

food products stores, large ethnic markets and national retailers.

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large national retailers,

including Albertsons/Safeway, Kroger companies, and regional grocery chains

such as Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas, Bristol

Farms, Vallarta, Superior Foods, Brookshires, HEB and other companies

throughout the United States.

In total we are now in 36 of the top 75 grocery

retailers in the United States.

including Walmart, Albertsons/Safeway, Kroger companies, and regional grocery

chains such as Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas,

Bristol Farms, Stater Brothers, Vallarta, Superior Foods, Brookshires, HEB and

other companies throughout the United States.

In total we are now in more than

half of the top 75 (by sale) grocery retailers in the United States.

Dependence on Few Customers

We have 3 major customers that together account for 51% (25%,

and 17%, respectively) of accounts receivable at March 31, 2017, and 3 customers

that together account for 58% (29%, 15%, and 14%, respectively) of the total

revenues earned for the year ended March 31, 2017.

16% and 10%, respectively) of accounts receivable at March 31, 2018, and 3

customers that together account for 47% (25%, 12%, and 10%, respectively) of the

total revenues earned for the year ended March 31, 2018.

There can be no assurance that such customers will continue to

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operating results and financial condition.

We intend to market our product through our broker network and

to avail ourselves to the promotional activities of other companies and

competitors regarding the benefits of alkaline water.

We intend to continue to market our product through our broker

network and to avail ourselves to the promotional activities of other companies

and competitors regarding the benefits of alkaline water.

We anticipate that our

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refreshments, including bottled water and numerous specialty beverages, such as

SoBe, Snapple, Arizona, Vitamin Water, Gatorade, and Powerade.

We will compete

directly with other alkaline water producers and brands focused on the emerging

alkaline beverage market including Eternal, Essentia, Icelandic, Real Water,

Aqua Hydrate, Mountain Valley, Qure, Penta, and Alka Power.

Core Hydration, SoBe, Snapple, Arizona Ice Tea, Vitamin Water, Gatorade, and

We will compete directly with other alkaline water producers and

brands focused on the emerging alkaline beverage market including Eternal,

Essentia, Icelandic, Real Water, Aqua Hydrate, Mountain Valley, Qure, Penta, and

Products offered by our direct competitors are sold in various

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three-liter bottle for a suggested retail price (SRP) of $3.99, one-gallon

bottle for an SRP of $4.99, 700 milliliter single serving at an SRP of $1.19, 1

liter at an SRP of $1.99 and a 500 milliliter at an SRP of $0.99.

bottle for an SRP of $4.99, 1.5 -liter at an SRP of $2.49, 1 liter at an SRP of

$1.99, 700 milliliter single serving at an SRP of $1.19, and a 500 milliliter at

an SRP of $0.99.

Intellectual Property

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infringing these rights.

The trademark for Alkaline 88 has been approved in the

USA and Canada and has been applied for in China.

The trademark for Alkaline88 ® has been

registered in the USA, Canada, Hong Kong, and has been applied for in China.

While there can be no assurance that registered trademarks will

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our results of operations for such periods.

Research and Development Costs During the Last Two Years

Alkaline 88, LLC currently has an in-house research and

development department that works on activities related to the development of

our alkaline generating electrolysis system machines, a proprietary alkaline

water system.

Government Regulation

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sale, marketing, and use of certain non-refillable beverage containers.

precise requirements imposed by these measures vary.

Other types of statutes and

regulations relating to beverage container deposits, recycling, ecotaxes and/or

product stewardship also apply in various jurisdictions in the United States.

anticipate that additional, similar legal requirements may be proposed or

enacted in the future at the local, state and federal levels in the United

precise requirements imposed by these measures vary and are constantly evolving.

Other types of statutes and regulations relating to beverage container deposits,

recycling, ecotaxes and/or product stewardship also apply in various

jurisdictions in the United States.

We anticipate that additional, similar legal

requirements may be proposed or enacted in the future at the local, state and

federal levels in the United States.

Any third-party bottling facility that we may choose to utilize

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policy to comply with any and all such legal requirements.

Compliance with these

provisions has not had, and we do not expect such compliance to have, any

material adverse effect on our capital expenditures, net income or competitive

Compliance with these provisions has not had, and we do not

expect such compliance to have, any material adverse effect on our capital

expenditures, net income or competitive position.

In addition to Richard A.

Wright, who is our president, chief

Executive Officer and Director, and David Guarino, who is our Chief Financial

executive officer and director, and David A.

Guarino, who is our chief financial

officer, secretary, treasurer and director, we currently employ 11 full time

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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-K

Item 1. Business