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Item 9A. Controls and Procedures

2018-06-29 compared with 2017-07-14 · 504 added, 424 removed, 726 unchanged (56% of the section changed)

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faulty, and that breakdowns can occur because of a simple error or mistake.

Additional controls can be circumvented by the individual acts of some

persons, by collusion of two or more people, or by management override of the

The design of any system of controls also is based in part upon

certain assumptions about the likelihood of future events, and there can be no

assurance that any design will succeed in achieving its stated goals under all

potential future conditions;

over time, controls may become inadequate because

of changes in conditions, or the degree of compliance with the policies or

procedures may deteriorate.

Because of the inherent limitations in a

cost-effective control system, misstatements due to error or fraud may occur and

not be detected.

Additional controls can be circumvented by the individual acts of some persons,

by collusion of two or more people, or by management override of the controls.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there

can be no assurance that any design will succeed in achieving its stated goals

under all potential future conditions;

over time, controls may become inadequate

because of changes in conditions, or the degree of compliance with the policies

or procedures may deteriorate.

Because of the inherent limitations in a cost-

effective control system, misstatements due to error or fraud may occur and not

Changes in Internal Control over Financial Reporting

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OTHER INFORMATION

On December 31, 2017, we exercised our purchase option to

purchase four alkaline generating electrolysis system machines leased under the

master lease agreement entered into on October 22, 2014, as amended on February

25, 2015 with Veterans Capital Fund, LLC for a total of $160,000.

price bears interest of 12% per annum and is payable in eleven equal monthly

installments of $14,934.00 each and one final installment of $4,040.41, 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.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

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held, and duration of such, are as follows:

Position Held with Our Company

Position Held with Our

Date First Elected or Appointed

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Vice-President, Chief Operating Officer, and Director

David Guarino

Chief Financial Officer, Secretary, Treasurer

April 28, 2017

Chairman of the Board and Director

July 22, 2016

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The following is a brief account of the education and business

experience of our current executive officers during at least the past five

experience of our directors and executive officers during at least the past five

years, indicating their principal occupation during the period, and the name and

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Wright as the chief executive officer of our company.

David Guarino

We believe that Mr.

Wright is qualified to serve on our board

of directors because of his knowledge of our current operations in addition to

his education and business experiences described above.

On April 28, 2017, Mr.

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From 2015 until April, 2017, Mr.

Guarino has been a consultant to

Guarino had been a consultant to

We believe that Mr.

Guarino is qualified to serve on our board

of directors because of his knowledge of our current operations in addition to

his education and business experiences described above.

On July 22, 2016, Mr.

Keay was appointed as a director of our

company and on August 17, 2017, Mr.

Keay was appointed as the Chairman of the

Keay has been the President and Managing Partner of Inform

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Human Kinetics from the University of British Columbia.

We believe that Mr.

Keay is qualified to serve on our board of

directors because of his knowledge of our current operations in addition to his

education and business experiences described above.

Leitch has been a director of our company since September

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an officer, director and principal of several public and private companies.

Nickolas was appointed President of Nutripure

Beverages, Inc., a small cap pink sheet company that intended to launch a

beverage product that was developed by him, on a national basis.

The company was

unsuccessful in raising the necessary capital, at which time Mr.

resigned his position after three months with the company and proceeded to

investigate other financial opportunities.

From May 2008 to July 2010, Mr.

Nickolas was a founder of and acted as the president, secretary, treasurer and a

director of Northsight Capital, Inc., a publicly-traded financial holding

company (OTCBB:

NCAP), which was sold in order to support the ongoing research

and development of various beverage products.

During this time Mr.

founded Jayger International, LTD, which involved the sale of a variety of

healthy products in Japan and other Asian countries.

Nickolas also engaged

in a number of consulting activities with both large and small companies and

continued to remain active in the food and beverage industry.

During this same

period of time Mr.

Nickolas founded The Healthy Food Project, Inc., a 501(c)(3)

non-profit organization dedicated to promoting the development of healthy foods

and beverages for the public use.

Since inception of the Company

and until November 18, 2016, when the Company provided notice to Mr.

finding that there is just cause for termination of Mr.

Nickolass employment

he focused his attention on the commercial development of the water electrolysis

process utilized in the Company.

Effective as of May 31, 2013, Mr.

Nickolas was appointed as

chairman, president, chief executive officer, secretary and a director of our

On August 7, 2013, our board of directors replaced Mr.

secretary of our company with Richard A.

On April 7, 2017, our company

Nickolas as the president and chief executive officer of our

We believe that Mr.

Leitch is qualified to serve on our board

of directors because of his knowledge of our current operations in addition to

his business experiences described above.

Family Relationships

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Involvement in Certain Legal Proceedings

Except as disclosed below, none of our directors and executive

officers has been involved in any of the following events during the past ten

None of our directors and executive officers has been involved

in any of the following events during the past ten years:

any petition under the federal bankruptcy laws or any

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being the subject of, or a party to, any sanction or

order, not subsequently reversed, suspended or vacated, of any

self-regulatory organization (as defined in Section 3(a)(26) of the

Securities Exchange Act of 1934), any registered entity (as defined in

Section 1(a)(29) of the Commodity Exchange Act), or any equivalent

exchange, association, entity or organization that has disciplinary

authority over its members or persons associated with a

Nickolas filed a Chapter 13 bankruptcy petition in the

State of Arizona on July 22, 2015.

Nickolas has since completely withdrawn

from bankruptcy court as of April 20, 2017.

order, not subsequently reversed, suspended or vacated, of any self-

regulatory organization (as defined in Section 3(a)(26) of the

Securities Exchange Act of 1934), any registered

entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any

equivalent exchange, association, entity or organization that has disciplinary

authority over its members or persons associated with a member.

Section 16(a) Beneficial Ownership Reporting Compliance

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Committees of Board of Directors

We do not presently have a separately constituted audit

committee, compensation committee, nominating committee, or any other committees

of our board of directors.

Our board of directors does not believe that it is

necessary to have such committees because it believes that the functions of such

committees can be adequately performed by our board of directors.

Audit Committee

Effective February 22, 2018, our board of directors established

an audit committee.

The audit committee currently consists of three directors,

Aaron Keay, Bruce Leitch and David A.

Our audit committee assists our

board of directors in fulfilling its financial oversight responsibilities by

reviewing the financial reports and other financial information provided by our

company to regulatory authorities and stockholders, our systems of internal

controls regarding finance and accounting and our auditing, accounting and

financial reporting processes.

Our audit committees primary duties and

responsibilities are to:

serve as an independent and objective party to monitor

our financial reporting and internal control system and review our financial

oversee our accounting and financial reporting processes and the

preparation and auditing of our financial statements;

review and appraise the

performance of our external auditor;

and provide an open avenue of communication

among our auditor, financial and senior management and our board of directors.

Audit Committee Financial Expert

Our board of directors has determined that each of Richard A.

Wright and David A.

Guarino, both directors of our company, qualifies as an

audit committee financial expert as defined in Item 407(d)(5)(ii) of

Regulation S-K, but Mr.

Wright and Mr.

Guarino are not independent as the term

is used by NASDAQ Marketplace Rule 5605(a)(2).

We believe that retaining an

independent director who would qualify as an audit committee financial expert

would be overly costly and burdensome and is not warranted in our circumstances

given the early stages of our development.

Nominating and Compensation Committees

We do not presently have a separately constituted compensation

committee, or nominating committee.

Our board of directors does not believe that

it is necessary to have such committees because it believes that the functions

of such committees can be adequately performed by our board of directors.

We do not have any defined policy or procedure requirements for

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the first page of this annual report.

Audit Committee Financial Expert

Our board of directors has determined that each of Richard A.

Wright and David Guarino, both directors of our company, qualifies as an audit

committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K,

Wright and Mr.

Guarino are not independent as the term is used by

NASDAQ Marketplace Rule 5605(a)(2).

We believe that retaining an independent

director who would qualify as an audit committee financial expert would be

overly costly and burdensome and is not warranted in our circumstances given the

early stages of our development.

EXECUTIVE COMPENSATION

Summary Compensation

The particulars of compensation paid to the following

The particulars of compensation paid to the following persons:

all individuals serving as our principal executive

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Summary Compensation Table Years ended March 31, 2018

Deferred Compensation Earnings

Director and Former

President and Chief

President, Chief

Officer, Vice-

President, Chief Operating Officer, Director and Former

Officer, Vice- President, Chief

Operating Officer, Director and

Secretary and

Treasurer (1)

Chief Financial Officer,

Secretary, Treasurer and

Former President,

Executive Officer and

Effective as of May 31, 2013, Mr.

Wright was appointed as

vice-president, treasurer and a director of our company.

2013, our board of directors appointed Mr.

Wright as secretary of our

On August 28, 2016, our board of directors appointed Mr.

as chief operating officer of our company.

On April 7, 2017, our board of

directors appointed Mr.

Wright as president of our company.

Wright resigned as the secretary and treasurer of our company

and our board of directors appointed Mr.

Wright as the chief executive

officer of our company.

On April 28, 2017, our board of directors appointed Mr.

Guarino as the chief financial officer, secretary and treasurer and a

director of our company.

From 2015 until April, 2017, Mr.

Guarino has been

a consultant to our company.

On April 7, 2017, our company removed Mr.

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president and chief executive officer of our company.

On April 7, 2017, our board of directors appointed Mr.

Wright as president of our company.

On April 28, 2017, Mr.

Wright resigned

as the secretary and treasurer of our company and our board of directors

appointed Mr.

Wright as the chief executive officer of our

Effective October 7, 2013, our board of directors adopted and

approved the 2013 Equity Incentive Plan.

The plan was approved by a majority of

our stockholders on October 7, 2013.

On October 31, 2014, our board of directors

amended the 2013 Equity Incentive Plan to, among other things, increase the

number of shares of stock of our company available for the grant of awards under

the plan from 20,000,000 shares to 35,000,000 shares.

The purpose of the plan is

to (a) enable our company and any of our affiliates to attract and retain the

types of employees, consultants and directors who will contribute to our

companys long range success;

(b) provide incentives that align the interests of

employees, consultants and directors with those of the stockholders of our

and (c) promote the success of our companys business.

Effective as of

December 30, 2015, we effected a 50-for-1 reverse stock split of our authorized

and issued and outstanding shares of common stock which decreased the number of

shares of stock of our company available for the grant of awards under the plan

from 35,000,000 shares to 700,000 shares.

Effective as of January 20, 2016, our

board of directors amended the plan to increase the number of shares of stock of

our company available for the grant of awards under the plan from 700,000 to

The plan enables us to grant awards of a maximum of 7,700,000 shares

of our stock and awards that may be granted under the plan includes incentive stock options, non-qualified stock options,

stock appreciation rights, restricted awards and performance compensation

Effective October 9, 2013, we granted a total of 6,000,000

stock options to Steven A.

Nickolas and Richard A.

Wright (3,000,000 stock

options to each).

The stock options were exercisable at the exercise price of

$0.605 per share for a period of ten years from the date of grant.

options vested as follows:

(i) 1,000,000 upon the date of grant;

500,000 per quarter until fully vested.

On October 31, 2014, we reduced the

exercise price of these stock options to $0.15 per share.

Effective May 12, 2014, we granted a total of 1,200,000 stock

options Steven A.

Nickolas and Richard A.

Wright (600,000 stock options to

The stock options are exercisable at the exercise price of $0.165 per

share for a period of five years from the date of grant.

600,000 stock options

vested upon the date of grant.

Effective May 21, 2014, we granted a total of 6,000,000 stock

options to Steven A.

Nickolas and Richard A.

Wright (3,000,000 stock options to

The stock options are exercisable at the exercise price of $0.1455 per

share for a period of ten years from the date of grant.

3,000,000 of these stock

options vested upon the date of grant and the other 3,000,000 stock options

vested on November 21, 2014.

Effective February 18, 2015, we granted a total of 1,600,000

stock options to Steven A.

Nickolas and Richard A.

Wright (800,000 stock options

The stock options are exercisable at the exercise price of $0.115 per

share for a period of five years from the date of grant.

All of these stock

options vested upon the date of grant.

Effective January 29, 2016, we granted a total of 3,000,000

stock options to Steven A.

Nickolas and Richard A.

Wright (1,500,000 stock

options each).

The stock options are exercisable at the exercise price of $0.52

per share until October 7, 2023.

All of these stock options vested effective

January 29, 2016.

We estimated compensation expense of $1,560,000 on the stock

options granted that vested during the year ended March 31, 2016, divided

equally between Steven P.

Nickolas and Richard A.

Wright in the amount of

$780,000 each.

The aggregate intrinsic value of these options was $4,290,000 at

March 31, 2016.

Employment Agreement with Steven P.

On March 30, 2016, we entered into an employment agreement

dated effective March 1, 2016 with Steven P.

Nickolas, our former president and

chief executive officer and current director, pursuant to which Mr.

agreed to perform such duties as are regularly and customarily performed by the

president and chief executive officer of a corporation, and any other duties

consistent with Mr.

Nickolass position in our company.

Pursuant to the terms of

the employment agreement, we agreed to (i) pay Mr.

Nickolas $15,000 per month or

such other amount as may be determined by our board of directors from time to

and (ii) issue to Mr.

Nickolas 1,500,000 shares of our Series C Preferred

Stock (issued effective as of March 31, 2016).

We also agreed that each of the

following events constitute a Negotiated Trigger Event as defined in the

Certificate of Designation for the Series C Preferred Stock:

(i) the occurrence

of a change of control event;

(ii) the death of Mr.

and (iii) the

termination of the employment agreement for any reason.

In addition, we agreed to (i) provide Mr.

Nickolas with vehicle

leased in our companys name, with lease payments not exceeding $700/month or

such other amount as may be determined by our board of directors;

Nickolas an allowance of $5,000 per month or such other amount as may be

determined by our board of directors, which may be used by Mr.

Nickolas as he

sees fit, including without limitation, the funding of non-qualified retirement

(iii) reimburse Mr.

Nickolas for any expenses that he incurs in

connection with his duties under his employment agreement.

On November 18, 2016, our company provided notice to Mr.

Nickolas of our board of directors finding that there is just cause for

termination of Mr.

Nickolass employment and of our companys 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 termination.

Nickolas failed to cure

such failure and breaches and, on April 7, 2017, our company terminated the

employment of Mr.

Nickolas for cause.

In addition, our company removed Mr.

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

Cash Bonus to Steven P.

Effective March 15, 2016, we agreed to pay Mr.

Nickolas a cash

bonus in the amount of $35,000 for past services that he has provided to our

On October 6, 2017,

Nickolas resigned as a director of our company.

Reflects the grant date fair value computed in accordance

with FASB ASC Topic 718.

Reflects the issuance of 1,500,000 shares of

Series D Preferred Stock which 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

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

Reflects the grant date fair value computed in accordance

with FASB ASC Topic 718.

Reflects the issuance of 130,000 shares of common

stock effective April 28, 2017 (valued at $167,700) and the issuance of

1,000,000 shares of Series D Preferred Stock (valued at

Employment Agreement with Richard A.

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termination of the employment agreement for any reason.

In addition, we may (i) grant awards under our 2013 equity

incentive plan to Mr.

In addition, we may (i) grant awards under our 2018 stock

option plan to Mr.

Wright from time to time and (ii) pay to Mr.

annual discretionary performance bonus in an amount to be determined by our

board of directors in its sole discretion.

Wright an annual

discretionary performance bonus in an amount to be determined by our board of

directors in its sole discretion.

Wright will also be eligible to

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he acted honestly and in good

faith with a view to the best interests of our company, any of its

subsidiaries or any of their respective affiliates;

and in the case of a

criminal or administrative action or proceeding that is enforced by a monetary

penalty, he had reasonable grounds for believing that his conduct was

faith with a view to the best interests of our company, any of its subsidiaries

or any of their respective affiliates;

and in the case of a criminal or

administrative action or proceeding that is enforced by a monetary penalty, he

had reasonable grounds for believing that his conduct was lawful.

Wright agreed to indemnify and save harmless our company

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policy on a basis no less favorable than made available to other executives of

On April 28, 2017, Richard A.

Wright resigned as the secretary

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

of our company.

Cash Bonus to Richard A.

Effective March 15, 2016, we agreed to pay Mr.

Wright a cash

bonus in the amount of $35,000 for past services that he has provided to our

On August 28, 2016, our board of directors appointed Mr.

as chief operating officer of our company.

On April 7, 2017, our board of

directors appointed Mr.

Wright as president of our company.

On April 28, 2017,

Wright resigned as the secretary and treasurer of our company and our board

of directors appointed Mr.

Wright as the chief executive officer of our company.

We pay David A.

Guarino $14,000 per month for his services and

a $500 monthly car allowance.

Effective April 28, 2017, we issued 130,000 shares

of common stock to Mr.

Guarino, who was appointed as the chief financial

officer, secretary, treasurer and a director of our company on the same date.

These shares are restricted from transfer for a period of two years.

Employment Agreement with Steven P.

On March 30, 2016, we entered into an employment agreement

dated effective March 1, 2016 with Steven P.

Nickolas, our former president and

chief executive officer and a former director of our company, pursuant to which

Nickolas agreed to perform such duties as are regularly and customarily

performed by the president and chief executive officer of a corporation, and any

other duties consistent with Mr.

Nickolass position in our company.

the terms of the employment agreement, we agreed to (i) pay Mr.

Nickolas $15,000

per month or such other amount as may be determined by our board of directors

from time to time;

and (ii) issue to Mr.

Nickolas 1,500,000 shares of our Series

C Preferred Stock (issued effective as of March 31, 2016).

We also agreed that

each of the following events constitute a Negotiated Trigger Event as defined

in the Certificate of Designation for the Series C Preferred Stock:

occurrence of a change of control event;

(ii) the death of Mr.

(iii) the termination of the employment agreement for any reason.

In addition, we agreed to (i) provide Mr.

Nickolas with vehicle

leased in our companys name, with lease payments not exceeding $700/month or

such other amount as may be determined by our board of directors;

Nickolas an allowance of $5,000 per month or such other amount as may be

determined by our board of directors, which may be used by Mr.

Nickolas as he

sees fit, including without limitation, the funding of non-qualified retirement

(iii) reimburse Mr.

Nickolas for any expenses that he incurs in

connection with his duties under his employment agreement.

On November 18, 2016, our company provided notice to Mr.

Nickolas of our board of directors finding that there is just cause for

termination of Mr.

Nickolass employment and of our companys 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 termination.

Nickolas failed to cure

such failure and breaches and, on April 7, 2017, our company terminated the

employment of Mr.

Nickolas for cause.

In addition, our company removed Mr.

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

Nickolas resigned as a director of our company.

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

into a Settlement Agreement and Mutual Release of Claims 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, and McDowell 78, LLC and Wright Investments Group, LLC, a company

controlled or owned by Richard A.

The Settlement Agreement and Mutual

Release of Claims provides that Mr.

Nickolas 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.

Grant of Series C Convertible Preferred Stock

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Effective March 31, 2016, we issued a total of 3,000,000 shares

of our Series C Preferred Stock to Steven P.

Nickolas and Richard A.

(1,500,000 shares to each), our directors and executive officers, pursuant to

their employment agreements dated effective March 1, 2016.

of our Series C Preferred Stock (1,500,000 shares to each) to Steven P.

Nickolas, a former director and executive officer of our company, and Richard A.

Wright, a director and executive officer of our company, pursuant to their

employment agreements dated effective March 1, 2016.

On August 17, 2017, we issued 1,500,000 shares of our common

stock to Steven P.

Nickolas upon conversion of 1,500,000 shares of our Series C

Preferred Stock held by Mr.

The shares of our Series C Preferred Stock

became convertible into shares of our common stock without the payment of any

additional consideration by Mr.

Nickolas and at the option of Mr.

because the termination of the employment agreement between our company and Mr.

Nickolas was an event constituting a Negotiated Trigger Event as defined in

the Certificate of Designation for our Series C Preferred Stock.

Grant of Series D Convertible Preferred Stock

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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.

Effective May 3, 2017, we issued a total of 1,000,000 shares of

our Series D Preferred Stock to Richard A.

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.

Effective May 3, 2017, we issued 1,000,000 shares of our Series

D Preferred Stock to Richard A.

Wright and 1,000,000 shares of our Series D

Preferred Stock to Mr.

Retirement or Similar Benefit Plans

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36 months salary plus an amount, if any, equal to the following:

months salary multiplied by the number of calendar years, starting on the

effective date of the employment agreement, that Mr.

Wright is employed by our

company under his employment agreement.

one months salary

multiplied by the number of calendar years, starting on the effective date of

the employment agreement, that Mr.

Wright is employed by our company under his

employment agreement.

We may terminate Mr.

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and any outstanding amounts due under any awards which will

be dealt with in accordance with our 2013 equity incentive plan and the award

be dealt with in accordance with our 2013 equity incentive plan or 2018 stock

option plan and the award agreement.

In the event Mr.

Wrights employment is terminated due to a

disability, we agreed to pay to Mr.

Wright the severance referred to above.

Wrights employment is

terminated due to a disability, we agreed to pay to Mr.

Wright the severance

referred to above.

We may terminate Mr.

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Wright by our company as of the date of

termination, except for any awards under our 2013 equity incentive plan will be

dealt with in accordance with the plan and award agreement.

termination, except for any awards under our 2013 equity incentive plan or 2018

stock option plan will be dealt with in accordance with the plan and award

Outstanding Equity Awards at Fiscal Year-End

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unexercisable

October 9, 2023

February 18, 2020

October 7, 2023

October 9, 2023

February 18, 2020

October 7, 2023

Compensation of Directors

During the fiscal year ended March 31, 2017, directors who were

not our named executive officers did not receive any compensation.

Effective April 28, 2017, we granted 350,000 stock options to

Aaron Keay, a director of our company.

These stock options are exercisable at

the exercise price of $1.29 per share for a period of ten years from the date of

grant and vest as follows:

(i) 87,500 upon the date of grant;

and (ii) 87,500 on

each anniversary date of grant.

Effective April 28, 2017, we granted 100,000 stock options to

Bruce Leitch, a director of our company.

These stock options are exercisable at

the exercise price of $1.29 per share for a period of ten years from the date of

grant and vest as follows:

(i) 25,000 upon the date of grant;

and (ii) 25,000 on

each anniversary date of grant.

The particulars of compensation paid to our directors who are

not named executive officers for the fiscal year ended March 31, 2018 are set

out in the following director compensation table:

100,712 (1)(3)

28,775 (2)(3)

Effective April 28, 2017, we granted 350,000 stock

options to Aaron Keay, a director of our company.

These stock options are

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

years from the date of grant and vest as follows:

(i) 87,500 upon the date

and (ii) 87,500 on each anniversary date of grant.

Effective April 28, 2017, we granted 100,000 stock

options to Bruce Leitch, a director of our company.

These stock options

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

ten years from the date of grant and vest as follows:

(i) 25,000 upon the

date of grant;

and (ii) 25,000 on each anniversary date of

Reflects the grant date fair value computed in accordance

with FASB ASC Topic 718.

We have no formal plan for compensating our directors for their

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MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of July 13, 2017, certain

The following table sets forth, as of June 28, 2018, certain

information with respect to the beneficial ownership of our common stock by each

stockholder known by us to be the beneficial owner of more than 5% of any class

of our voting securities and by each of our directors, our executive officers

and by our executive officers and directors as a group.

of our voting securities and by each of our current directors, our named

executive officers(as defined in the Executive Compensation section above) and

by our current executive officers and directors as a group.

Name of Beneficial Owner

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Percentage of

87 St., Suite 109

Scottsdale, AZ 85260

2,276,000 (4)

Preferred Stock (3)

Preferred Stock (6)

Greenway Road, Suite

14301 North 87 St.,

Scottsdale, AZ 85260

1,500,000 (5)

Preferred Stock (4)

Preferred Stock (6)

Preferred Stock (7)

David Guarino

Preferred Stock (7)

All executive officers and

All executive officers and directors as

a group (4 persons)

Preferred Stock (3)

Preferred Stock (4)

* Less than 1%.

Except as otherwise indicated, we believe that the

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Percentage of common stock is based on 30,989,727 shares

of our common stock issued and outstanding as of July 13, 2017.

of Series A Preferred Stock is based on 20,000,000 shares of Series A

Preferred Stock issued and outstanding as of July 13, 2017.

Percentage of

Series C Preferred Stock is based on 3,000,000 shares of Series C

Preferred Stock issued and outstanding as of July 13, 2017.

of our common stock issued and outstanding as of June 28, 2018.

of Series C Preferred Stock is based on 1,500,000 shares of Series C

Preferred Stock issued and outstanding as of June 28, 2018.

Percentage of

Series D Preferred Stock is based on 3,000,000 shares of Series C

Preferred Stock issued and outstanding as of July 13, 2017.

The Series A Preferred Stock has 10 votes per share and

is not convertible into shares of our common stock.

Consists of 1,500,000 stock options exercisable within 60

days, 430,000 shares of our common stock owned by WiN Investments, LLC and

346,000 shares of our common stock owned by Lifewater Industries, LLC.

Nickolas exercises voting and dispositive power with respect to

the shares of our common stock that are beneficially owned by WiN

Investments, LLC and Lifewater Industries, LLC.

Except for the number of

stock options, these numbers are approximate numbers based on information

currently available to our company.

Consists of 1,500,000 stock options exercisable within 60

Series D Preferred Stock is based on 3,800,000 shares of Series D

Preferred Stock issued and outstanding as of June 28, 2018.

Each share of the Series C Preferred Stock will be

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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.

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.

Each share of the Series D Preferred Stock will be

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Consists of 50,000 stock options exercisable within 60

This number is an estimated number based on information

currently available to our company.

Changes in Control

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Solutions LLC, an entity that is controlled and majority owned by Steven P.

Nickolas, a director and stockholder and a former officer of our company, and

Wright, an officer, director and stockholder of our company, and

during the years ended March 31, 2017 and March 31, 2016, we paid $104,619 and

$312,500, respectively, to Water Engineering Solutions LLC for custom engineered

equipment used in the production of our alkaline water.

On August 1, 2013 we entered into a 3-year sub-lease agreement

requiring a monthly payment of $2,085 for office space in Scottsdale, Arizona,

with a basic monthly lease increase of 8% and 7% on each anniversary date.

sub-lessor was an entity owned by Steven P.

This sub-lease agreement

was terminated at the end of the 3-year term.

Nickolas, a stockholder who beneficially owns, directly or indirectly, more than

5% of a class of our voting securities and a former officer and director of our

company, and Richard A.

Wright, an officer, director and stockholder of our

company, and during the year ended March 31, 2017, we paid $104,619 to Water

Engineering Solutions LLC for custom engineered equipment used in the production

of our alkaline water.

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

Simultaneous with the full execution of the Settlement

Agreement, we agreed to pay Mr.

Nickolas $110,000 in one lump sum

From the date of the Settlement Agreement, we agreed to

waive the application of our Insider Trading Policy as to Mr.

thereby removing any black-out periods for all future sales of our common

Within three business date of the full execution of the

Settlement Agreement, we agreed to instruct our transfer agent to issue

Nickolas 700,000 shares of our common stock (issued);

Within 10 business days of the full execution of the

Settlement Agreement, we agreed to issue Mr.

Nickolas 300,000 shares of

our Series D Preferred Stock (issued);

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;

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 attorneys 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 fees and costs;

Nickolas surrendered all right, interest or claim to

the shares of our common stock owned by WIN Investments, LLC and Lifewater

Industries, LLC for no additional consideration;

Nickolas 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;

We agreed to assume financial responsibility for the

federal tax obligations in the total amount of $45,738.68 owed by Mr.

Nickolas and certain outstanding invoice in the amount of

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

Nickolas before 2016 will automatically expire 90 days from October 6,

2017, the date Mr.

Nickolas ceased being a director of our company

We agreed that Mr.

Nickolas will have access to a

reasonable amount of Alkaline88 water, not to exceed 30 cases at the time

of pickup at our facility, for his personal consumption only at no cost

Nickolas is a direct stockholder of our company and Mr.

will be limited to an average of 20 cases per month for his personal

The parties also agreed to mutual release of

On November 8, 2017, we entered into an Exchange Agreement and

Mutual Release of Claims (the Exchange Agreement ) with Richard A.

Wright, our president, chief executive officer and director.

The Exchange Agreement provides, among other things, the

Within five business date of the full execution of the

Exchange Agreement, we agreed to instruct our transfer agent to issue Mr.

Wright 700,000 shares of our common stock (issued on November 9,

Within 10 business days of the full execution of the

Exchange Agreement, we agreed to issue 300,000 shares of our Series D

Preferred Stock (issued on November 9, 2017);

In exchange of 700,000 shares of our common stock and

300,000 shares of our Series D Preferred Stock described above, Mr.

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

cancelled for no further consideration;

The parties also agreed to mutual release of

On November 8, 2017, Richard A.

Wright and Sharon Wright, Mr.

Wrights spouse, executed a Stock Option Forfeiture & General Release (the

Stock Option Forfeiture Agreement ).

The Stock Option Forfeiture Agreement provides, among other

things, the following:

In exchange for, among other things, receipt of 200,000

shares of our Series D Preferred Stock (issued on November 9, 2017), Mr.

Wright agreed that Mr.

Wrights stock options to purchase 1,500,000 shares

of our common stock at an exercise price of $0.52 per share were

forfeited, terminated and otherwise cancelled as of November 8, 2017;

Wright also agreed to release of claims against our

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

controlled by Richard A.

Wright, our president, chief executive officer and

director, advanced $200,000 to our company.

On October 17, 2017, Wright

Investment Group LLC advanced $400,000 to our company.

On November 22, 2017,

Wright Investment Group LLC advanced $400,000 to our company.

The $1,000,000 in

advancements were repaid to Wright Investment Group, LLC on March 2, 2018.

On February 14, 2018, David A.

Guarino, our chief financial

officer, secretary, treasurer and director, entered into a guarantee agreement

with CNH Specialty Finance in order for CNH Specialty Finance to agree to

provide our company a $400,000 temporary order advance under the credit facility

Under the guarantee agreement, Mr.

Guarino personally, absolutely,

and unconditionally, jointly and severally, guaranteed the prompt, complete and

full payment of our obligations to repay the temporary order advance only, under

the credit agreement, with CNH Speciality Finance.

Compensation for Executive Officers and Directors

Effective April 28, 2017, we issued 130,000 shares of common

stock to David Guarino, who was appointed as the chief financial officer,

secretary, treasurer and a director of our company on the same date.

shares are restricted from transfer for a period of two years.

effective May 3, 2017, we issued 1,000,000 shares of our Series D Preferred

For additional information regarding compensation for our

executive officers and directors, see Executive Compensation.

For information regarding compensation for our executive

officers and directors, see Executive Compensation.

Director Independence

We currently act with five directors consisting of Richard A.

Wright, David Guarino, Aaron Keay, Bruce Leitch and Steven P.

common stock is quoted on the OTCQB operated by the OTC Markets Group, which

does not impose any director independence requirements.

Under NASDAQ rule

5605(a)(2), a director is not independent if he or she is also an executive

We currently act with four directors consisting of Richard A.

Wright, David A.

Guarino, Aaron Keay and Bruce Leitch.

Our common stock is

quoted on the OTCQB operated by the OTC Markets Group, which does not impose any

director independence requirements.

Our common stock is also listed on the TSX

Venture Exchange which imposes director independent requirements.

rule 5605(a)(2), a director is not independent if he or she is also an executive

officer or employee of the corporation or was, at any time during the past three

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PRINCIPAL ACCOUNTING FEES AND SERVICES

We have been notified that Seale & Beers, CPAs was acquired

by AMC Auditing, LLC.

We were notified that Seale & Beers, CPAs was acquired by

AMC Auditing, LLC.

As a result, effective as of November 18, 2016, Seale&

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engaged AMC Auditing, LLC as our independent registered public accounting firm.

The change of our independent registered public accounting firm from Seale&

Beers, CPAs to AMC Auditing, LLC was approved by our board of directors.

The following table sets forth the fees billed to our company

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Pre-Approval Policies and Procedures

Our entire board of directors, which acts as our audit

committee, pre-approves all services provided by our independent registered

public accounting firm.

All of the above services and fees were reviewed and

approved by our board of directors before the respective services were rendered.

Our audit committee reviews and pre-approves all audit and

audit-related services and the fees and other compensation related thereto, and

any non-audit services, provided by our independent registered public accounting

All of the above services and fees were reviewed and approved by our board

of directors (prior to the establishment of our audit committee) and our audit

committee (subsequent to the establishment of our audit committee) before the

respective services were rendered.

Our board of directors has considered the nature and amount of

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Plan of Acquisition, Reorganization, Arrangement,

Liquidation or Succession

Share Exchange Agreement dated May 31, 2013 with Alkaline

and its shareholders (incorporated by reference from our

Current Report on Form 8-K, filed on June 5, 2013)

Exhibit Number

Articles of Incorporation and Bylaws

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Quarterly Report on Form 10-Q, filed on August 13, 2013)

Certificate of Amendment (incorporated by reference from

our Current Report on Form 8-K, filed on October 11, 2013)

Certificate of Amendment to Articles of Incorporation

(incorporated by reference from our Current Report on Form 8-K, filed on

October 11, 2013)

Certificate of Designation (incorporated by reference

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from our Current Report on Form 8-K, filed on May 4, 2017)

Certificate of Amendment to Certificate of Designation

(incorporated by reference from our Current Report on Form 8-K, filed on

November 6, 2017)

Certificate of Withdrawal of Certificate of Designation

(incorporated by reference from our Quarterly Report on Form 10-Q, filed

on November 20, 2017)

Amended and Restated Bylaws (incorporated by reference

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our Current Report on Form 8-K, filed on June 5, 2013)

Stock Option Agreement dated October 9, 2013 with Steven

Nickolas (incorporated by reference from our Quarterly Report on Form

10-Q, filed on November 13, 2013)

Stock Option Agreement dated October 9, 2013 with Richard

Wright (incorporated by reference from our Quarterly Report on Form

10-Q, filed on November 13, 2013)

Contract Packer Agreement dated October 7, 2013 with

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filed on May 6, 2014)

Exhibit Number

Form of Common Stock Purchase Warrant (incorporated by

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(incorporated by reference from our Current Report on Form 8-K, filed on

Stock Option Agreement dated May 12, 2014 with Steven P.

Nickolas (incorporated by reference from our Current Report on Form 8-K,

filed on May 14, 2014)

Stock Option Agreement dated May 12, 2014 with Richard A.

Wright (incorporated by reference from our Current Report on Form 8-K,

filed on May 14, 2014)

Stock Option Agreement dated May 21, 2014 with Steven P.

Nickolas (incorporated by reference from our Current Report on Form 8-K,

filed on May 23, 2014)

Stock Option Agreement dated May 21, 2014 with Richard A.

Wright (incorporated by reference from our Current Report on Form 8-K,

filed on May 23, 2014)

Amendment #1 dated February 12, 2014 to Equipment Lease

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Report on Form 8-K, filed on November 4, 2014)

2013 Equity Incentive Plan (incorporated by reference

from our Current Report on Form 8-K, filed on November 4, 2014)

Form of Amending Agreement to Stock Option Agreement

1 unchanged sentence

November 4, 2014)

Stock Option Agreement dated February 18, 2016 with

Nickolas (incorporated by reference from our Current Report on

Form 8-K, filed on April 14, 2016)

Stock Option Agreement dated February 18, 2016 with

Wright (incorporated by reference from our Current Report on

Form 8-K, filed on April 14, 2016)

Securities Purchase Agreement dated as of May 11, 2015

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Securities Purchase Agreement dated as of August 20, 2015

with Assurance Funding Solutions LLC

with Assurance Funding Solutions LLC (incorporated by reference from our

Quarterly Report on Form 10-Q, filed on November 23, 2015)

Secured Term Note dated August 20, 2015 issued to

Assurance Funding Solutions LLC

Assurance Funding Solutions LLC (incorporated by reference from our

Quarterly Report on Form 10-Q, filed on November 23, 2015)

General Security Agreement dated as of August 20, 2015

with Assurance Funding Solutions LLC

Form of Warrant Exchange Agreement (incorporated by

reference from our Current Report on Form 8- K, filed on December 1,

with Assurance Funding Solutions LLC (incorporated by reference from our

Quarterly Report on Form 10-Q, filed on November 23, 2015)

Loan Agreement dated November 30, 2015 with Neil Rogers

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from our Current Report on Form 8-K, filed on January 25, 2016)

Exhibit Number

Loan Agreement dated January 25, 2016 with Turnstone

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filed on January 25, 2016)

Stock Option Agreement dated January 29, 2016 with Steven

Nickolas (incorporated by reference from our Current Report on Form

8-K, filed on February 4, 2016)

Stock Option Agreement dated January 29, 2016 with

Wright (incorporated by reference from our Current Report on

Form 8-K, filed on February 4, 2016)

Form of Subscription Agreement (incorporated by reference

from our Registration Statement on Form S- 1/A, filed on February 8, 2016)

Form of Warrant Certificate (incorporated by reference

from our Registration Statement on Form S- 1/A, filed on February 8, 2016)

Employment Agreement dated effective March 1, 2016 with

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June 16, 2016)

Form of Warrant Exchange Agreement (incorporated by

reference from our Current Report on Form 8- K, filed on June 16, 2016)

Loan Facility Agreement dated September 20, 2016 with

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from our Current Report on Form 8-K, filed on May 4, 2017)

Settlement Agreement and Mutual Release of Claims dated

October 31, 2017 with Steven P.

Nickolas, Nickolas Family Trust, Water

Engineering Solutions, LLC, Enhanced Beverages, LLC, McDowell 78, LLC and

Wright Investments Group, LLC (incorporated by reference from our Current

Report on Form 8-K filed on November 6, 2017)

Exchange Agreement and Mutual Release of Claims dated

November 8, 2017 with Ricky Wright (incorporated by reference from our

Current Report on Form 8-K, filed on November 14, 2017)

Stock Option Forfeiture & General Release dated

November 8, 2017 by Ricky Wright and Sharon Wright (incorporated by

reference from our Current Report on Form 8-K, filed on November 14, 2017)

Form of Warrant Amendment Agreement (incorporated by

reference from our Current Report on Form 8-K, filed on February 22, 2018)

Form of Common Stock Purchase Warrant (incorporated by

reference from our Current Report on Form 8-K, filed on March 5, 2018)

2018 Stock Option Plan (incorporated by reference from

our Current Report on Form 8-K, filed on April 25, 2018)

Form of Subscription Agreement (incorporated by reference

from our Current Report on Form 8-K filed on May 31, 2018)

Letter re Change in Certifying Accountant

Letter from Seale & Beers, CPAs dated November 18,

2016 (incorporated by reference from our Current Report on Form 8-K, filed

on November 18, 2016)

Exhibit Number

Subsidiaries of The Alkaline Water Company Inc.

Alkaline Water Corp., Arizona corporation

Alkaline 88, LLC, Arizona limited liability company

Consents of Experts and Counsel

Consent of Seale and Beers, CPAs

Consent of AMC Auditing

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XBRL Taxonomy Extension Label Linkbase

XBRL Taxonomy Extension Presentation

XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith

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(Principal Executive Officer)

July 14, 2017

June 29, 2018

Pursuant to the requirements of the Securities Exchange Act of

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(Principal Executive Officer)

July 14, 2017

June 29, 2018

Chief Financial Officer, Treasurer and Director

(Principal Financial Officer and Principal Accounting

July 14, 2017

June 29, 2018

/s/ Aaron Keay

July 14, 2017

June 29, 2018

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 9A. Controls and Procedures