Business Overview
We are an innovative water technology company that provides sustainable and environmentally sound solutions to water-scarce regions. We use proven technologies to create economically viable products that address the critical shortage of clean drinking water in developing countries.
Our goal is to address the vital issue of water quality and water supply by providing an alternative, sustainable source of pure water at the smallest possible environmental cost to global areas in need, while becoming a leading company in providing turn-key solutions using alternative energy for the purification, desalination and distribution of clean drinking water.
To date, we have focused our activities on the fifteen countries of the Southern African Development Community (“SADC”), with specific attention to Angola.
Our Corporate History and Background
We were incorporated under the laws of Delaware on February 25, 2010. From our inception until the closing of the Share Exchange, we sought to provide dental and other medical professionals with turn-key marketing solutions to generate referrals from existing clients and new business from the general public through our wholly owned subsidiary RPM Dental Systems, LLC (“RPM Kentucky”). RPM Kentucky was formed on September 15, 2009, under the laws of the Commonwealth of Kentucky, and we acquired RPM Kentucky on March 23, 2010.
Prior to the Share Exchange, we had minimal revenue and our operations were limited to capital formation, organization and development of our business plan. As a result of the Share Exchange, we ceased our prior operations and, through Quest, we now operate as an innovative water technology company that provides sustainable and environmentally sound solutions to water-scarce regions.
Quest was incorporated under the laws of Nevada on October 20, 2008 and commenced operations on February 20, 2009. Its operations to date have consisted of business formation, strategic development, marketing, technologies development, negotiations with technologies companies and capital raising activities. Quest has not generated any revenues since its inception.
Acquisition of Quest
On January 6, 2012, we completed the Share Exchange whereby we acquired all of the issued and outstanding capital stock of Quest in exchange for 2,568,493 shares of our common stock (on a pre-forward split basis), or approximately 62.74% of our issued and outstanding common stock as of the consummation of the Share Exchange. Subsequent to the Share Exchange, we completed a 20 for 1 forward split of our common stock (the “Forward Split”) that became effective on March 1, 2012. Pursuant to the Forward Split, the 2,568,493 shares described above increased to 51,369,860 shares.
As a result of the Share Exchange, Quest became our
wholly owned subsidiary and John Balanko and Peter Miele became our principal stockholders. The Share Exchange was treated as a recapitalization effected through a share exchange, with Quest as the accounting acquirer and the Company as the accounting acquiree.
In connection with and effective upon the closing of the Share Exchange, Josh Morita,
our former President, Chief Executive Officer, director and principal stockholder,
and Dr. Laura Sloan, our former director, resigned as members of our Board of Directors and Mr. Morita resigned as our sole officer. Also effective upon the closing of the Share Exchange, John Balanko and Peter Miele were appointed to fill the vacancies on our Board of Directors created by the resignations of Mr. Morita and Ms. Sloan. In addition, our Board of Directors appointed Mr. Balanko as our President and Chief Executive Officer and Mr. Miele as our Vice President and Secretary, all effective upon the closing of the Share Exchange. On April 13, 2012, we also appointed Mr. Miele as our Chief Financial Officer.
As a result of our acquisition of Quest, Quest became our wholly owned subsidiary and we assumed the business and operations of Quest. We then changed our name from RPM Dental, Inc. to Quest Water Global Inc. to more accurately reflect our new business operations.
Industry Overview
Water is the single most important economic input to the global economy, and more specifically, to individual enterprises. The disparity between supply and demand for clean water is an inexorable problem; yet the relentless international demand for its uninterrupted supply makes water by far the most stable of all global commodities.
Safe water and the prevention of waterborne disease are public health priorities in most developed countries, where clean water generally is available for about one-third of the world’s population. However, water-related human health problems in developing countries are daunting. Global estimates of the population in developing countries that lack access to safe drinking water range from 1.1 to 1.4 billion.
The consequences of lack of safe water are severe. The United Nations’ World Health Organization estimates that more than three billion cases of illness and five million deaths - the majority children - can be attributed annually to unsafe water. The death rate for children alone is estimated at one every eight seconds. Those numbers may rise in the early years of this century. World population surpassed seven billion in 2011. It is expected to top eight billion by 2028. Most of the increases are expected to be in developing countries, increasing pressure on already inadequate water resources.
In Angola, almost three decades of civil war devastated water systems across the country, leaving millions of people without clean, reliable municipal water supplies or basic sanitation. Presently, the quality of water is still very poor, and in fact is considered harmful to public health. Due to these increasing health risk concerns, the government of Angola launched a $650 million “Water for All”
(“Agua para Todos”)
program in 2007
that began in 2009/2010
.
The “Water for All” program is an initiative of Angolan President José Eduardo dos Santos. It is coordinated by the Ministry of Energy & Water and managed by four other ministries: the Ministry of Industry, Ministry of Health, Ministry of Agriculture & Rural Development and Ministry of Environment. The first phase of the program will continue through to 2015, with the second phase continuing through 2020. Under the program, Angola has committed to providing clean water to 80% of its rural population and 50% of urban dwellers by 2015, with targets raised to 100% and 80%, respectively, by 2020. The total current population of Angola is approximately 19 million, with 56.7% being urban and 43.3% rural.
Products and Markets
We focus on the manufacture and sale of two products: our AQUAtap
TM
community drinking water station and our WEPS
TM
(water extraction and purification system). Our AQUAtap
TM
station is an autonomous, decentralized, self-contained, solar-powered water purification and distribution system, while our WEPS
TM
is a unique, proprietary water extraction and purification system that produces clean drinking water from humidity in the atmosphere. We believe that our products can provide the world’s growing population with access to safe and clean drinking water, with a primary focus in water scarce regions.
As described above, we have focused our activities to date on the fifteen countries of the SADC, and specifically, Angola. There is a vast and increasing demand for a sustainable, cost-effective and decentralized continuous supply of clean drinking water in most areas of the SADC. We provide clean drinking water to end-users utilizing various formats of our water purification and distribution systems that include inexpensive bulk drinking water and government-subsidized community level drinking water. Applications of our systems include rural and urban community water supply, water supply for household needs, remote work site camps and water supply for disaster relief.
AQUAtap
TM
Community Drinking Water Station
We have developed a proprietary community drinking water station consisting of a self-contained water purification system using either a reverse osmosis membrane or ultrafiltration membrane, powered by photovoltaic solar panels and hosted in modified shipping containers. Each AQUAtap
TM
unit is energy self-sufficient with minimal operational and maintenance costs. We believe that this product represents the first truly environmentally sound solution to drinking water shortages as it is autonomous, decentralized and sustainable, and because each unit is capable of converting brackish, sea or contaminated fresh water into 20,000 litres of high quality drinking water each day, suitable for 1,000 people. Reverse osmosis and ultrafiltration purification remove all suspended solids, turbidity, viruses, bacteria and most organic compounds. The AQUAtap
TM
system uses no chemicals in the pre- or post-purification process, keeping maintenance time and costs to a minimum. The source water is pumped from a contaminated or saline source into an auto backflushing sand filter, through three sets of auto backflushing pre-filters, then through either a reverse osmosis membrane (in the event the source water contains salinity levels >15,000 parts per million) or an ultrafiltration membrane. The purified water is then pumped through an ultraviolet sterilization unit prior to being pumped into a holding tank, then through a second ultraviolet sterilization unit prior to being dispensed by the end user. The pumps and compressors are powered by a series of batteries that are charged through an array of photovoltaic panels.
Our target market for this product includes non-governmental organizations, governmental agencies, land developers, local communities and local water suppliers in developed and developing countries. We utilized ultrafiltration membranes to fabricate and assemble our first two AQUAtap
TM
community drinking water stations in the second quarter of 2011. In February 2012, we officially launched them in Angola.
WEPS
TM
(Water Extraction and Purification System)
In addition to the solar-powered water purification system, we have also developed a technology known as WEPS
TM
that produces potable water from humidity in the atmosphere. WEPS
TM
technology works by converting humidity into water, otherwise known as atmospheric water extraction. The unit draws in ambient air from the surrounding atmosphere, which passes through an air filtration system to remove any airborne contaminants. The filtered air then passes through the proprietary water extraction system, which efficiently removes moisture (condensate). The condensate is then sent through a multi-step water filtration and purification process. The result is contaminant- and bacteria-free, pure drinking water. The design of the WEPS
TM
incorporates elements of proven technology combined with our proprietary process, specifically designed to meet the climatic conditions and local regulatory framework of the installation site. The concept behind WEPS
TM
is to obtain an alternative, sustainable, pure source of water without exploiting current, limited groundwater resources. Utilizing our proprietary technology, vapor is captured from the troposphere before it condenses, falls to earth in the form of rain or snow and becomes contaminated as it comes in to contact with industrial waste and chemicals, agricultural pollutants and human contaminants.
Our target market for this product includes commercial bottled water operations, agricultural irrigation, industrial capture and reuse and bulk residential supply. The WEPS
TM
systems are modular and scalable in design, allowing for water production from a few thousand to millions of litres per day.
Development of Business and Growth Strategy
Our goal is to address the vital issue of water quality and water supply by providing an alternative, sustainable source of pure water at the smallest possible environmental cost to global areas in need, while becoming a leading company in providing turn-key solutions using alternative energy for the purification, desalination and distribution of clean drinking water. Primarily, we are focusing on installing our AQUAtap
TM
community drinking water stations in Angola.
Our management has worked diligently since 2008 establishing business relationships with key government officials and ministries in Angola, including the Ministries of Industry, Health, Agriculture & Rural Development and Energy & Water. In late 2009, while our management was in Angola, the Secretary of State for Industry requested us to design and construct an autonomous water purification and distribution system under the “Water for All” program that would be appropriate for use in rural communities throughout Angola, keeping in mind that there is little to no grid power and virtually no infrastructure in the majority of these locations. After numerous months and much deliberation on which technologies to utilize within the end product, we completed the design of our current AQUAtap
TM
community drinking water station. With engineering, technical and manufacturing assistance from our technology partner, Trunz Water Systems AG, the first two units were fabricated and assembled in Switzerland in the second quarter of 2011.
In mid-December 2011, we shipped our first two AQUAtap
TM
stations to
Angola. These units arrived in mid-January 2012 and we installed the first station on behalf of the Angolan Ministry of Industry, which is responsible for the technical assessment and evaluation of all new water technologies intended for use under the ‘Water for All’ program, in the rural community of Bom Jesus in early February 2012. Bom Jesus, with a population of 500, is located approximately 50 kilometres east of the capital city of Luanda. The Bom Jesus AQUAtap
TM
station became operational in on March 1, 2012 and was officially inaugurated by the Secretary of State for Industry on March 16, 2012, with residents of the village initially drawing approximately 10,000 litres of pure water a day.
The analysis of the product water from the Bom Jesus AQUAtap™ station and a comparative analysis of the product water and source water from the Kwanza River were performed by EPAL, a government agency and laboratory, and AngoLab, our private water analysis laboratory in Angola. The results of the product water analysis exceeded World Health Organization (WHO) standards for drinking water, while the results of the analysis of the source water proved it was not fit for human consumption.
Our second
AQUAtap™
station is currently awaiting an installation location and is being held in storage in the Viana Industrial Park owned by the Ministry of Industry. In the meantime, we are in the process of negotiating a formal agreement with the Ministry of Industry and Ministry of Energy & Water regarding becoming an official registered supplier for the “Water for All” program and for the construction of a facility to assemble the
AQUAtap™ stations in Angola.
In June 2012, our management met with the African Development (“AfDB”) to discuss financing the proposed
AQUAtap™
assembly plant(s) to be built in Angola and the level of funding required to carry out such an undertaking. These discussions established that we would require between $5.5-6 million per facility, including construction, inventory and working capital. As a result of the meetings, we received a non-binding letter of intent from the AfDB regarding the funding of the proposed project and the Angolan government indicated that once an agreement had been consummated, they would in turn submit a request for funding to the AfDB on our behalf.
Currently, only 50% of the population of Angola has access to an improved drinking water source. We believe that we will play an important role in alleviating this problem by providing access to clean drinking water through the use of our
AQUAtap™
community drinking water stations. However, no assurance can be given that any of the negotiations in which we are currently involved we will be successful, or that we will be able to complete any sales contracts for units of our
AQUAtap™ station
.
In keeping with our long-term growth strategy, our secondary business objective is to address the vital issue of water quality and bottled water supply in Angola through our majority-owned subsidiary, Agua Cuilo Lda. Agua Cuilo Lda. plans to construct and operate a water production and bottling plant in Angola. The plant will employ our proprietary WEPS
TM
technology for the production of water. The bottling operation will compete economically and environmentally with conventional bottled water production.
WEPS
TM
provides an alternate, pure source of water without exploiting current freshwater resources. In addition to creating a sustainable and reliable water source, other factors that differentiate the WEPS
TM
process from conventional water supply methods include low power consumption, no harmful by-products and the fact that absolutely no chemicals are utilized in the process. Reducing environmental impacts and costs are goals of our water production and bottling plant. In addition, Agua Cuilo Lda. will manufacture 100% of its biodegradable PET (polyethylene terephthalate) packaging in its plant, saving the energy required to transport thousands of truckloads of empty bottles to its facilities. Agua Cuilo Lda., as a new provider of pure bottled water based within the country, will have an immediate and major cost-competitive and environmental advantage. However, no assurance can be given that Agua Cuilo Lda., will be successful in consummating sales for its bottled water products.
Suppliers
Many of the components we use in our products are readily available from multiple world-wide manufacturers. We currently use specific suppliers for certain proprietary components and technologies, including Trunz Water Systems AG, Trojan Technologies and UV Pure.
Competition
We have identified the need to supply clean drinking water to rural and urban communities in developing countries by providing economically viable, turnkey solutions. We believe this is a good opportunity for us to take advantage of a very specific, targeted market by providing solar-powered, fully-autonomous water purification and distribution systems to populated areas where clean water is scarce.
This is a far different market than that addressed by a large segment of the industry which has concentrated on the multi-billion dollar municipal water treatment sector, or the equally large residential sector. The municipal solution requires significant investment for infrastructure development, for example, building plants and laying miles of distribution pipes. Products for residential markets do not offer the performance or features to meet the needs of the first response market or the needs of the underdeveloped nations of the world.
We have identified a few companies that manufacture equivalently sized water purification systems, but may or may not have similarities to our
AQUAtap™
community drinking water station. Our competitors include Cardinal Resources, Inc., SwissINSO Holding, Inc., WorldWater & Solar Technologies, Inc., PureSafe Water Systems, Inc., Global Water Group, Inc., Nirosoft Industries Ltd. and Rodi Systems Corporation. We believe that we have the following competitive advantages as compared to our competitors:
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The
AQUAtap™
system not only purifies and stores the produced water, but also contains a distribution point for the end user.
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The
AQUAtap™
system is configurable to the source water, thereby providing the option of either a reverse osmosis membrane (in the event of saline or brackish source water) or an ultrafiltration membrane (in the event of contaminated fresh source water).
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The
AQUAtap™
system has higher qualities as compared to our competitors’ for the specific markets that we are pursuing. For example, one competitor manufactures only a mobile disaster relief system that is cost prohibitive and not suitable for use in our target markets. Their units include redundant systems for their identified target market, rendering it cost inefficient. They also operate from grid or generator power and do not offer solar power as an option, further rendering their system unsuitable. Another competitor markets a large reverse osmosis system that is possibly suitable for larger markets or when greater amounts of water are required. It is not a suitable product for our target market in that it utilizes only reverse osmosis membranes, which, if the source water is contaminated fresh water, renders it somewhat excessive and too expensive. Purifying contaminated fresh water as opposed to saline water, reverse osmosis requires a greater amount of power to operate; hence a large array of solar panels is required, making the system far too expensive to operate, when an ultrafiltration membrane and a smaller array of solar panels would suffice to produce the same quantity of water.
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The markets in which we intend to operate are highly competitive with respect to performance, quality and price. We anticipate that we will directly compete with those competitors identified above, as well as with other local, regional and water treatment service and equipment providers. In the future, we also may face further competition from new market entrants and possible alliances between existing competitors. Some of our competitors have, or may have, greater financial, marketing and other resources. As a result, competitors may be able to respond more quickly to new or emerging trends and changes in technology, benefit from greater purchasing economies, offer more aggressive pricing to customers or devote greater resources to the promotion of their products than we are capable of accomplishing. There can be no assurance that we will be able to successfully compete in the future with such competitors. The failure to successfully compete could have an adverse effect on our operating results.
Intellectual Property
We developed WEPS
TM
, a proprietary process that extracts moisture from the atmosphere to produce potable water. While the system incorporates elements of proven technology (dehumidification and refrigeration), we have designed proprietary processes that capture the water from air more efficiently and economically. A further proprietary process incorporated into the system ensures the integrity of the water after production, thereby eliminating the production of bio film, ultimately inhibiting the growth of bacteria.
In 2009, we filed an application to register the trademark for WEPS
TM
with the Canadian Intellectual Property Office and in 2013, the United States Patent and Trademark Office published our application to register the trademark for our
AQUAtap™
community drinking water station.
Agreement with Trunz Water Systems AG
On June 29, 2011, we entered into a Global Cooperation Partner Agreement with Trunz Water Systems AG (“TWS”) of Switzerland for the use of their proprietary technologies that serve as the core of our
AQUAtap™
community drinking water stations. This agreement brings a breadth of fully-developed, proven technologies to us, thereby minimizing development time, costs and risks. Our technologies include an auto backflushing pre-filtration technology and reverse osmosis membrane technology from TWS whose low energy consumption permits the entire water purification process to be powered using solar energy. Under the agreement, we will continue to develop new products with the assistance of and in cooperation with TWS, allowing us to maintain ownership of the end product. TWS will market our
AQUAtap™
community drinking water station system on a worldwide basis along with other products that are co-developed, with a royalty being paid to us for each system sold. In addition to this, we have the rights to market all the products of TWS on a worldwide basis, and as an official dealer in Canada and Angola, which will be sold under our brand. Pursuant to the agreement, TWS will also provide design engineering services, technical assistance, fabrication, manufacturing and consultancy and other services as requested by us.
Employees
We currently have two full time employees and one part time employee. From time to time, we may hire additional workers on a contract basis as the need arises.