10-Q: Quest Water Global Reports Q2 Loss, Secures DRC Water Deal

Quest Water Global, Inc. reported a net loss of $198,189 for Q2 2025, continued to operate without revenue, and announced a significant public-private partnership in the Democratic Republic of Congo.

Summary

• Reported a net loss of $198,189 for the three months ended June 30, 2025, compared to a net loss of $140,415 for the same period in 2024.
• Incurred a net loss of $339,494 for the six months ended June 30, 2025, an improvement from $472,725 in the prior year, primarily due to lower stock-based compensation expenses.
• Generated no revenue for both the three and six months ended June 30, 2025 and 2024.
• Ended the period with $66 in cash, a working capital deficiency of $2,811,380, and an accumulated deficit of $12,932,490.
• Entered into a public-private partnership agreement with the National Office for Rural Hydraulics (ONHR) in the Democratic Republic of Congo (DRC) to install 300 AQUAtap community water centers over 5 years.
• Committed to contributing $30,000,000 to the DRC partnership over an anticipated 10-year term, with a 60% share of gross revenue.
• Disclosure controls and procedures were deemed not effective due to deficiencies in internal control over financial reporting.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, including a going concern warning, no revenue, and increasing cash burn. While a significant partnership in the DRC was announced, the $30 million funding requirement and uncertainty of capital raise overshadow this potential positive. The ineffective disclosure controls further add to the negative sentiment.

Positives

• Net loss for the six months ended June 30, 2025, decreased to $339,494 from $472,725 in the prior year, mainly due to lower stock-based compensation.
• Secured a significant public-private partnership in the Democratic Republic of Congo (DRC) to install 300 AQUAtap community water centers, representing a potential future revenue stream.
• Cash balance increased to $66 as of June 30, 2025, from $4 at December 31, 2024.
• The 'Due to related company' balance (AQUAtap) was reduced to nil from $20,564.

Negatives

• No revenue generated for the three and six months ended June 30, 2025 and 2024, with continued uncertainty about future revenue generation.
• Net loss for the three months ended June 30, 2025, increased to $198,189 from $140,415 in the prior year.
• Working capital deficiency worsened to $2,811,380 as of June 30, 2025, from $2,405,327 at December 31, 2024.
• Accumulated deficit increased to $12,932,490 as of June 30, 2025.
• Significant dependence on related party advances, with $2,738,847 owed to principal shareholders as of June 30, 2025.
• Cash used in operating activities increased significantly to $437,832 for the six months ended June 30, 2025, from $282,844 in the prior year.
• Insufficient cash resources ($66) to meet operating expenses for the next month based on the current burn rate.

Risks

• Substantial doubt regarding the ability to continue as a going concern due to a working capital deficiency of $2,744,654, an accumulated deficit of $12,932,490, and dependence on continued financial support from shareholders and equity financing.
• Uncertainty in generating any revenues in the next 12 months, with anticipation of substantial losses for the foreseeable future.
• Dependence on obtaining necessary equity financing and debt financing to fund operations and the $30,000,000 commitment for the DRC partnership, with no assurance of successful capital raising.
• Disclosure controls and procedures were not effective due to deficiencies in internal control over financial reporting.
• Reliance on related party advances for funding, which are non-interest bearing, unsecured, and due on demand, posing a liquidity risk if not sustained.
• The company's operations have been limited primarily to capital formation, organization, and business plan development, indicating a lack of established revenue-generating activities.

Future Outlook

The company anticipates incurring substantial losses for the foreseeable future and its ability to generate any revenues in the next 12 months remains uncertain. It plans to continue addressing water quality and supply issues in the Democratic Republic of Congo through the installation of AQUAtapTM systems and WEPSTM technology, requiring a minimum of $990,000 over the next 12 months. Funding for these plans and the $30,000,000 commitment for the DRC partnership is expected to come from advances from related parties, debt financing, and equity financing through private placements, though there is no assurance of successful capital raising.

Management Comments

• "We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain."
• "Our plan of operations over the next 12 months is to continue to address water quality and supply issues in the DRC through the installation of our AQUAtapTM Community Water Purification & Distribution systems as well as the employment of our WEPSTM technology, and we anticipate that we will require a minimum of $990,000 to pursue those plans."
• "We intend to meet the balance of our cash requirements for the next 12 months through advances from related parties as well as a combination of debt financing and equity financing through private placements as circumstances allow."
• "There is no assurance that we will be successful in completing any private placement or other financings."
• "Our continuation as a going concern is dependent upon the continued financial support from our creditors, our ability to obtain necessary equity financing to continue operations, and ultimately on the attainment of profitable operations."

Industry Context

The company operates in the critical and growing global market for clean water solutions, particularly in water-scarce regions and emerging markets like the Democratic Republic of Congo and South Africa. Its focus on decentralized, solar-powered purification systems (AQUAtapTM) and atmospheric water extraction (WEPSTM) aligns with increasing demand for sustainable and off-grid water infrastructure. The public-private partnership model in the DRC reflects a common strategy for addressing large-scale infrastructure needs in developing countries, leveraging private sector technology and capital with government support.

Corporate Governance

Related Party Transactions

• As of June 30, 2025, $1,421,071 was owed to the President of the company, which is non-interest bearing, unsecured, and due on demand.
• As of June 30, 2025, $1,317,776 was owed to the Vice President of the company, which is non-interest bearing, unsecured, and due on demand.
• For the six months ended June 30, 2025, $247,500 in management fees were incurred to the President and Vice President.
• The company advanced $66,726 to AQUAtap Oasis Partnership S.A.R.L. (a related company) as of June 30, 2025.

Stakeholder Impact

• Shareholders face significant dilution risk from potential equity financing, high risk of investment loss due to going concern doubts, and uncertainty regarding future profitability and revenue generation.
• Creditors (including related parties) are exposed to high credit risk given the company's working capital deficiency, accumulated deficit, and dependence on further financing. Related parties are significant creditors.
• Employees/Management's continued employment and compensation are dependent on successful capital raises and the company's ability to continue as a going concern.
• Customers/Partners (e.g., ONHR in DRC) will see the success of the DRC partnership and the delivery of water solutions contingent on the company's ability to secure the required $30,000,000 funding.

Next Steps

• Continue to address water quality and supply issues in the Democratic Republic of Congo (DRC) through the installation of AQUAtapTM Community Water Purification & Distribution systems and WEPSTM technology.
• Secure a minimum of $990,000 in financing over the next 12 months through advances from related parties, debt financing, and equity financing via private placements.
• Contact broker/dealers in Canada and elsewhere regarding possible financing arrangements.
• Manufacture and install 300 AQUAtap community water centers over the next 5 years in the DRC as part of the public-private partnership with ONHR, requiring a $30,000,000 contribution over 10 years.

Key Dates

Recommendation

The company presents a high-risk investment profile with a clear 'going concern' warning, indicating significant doubt about its ability to continue operations. It has no revenue, a worsening working capital deficiency, and a substantial accumulated deficit. While a large public-private partnership in the DRC is a positive development, the company's commitment of $30 million over 10 years and the immediate need for $990,000 for operations, coupled with no assurance of successful financing, make its financial future highly precarious. The ineffective disclosure controls further erode investor confidence. Given these severe financial and operational challenges, a strong sell recommendation is warranted.

Keywords

Water Technology, Water Purification, AQUAtap, WEPS, Democratic Republic of Congo, DRC, South Africa, Clean Water, Water Scarcity, SEC Filing, 10-Q, Environmental Solutions, Public-Private Partnership, Emerging Markets