10-Q: Rainmaker Worldwide Reports Q3 2025 Loss Amid Restatement

Rainmaker Worldwide Inc. reported an increased net loss for the nine months ended September 30, 2025, alongside a restatement of prior financials and ongoing going concern doubts, despite strategic partnerships and product portfolio expansion.

Summary

• Net loss for the nine months ended September 30, 2025, increased to $929,521, up from $757,823 in the same period of 2024.
• Revenue significantly decreased to $34,250 for the nine months ended September 30, 2025, compared to $143,725 in 2024.
• The company reported a positive gross margin of $8,669 for the nine months ended September 30, 2025, compared to $0 in the prior year.
• Cash balance at September 30, 2025, was critically low at $12, down from $116 at December 31, 2024.
• An accumulated deficit of $77,907,616 as of September 30, 2025, raises substantial doubt about the company's ability to continue as a going concern.
• The company restated previously issued financial statements to correct an error related to omitted accrued interest on a 2016 legal judgment, increasing the contingent liability to $6,446,182.
• Strategic initiatives include the formation of RAKR Mxico S.A. de C.V. (RMEX) in June 2025 and continued benefits from Miranda product distribution rights despite impairing the RWI equity investment to zero.
• Common shares outstanding increased significantly to 83,799,728 as of September 30, 2025, from 19,987,241 at December 31, 2024, due to various debt and preferred stock conversions and stock-based compensation.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by a critically low cash balance, increasing net losses, and an accumulated deficit raising substantial doubt about its ability to continue as a going concern. Revenue has significantly declined, and internal controls are ineffective. While strategic partnerships and product expansion are noted, they have not yet translated into improved financial performance or alleviated liquidity concerns.

Positives

• Achieved a positive gross margin of $8,669 for the nine months ended September 30, 2025, compared to zero in the prior year.
• Net cash used for operating activities improved to $(10,104) for the nine months ended September 30, 2025, from $(49,718) in the same period of 2024.
• Successfully formed a Mexican subsidiary, RAKR Mxico S.A. de C.V. (RMEX), in June 2025 with a local partner to pursue commercial opportunities.
• Maintains strategic distribution rights for Miranda Environmental and Water Treatment Technologies products in Mexico and the United States, despite the impairment of the RWI equity investment.
• Amortization of debt discount significantly declined to $1,915 in 2025 from $246,494 in 2024, indicating less non-cash interest expense.
• Interest expense decreased to $592,753 in 2025 from $633,973 in 2024.
• Total stockholders' equity deficit improved (less negative) to $(13,187,442) at September 30, 2025, from $(13,779,947) at December 31, 2024.

Negatives

• Net loss increased by 22.6% to $929,521 for the nine months ended September 30, 2025, from $757,823 in the prior year.
• Revenue decreased significantly by 76.1% to $34,250 for the nine months ended September 30, 2025, from $143,725 in the prior year.
• Cash balance is critically low at $12 as of September 30, 2025, down from $116 at December 31, 2024.
• Accumulated deficit grew to $77,907,616, raising substantial doubt about the company's ability to continue as a going concern.
• General and administrative expenses increased by 33.6% to $343,522 for the nine months ended September 30, 2025, primarily due to a 421.4% increase in stock-based compensation to $125,020.
• The company's investment in Rainmaker Worldwide Inc. (Ontario) (RWI) was impaired to zero due to RWI's insufficient cash flow, net liabilities, and ongoing net losses.
• The company's disclosure controls and procedures and internal control over financial reporting were deemed ineffective due to material weaknesses, including insufficient segregation of duties, lack of a formal policy for related party transactions, and material audit adjustments.
• Significant dilution occurred with common shares outstanding increasing to 83,799,728 from 19,987,241 due to various conversions and compensation issuances.
• One customer accounted for 100% of total revenue in both 2024 and 2025, posing a significant customer concentration risk.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to recurring losses and an accumulated deficit of $77,907,616.
• Inability to raise additional capital on acceptable terms or generate sufficient cash flows from operations to meet operating costs and debt service.
• Reliance on independent distributors and project developers for future sales, which may not materialize as expected.
• Long sales cycles in the water infrastructure sector, often contingent upon timely permitting for projects.
• Potential for competition from companies with significantly greater resources developing competing products.
• High customer concentration, with one customer accounting for 100% of total revenue in 2024 and 2025, making the company vulnerable to the loss of this customer.
• Ineffective disclosure controls and procedures and internal control over financial reporting due to material weaknesses, including insufficient segregation of duties, lack of a formal policy for related party transactions, and a history of material audit adjustments.
• The contingent liability of $6,446,182 from a 2016 legal judgment, which continues to accrue interest.
• The company does not directly hold intellectual property, relying on suppliers' IP, which could pose risks if those relationships change.
• Accuracy of management's estimates regarding expenses, future revenues, capital requirements, and needs for additional financing.
• Ability to manufacture and the performance of third-party manufacturers.
• Ability to identify, license, and maintain collaboration partners.
• Regulatory developments in the United States and other countries.

Future Outlook

The company aims to become a full-service water delivery partner for medium-sized communities, developments, and industrial/commercial applications, leveraging its expanded product portfolio through Miranda and affiliate partners. It is actively pursuing business opportunities across North, Central, and South America, as well as the Caribbean, positioning itself as a leader in sustainable water solutions. Management plans to procure additional funds through debt and equity financing to meet operating needs and future sales orders, with revenues being forecasted at the operational level. The company believes its technologies offer a competitive advantage in cost per liter and energy efficiency, outperforming peers.

Management Comments

• "We have now pursued and executed a strategy whereby we have a full suite of products that can deliver distributed water solutions globally."
• "Rainmaker has the capability to be a full service water delivery partner for medium sized communities, developments of all kinds, and industrial/commercial applications."
• "The water infrastructure sector has long sales cycles, often contingent upon factors such as timely permitting for projects that require water treatment."
• "We substantially out-perform peer competitors because we can deploy remotely where the water is consumed and using up to 50% less power than those same competitors."
• "The global nature of our approach means that regulatory conditions vary by jurisdiction. We believe that the ultimate test of profitability in this complex, cross-jurisdictional environment will be the quality of the water that is bottled and tested."
• "The Company recognizes and is addressing the need to raise additional capital or imminently become revenue positive in order to continue to execute its business plan in the future."

Industry Context

The company operates within the immense global water market, which was valued at $880 billion in 2023 and is projected to grow to $1.2 trillion by 2031. This growth is driven by increasing global awareness of fresh water shortages, particularly in underserved regions, and the United Nations' Sustainable Development Goals. Rainmaker's focus on decentralized, energy-efficient Atmospheric Water Generator (AWG) and purification systems aligns with the industry's need for scalable and cost-effective solutions, especially in remote areas where bottled or trucked water is expensive. The long sales cycles and permitting dependencies inherent in water infrastructure projects are a recognized industry challenge.

Comparison to Industry Standards

• The company claims its operating efficiency allows it to provide clean water at a price highly competitive relative to traditional alternatives and competitors, substantially outperforming peers by using up to 50% less power.
• Its compact and scalable AWG and purification systems enable decentralized deployment, eliminating expensive piping or truck transport, which is a key differentiator in remote locations where bottled water costs can range from US$0.30 to US$2.00 per liter.
• The company seeks to adhere to World Health Organization standards for clean water, a global benchmark for water quality.
• The filing does not provide specific comparable companies or projects with detailed results for a direct quantitative comparison.

Management Changes

Corporate Governance

Legal Proceedings

• A judgment of $4,423,910 was rendered on August 8, 2016, against several parties including a former subsidiary and a predecessor to the company. The judgment was upheld on appeal in 2018.
• The total contingent liability, including accrued interest at 5% per annum from the judgment date, is $6,446,182 as of September 30, 2025.
• The company has not been contacted by the Plaintiff since its last report.

Related Party Transactions

• Outstanding compensation and expense reimbursements due to consultants engaged by the company totaled $1,064,600 as of September 30, 2025 (up from $843,449 in 2024).
• Conversion of related party convertible promissory notes and long-term promissory notes into common shares in 2025, including $230,000 plus interest (7,271,300 shares), $622,000 plus interest (19,664,124 shares), and $78,833 plus interest (2,512,930 shares).
• The company's loan to RHBV was applied to certain payables related to RHBV on December 31, 2024, fully eliminating the loan and accrued interest.
• Issuance of 1,600,000 shares to RWI on November 6, 2023, for the Miranda acquisition, with $24,000 recorded as stock-based compensation.
• Investment of $400,000 in RWI on January 16, 2024, for the Miranda acquisition, which was later impaired to zero.
• Lack of a formal policy for related party transactions was identified as a material weakness in internal control over financial reporting.

Stakeholder Impact

• Shareholders: Significant dilution from common stock issuances (83.8M shares outstanding vs. 20M previously), increased net losses, and going concern doubts negatively impact shareholder value. The restatement of financials also affects confidence.
• Creditors: The company's critically low cash balance and going concern warning indicate increased risk for creditors. However, some related party debt has been converted to equity, reducing immediate debt burden.
• Employees/Consultants: Stock-based compensation increased significantly, potentially benefiting consultants and executives, but the overall financial instability could pose risks to job security or future compensation.
• Customers: The company's ability to fulfill orders is tied to its financial stability and ability to raise capital. Increased customer deposits ($179,505) indicate ongoing orders, but the low cash balance could impact delivery.
• Management: Faces significant challenges in addressing financial instability, improving internal controls, and securing necessary financing to continue operations.

Next Steps

• Management plans to procure additional funds through debt and equity financing.
• Management plans to implement remediation plans to address material weaknesses in disclosure controls and internal control over financial reporting, including enhanced review procedures and improved documentation related to contingent liabilities and legal accruals.
• The company will continue to monitor its operations and update segment reporting as necessary if future expansion or changes in the business model warrant additional segments.
• The company will continue to focus on business development across North, South, and Central America, as well as the Caribbean.
• The company will seek government subsidies and incentives in due course as its technology deployment expands in underserved countries and communities.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by a critically low cash balance ($12), increasing net losses, and an accumulated deficit of over $77 million, leading to a "going concern" warning. Revenue has plummeted by 76% year-over-year, and internal controls are deemed ineffective due to material weaknesses. While strategic initiatives like the Mexican subsidiary and Miranda distribution rights exist, they have not translated into meaningful financial improvement. The significant dilution of common shares and the impairment of a key equity investment further erode shareholder value. Without immediate and substantial capital infusion and a dramatic turnaround in operational performance, the company's viability is highly questionable, making it a high-risk investment with significant downside potential.

Keywords

Water purification, Atmospheric Water Generator (AWG), SEC filing, 10-Q, Financial results, Going concern, Water technology, Sustainable water solutions, Rainmaker Worldwide Inc., RAKR, Miranda Environmental, Mexico water market, Convertible notes, Related party transactions, Corporate governance, Internal controls, Reverse stock split, Mezzanine equity, Accumulated deficit, Stock-based compensation