The following discussion and analysis contain forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our results could differ materially from the results indicated by our forward-looking statements as a result of many known or unknown factors, including, but not limited to, those factors discussed in Item 1A. "Risk Factors" in our on Form 10-12GA below in Part II Item 1A. "Risk Factors" of this Form 10-Q and in the "Cautionary Note Regarding Forward-Looking Statements" set forth at the beginning of this report.
You should read the following discussion and analysis in conjunction with the
audited financial statements, and the related footnotes thereto, appearing
elsewhere in this Form 10-Q. In addition, we intend to use our media and
investor section on our website
(www.rainmakerww.com/category/investor-updates/),
Overview
On
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On
As a result of the incomplete Sphere 3D transaction, on
The Company operates out of its head office based in
The Company's current and ongoing focus is to deliver WaaS, i.e., selling water directly to the customer on a per liter basis, using the two Rainmaker technologies discussed above or other complementary technologies acquired or licensed by the Company. This focus shall be administered by forming local joint venture partnerships ("JV") where demand exists with profitable pricing scenarios. The JVs will in turn own the water delivery system and related equipment. In most if not all cases, RAKR expects to have ownership stakes in JVs. Ownership percentages will typically be determined by the relative contribution of the stakeholders.
The Company has concurrently planned various WaaS projects in Turks and Caicos
and other
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In the
The Company has generated limited revenue up until the present time, and its
operations for the past four years have been typically focused on business
development, market research, technology research and development activities.
The Company, on a consolidated basis, had total assets of
At present, the Company executes consulting agreements with experienced
executive personnel and senior advisors. Sales are heavily driven by independent
distributors and project developers. The Company had no revenue for the quarter
ended
Impact of COVID-19
On
As a global corporation the economic effects within the Company's environment have been substantial. In global markets, disruptions in supply chains and increases in related costs have had a real impact on our ability to deliver WaaS projects. Measures being introduced at various levels of government to curtail the spread of the virus (such as travel restrictions, closures of non-essential municipal and private operations, imposition of quarantines and social distancing) have had a material impact on the Company's operations.
Products and Services Overview
Across the world, fresh water is unevenly distributed. Many regions are
desperately under-served, including
Fundamentally, the WaaS solutions are based on deploying technology with the following attributes to ensure low-cost delivery and Company profitability:
? Versatile ? Scalable & Cost-effective ? Environmentally & Socially Sustainable ? Applying Proprietary Technology through partners and affiliates
Air-to-Water (AW) - Harvests fresh water from airborne humidity by using advanced heating and cooling technologies
Water-to-Water (WW) - Transforms contaminated water (saltwater, sewage, polluted) into safe, clean water by using an environmentally sustainable process called Multi-Effect Membrane Distillation.
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The operating efficiency of these technologies allows us to provide customers with clean water at a price that is highly competitive relative to traditional alternatives. We substantially out-perform peer competitors because we can deploy remotely where the water is consumed where the water is consumed and using up to 50% less power than those same competitors. The compact and scalable systems for AW and WW enable decentralized deployment, in which water is distributed directly to the consumption site with no expensive piping or truck transport. AW and WW are both cost-effective technology solutions and can be powered by solar, wind, or grid electricity, or a combination of power sources. They can produce roughly 5,000 to 150,000 liters of water per unit, per day, depending on the local conditions and the type of unit deployed.
Cost Information
With the core focus on WaaS delivered on a per liter basis, the relevant Cost
Information is the cost per liter of alternative suppliers. Currently in remote
locations, the principal source of supply is bottled water. Accordingly, our
solutions are optimally profitable when we compete head-to-head with bottled
water that is transported or bulk water that is transported by truck to local
communities. In most remote communities where this water is imported, the
minimum cost per liter is
Regulatory Information
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 seeks to adhere to
WaaS Recurring Revenue Model
The RAKR business model begins with the identification of a trusted local partner. The next step is to enter into JV structures, which maximize value to all stakeholder-parties.
The Rainmaker delivery systems are to be installed by entering into contracts with local third-party experts that are typically Heating, Ventilation and Air Conditioning ("HVAC") experts.
The RAKR model charges a market determined price per liter of bottled water or
similarly treated water. Revenue sources include bottled water, bulk water, and
industrial water. A representative project in the
We believe the value we will offer through our WaaS projects is based on the following factors:
(1) There are no upfront costs to the customer. (2) Capital costs are borne through the JVs and other partnerships. Only end-consumers of the water pay on a per liter basis. (3) The combination of (1) and (2) above make it economically viable to deploy in communities that do not have the resources or network infrastructure to independently finance projects that require high amounts of financial capital. 29
Potential Improvements
Potential improvements and related applications that we are pursuing or plan to pursue include the following:
(1) Seek more strategic and technology-based partnerships with complementary technology and business development companies to expand our global reach and service offering. (2) Work with RHBV to identify relevant technological advances based on lessons learned from previously implemented projects to reduce total costs and enhance net profits. Market Opportunity
In the past ten years, there has been a growing awareness of the shortage of
fresh water-and the associated economic and social effects the problem magnifies
in impoverished and underdeveloped communities. Entities ranging from Water.Org
to the
The metrics that underpin the international need for ingenuity and action are the same as those that animate and sustain the market opportunity for our Company:
(1) Less than 3% of the world's water is fresh - the rest is seawater and undrinkable in its current state. (2) Of this 3%, over 2.5% is frozen and locked up inAntarctica ,the Arctic and glaciers. (3) People and animals rely on 0.5% of the world's water. (Source: Unwater.org - Facts and Trends: Water)
Moreover, at any moment, the atmosphere contains approximately 37.5 million billion gallons of water. This potential is not currently harvested by the means of private organizations or government institutions and thus presents a significant opportunity for AW technology to satisfy worldwide demand for water.
The
The above analysis points to a global market for water that is extraordinarily
immense. Today, the annual global water market for all purposes and uses is
Current Projects
Representative existing projects reside within the
Suppliers
As stated previously, our principal supplier for the core technologies to be deployed is RHBV. RHBV in turn has built a global supply chain for its components. Should RHBV not supply the appropriate scale of technology required by a project, RAKR has identified multiple technologies of different sizes and types.
Supplemental technology (i.e., bottling, pre-post wastewater treatment, mineralization solutions, and renewable energy) - suppliers are global, abundant, and highly competitive so as to ensure the lowest cost per liter for any given WaaS project planned implemented by the Company.
30 Competition
The Rainmaker WaaS-focused business model that will deliver potable water at the source of demand is uniquely positioned to address alternative competitive models. We believe that competitive models, while relevant and plausible alternatives, will not ultimately fully support the global level of demand for water at a reasonable price per liter. By virtue of our current affiliations, we believe we have a cost per liter competitive advantage. Accordingly, on a global basis, we do not believe competitive conditions will thwart our ability to produce long-term, corporate value or significantly diminish our financial results in the near term. However, other companies with sufficiently greater resources may develop competing products and have an advantage over us based on the relative size.
Government Subsidies and Incentives
While RAKR is not currently pursuing subsidies and incentives, we believe that over time such programs will be applicable to the Company, and we will pursue them in due course.
Over time, RAKR will seek subsidies and incentives through its deployment of
WaaS in underserved countries and particular communities within countries. One
example is First Nations in
Intellectual Property
We have indirect access to considerable intellectual property assets as a consequence of our partial ownership of and various partnerships with RHBV. We believe that this allows us to maintain an edge in the competitive process from a technology and economic cost perspective.
Results of Operations for the Three Months ended
Revenue
Revenue was
General and Administrative Expenses
General and administrative expenses primarily include consultant expenses and
benefit costs and stock-based compensation expense for executive consultants,
outside legal and professional services, marketing and advertising, and
facilities costs. General and administrative expenses for the nine months ended
Nine Months Ended Increase September 30, (Decrease) 2022 2021 $ % General and administrative expense$ 646,518 $ 1,147,679 $ (499,404 ) (43.7 )% Stock-based compensation expense included in general and administrative expense$ 101,756 $ 39,576 $ 62,180 157.1 %
General and administrative expenses, including stock-based compensation, for the
nine months ended
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Liquidity and Capital Resources
Management's Plans
Similar to other development stage companies, our products have yet to generate
significant revenue. As a result, we have historically suffered recurring losses
and we do not have required cash resources to fully execute our business plans.
However, we have approximately
Historically, the Company's major sources of cash have comprised proceeds from
various private offerings of its securities (including common stock) and debt
financings. From 2015 through to the date of this filing, the Company raised
approximately
The Company recognizes and is addressing the need to raise additional capital in order to continue to execute its business plan in the future. There is no assurance that additional financing will be available when needed or that the Company will be able to obtain financing on terms acceptable to it or whether the Company will become profitable and generate positive operating cash flow.
Off-Balance Sheet Arrangements
As of
Critical Accounting Estimates
The preparation of financial statements in accordance with accounting principles
generally accepted in
? it requires assumptions to be made that were uncertain at the time the estimate was made, and ? changes in the estimate or different estimates that could have been selected could have material impact in our results of operations or financial condition.
While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates and the differences could be material. The most significant estimates impact the following transactions or account balances: stock compensation.
See Note 2 to our consolidated financial statements for a discussion of our significant accounting policies.
Recently Issued Accounting Standards Not Yet Effective or Adopted
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying condensed consolidated financial statements.
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