10-12G

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

Form 10

General Form for Registration of Securities

Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934

WATER NOW, INC. 
(Exact name of registrant as specified in its charter)

Texas	81-1419236
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
4555 Village Creek Road
Fort Worth, Texas	76119
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (817) 908-6382

Send all correspondence to:

Water Now, Inc.

4555 Village Creek Road

Fort Worth, Texas 76119

Attn: David King

Telephone: (817) 908-6382
 

Copies to:

Gray Reed & McGraw LLP

1601 Elm Street, Suite 4600

Dallas, Texas 75201

Attn: David R. Earhart

Telephone: (469)320-6041

Securities to be registered under Section 12(b) of the Act: None

Securities to be registered under Section 12(g) of the Act: Common Stock, no par value

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐	Accelerated filer  ☐
Non-accelerated filer  ☐	Smaller reporting company  ☐
Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

TABLE OF CONTENTS

Page

Item 1.	Business	1
Item 1A.	Risk Factors	4
Item 2.	Financial Information	12
Item 3.	Properties	19
Item 4.	Security Ownership of Certain Beneficial Owners and Management	19
Item 5.	Directors and Executive Officers	20
Item 6	Executive Compensation	21
Item 7.	Certain Relationships and Related Transactions, and Director Independence	22
Item 8.	Legal Proceedings	22
Item 9.	Market Price of and Dividends on the Registrant’s Common Equity and
	Related Shareholder Matters	23
Item 10.	Recent Sales of Unregistered Securities	24
Item 11.	Description of Registrant’s Securities to be Registered	25
Item 12.	Indemnification of Directors and Officers	25
Item 13.	Financial Statements and Supplementary Data	26
Item 14.	Changes in and Disagreements with Accountants on Accounting and
	Financial Disclosure	26
Item 15.	Financial Statements and Exhibits	26

We are filing this General Form for Registration of Securities on Form 10 to register our common stock, no par value per share (the “Common Stock”), pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless otherwise noted, references in this registration statement to “Water Now” or the “Company,” or pronouns such as, “we,” “our” or “us,” refer to Water Now, Inc. Once this registration statement is deemed effective, we will be subject to the requirements of Regulation 13A under the Exchange Act, which will require us to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.

FORWARD LOOKING STATEMENTS

There are statements in this registration statement that are not historical facts. These “forward-looking statements” can be identified by use of terminology suggesting a belief in future performance and similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire registration statement carefully. Although management believes that the assumptions underlying the forward-looking statements included in this registration statement are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward-looking statements. The assumptions used for purposes of the forward-looking statements represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this registration statement will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We do not undertake any obligation to update or revise any forward-looking statements.

Item 1.Business.

Company Overview

Water Now, Inc. was incorporated in Texas on February 10, 2016 to develop and commercialize a patent-pending, gas/diesel powered, portable device that processes and purifies contaminated water. Our business strategy was conceived as a result of the growing global water crisis. Today, many countries and regions are experiencing acute water shortages and we believe our technology and products are capable of generating safe drinking water from many available water sources.

Our Aqua^TM product line is designed to consist of small, portable units capable of providing a cost-effective, safe and efficient method of water purification. The Aqua product line requires no pre- or post-treatment of the source water, no filters, no membranes and no chemicals. The quality of water purified by the Aqua product line has been tested to meet or exceed the World Health Organization’s (“WHO”) drinking water standards.

Product Line

Three models in our product line have been developed for commercialization: the Aqua^TM unit, the Aqua+^TM unit, and an upgraded Aqua+ unit designed for disaster relief, military and agricultural applications. The base Aqua model is capable of cleaning fresh water that is contaminated primarily with partially dissolved solid material, microorganisms and other pathogens, which can be dangerous to humans. The Aqua model has the capacity to purify up to 1,000 gallons of water per day. The Aqua+ model adds the ability to desalinate salt water, with a capacity of up to 120 gallons per day. The disaster relief configuration, which consists of an upgraded Aqua unit complemented with a reservoir mounted on a trailer, is expected to be capable of purifying up to 1,000 gallons of water per day.

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Aqua Model Shown Above

Final design and construction of the prototypes are complete, with the Aqua+ production model expected to be available by September 2017. Base model Aqua units and disaster relief units are expected to be available starting in November 2017.

Manufacturing and Distribution

Strategy

Our distribution strategy initially is to distribute our products primarily through distributors. We anticipate that we will focus, initially, on selling our products to governmental and non-governmental organizations both inside and outside the U.S. For the foreseeable future, we do not anticipate focusing on retail distribution.

Maruyama US Inc.

Maruyama US Inc., an affiliate of Maruyama Mfg. Co., a 120 year old company headquartered in Tokyo, Japan (collectively, “Maruyama”), has been engaged to be our initial third-party contract manufacturer, and one of our distributors, of the Aqua model. We believe that Maruyama excels in producing equipment for tough commercial applications in demanding operating environments. Maruyama has manufacturing facilities in Japan, Thailand and China. We anticipate that Maruyama will provide distribution of our products through its existing distribution network. Our relationship with Maruyama is on an at-will basis.

Sunmark Ltd.

We have entered into a Sales Agreement with Sun Mark (Gulf) JLT, an affiliate of UK-based Sun Mark Ltd. This Sales Agreement provides that we will sell to Sun Mark a total of 10,000 units of the Aqua+ model, subject to the terms and conditions of the Sales Agreement. The initial delivery of units under the Sales Agreement is currently scheduled to occur not later than September 2017. The foregoing summary of the Sales Agreement is subject in all respects to the complete text thereof, which is filed as an exhibit hereto. We have not agreed to make sales to any customer other than Sun Mark.

Materials and Suppliers

We do not expect to depend on any single source of materials for the production of our water purification products. As currently designed, the components of our Aqua units are available from various sources. We believe that all components have adequate replacements from other suppliers.

We entered into a General Assembly Agreement with Source One International Co. Ltd. (“Source One”). Pursuant to the General Assembly Agreement, Source One agrees to assemble and deliver to us our requirements of units of the Aqua+ model.

Currently, we purchase Ducar generators from Chongqing Dajiang Power Equipment Company, Ltd (“CDP”); however, we do not have a supplier agreement with CDP. Source One supplies the remainder of the materials for our products. 

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Customers

We have not made sales to any customers. Sun Mark has issued a purchase order to us for a total of 10,000 units of the Aqua+ model, which we anticipate beginning to fill by September 2017.

Warranty

We have engaged a third-party warranty administrator to administer warranty claims. Our cost to administer these claims is payable on a per unit basis. We expect that all significant components of our products will have warranties from the respective supplier.

Competition

There are numerous competitors in the water purification industry. We believe that the design of our water purification products will have advantages over other water purification solutions that are currently available. Our products are designed not to require pre- or post-treatment of the source water, filters, membranes or chemicals. We believe that our water purification units will compete on the basis of a combination of the foregoing factors, as well as price. We expect that competition for water purification solutions will remain highly competitive.

Governmental Approvals and Regulations

We do not anticipate that we will need to obtain material governmental approvals for the manufacturing and distribution of our water purification products, other than customary permits and licenses generally applicable to businesses operating in the geographic areas in which we operate. We do not anticipate that obtaining any such permit or license will impact or hinder our operations in any material respect. We also expect to be subject to regulations applicable to businesses operating in the areas in which we operate. We do not anticipate that any of such regulations will have a material effect on our business. Notwithstanding the foregoing, we can give no assurance regarding the impact that governmental regulations might have on our operations. We do not anticipate that we will be required to incur significant costs and expenses in order to comply with environmental laws, although certain components incorporated into our products are expected to require certifications that they satisfy applicable environmental regulatory requirements. The cost of obtaining such certifications are expected to be borne by our suppliers.

Intellectual Property

We have filed a patent application (application number 62/472,246) for the design of our water purification technology with the United States Patent and Trademark Office. Current water purification products typically require disposable filters and membranes coupled with a heating element driven through a resistive coil that can fail, especially if coming in contact with the fluids involved. Our design seeks to mitigate these problems by utilizing a water pump fed rotational centrifugal system, where solid contaminants are held to the interior cylindrical walls of the centrifuge, resulting in water containing fewer contaminants.

Research and Development; Employees

From our formation through March 31, 2017, we incurred an aggregate of $757,210 on research and development (“R&D”) activities. As of July 31, 2017, we had 6 employees, including 4 full-time employees.

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Merger of VCAB One Corporation into Water Now, Inc.

On September 27, 2016, we consummated a transaction whereby VCAB One Corporation, a Texas corporation (“VCAB”), merged with and into us. At the time of the merger VCAB was subject to a bankruptcy proceeding and had minimal assets, no equity owners and no liabilities, except for approximately 1,500 holders of Class 5 Allowed General Unsecured Claims and a holder of allowed administrative expenses (collectively, “Claim Holders”). Pursuant to the terms of the merger, and in accordance with the bankruptcy plan, we issued an aggregate of 900,000 shares of our common stock (the “Plan Shares”) to the Claim Holders as full settlement and satisfaction of their respective claims. As provided in the bankruptcy plan, the Plan Shares were issued pursuant to Section 1145 of the United States Bankruptcy Code. As a result of the merger, the separate corporate existence of VCAB was terminated. We entered into the merger in order to increase our shareholder base in order to, among other things, assist us in satisfying the listing standards of a national securities exchange.

Item 1A. Risk Factors.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained herein before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

We have a limited operating history and there can be no assurance that we can achieve or maintain profitability.

We were formed in February 2016, and have had limited operations to date.  We are currently in the development stage. As a result, we have not yet begun to generate revenues from the sale of water purification products. Accordingly, we cannot guarantee that we will become profitable. Moreover, even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may be unable to either attain, sustain or increase profitability and our failure to do so would adversely affect our business, including our ability to raise additional funds that may be required to maintain and/or enhance operations.

We will need substantial additional funding and may be unable to raise capital when needed, which would force us to delay, curtail or cease our efforts.

We expect to spend substantial amounts on product development. We will require additional funds to support our continued activities, as well as the costs of commercializing, marketing and selling water purification units. We have based this estimate, however, on assumptions that may prove to be wrong, and we could spend our available financial resources much faster than we currently expect.

Until such time, if ever, as we can generate a sufficient amount of revenue and achieve profitability, we expect to seek to finance future cash needs through equity or debt financings and strategic arrangements. We currently have no other commitments or agreements relating to any of these types of transactions and we cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital, we might have to delay, curtail or eliminate commercializing, marketing and selling water purification units.

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Product development is a long, expensive and uncertain process.

The development of water purification products is a costly, complex and time-consuming process, and investments in product development often involve a long wait until a return, if any, can be achieved on such investment. We might face difficulties or delays in the development process that will result in our inability to timely offer products that satisfy the market, which might allow competing products to emerge during the development process. We anticipate making significant investments in research and development relating to our products and services, but such investments are inherently speculative and require substantial capital expenditures. Any unforeseen technical obstacles and challenges that we encounter in the research and development process could result in delays in or the abandonment of product commercialization, may substantially increase development costs, and may negatively affect our results of operations.

Successful technical development of our products does not guarantee successful commercialization.

Although we have successfully developed and tested prototypes of the Aqua unit, we may still fail to achieve commercial success for a number of reasons, including, among others, the following:

• prohibitive production costs;

• competing products;

• lack of product innovation;

• unsuccessful distribution and marketing;

• insufficient cooperation from our suppliers and distributors; and

• product development that does not align with or meet customer needs.

Our success in the market for our products will depend largely on our ability to properly demonstrate their capabilities.  Upon demonstration, our products may not have the capabilities they were designed to have or that we believed they would have. Furthermore, even if we do successfully demonstrate our products’ capabilities, potential customers may be more comfortable doing business with a competitor, or may not feel there is a significant need for the products we develop.  As a result, significant revenue from our products may not be achieved for a number of years, if at all.

If our patent application is not granted, we could lose our ability to compete in the marketplace.

We have developed certain intellectual property used in the design of our water purification units. We believe this technology is essential to our ability to be competitive and successful in the development and distribution of water purification units. Patent protection can be limited and not all intellectual property can be patented. Even if our patent is granted, our intellectual property rights may be challenged, invalidated or circumvented by third parties. We may not be able to prevent the unauthorized disclosure or use of technical information or other trade secrets by employees or competitors.

Furthermore, our competitors may independently develop technologies and products that are substantially equivalent or superior to the products to be manufactured by us, which could result in decreased revenues. Litigation may be necessary to enforce intellectual property rights, which could result in substantial costs to us and substantial diversion of management’s attention. If our intellectual property is not adequately protected, our competitors could use it to enhance their products. Our inability to adequately protect these intellectual property rights could adversely affect our business and financial condition.

Other companies may claim that we infringe their intellectual property, which could materially increase our costs and harm our ability to generate future revenue and profit.

We do not believe that the technology upon which our water purification units is based infringes on the proprietary rights of any third party, but we are subject to a lawsuit in which the plaintiff alleges that our technology infringes its rights. While we intend to vigorously defend against such claims, we can give no assurance that we will prevail.

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It may be difficult or impossible to identify, prior to receipt of notice from a third party, the trade secrets, patent position or other intellectual property rights of a third party, either in the United States or in foreign jurisdictions. Any such assertion may result in litigation or may require us to obtain a license for the intellectual property rights of third parties. If we are required to obtain licenses to use any third party technology, we would have to pay royalties, which may significantly reduce any profit on our products. In addition, any such litigation could be expensive and disruptive to our ability to generate revenue or enter into new market opportunities. If any of our products were found to infringe other parties’ proprietary rights and we are unable to come to terms regarding a license with such parties, we may be forced to modify our products to make them non-infringing or to cease production of such products altogether.

The nature of our business involves significant risks and uncertainties that may not be covered by insurance or indemnification.

We may sell products and services in circumstances where insurance or indemnification may not be available. We may not be able to maintain insurance to protect against all operational risks and uncertainties that we confront. Substantial claims resulting from an accident, product failure, or liability arising from our products in excess of any indemnity or insurance coverage (or for which indemnity or insurance coverage is not available or is not obtained) could harm our financial condition, cash flows and operating results. Any accident, even if fully covered or insured, could negatively affect our reputation among our customers and the public, and make it more difficult for us to compete effectively.

We may incur substantial product liability claims relating to our products.

Defects in our products may lead to potential life, health and property risks. In addition, no assurance can be given that our water purification products will have the capability to remove all contaminants that might be harmful to humans or animals, even if there are no defects in our products. Any claims against us, regardless of their merit, could severely harm our financial condition, strain our management and other resources. We are unable to predict if we will be able to obtain or maintain product liability insurance for any products that may be approved for marketing.

We rely heavily on the industry relationships and expertise of our CEO, David King, and our President, Mark Dyos, and if either were to leave the Company, our business may suffer.

David King and Mark Dyos are essential to our ability to continue to grow our business. If their services were no longer available to us for any reason, our growth strategy would be hindered, which could limit our ability to increase revenue.

We do not maintain key man life insurance on Mr. King. We do maintain key man life insurance on Mr. Dyos, although there is no assurance that we will continue to be able to maintain such insurance.  If Mr. Dyos’ services were no longer available due to his death, there is no assurance that the proceeds of key man life insurance, if in place at such time, would be sufficient to enable us to find a suitable replacement.

If we are unable to recruit and retain key management, technical and sales personnel, our business would be negatively affected.

For our business to be successful, we need to attract and retain highly qualified technical, management and sales personnel. The failure to recruit additional key personnel when needed, with specific qualifications, on acceptable terms, might impede our ability to continue to develop, commercialize and sell our products. To the extent the demand for skilled personnel exceeds supply, we could experience higher labor, recruiting and training costs in order to attract and retain such employees. The loss of any members of our management team may also delay or impair achievement of our business objectives and result in business disruptions due to the time needed for their replacements to be recruited and become familiar with our business. We face competition for qualified personnel from other companies with significantly more resources available to them and thus may not be able to attract the level of personnel needed for our business to succeed.

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If our proposed marketing efforts are unsuccessful, we may not earn enough revenue to become profitable.

Our future growth depends on our gaining market acceptance and regular production orders for our products. We will need to heavily invest in marketing resources for the successful implementation of our marketing plan. Our marketing plan includes cultivating relationships with established distribution networks, attendance at trade shows, making private demonstrations, advertising, promotional materials and advertising campaigns in print and/or broadcast media.  In the event we are not successful in obtaining a significant volume of orders for our products, we will face significant obstacles in expanding our business. We cannot give any assurance that our marketing efforts will be successful.  If they are not, revenue may not be sufficient to cover our fixed costs and we may not become profitable.

We face a significant risk of failure because we cannot accurately forecast our future revenues and operating results.  

The nature of the markets in which we expect to compete makes it difficult to accurately forecast our revenues and operating results.  Furthermore, we expect our revenues and operating results to fluctuate in the future due to a number of factors, including the following:

• the timing of sales of our products;

• unexpected delays in introducing new products; and

• increased expenses, whether related to sales and marketing, or administration.

Rapid technological changes may adversely affect the market acceptance of our products and could adversely affect our business, financial condition and results of operations.

The market in which we compete is subject to technological changes, introduction of new products, change in customer demands and evolving industry standards. Our future success will depend upon our ability to keep pace with technological developments and to timely address the increasingly sophisticated needs of our customers by supporting existing and new technologies and by developing and introducing enhancements to our current products and new products. We may not be successful in developing and marketing enhancements to our products that will respond to technological change, evolving industry standards or customer requirements. In addition, we may experience difficulties internally or in conjunction with our contract manufacturers that could delay or prevent the successful development, introduction and sale of such enhancements and such enhancements may not adequately meet the requirements of the market and may not achieve any significant degree of market acceptance. If release dates of our new products or enhancements are delayed or, if when released, they fail to achieve market acceptance, our business, operating results and financial condition may be adversely affected.

Our future results may be affected by various legal and regulatory proceedings and legal compliance risks, including those involving product liability, intellectual property, environmental, governmental regulations, the U.S. Foreign Corrupt Practices Act and other anti-bribery, anti-corruption, or other matters.

The outcome of these legal proceedings may differ from our expectations because the outcomes of litigation, including regulatory matters, are often difficult to reliably predict. Various factors or developments can lead us to change current estimates of liabilities and related insurance receivables where applicable, or make such estimates for matters previously not susceptible of reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments or changes in applicable law. A future adverse ruling, settlement or unfavorable development could result in future charges that could have a material adverse effect on our results of operations or cash flows in any particular period.

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If we do not receive the governmental approvals necessary for the sales or export of our products, or if our products are not compliant in other countries, our sales may be negatively impacted.

Various licenses may be required in the future to initiate marketing activities. We may also be required to obtain export licenses. We may not be able to receive all the required permits and licenses for which we may apply in the future. If we do not receive the required permits for which we apply, our revenues may be negatively impacted. In addition, if government approvals required under these laws and regulations are not obtained, or if authorizations previously granted are not renewed, our ability to export our products could be negatively impacted, which may have a negative impact on our revenues and a potential material negative impact on our financial results.

Our ability to manufacture our products may be disrupted if our relationship with our third-party contract manufacturer were to be terminated for any reason.

While we have entered into a manufacturing relationship with Maruyama, we do not have our own manufacturing capabilities. We expect to be dependent on Maruyama, or other third-party manufacturers, for the foreseeable future. In the event our relationship with Maruyama is terminated for any reason, we may be left without the ability to manufacture and distribute our products. This may result in our business, operating results and financial condition being adversely affected.

We may pursue additional strategic transactions in the future, which could be difficult to implement, disrupt our business or change our business profile significantly.

We intend to consider additional potential strategic transactions, which could involve acquisitions of businesses or assets, joint ventures or investments in businesses, products or technologies that expand, complement or otherwise relate to our business. We may also consider, from time to time, opportunities to engage in joint ventures or other business collaborations with third parties. Should our relationships fail to materialize into significant agreements or should we fail to work efficiently with these companies, we may lose sales and marketing opportunities and our business, results of operations and financial condition could be adversely affected.

These activities, if successful, create risks such as, among others: (i) the need to integrate and manage the businesses and products acquired with our own business and products; (ii) additional demands on our resources, systems, procedures and controls; (iii) disruption of our ongoing business; and (iv) diversion of management’s attention from other business concerns. Moreover, these transactions could involve: (a) substantial investment of funds or financings by issuance of debt or equity securities; (b) substantial investment with respect to technology transfers and operational integration; and (c) the acquisition or disposition of product lines or businesses. Also, such activities could result in one-time charges and expenses and have the potential to either dilute the interests of our existing shareholders or result in the issuance of, or assumption of debt.  Such acquisitions, investments, joint ventures or other business collaborations may involve significant commitments of financial and other resources. Any such activities may not be successful in generating revenue, income or other returns, and any resources we committed to such activities will not be available to us for other purposes. Moreover, if we are unable to access the capital markets on acceptable terms or at all, we may not be able to consummate acquisitions, or may have to do so on the basis of a less than optimal capital structure. Our inability to take advantage of growth opportunities or address risks associated with acquisitions or investments in businesses may negatively affect our operating results.

Additionally, any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or charges to earnings associated with any acquisition or investment activity, may materially reduce our earnings. Future acquisitions or joint ventures may not result in their anticipated benefits and we may not be able to properly integrate acquired products, technologies or businesses with our existing products and operations or successfully combine personnel and cultures. Failure to do so could deprive us of the intended benefits of those acquisitions.

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Breaches of network or information technology security could have an adverse effect on our business.

Cyber-attacks or other breaches of network or IT security may cause equipment failures or disrupt our, as well as our manufacturers’, systems and operations. We and our manufacturers may be subject to attempts to breach the security of applicable networks and IT infrastructure through cyber-attack, malware, computer viruses and other means of unauthorized access. The potential liabilities associated with these events could exceed the insurance coverage we or our manufacturers maintain, if any. An inability to operate facilities as a result of such events, even for a limited period of time, may result in significant expenses or loss of market share to other competitors in the market we serve. In addition, a failure to protect the privacy of customer and employee confidential data against breaches of network or IT security could result in damage to our reputation. To date, we have not been subject to cyber-attacks or other cyber incidents which, individually or in the aggregate, resulted in a material adverse effect on our business, operating results and financial condition.

The preparation of our financial statements involves use of estimates, judgments and assumptions, and our financial statements may be materially affected if our estimates prove to be inaccurate.

Financial statements prepared in accordance with generally accepted accounting principles in the United States require the use of estimates, judgments, and assumptions that affect the reported amounts. Different estimates, judgments, and assumptions reasonably could be used that would have a material effect on the financial statements, and changes in these estimates, judgments, and assumptions are likely to occur from period to period in the future. These estimates, judgments, and assumptions are inherently uncertain, and, if they prove to be wrong, then we face the risk that charges to income will be required.

Worldwide and domestic economic trends and financial market conditions may adversely affect our operating performance.

We intend to distribute in a number of countries and derive revenues from both inside and outside the United States. We expect our business will be subject to global competition and may be adversely affected by factors in the United States and other countries that are beyond our control. Unfavorable global or regional economic conditions, could adversely impact our business, liquidity, financial condition and results of operations.

If we are required to obtain components included in our products from alternative suppliers we could experience delays in the manufacturing of our products and our financial results could be adversely affected.

We expect to acquire the components for the manufacture of our products from suppliers and subcontractors. We have not entered into any long-term agreements or arrangements with any potential suppliers or subcontractors. Suppliers of some of the components may require us to place orders with significant lead-times to assure supply in accordance with our manufacturing requirements. Our present lack of working capital may cause us to delay the placement of such orders and may result in delays in supply. Delays in supply may significantly hurt our ability to fulfill our contractual obligations and may significantly hurt our business and result of operations. In addition, we may not be able to continue to obtain such components from these suppliers on satisfactory commercial terms. Disruptions of our manufacturing operations would ensue if we were required to obtain components from alternative sources, which would have an adverse effect on our business, results of operations and financial condition.

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We indemnify our officers and directors against liability to us and our security holders, and such indemnification could increase our operating costs.

Our certificate of formation and bylaws allow us to indemnify our officers and directors against claims associated with carrying out the duties of their offices. Our bylaws also allow us to reimburse them for the costs of certain legal defenses. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our officers, directors or control persons, the SEC has advised that such indemnification is against public policy and is therefore unenforceable.

Risks Associated with our Capital Stock

One of our shareholders beneficially owns a majority of our outstanding capital stock and will have the ability to control our affairs.

Our Chief Executive Officer, David King, beneficially owns approximately 46.4% of our issued and outstanding capital stock. By virtue of his holdings, he may significantly influence, or effectively control, the election of the members of our board of directors, our management and our affairs, and may prevent us from consummating corporate transactions such as mergers, consolidations or the sale of all or substantially all of our assets that may be favorable from our standpoint or that of our other shareholders.

We do not know whether an active, liquid and orderly trading market will develop for our common stock.

As of the filing of this registration statement, there has been no public market for our common stock. An active trading market for our shares may never develop or be sustained. The lack of an active or liquid market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.

The market price of our common stock may be volatile and may fluctuate in a way that is disproportionate to our operating performance.

Our stock price may experience substantial volatility as a result of a number of factors, including, among others:

• sales or potential sales of substantial amounts of our common stock;

• announcements about us or about our competitors or new product introductions;

• developments concerning our third-party product manufacturers and distributors;

• the loss or unanticipated underperformance of our global distribution channels;

• litigation and other developments relating to our patents or other proprietary rights or those of our competitors;

• conditions in the water purification industry;

• governmental regulation and legislation;

• variations in our anticipated or actual operating results;

• changes in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations;

• foreign currency values and fluctuations; and

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• overall political and economic conditions.

Many of these factors are beyond our control. The stock markets have historically experienced substantial price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance.

Future sales of shares of our common stock by existing shareholders could depress the market price of our common stock.

We have an aggregate of 30,000,000 outstanding shares of common stock. The Plan Shares issued in connection with the merger with VCAB are freely tradeable. The remainder of the outstanding shares may be sold, subject to certain volume limitations, pursuant to Rule 144 or other available exemptions.

Also, in the future, we may issue additional securities in connection with investments and acquisitions. The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding stock. Due to these factors, sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

We do not intend to pay cash dividends.  As a result, for the foreseeable future, capital appreciation, if any, will be your sole source of gain.

We currently intend to retain future earnings, if any, to fund the development and growth of our business.  In addition, the terms of future debt agreements may preclude us from paying dividends.  As a result, capital appreciation, if any, of our common stock is anticipated to be your sole source of gain for the foreseeable future.

Provisions in our amended and restated certificate of formation, our amended and restated bylaws and Texas law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Provisions of our amended and restated certificate of formation, our amended and restated bylaws and Texas law may have the effect of deterring unsolicited takeovers or delaying or preventing a change in control of our company or changes in our management, including transactions in which our shareholders might otherwise receive a premium for their shares over then current market prices. In addition, these provisions may limit the ability of shareholders to approve transactions that they may deem to be in their best interests. These provisions include the ability of our board of directors to designate the terms of and issue new series of preferred stock without shareholder approval, which could include the right to approve an acquisition or other change in our control or could be used to institute a rights plan, also known as a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors.

The existence of the forgoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

FINRA sales practice requirements may limit a shareholder’s ability to buy and sell our stock.

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The Financial Industry Regulatory Authority, Inc. (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for certain customers. FINRA requirements will likely make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in the shares, resulting in fewer broker-dealers may be willing to make a market in our shares, potentially reducing a shareholder’s ability to resell shares of our common stock.

We are eligible to be treated as an “emerging growth company,” as defined in the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in this registration statement and our periodic reports and proxy statements and (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our shares or if our results of operations do not meet their expectations, our share price and trading volume could decline.

The trading market for our shares will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline. Moreover, if analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, our share price could decline.

Item 2. Financial Information.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion and analysis should be read in conjunction with our financial statements and the related notes. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Forward-Looking Statements and Business sections in this registration statement. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

We seek to develop and commercialize a patent-pending, gas/diesel operated, portable device that processes and purifies contaminated water. Our business strategy was conceived as a result of the growing global water crisis. Our Aqua^TM product line is designed to provide a small, portable unit capable of a cost-effective, safe and efficient method of water purification. The Aqua product line requires no pre- or post-treatment of the source water, no filters, no membranes and no chemicals.

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Financial Overview

Revenue

To date, we have not generated any revenues. Our ability to generate revenues, which we expect will occur prior to the end of 2017, will depend on the successful manufacturing and commercialization of our water purification units.

Reorganization Expenses

During 2016, we incurred reorganization expenses in connection with our merger with VCAB, and related transactions, as described under “Business – Merger of VCAB One Corporation into Water Now, Inc.” Reorganization expenses primarily consisted of the fair value of the Plan Shares issued in connection with those transactions, as well as legal expenses incurred in connection therewith. All reorganization expenses in connection with those transactions have been incurred, and no additional expenses with respect thereto are anticipated.

Research and Development Expenses

The Company expenses R&D costs as incurred. The Company’s R&D activities related to activities undertaken to adapt the water purification technology contributed by David King for commercial-scale manufacturing.

General and Administrative Expenses

General and administrative (“G&A”) expenses consist primarily of salaries and related costs for personnel, including stock-based compensation expense. To date, we have estimated the fair value of stock-based awards issued to employees, directors and non-employees based on prices paid by unrelated third-parties for the purchases of our common stock. Other G&A expenses include patent costs, and professional fees for legal, finance and accounting services.

We anticipate that our G&A expenses will increase in future periods to support increases in our research and development activities and as a result of increased headcount, expanded infrastructure, increased legal, compliance, accounting and investor and public relations expenses associated with being a public company and increased insurance premiums, among other factors.

Interest Expense

Interest expense consists primarily of interest incurred on borrowings.

Significant Accounting Policies and Recent Accounting Pronouncements

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, stock-based compensation, impairment of financing receivables and long-lived assets, valuation of warrants, income taxes and contingencies and litigation, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting estimates and assumptions discussed in this section are those that we

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consider to be the most critical to an understanding of our consolidated financial statements because they inherently involve significant judgments and uncertainties.  For a discussion of our significant accounting policies, refer to Note 3 – “Summary of Significant Accounting Policies” in the Notes to our Consolidated Financial Statements for the year ended December 31, 2016, included in this registration statement in Item 15.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposit accounts with original maturities of three months or less.

Use of Accounting Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant estimates and assumptions made by management related to determining the value of stock-based expenses.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities for a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.

We account for uncertain tax positions in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 740-10, “Income Taxes”. ASC 740-10 provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. ASC 740-10 applies a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, we must determine whether any amount of the tax benefit may be recognized. Second, we determine how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition). No additional liabilities have been recognized as a result of the implementation. Accordingly, we have not recognized any penalty, interest or tax impact related to uncertain tax positions.

Stock-Based Expenses

We account for stock-based expenses under the provisions of ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of expense for stock-based awards made to employees and directors based on estimated fair values on the grant date. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the shorter of the period over which services are to be received or the vesting period.

We account for stock-based expenses awards to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees”. In accordance with ASC 505-50, we determine the fair value of stock-based expenses awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

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We estimated the fair value of stock-based awards issued to employees, directors and non-employees based on prices paid by unrelated third-parties for the purchases of our common stock during the applicable period.

Research and development costs

We expense research and development costs as incurred in accordance with ASC 730, “Research and Development”. Our research and development activities related to activities undertaken to adapt the water purification technology contributed by David King for commercial-scale manufacturing.

Earnings (Loss) Per Share

Basic earnings (loss) per share are computed by dividing the net income (loss) by the weighted-average number of shares of common stock and common stock equivalents such as outstanding stock options and warrants. Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later.

Recently Adopted Accounting Pronouncements

In October 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory” (“ASU 2016-16”), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-06 will be effective for us in our first quarter of 2019. We are currently evaluating the impact of adopting ASU 2016-16 on our financial statements.

ASU 2014-15 – “Presentation of Financial Statements—Going Concern—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). In August 2014, the FASB issued guidance that requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The updated accounting guidance was effective for us on December 31, 2016. We have implemented this new accounting standard and we will update our liquidity disclosures as necessary.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which outlines a single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of the new guidance.

In February 2016, the FASB issued ASU 2016-02 “Leases”. This standard will require entities that lease assets—referred to as “lessees”—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The accounting by entities that own the assets leased by the lessee—also known as lessor accounting—will remain largely unchanged from current GAAP. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018. Modified retrospective application is required, with optional practical expedients available. The Company is currently evaluating the impact of the new guidance.

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

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Results of Operations

We were incorporated on February 10, 2016 (hereinafter, “inception”). As such, our results of operations reflect the period from inception to December 31, 2016 and the three month periods from January 1, 2017 through March 31, 2017 and from inception through March 31, 2016. There are no comparable periods for 2015.

Discussion of the Quarters Ended March 31, 2017 and 2016 (unaudited)

Research and development expenses. R&D expenses were $19,063 for the three month period ended March 31, 2017. No R&D expenses were incurred during the comparable period in 2016. R&D expenses during the 2017 period consisted primarily of payroll expenses for such research and development employees.

General and administrative expenses. G&A expenses were $109,477 for the three month period ended March 31, 2017, consisting principally of payroll expenses. During the comparable period in 2016, we incurred G&A expenses of $58.

Discussion of the Period from Inception to December 31, 2016

Reorganization expenses. Reorganization expenses were $615,000 for the period from inception to December 31, 2016. Expenses during the period primarily consisted of the fair value of the Plan Shares issued in connection with our merger transaction with VCAB and related transactions.

Research and development expenses.    R&D expenses were $738,147 for the period from inception to December 31, 2016. R&D expenses during the period included:

· Payroll expense of $31,250, representing 4.2% of total R&D expenses during the period, including salaries, payroll taxes and benefits for our employees in research and development.

· Stock-based compensation expense of $675,000, representing 91.5% of total R&D expenses during the period, primarily related to common stock granted to certain of our employees and advisors.

· Travel expense and other miscellaneous expense of $31,897, representing 4.3% of total R&D expenses during the period.

Legal and professional fees. Legal and professional fees were $215,979 for the period from inception to December 31, 2016. Of the total legal and professional fees incurred during the period, $135,000 was paid through the issuance of our common stock.

General and administrative expenses. G&A expenses were $311,038 for the period from inception to December 31, 2016. G&A expenses during the period included:

· Payroll expense of $48,000, representing 15.4% of total G&A expenses during the period, including salaries, payroll taxes and benefits for our general and administrative employees.

· Travel expense and other miscellaneous expense of $13,038, representing 4.2% of total G&A expenses during the period.

· Stock-based compensation expense of $250,000, representing 80.4% of total G&A expenses during the period, primarily related to the issuance of restricted stock.

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Liquidity and Capital Resources

Sources of Liquidity

To date, we have not generated any revenues. We have financed our operations to date primarily through private placements of our common stock and borrowings. From inception through March 31, 2017, we received approximately $397,000 in net proceeds from the issuance of our common stock. As of March 31, 2017, we had outstanding borrowings of $100,000 from the issuance of convertible promissory notes. Subsequent to March 31, 2017, those convertible promissory notes have been converted to common stock.

Cash Flows

The following table sets forth the primary sources and uses of cash for the period set forth below.

	Period from inception to December 31, 2016			Three months ended March 31, 2017
Net cash used in operating activities	$	(293,164	)	$	(176,598	)
Net cash used in investing activities		—			—
Net cash provided by financing activities	$	293,500		$	191,094
Net increase in cash and cash equivalents	$	336		$	14,496

Operating activities. Our use of cash in operating activities resulted primarily from our net loss, as adjusted for certain non-cash items. During the period from inception through December 31, 2016, non-cash items consisted primarily of common stock issued as payment of representation costs and expenses, as well as services of employees and contractors. For the quarter ended March 31, 2017, non-cash items consisted of a decrease in accounts payable and accrued expenses, partially offset by an increase in payroll tax liability.

Financing activities. Cash provided by financing activities consisted primarily of proceeds from the issuance of our common stock in private placements. During the period from inception through December 31, 2016, the $170,000 we received from the issuance of our common stock was supplemented by an aggregate of $121,000 of borrowings. During the quarter ended March 31, 2017, the $227,000 received from the issuance of our common stock was partially offset by repayments of amounts borrowed.

Funding Requirements

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:

• establish a sales, marketing and distribution infrastructure to commercialize our water purification units and any other products we successfully develop;

• maintain, expand and protect our intellectual property portfolio; and

• add operational and financial personnel to handle the public company reporting and other requirements to which we will be subject following effectiveness of this registration statement.

We expect that we will require approximately $2,500,000 in additional capital to fund operations during the next twelve (12) month period. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our water purification units, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with successfully commercializing such products. Our future capital requirements will depend on many factors, including:

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• the costs and timing of commercialization activities for our water purification units, including manufacturing, sales, marketing and distribution;

• revenues received from sales of our products;

• the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and

• our ability to maintain manufacturing and distribution relationships on favorable terms, if at all.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, and strategic alliances. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common shareholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies and future revenue streams or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to commercialize products that we would otherwise prefer to develop and market ourselves.

Quantitative and Qualitative Disclosures About Market Risk

We have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. We do not have any borrowings and, consequently, we are not affected by changes in market interest rates. We do not currently have any sales or own assets and operate facilities in countries outside the United States and, consequently, we are not effected by foreign currency fluctuations or exchange rate changes.  Overall, at this time, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Tax Loss Carryforwards

We had a net operating loss carry-forward for federal and state tax purposes of approximately $2,014,704 at March 31, 2017, that is potentially available to offset future taxable income, which will begin to expire in the year 2036. For financial reporting purposes, no deferred tax asset was recognized because at March 31, 2017 and December 31, 2016, management estimates that it is more likely than not that substantially all of the net operating losses will expire unused. As a result, the amount of the deferred tax assets considered realizable was reduced 100% by a valuation allowance. The change in the valuation allowance was approximately $49,985 and $0 for the three months ended March 31, 2017 and for the period from inception to March 31, 2016, respectively.

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Item 3.Properties.

We currently do not own any real properties. We utilize office facilities for our principal executive offices in Fort Worth, Texas through a cost-free arrangement with our CEO. We also have a lease for approximately 5,000 square feet of warehouse facilities in Boyd, Texas. The monthly rent for these warehouse facilities is $1,500. The lease provides for 90 day renewable terms until cancelled by the Company.

We believe suitable replacement facilities would be available to us if our arrangements for our facilities were to terminate.

Item 4.Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth the ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, as well as our officers and directors, as of July 27, 2017. There are not any pending arrangements that may cause a change in control. The information presented below has been presented in accordance with the rules of the SEC and is not necessarily indicative of ownership for any other purpose.

A person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner.

Name and Address	Amount and Nature of  Beneficial Ownership	Percentage of Class
David King(1)(2)	13,918,000	46.4%
Mark Dyos	500,000	1.7%
All Officers and Directors as a group (2 persons)	14,418,000	48.1%
Other 5% holder:
Steve Clohessy(2)	4,000,000	13.3%

(1)Includes 1,000,000 share held by Mr. King’s spouse.

(2)Includes 2,000,000 share held by Royalty Wines LLC, an entity controlled by Mr. King and Mr. Clohessy.

The address for each person named in the table above is c/o the Company, unless otherwise indicated.

This table is based upon information derived from our stock records. We believe that each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned.

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Item 5.Directors and Executive Officers.

Identification of Directors, Executive Officers and Significant Consultant

Our officers and directors, and significant consultant, and additional information concerning them, are as follows:

Name	Age	Position(s)
David King	49	Chief Executive Officer, Chief Financial Officer and Director
Mark Dyos	53	President
Phillip Marshall	67	Consultant

David King, Chief Executive Officer, Chief Financial Officer and Director

Mr. King has been our Chief Executive Officer and Director since inception in February 2016. In addition to his duties at Water Now, since August 2012, Mr. King has operated Drink Robust Inc. Drink Robust serves as the exclusive U.S. distributor of Robust Energy Drink^TM. Robust Energy Drink was developed by Sun Mark, Ltd., and has current global sales in excess of $100 million. From 1996 to 2012, Mr. King was involved in the real estate industry focusing on sub-division development, re-conditioning distressed property and building high-end homes. Mr. King was a principal in real estate transactions having an aggregate value in excess of $32 million. Mr. King served in the United States Air Force and was honorably discharged.

Mark Dyos, President

Mr. Dyos became President of the Company in May 2017.  Prior to joining the Company, Mr. Dyos served in various capacities with Maruyama US, Inc., a wholly owned subsidiary of Maruyama Manufacturing Company, initially as General Manager and since 2010 as Executive Vice President.  From 2005 until joining Maruyama, Mr. Dyos took a 50% stake in AVID Telecom and helped grow that company into the largest national Samsung Business Telecom reseller in the US.  Mr. Dyos is a graduate of London University City and Guilds Engineering program.

Phillip Marshall, Consultant

Mr. Marshall serves as a consultant to the Company. Since May 2007, Mr. Marshall has served as Chief Financial Officer of RCI Hospitality Holdings Inc., an operator of adult entertainment businesses. Mr. Marshall was previously controller of Dorado Exploration, Inc., an oil and gas exploration and production company, from February 2007 to May 2007. He previously served as Chief Financial Officer of CDT Systems, Inc., a publicly held water technology company, from July 2003 to January 2007.  Mr. Marshall graduated from Texas State University in 1972. He began his public accounting career with the international accounting firm, KMG Main Hurdman and became a Certified Public Accountant in 1974. After the firm’s merger with Peat Marwick, Mr. Marshall served as an audit partner at KPMG for several years. After leaving KPMG, Mr. Marshall was partner in charge of the audit practice at Jackson & Rhodes in Dallas from 1992 to 2003, where he specialized in small publicly held companies.

Involvement in Legal Proceedings

No officer or director has been involved in the last ten years in any of the following:

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· Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

· Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

· Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and

· Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. 

Committees of the Board

The Board of Directors currently consists only of Mr. King. Therefore, the Board of Directors has no separate committees. The Company has no qualified financial expert at this time because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources at this time to hire such an expert. The Company intends to continue to search for a qualified individual for hire.

Code of Ethics

We do not currently have a code of ethics.

Compensation Committee Interlocks and Insider Participation

Because the Board of Directors consists only of Mr. King, the Company has no compensation committee.  During 2016, none of our executive officers or director served as a member of the board of directors or compensation committee of any other entity that has or has had one or more executive officers serving as a member of our Board.

Item 6.Executive Compensation

Summary Compensation Table

The table below summarizes the total compensation earned by each of our executive officers for the fiscal year ended December 31, 2016.

Name and Principal Position	Year		Salary		Stock Awards			Total
David King, CEO and CFO		2016	$	—		$	—	$	—
Mark Dyos, President(1)		2016	$	56,000		$	250,000	$	306,000

(1) Consists of 500,000 shares with an aggregate estimated value at December 31, 2016 of $250,000.

Outstanding Equity Awards at December 31, 2016

The following table below summarizes stock awards during the fiscal year ended December 31, 2016 that was not vested as of the end of such fiscal year.

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Name	Number of Shares that Have not Vested	Market Value of Shares that Have not Vested (1)
David King	___	___
Mark Dyos	500,000	$250,000

(1)Calculated based on the value at which shares were most recently issued in private placements as of December 31, 2016.

Material Terms of Employment and Consulting Agreements

Commencing January 20, 2017, Mr. King was entitled to receive a salary of $10,000 per month. Beginning the month following the time that the Company first generates revenues, Mr. King will be entitled to receive a salary of $20,000 per month.

Effective as of May 1, 2016, the Company entered into a three-year employment agreement with Mr. Dyos. The agreement calls for monthly payments of $7,000 per month through April 2017 and $15,000 per month thereafter. The employment agreement also provided for the grant of 500,000 shares of common stock, which were fully vested at May 1, 2017. The employment agreement provides for an additional grant of 500,000 shares of common stock on the first day following the second month during which the Company recognizes revenue pursuant to generally accepted accounting principles.

The Company has entered into a two-year accounting consulting services agreement with Mr. Marshall. The accounting consulting services agreement provided for a grant of 100,000 shares of common stock, which fully vested at January 2, 2017. The Company shall pay to Mr. Marshall 75,000 shares of common stock per each completed six months of satisfactory service. The first installment shall be payable at such time as the Company generates revenue from the sale of its products.

Director Compensation

Mr. King, the sole director of the Company, does not receive compensation from the Company for his service in such capacity.

Item 7. Certain Relationships and Related Transactions, and Director Independence.

We do not have a policy or procedures in place for the review, approval or ratification of any related-party transaction, other than, written consent in lieu of the meeting of the Board of Directors or shareholders, as the case may be, for the given transaction. The related party transactions described above were approved by the Board of Directors, but not approved pursuant to any written policy or procedure.

We do not have director independence under Item 407(a) of Regulation S-K.

Item 8.Legal Proceedings.

We may become involved in, or have been involved in, arbitrations or various other legal proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these claims and other proceedings. The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material negative impact on our results of operations, balance sheets and cash flows due to defense costs, and divert management resources. Currently, except as set forth below, we are not involved in any arbitration and/or other legal proceeding that could have a material effect on our business, financial condition, results of operations and cash flows.

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On April 6, 2017, Cloudburst Solutions, LLC (“Cloudburst”) filed suit against the Company and David King in the 17th District Court of Tarrant County, Texas.    Cloudburst alleges that the Company breached its obligations under a Manufacturing and Distribution Agreement to which the Company and Cloudburst were parties.  Cloudburst also claims that the Company and Mr. King have misappropriated unspecified “intellectual property rights related to water treatment/reclamation processes.”  Cloudburst seeks a declaratory judgment and unspecified damages, including $1,536,000 alleged to be owed pursuant to Manufacturing and Distribution Agreement.  The Company has filed special exceptions, and the parties have exchanged discovery requests.  The Company intends to vigorously defend against the claims made by Cloudburst.

Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Shareholder Matters

Market Information

There is no established public trading market in our common stock. Our securities are not listed for trading on any securities exchange nor are bid or asked quotations reported in any over-the-counter quotation service. Upon effectiveness of this registration statement, we intend to file application to make our shares of common stock eligible for quotation on the OTCQB Market. No assurance can be given that an active market will exist for our common stock.

Equity Compensation Plans

We expect that in the future we will file a registration statement on Form S-8 under the Securities Act registering the common stock subject to issuance pursuant to such plan. That registration statement will become effective immediately upon filing, and shares covered by that registration statement will thereupon be eligible for sale in the public markets, subject to grant of the underlying awards, vesting provisions and Rule 144 limitations applicable to our affiliates.

Holders

As of July 27, 2017, there were 30,000,000 shares of common stock outstanding, which were held by approximately 697 record holders.

Dividends

We have never paid cash dividends on any of our capital stock and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. We do not intend to pay cash dividends to holders of our common stock in the foreseeable future.

Stock Not Registered under the Securities Act; Rule 144 Eligibility

Our common stock has not been registered under the Securities Act. However, the 900,000 Plan Shares issued in connection with the VCAB merger were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 1145 of the U.S. Bankruptcy Code and may be resold without registration. Our remaining issued and outstanding shares of common stock are restricted securities and may not be resold absent registration under the Securities Act and applicable state securities laws or an available exemption thereunder.

Rule 144

Shares of our common stock that are restricted securities will be eligible for resale in compliance with Rule 144 or Rule 701 of the Securities Act, subject to the requirements described below. “Restricted securities,” as defined under Rule 144, were issued and sold by us in reliance on exemptions from the registration requirements of the Securities Act. These shares may be sold in the public market only if registered or if they qualify for an exemption from registration, such as Rule 144 or Rule 701. Below is a summary of the requirements for sales of our common stock pursuant to Rule 144, after the effectiveness of this Registration Statement.

23

Beginning 90 days after the effectiveness of this Registration Statement, a person who is our affiliate or who was our affiliate at any time during the preceding three months and who has beneficially owned restricted securities for at least six months, will generally be entitled to sell within any three month period a number of shares that does not exceed one percent of the number of shares of our common stock then outstanding. Sales under Rule 144 by our affiliates are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

Persons who may be deemed to be our affiliates generally include individuals or entities that control, or are controlled by, or are under common control with, us and may include our directors and officers, as well as our significant shareholders.

For a person who has not been deemed to have been one of our affiliates at any time during the 90 days preceding a sale, sales of our shares of common stock held longer than six months, but less than one year, will be subject only to the current public information requirement and can be sold under Rule 144 beginning 90 days after the effectiveness of this Registration Statement without restriction. A person who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least one year, is entitled to sell his or her shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

We expect approximately __________ shares of our common stock will be eligible for sale under Rule 144 90 days following the effective date of this Registration Statement. In __________, __________ additional shares will become eligible for sale under Rule 144, subject to applicable volume limitations.

Rule 701

Rule 701 under the Securities Act permits resales of shares in reliance upon Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement and the volume and public information requirements. Any of our employees, consultants or advisors, other than our affiliates, who purchased shares from us under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701, but all holders of Rule 701 shares are required to wait until 90 days after the effective date of this Registration Statement before selling their shares under Rule 701. None of our currently outstanding shares, other than the __________ shares that will otherwise become eligible for resale under Rule 144, will become eligible for sale pursuant to Rule 701 90 days following the effective date of this Registration Statement.

Item 10.Recent Sales of Unregistered Securities.

Since its formation, the Company issued a total of 30,000,000 shares of common stock other than shares issued in connection with VCAB merger, shares issued in connection with the formation of the Company and shares issued pursuant to employment or consulting agreements all remaining shares were sold to various investors at a purchase price of $0.50 per share. The Company relied on Section 4(a)(2) of the Securities Act of 1933, as amended. We believe that Section 4(a)(2) was available because none of such issuances involved underwriters, underwriting discounts or commissions; restrictive legends were placed on the certificates representing the shares purchases; and none of such sales were made by general solicitation.

On September 27, 2016, the Company merged with VCAB, pursuant to which VCAB merged with and into the Company, and the separate existence of VCAB ceased. Pursuant to the merger, the Company issued an aggregate of 900,000 Plan Shares to VCAB’s holders of Class 5 Claims and HFG. The issuance of the Plan Shares was in reliance on the exemption provided by Section 1145 of the United States Bankruptcy Code.

24

Item 11.Description of Registrant’s Securities to be Registered.

The following is a summary of the current material terms of our capital stock. Because it is only a summary, it does not contain all information that may be important to you. Therefore, you should read carefully the more detailed provisions of our certificate of formation and bylaws. For information on how to obtain copies of our certificate of formation and bylaws, see “Where You Can Find More Information.”

General

As of the date of this Registration Statement, our authorized capital stock consists of 90,000,000 shares of common stock, no par value per share, and 10,000,000 shares of preferred stock, no par value per share. No other classes of stock are authorized or expected to be authorized under our certificate of formation. The issued and outstanding shares of our common stock are duly authorized, validly issued, fully paid and non-assessable.

Common Stock

Each holder of shares of our common stock is entitled to one vote for each share of common stock held of record by such holder. Holders of our common stock, voting as a single class, are entitled to elect all of the directors of the Company. Matters submitted for shareholder approval generally require a majority vote. Holders of our common stock are entitled to receive ratably such dividends as may be declared by our board out of funds legally available therefor. Upon our liquidation, dissolution or winding up, holders of our common stock would be entitled to share ratably in our net assets. Holders of our common stock have no preemptive, redemption, conversion or other subscription rights.

The registrar and transfer agent for our common stock is Securities Transfer Corporation, 2901 Dallas Parkway, Suite 380, Plano, Texas 75034-8543, (469) 633-0101.

Preferred Stock

Our board has the power, without further vote of shareholders, to authorize the issuance of up to 10,000,000 shares of our preferred stock and to fix and determine the terms, limitations and relative rights and preferences of any shares of our preferred stock. This power includes the authority to establish voting, dividend, redemption, conversion, liquidation and other rights of any such shares. Our preferred stock may be divided into such number of series as our board determines. There are no shares of our preferred stock currently outstanding.

Reports

We will be required to file reports with the SEC under section 15(d) of the Securities Act and the reports will be filed electronically.  The reports we will be required to file are Forms 10-K, 10-Q, and 8-K.  You may read copies of any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549.  You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC also maintains an Internet site that will contain copies of the reports we file electronically.  The address for the Internet site is www.sec.gov.

Item 12.Indemnification of Directors and Officers.

The Company’s certificate of formation provides that no director of the Company will be personally liable to the Company or any of its shareholders for monetary damages arising from the director’s breach of fiduciary duty as a director, with certain limited exceptions.

25

Pursuant to the Texas Business Organizations Code (the “Code”), every Texas corporation has the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation or is or was serving in such a capacity at the request of the corporation for another corporation, partnership, joint venture, trust or other enterprise, against any and all expenses, judgments, fines and amounts paid in settlement and reasonably incurred in connection with such action, suit or proceeding.  The power to indemnify applies only if such person acted in good faith and in a manner such person reasonably believed to be in the best interests, or not opposed to the best interests, of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

The power to indemnify applies to actions brought by or in the right of the corporation as well, but only to the extent of defense and settlement expenses and not to any satisfaction of a judgment or settlement of the claim itself, and with the further limitation that in such actions no indemnification shall be made in the event of any adjudication of negligence or misconduct unless the court, in its discretion, believes that in light of all the circumstances indemnification should apply.

The Registrant’s Amended and Restated Certificate of Formation contains provisions authorizing it to indemnify its officers and directors to the fullest extent permitted by the Act.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions,  or otherwise,  the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Item 13.Financial Statements and Supplementary Data.

Our financial statements included in this Registration Statement begin on page F-1 hereof.

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

There are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.

Item 15.Financial Statements and Exhibits.

Financial Statements

The financial statements and related notes listed on p. F-1 are included as part of this Registration Statement. 

26

Exhibits

Exhibit Exhibit Description

2.5	Certificate of Compliance with Merger, Combination or Acquisition Requirements, filed September 27, 2016
3.1#	Amended and Restated Certificate of Formation of Water Now, Inc.
3.2#	Amended and Restated Bylaws
10.1	General Assembly Agreement between Source One International Co. Ltd. and Water Now, Inc., effective as of April 7, 2017
10.2*	Employment Agreement between Water Now, Inc. and Mark Dyos, effective as of May 1, 2016
10.3	Advisory Agreement between HFG Capital Investments, LLC and Water Now, Inc., entered into April 4, 2016
10.4	Sales Agreement between Water Now, Inc. and Sun Mark (Gulf) JLT, dated March 1, 2017
10.5*	Contractor Agreement between Water Now, Inc. and Phil Marshall, effective as of September 16, 2016
10.6	Administration Agreement between Datacom Warranty Corp. and Water Now, Inc. dated July 29, 2017
10.7	Manufacturing and Distribution Agreement (by and between Cloudburst Solutions, LLC and Water Now, Inc. dated July 1, 2016)
23.1	Consent of Independent Auditors

* Indicates management contract or compensatory plan

# To be filed by amendment

27

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 11, 2017	WATER NOW, INC.
	By: /s/ David King
	David King, Chief Executive Officer

28

FINANCIAL STATEMENTS AND EXHIBITS

Financial Statements – December 31, 2016

Independent Auditor’s Report	F-1
Balance Sheet as of December 31, 2016	F-2
Statement of Operations for period from February 10, 2016 (Inception) December 31, 2016	F-3
Statement of Changes in Shareholders’ Deficit for period from February 10, 2016 (Inception) to December 31, 2016	F-4
Statement of Cash Flows for period from February 10, 2016 (Inception) through December 31, 2016	F-5
Notes to Financial Statements	F-6

Financial Statements – March 31, 2017 and 2016 (unaudited)

Condensed Balance Sheets as of March 31, 2017 and December 31, 2016	F-12
Condensed Statements of Operations for the three Months ended March 31, 2017 and 2016	F-13
Condensed Statements of Cash Flows for the three months ended March 31, 2017 and 2016	F-14
Notes to Financial Statements	F-15

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and

Stockholders of Water Now, Inc.

We have audited the accompanying balance sheet of Water Now, Inc. (the “Company”) as of December 31, 2016, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the period from February 10, 2016 (Inception) to December 31, 2016. Water Now, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Water Now, Inc. at December 31, 2016, and the results of its operations and its cash flows for the period from February 10, 2016 (Inception) to December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.

/s/ MONTGOMERY COSCIA GREILICH LLP

Montgomery Coscia Greilich LLP

Plano, Texas

August 11, 2017

 

F-1

WATER NOW, INC.
BALANCE SHEET
DECEMBER 31, 2016
ASSETS
Cash and cash equivalents	$	336
TOTAL ASSETS	$	336
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Outstanding checks in excess of bank balance	$	2,500
Accrued expenses		80,000
Advance from related party		21,000
Notes payable - related parties		100,000
Total current liabilities		203,500
Total liabilities		203,500
Commitments and contingencies ( Note 6)		—
STOCKHOLDERS' DEFICIT
Preferred stock – no par value, 10,000,000 shares authorized
zero issued and outstanding at December 31, 2016		—
Common Stock -  no par value, 90,000,000 shares authorized,
28,349,500 shares issued and outstanding at December 31, 2016		1,680,000
Accumulated deficit		(1,883,164	)
Total stockholders' deficit		(203,164	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	336

F-2

WATER NOW, INC.
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 10, 2016 (INCEPTION) TO DECEMBER 31, 2016
REVENUES, net	$	—
OPERATING EXPENSES:
Reorganization expenses		615,000
Research and development expenses		738,147
Legal and professional fees		215,979
Other general and administrative expenses		311,038
Total operating expenses		1,880,164
Loss from operations		(1,880,164	)
OTHER EXPENSE
Interest expense		(3,000	)
Total other expense		(3,000	)
Loss before provision for income taxes		(1,883,164	)
Provision for income taxes		—
NET LOSS	$	(1,883,164	)
Loss per share
Basic and fully diluted	$	(0.07	)
Weighted-average number of shares of common stock
Basic and fully diluted		27,091,900

F-3

WATER NOW, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM FEBRUARY 10, 2016 (INCEPTION) TO DECEMBER 31, 2016
								Total
	Common Stock				Accumulated			Stockholders'
	Shares		Amount		Deficit			Deficit
Balance, February 10, 2016 (Inception)		—	$	—	$	—		$	—
Common stock issuances to founder		25,589,500		—		—			—
Common stock issuances for cash		340,000		170,000		—			170,000
Common stock issuances for restructuring		900,000		450,000		—			450,000
Common stock issuances as payment		1,520,000		1,060,000		—			1,060,000
for services compensation
Net loss		—		—		(1,883,164	)		(1,883,164	)
Balance, December 31, 2016		28,349,500	$	1,680,000	$	(1,883,164	)	$	(203,164	)

F-4

WATER NOW, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 10, 2016 (INCEPTION) TO DECEMBER 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,883,164	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Common stock issued as payment for restructuring		450,000
Common stock issued as payment for services compensation		1,060,000
Accrued liabilities		80,000
Net cash used in operating activities		(293,164	)
CASH FLOWS FROM INVESTING ACTIVITIES		—
CASH FLOWS FROM FINANCING ACTIVITIES
Outstanding checks in excess of bank balance		2,500
Advance from related party		21,000
Borrowings on related party notes payable		100,000
Issuances of common stock		170,000
Net cash provided by financing activities		293,500
NET INCREASE IN CASH		336
CASH AT BEGINNING OF PERIOD		—
CASH AT END OF PERIOD	$	336
SUPPLEMENTAL INFORMATION:
Cash paid for interest	$	3,000
Cash paid for income taxes	$	—

F-5

Water Now, Inc.

Notes to Financial Statements

Period from February 10, 2016 (Inception) to December 31, 2016

1. Business and Organization

Water Now, Inc. was incorporated in Texas on February 10, 2016. The founding shareholder received 25,929,500 shares of common stock of the Company upon formation. The Company is expected to contract with third-party manufacturers to build water purification equipment based on its proprietary technology for sale to distributors and various end users. The Company has filed an application for a patent for the design of its water purification technology with the United States Patent and Trademark Office.

On September 27, 2016, the Company consummated a transaction whereby VCAB One Corporation, a Texas corporation (“VCAB”), merged with and into the Company.  At the time of the merger VCAB was subject to a bankruptcy proceeding and had minimal assets, no equity owners and no liabilities, except for approximately 1,500 holders of Class 5 Allowed General Unsecured Claims and a holder of allowed administrative expenses (collectively, “Claim Holders”).  Pursuant to the terms of the merger, and in accordance with the bankruptcy plan, the Company issued an aggregate of 900,000 shares of  common stock (the “Plan Shares”) to the Claim Holders as full settlement and satisfaction of their respective claims.  As provided in the bankruptcy plan, the Plan Shares were issued pursuant to Section 1145 of the United States Bankruptcy Code.  As a result of the merger, the separate corporate existence of VCAB was terminated.  The Company entered into the merger in order to increase its shareholder base in order to, among other things, assist  in satisfying the listing standards of a National securities exchange. The Company recorded total restructuring expenses of $615,000, including $165,000 of consulting fees in cash and $450,000 for the issuance of the Plan Shares for settlement of claims held by the Claim Holders.

2. Going Concern

The Company, which generated a net loss of $1,883,164 for the period from February 10, 2016 (Inception) to December 31, 2016, may not have sufficient cash to fund its current and future operations. There is no assurance that future operations will result in profitability. No assurance can be given that management will be successful in its efforts to raise additional capital from present or future shareholders or from its principal shareholder. The failure to raise additional capital needed to achieve its business plans will have a material adverse effect on the Company’s financial position, results of operations, and ability to continue as a going concern.

3. Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposit accounts with original maturities of three months or less.

Use of Accounting Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant estimates and assumptions made by management related to determining the value of stock-based compensation.

F-6

Water Now, Inc.

Notes to Financial Statements

Period from February 10, 2016 (Inception) to December 31, 2016

3. Summary of Significant Accounting Policies, Continued

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities for a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.

The Company accounts for uncertain tax positions in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 740-10 Income Taxes. ASC 740-10 provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. ASC 740-10 applies a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the Company must determine whether any amount of the tax benefit may be recognized. Second, the Company determines how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition.) No additional liabilities have been recognized as a result of the implementation. Accordingly, the Company has not recognized any penalty, interest or tax impact related to uncertain tax positions.

Stock-Based Compensation

The Company accounts for stock-based compensation under the provisions of ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of compensation expense for stock-based awards made to employees and directors based on estimated fair values on the grant date. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the shorter of the period over which services are to be received or the vesting period.

The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees”. In accordance with ASC 505-50, the Company determines the fair value of stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

The Company estimated the fair value of stock-based awards issued to employees, directors and non-employees during the period from February 10, 2016 (Inception) to December 31, 2016 based on prices paid by unrelated third-parties for the purchases of its common stock during this period.

F-7

Water Now, Inc.

Notes to Financial Statements

Period from February 10, 2016 (Inception) to December 31, 2016

3. Summary of Significant Accounting Policies, Continued

Stock-Based Compensation

The stock-based expenses expense of $1,510,000 recorded by the Company for the period from February 10, 2016 (Inception) to December 31, 2016 is comprised of the following: $450,000 for the settlement of claims of the creditors of VCAB in bankruptcy proceedings, $135,000 for the provision of legal and accounting services, $675,000 for research and development expenses and $250,000 for employees services.

Research and development costs

The Company expenses research and development costs as incurred in accordance with ASC 730 Research and Development. The Company’s research and development activities related to activities undertaken to adapt the water purification technology contributed by its founder for commercial-scale manufacturing. The accompanying statement of operations for the period from February 10, 2016 (Inception) to December 31, 2016 included $738,147 of research and development expenses.

Earnings (Loss) Per Share

Basic earnings (loss) per share are computed by dividing the net income (loss) by the weighted-average number of shares of common stock and common stock equivalents such as outstanding stock options and warrants. Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later.

4. Notes Payable

The Company had two convertible notes payable (the “Convertible Notes”) to stockholders in aggregate principal amount of $100,000 at December 31, 2016. The Convertible Notes mature on August 25, 2017 and bear interest at 12% per annum. The related agreements give the holders of the Convertible Notes the option to convert the amounts outstanding on the Convertible Notes to shares of common stock of the Company at an exercise price pf $0.50 per share. Based on the terms of the conversion feature, the Company had determined that the Convertible Notes did not contain a beneficial conversion feature. As such, the entire proceeds of the Convertible Notes were recorded as a liability. The accompanying statement of operations for the period from February 10, 2016 (Inception) to December 31, 2016 included $3,000 of interest expenses incurred on the Convertible Notes.

F-8

Water Now, Inc.

Notes to Financial Statements

Period from February 10, 2016 (Inception) to December 31, 2016

5. Advance from Related Party

The Company received a non-interest bearing advance without a specified maturity date from a stockholder of the Company. The balance outstanding on the stockholder advance at December 31, 2016 was $21,000.

6. Commitments and Contingencies

Effective as of May 1, 2016, the Company entered into a three-year employment agreement with Mr. Dyos. The agreement calls for monthly payments of $7,000 per month through April 2017 and $15,000 per month thereafter. The employment agreement also provided for the grant of 500,000 shares of common stock, which were fully vested at May 1, 2017. The employment agreement provides for an additional grant of 500,000 shares of common stock on the first day following the second month during which the Company recognizes revenue pursuant to generally accepted accounting principles.

The Company has entered into a two-year accounting consulting services agreement with Mr. Marshall. The accounting consulting services agreement provided for a grant of 100,000 shares of common stock, which fully vested at January 2, 2017. The Company shall pay to Mr. Marshall 75,000 shares of common stock per each completed six months of satisfactory service. The first installment shall be payable at such time as the Company generates revenue from the sale of its products.

7. Income Taxes

The Company’s tax provision is determined using an estimate of an annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The annual effective tax rate for the period ended December 31, 2016 was a combined 38% for the U.S. federal and state statutory tax rates. The Company reviews tax uncertainties in light of changing facts and circumstances and adjust them accordingly. As of December 31, 2016, there were no tax contingencies recorded.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The Company had a deferred tax asset of $715,602 associated with its operating loss for the period from February 10, 2016 (Inception) to December 31, 2016. The deferred tax asset was fully offset with a valuation allowance of $715,602 at December 31, 2016.

The Company has a net operating loss carry-forward for federal and state tax purposes of $1,883,164 at December 31, 2016, that is potentially available to offset future taxable income, which will begin to expire in the year 2036.

8. Subsequent Events

The Company has evaluated all material events or transactions that occurred after December 31, 2016 up to August 11, 2017, the date these financial statements were available to be issued and noted no material subsequent events which would require disclosure.

F-9

WATER NOW, INC.

UNAUDITED FINANCIAL STATEMENTS

MARCH 31, 2017 AND 2016

	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Balance Sheets as of March 31, 2017 (unaudited) and December 31, 2016
	Statements of Operations for the three months ended March 31, 2017 and the period commencing February 10, 2016 (date of inception) through March 31, 2016(unaudited)
	Statements of Cash Flows for the three months ended March 31, 2017 and the period commencing February 10, 2016 (date of inception) through March 31, 2016 (unaudited)
	Notes to Financial Statements

F-10

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Water Now, Inc.

Balance Sheets

	March 31,			December 31,
	2017			2016
	(Unaudited)
ASSETS
Current Assets
Cash	$	14,832		$	336
Other receivable from related party		12,406			—
Total Assets	$	27,238		$	336
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Outstanding checks in excess of bank balance	$	—		$	2,500
Accrued expenses		34,942			80,000
Advance from related party		—			21,000
Notes payable		100,000			100,000
Total Liabilities		134,942			203,500
Commitments and Contingencies - Note 6
Stockholders' Deficit
Preferred stock – no par value, 10,000,000 shares authorized, zero issued and outstanding at March 31, 2017 and December 31, 2016		—			—
Common Stock - no par value, 90,000,000 shares authorized, 29,449,500 and 28,349,500 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively		1,930,000			1,680,000
Subscription receivable		(23,000)			—
Accumulated deficit		(2,014,704	)		(1,883,164	)
Total Stockholders' Deficit		(107,704	)		(203,164	)
Total Liabilities and Stockholders' Deficit	$	27,238		$	336

The accompanying notes are an integral part of these condensed financial statements.

F-11

Water Now, Inc.

Statements of Operations

(Unaudited)

	For the three months ended			For the period from February 10, 2016 (inception) through
	March 31,			March 31,
	2017			2016
Revenues, net	$	—		$	—
Operating expenses
Research and development expenses		19,063			—
Other general and administrative expenses		109,477			58
Total operating expenses		128,540			58
Loss from operations		(128,540	)		(58	)
Other expense
Interest expense		(3,000)			—
Total other expense		(3,000)			—
Loss before provision for income taxes		(131,540	)	$	(58	)
Provision for income taxes		—			—
Net Loss	$	(131,540	)	$	(58	)
Loss per weighted-average share of common stock outstanding, computed on net loss -basic and fully diluted	$	(0.00	)	$	(0.00	)
Weighted-average number of shares of common stock outstanding - basic and fully diluted		29,052,833			25,589,500

The accompanying notes are an integral part of these condensed financial statements.

F-12

Water Now, Inc.

Statement of Cash Flows

(Unaudited)

	For the three months ended			For the period from February 10, 2016 (inception) through
	March 31,			March 31,
	2017			2016
Cash Flows from Operating Activities:
Net loss	$	(131,540	)	$	(58	)
Adjustments to reconcile net loss to net cash used in operating activities
Changes in operating working capital items:
Decrease inaccrued expenses		(45,058	)
Net Cash Used in Operating Activities		(176,598	)		(58	)
Cash Flows from Financing Activities:
Outstanding checks in excess of bank balance		(2,500	)		-
Advances (repayments) on notes payable and advances		(33,406	)		10,500
Issuances of common stock		227,000			-
Net Cash Provided by Financing Activities		191,094			10,500
Increase in Cash		14,496			10,442
Cash at beginning of period		336			-
Cash at end of period	$	14,832		$	10,442
Supplemental Disclosure of Interest and Income Taxes Paid:
Interest paid during the period	$	3,000		$	—
Income taxes paid during the period	$	—		$	—

The accompanying notes are an integral part of these condensed financial statements.

F-13

Water Now, Inc.

Notes to Financial Statements

March 31, 2017

1. Basis of presentation, Background and Description of Business

Basis of presentation

The accompanying unaudited condensed financial statements of Water Now, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements for the year ended December 31, 2016.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month period have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms "Company", "we", "us" or "our" mean Water Now, Inc.

Background and Description of Business

On September 27, 2016, the Company consummated a transaction whereby VCAB One Corporation, a Texas corporation (“VCAB”), merged with and into the Company.  At the time of the merger VCAB was subject to a bankruptcy proceeding and had minimal assets, no equity owners and no liabilities, except for approximately 1,500 holders of Class 5 Allowed General Unsecured Claims and a holder of allowed administrative expenses (collectively, “Claim Holders”).  Pursuant to the terms of the merger, and in accordance with the bankruptcy plan, the Company issued an aggregate of 900,000 shares of common stock (the “Plan Shares”) to the Claim Holders as full settlement and satisfaction of their respective claims.  As provided in the bankruptcy plan, the Plan Shares were issued pursuant to Section 1145 of the United States Bankruptcy Code.  As a result of the merger, the separate corporate existence of VCAB was terminated.  The Company entered into the merger in order to increase its shareholder base in order to, among other things, assist  in satisfying the listing standards of a National securities exchange. The Company recorded total restructuring expenses of $615,000, including $165,000 of consulting fees in cash and $450,000 for the issuance of the Plan Shares for settlement of claims held by the Claim Holders.

2. Going Concern

The Company,which generated a net loss of $131,540 for the three-months ended March 31, 2017, may not have sufficient cash to fund its current and future operations. There is no assurance that future operations will result in profitability. No assurance can be given that management will be successful in its efforts to raise additional capital from present or future shareholders. The failure to raise additional capital needed to achieve its business plans will have a material adverse effect on the Company’s financial position, results of operations, and ability to continue as a going concern.

3. Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposit accounts with original maturities of three months or less.

Use of Accounting Estimates

F-14

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Actual results could differ from those estimates. The most significant estimates and assumptions made by management related to determining the value of stock-based expenses.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities for a change in tax rate is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.

The Company accounts for uncertain tax positions in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 740-10“Income Taxes”. ASC 740-10 provides several clarifications related to uncertain tax positions. Most notably, a “more likely-than-not” standard for initial recognition of tax positions, a presumption of audit detection and a measurement of recognized tax benefits based on the largest amount that has a greater than 50 percent likelihood of realization. ASC 740-10 applies a two-step process to determine the amount of tax benefit to be recognized in the financial statements. First, the Company must determine whether any amount of the tax benefit may be recognized. Second, the Company determines how much of the tax benefit should be recognized (this would only apply to tax positions that qualify for recognition). No additional liabilities have been recognized as a result of the implementation. Accordingly, the Company has not recognized any penalty, interest or tax impact related to uncertain tax positions.

Stock-Based Expenses

The Company accounts for stock-based expenses under the provisions of ASC 718, “Compensation—Stock Compensation”, which requires the measurement and recognition of expense for stock-based awards made to employees and directors based on estimated fair values on the grant date. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the shorter of the period over which services are to be received or the vesting period.

The Company accounts for stock-based expenses awards to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees”. In accordance with ASC 505-50, the Company determines the fair value of stock-based expenses awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

The Company estimated the fair value of stock-based awards issued to employees, directors and non-employees during the period from February 10, 2016 (Inception) to December 31, 2016 based on prices paid by unrelated third-parties for the purchases of its common stock during this period.

The Company has no stock-based compensation for the three months ended March 31, 2017 and for the period from February 10, 2016 (Inception) to March 31, 2016.

F-15

Research and development costs

The Company expenses research and development costs as incurred in accordance with ASC 730,“Research and Development”. The Company’s research and development activities related to activities undertaken to adapt the water purification technology contributed by its founder for commercial-scale manufacturing. Research and development expenses was approximately $19,063 and $0, for the three months ended March 31, 2017 and for the period from February 10, 2016 (Inception) to March 31, 2016, respectively

Earnings (Loss) Per Share

Basic earnings (loss) per share are computed by dividing the net income (loss) by the weighted-average number of shares of common stock and common stock equivalents such as outstanding stock options and warrants. Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later.

Recently Adopted Accounting Pronouncements

Going Concern

In August 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-15 – “Presentation of Financial Statements – Going Concern – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, which requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The updated accounting guidance was effective for the Company on December 31, 2016. We have implemented this new accounting standard and we will update our liquidity disclosures as necessary.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which outlines a single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of the new guidance.

In February 2016, the FASB issued ASU 2016-02 “Leases”. This standard will require entities that lease assets—referred to as “lessees”—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The accounting by entities that own the assets leased by the lessee—also known as lessor accounting—will remain largely unchanged from current GAAP. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018. Modified retrospective application is required, with optional practical expedients available. The Company is currently evaluating the impact of the new guidance. 

4. Notes Payable

The Company had two convertible notes payable (the “Convertible Notes”) to stockholders in aggregate principal amount of $100,000 at March 31, 2017 and December 31, 2016. The Convertible Notes mature on August 25, 2017 and bear interest at 12% per annum. The holders of the Convertible Notes have the option to convert the amounts outstanding under the Convertible Notes to shares of common stock of the Company at an exercise price of $0.50 per share. Based on the terms of the conversion feature, the Company had determined that the Convertible Notes did not contain a beneficial conversion feature. As such, the entire proceeds of the Convertible Notes were recorded as a liability. The interest expenses incurred on the Convertible Notes was approximately $3,000 and $0, for the three months ended March 31, 2017 and for the period from February 10, 2016 (Inception) to March 31, 2016, respectively.

F-16

5.Advance From Related Party

The Company received a non-interest bearing advance without a specified maturity date from a stockholder of the Company. The balance outstanding on the stockholder advance at March 31, 2017 and December 31, 2017 was $0 and $21,000, respectively.

6. Commitments and Contingencies

Effective as of May 1, 2016, the Company entered into a three-year employment agreement with Mr. Dyos. The agreement calls for monthly payments of $7,000 per month through April 2017 and $15,000 per month thereafter. The employment agreement also provided for the grant of 500,000 shares of common stock, which were fully vested at May 1, 2017. The employment agreement provides for an additional grant of 500,000 shares of common stock on the first day following the second month during which the Company recognizes revenue pursuant to generally accepted accounting principles.

The Company has entered into a two-year accounting consulting services agreement with Mr. Marshall. The accounting consulting services agreement provided for a grant of 100,000 shares of common stock, which fully vested at January 2, 2017. The Company shall pay to Mr. Marshall 75,000 shares of common stock per each completed six months of satisfactory service. The first installment shall be payable at such time as the Company generates revenue from the sale of its products.

7. Income Taxes

The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

The Company’s tax provision is determined using an estimate of an annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2017 and 2016 annual effective tax rate is estimated to be a combined 38% for the U.S. federal and state statutory tax rates. The Company reviews tax uncertainties in light of changing facts and circumstances and adjust them accordingly. As of March 31, 2017 and December 31, 2016, there were no tax contingencies recorded.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes.

The Company has a net operating loss carry-forward for federal and state tax purposes of $2,014,704 at March 31, 2017, that is potentially available to offset future taxable income, which will begin to expire in the year 2036. For financial reporting purposes, no deferred tax asset was recognized because at March 31, 2017 and December 31, 2016, management estimates that it is more likely than not that substantially all of the net operating losses will expire unused. As a result, the amount of the deferred tax assets considered realizable was reduced 100% by a valuation allowance. The change in the valuation allowance was approximately $49,985 and $0 for the three months ended March 31, 2017 and for the period from February 10, 2016 (Inception) to March 31, 2016, respectively. 

8. Subsequent Events

The Company has evaluated all material events or transactions that occurred after March 31, 2017 up to August 11, 2017,the date these financial statements were available to be issued and noted no material subsequent events which would require disclosure.

F-17

EX-2

E. P. Keiffer (SBN 11181700) COATS | ROSE P.C.

325 N. St. Paul Street, Suite 4150

Dallas, TX 75201

Phone: (214) 651-6517

Fax: (214) 481-2817

Email: pkeiffer@coatsrose.com

ATTORNEYS FOR HFG CAPITAL INVESTMENTS, LLC

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION 

In re:	§
	§	Jointly Administered
VICTORY MEDICAL CENTER MID-	§
CITIES, LP, et al,	§	CASE NO. 15-42373-RFN-11
	§
Debtor.	§

CERTIFICATE OF COMPLIANCE

WITH MERGER, COMBINATION OR ACQUISITION REQUIREMENTS

TO THE HONORABLE RUSSEL F. NELMS, UNITED STATES BANKRUPTCY JUDGE:

VCAB One Corporation. (“VCAB One”), the debtor formerly known as Victory Medical Center Mid-Cities, LP, files this its

Certificate of Compliance with Merger, Combination or Acquisition Requirements and would respectfully show the Court as

follows:

1.The First Amended Joint Plan of Reorganization for Victory Medical Center Mid-Cities, LP, et al (the “Plan”) was confirmed by order of this Court entered on March 28, 2016. VCAB One is referred to in the Plan as Victory Medical Center Mid-Cities, LP.

2.Pursuant to the Plan, VCAB One was required to complete a merger,combination or acquisition by the Consummation of the Plan Date, as that date was modified in the Notice of Change to Consummation of the Plan Date [DKT #1395] (the “Notice”) in order to secure the discharge under 11 U.S.C. §1141. The revised Consummation of the Plan Date as to VCAB One is no later than four (4) months from the Effective Date of the Plan (May 11, 2016, as noted in the Notice of Effective Date filed in this jointly administered case [DKT #1081]) or September 11, 2016, plus the extension period of seventeen (17) days as contained in the Notice. As such the Consummation of the Plan Date for VCAB One is September 28, 2016.

1

3.VCAB One entered into an Agreement of Plan of Merger (the “Agreement”) with Water Now, Inc. on July

27, 2016. By the Agreement and per the provisions of the Plan and Section 1145(a)(1) of the Bankruptcy Code, Water

Now, Inc., becomes the successor to the renamed Debtor VCAB One by, among other things, issuing nine hundred

thousand (900,000) shares of its common stock as Plan Shares to: a) HFG-CAP (630,000); and b) to holders of allowed

Class 5 Claims (270,000) (as same are to be distributed pursuant to other provisions detailed in the HFG Plan

Supplement to the Plan). Water Now, Inc., on account of the Agreement and subsequent filings required under

otherwise applicable law(hereinafter the post merger entity is referred to as “WNI”) is the successor to the Debtor

VCAB One.

4.Pursuant to the Agreement, WNI is engaged in the business of developing and selling cleansing machinery that makes polluted water potable. The patented technology allows for low and high volume treatment of contaminated water. The applications of the product range from personal to institutional utilization . The former VCAB One and HFG-CAP herein certify to this Court that the closing of the Agreement meets the requirement of the Plan.

Dated: September 27, 2016	Respectfully submitted,
	COATS | ROSE  P.C.
	By:  /s/ E. P. Keiffer
	E. P. Keiffer (SBN 11181700)
	325 N. St. Paul Street, Suite 4150
	Dallas, Texas 75201
	(214) 651-6517 - telephone
	(214) 481-2817 - facsimile
	Email: pkeiffer@coatsrose.com ATTORNEYS FOR HFG CAPITAL INVESTMENTS, LLC

2

EX-10

GENERAL ASSEMBLY AGREEMENT

BETWEEN

Source One International Co. Ltd

AND

WATER NOW, INC.

THIS GENERAL ASSENBLY AGREEMENT (the "Agreement") is made effective as of the 7 day of April, 2017 by and between Source One International Co. Ltd. ("Supplier"), with its place of business at 298 Yong Ding West Road, Economic Development Zone Taizhou, Jiangsu, China 235300 and Water Now, Inc. ("Customer"), with its place of business at 4565 Village Creek Rd., Fort Worth, TX 761 19.

This Agreement shall remain effective and shall govern all pending sales transactions between the parties for a period of two years or until either party tenders a written notice of withdrawal from the Agreement to the other party as set forth below or until the parties enter into another contract that expressly supersedes this one. This Agreement may be renewed prior to the end of the then-applicable term for an unlimited number of one year terms by either party upon thirty (30) days written notice to the other party, with the other party's acceptance of such notice. Acceptance may be by accepting or making an order for Products, or by express written acceptance.

RCITALS

WHEREAS, Supplier wishes to engage in manufacturing of the product code-named "Aqua Lite" defined in this Agreement on behalf of Customer.

NOW, THEREFORE, for good and valuable consideration of the covenants contained herein, intending to be bound hereby, Supplier and Customer agree as follows:

AGREEMENT

1. Definitions

The term "Products" shall mean the product known by the name "Aqua Lite" which is to be assembled by Supplier pursuant to this Agreement.

The term "Order" shall mean a purchase order form submitted by Customer to initiate manufacturing of Products by Supplier.

2. Sale of Products

Supplier agrees to assemble and deliver to Customer such number of units of the Products from the effective date of this Agreement until termination as are ordered by Customer, except as further set forth in this Agreement. All units of the Products assembled and delivered pursuant to this Agreement shall conform to the written specifications agreed to between Customer and Supplier.

3.       Exclusivity and Requirements

Customer will not be required to use Supplier for all its manufacturing needs, unless Supplier provides a firm sales forecast, pursuant to Supplier's rights of sale in Paragraph I I below. If Supplier provides a firm sales forecast, Customer shall order all required Products from Supplier to meet such forecasts.

4.       Order Procedure

(a)       Order Form

Customer must submit an Order form to begin production of the Products. In placing an Order hereunder, Customer may use its own Order form. Any forms or other Order documents used by the parties in placing an Order hereunder may be used for convenience only.

Any terms or conditions contained therein, other than a description of the Products being ordered and delivery schedules, that are inconsistent with or in addition to the terms and conditions of this Agreement shall not be enforced or in effect.

(b) Order Time Frame

Customer shall submit an Order for the Products within 105 days before the delivery date requested in the Order. No less than 60 days and no more than 120 days shall be the customary production time required to manufacture and assemble the Products, subject to delivery of all components required. Delivery will be made to Customer on the dates and in the quantities specified in the Order. In the event delivery is not feasible, Supplier must notify Customer and propose an alternative delivery schedule; Customer may accept or not.

(c) Quotations

When the Products to be manufactured require a custom price quotation due to configurations of equipment not covered in the basic quotation, the Customer must request an individual custom piece production quotation.

(1) Quotation requests must be submitted to Supplier either via fax or email.

(2) Time is of the essence for both parties. Supplier shall submit quotations to Customer by fax or email within I business day of the request. In the event that a quotation requires more than) business day response time, Supplier shall notify Customer as soon as possible of the delay and provide an estimate of when the quotation will be made available.

UNDER NO CIRCUMSTANCES SHALL ORDERS BE ACCEPTED WITHOUT A VALID PURCHASE ORDER FROM CUSTOMER.

5.       Price

The price under this Agreement will be in accordance with the latest price quotation provided by Supplier to Customer. The parties shall use their commercially reasonable efforts to agree, in writing, to the initial price quotation for the Products within two weeks of the date of this Agreement.

(a) Prices will be F.O.B. Supplier's place of business.

(b) Customer may elect to use its preferred shipping method and carrier. Freight, shipping costs, sales, excise and similar taxes imposed by governmental authorities will be the responsibility of the Customer

6. Payment Terms

Unless otherwise indicated on the Customer's first invoice for the completed sales order shall be paid within 30 days following the invoice date with a 30% deposit towards the initial invoice. Subsequent Invoices shall be paid no later than 60 days from date of Invoice. Invoices shall not be dated prior to the date that the Products subject to such invoice have been made available for shipment.

 Increases to pricing under this agreement must be provided by Supplier to Customer in writing no less than 90 days prior to the effective date of the intended pricing increase.

7. Billing

All Invoices and statements shall be communicated promptly to:

WATER NOW, INC. 4565 Village Creek Rd.

Fort Worth, TX 761 19

8. Shipment and Risk of Loss

Shipment and risk of loss will be F.O.B. Supplier's place of business.

9.       Components

Customer understands that Supplier will not manufacture all components to the Products, and some of the components may be manufactured inside or outside of the United States. All final assembly of the heater components shall occur in the United States. The components used must be sourced sufficiently that the Products may be identified as "Made in the US" or other similar moniker pursuant to Federal Trade

Commission Standards. Supplier intends to use the following components, in addition to those components that Supplier manufactures:

Ducar DG9000E Generator

Mobile delivery cart with hand and towing capability and oversized tires

Base frame for unit mounting

Steel jacket cabinet for heater

Powder coated protection cowling

One color cardboard packaging box with instructions and illustrated parts list

If specific components cannot be provided by the respective manufacturers in order to the Order Time frame outlined above, Source One may NOT substitute a component of substantially equal quality, specifications, and capabilities without the prior approval of Customer, all alternate suppliers must be disclosed. Substitutes must also meet the standard set forth above.

10.       Inspection and Acceptance.

All Products delivered under this Agreement must be inspected and approved by Customer at its place of business before acceptance. Defective or excess Products, or Products manufactured by Supplier not in accordance with Customer's specifications, may be rejected by Customer and returned to Supplier, or held by Customer at Supplier's expense and risk. If after 30 days such Products have not been reclaimed or disposed of by Supplier, Customer may sell or otherwise dispose of them for Supplier's account. The unit price for the rejected Products may be debited against the invoice covering the shipment in which such Products were included. In the event payment is made for Products that the Customer has not inspected, payment shall be deemed acceptance of the Products.

Supplier shall provide to Customer or its designated representatives, upon prior written notice of not less than three (3) days, and during normal business hours, reasonable access to all facility(ies) utilized by Supplier for the assembly ofthe Products, sufficient for Customer or its designated representatives to monitor the use of all proprietary technology of Customer during the manufacture and assembly of the Products and to assure compliance with the terms of this Agreement and all quality requirements of Customer, which access shall include review by Customer or its designated representatives of pertinent documents and records related to such assembly process. Supplier shall act promptly and in good faith to provide such access so long as such access does not materially disrupt Supplier's operation of its business.

11.       Sales by Supplier

It is anticipated that Supplier may sell the Products using Supplier's own distribution and sales channels, or any such channels developed in the future. Supplier's sales will be governed by a separate agreement. Subject to the terms in such separate agreement, Supplier may sell in any region except Africa, India, Pakistan, and Afghanistan.

12.        Warranty

Supplier warrants the Products that they manufacture are free against defects in material and workmanship for a period of 365 days from the date of shipment for those Products sold by Customer in the North America, Central America, and South America. Supplier's obligation under this warranty is limited to repair or replacement of the Product that proves to be defective upon inspection according to specifications agreed upon by Supplier and Customer on manufactured Products.

This warranty does not apply to any Products that have been repaired or altered by any person other than the Supplier in a manner that Supplier determines adversely affects the performance or reliability of the Products.

This warranty does not apply to any Products that have been subject to misuse, neglect, lack of maintenance, or accident.

This warranty is in lieu of all other warranties, expressed or implied, including any warranty as to the merchantability or fitness for a particular purpose. Under no circumstances shall Supplier be responsible for any damages to other property of Customer, loss of use or downtime, loss of profit or goodwill, or any incident or consequential damages under this warranty.

Supplier is not responsible for any warranty of sourced products, supplied by the customer as part o fthe suppliers build out, however sourced product used by the supplier in order to complete their manufacturing is their responsibility to warrant under this agreement.

No warranty, express or implied, including any warranty as to the merchantability or fitness for a particular purpose, is provided for any sales other than those outlined in this paragraph. However, Customer will have use of the Maruyama certified technical support centers available to assist such sales where Maruyama pumps are involved.

13.       Non-Disclosure

Customer shall not reveal any tooling, specifications, materials, drawings, designs, or other property, including but not limited to, any data or information supplied by Supplier; nor disclose to third parties any of the details connected with this Agreement without the prior written consent of Supplier. All specifications, or other information relating to the Products shall be the sole property of Customer, and Supplier agrees to deliver the same to Customer upon Customer's request. Supplier shall use the proprietary technology of Customer only in connection with supplying the Products under this Agreement and for no other purpose. Supplier acknowledges and agrees that Customer may disclose the contents of this Agreement to such regulatory authorities, including but not limited to the United States Securities and Exchange Commission, as it deems reasonable or necessary.

 14.    Assignment

This Agreement binds and inures to the benefit of Supplier, its successors and assigns and Suppliers customers for the Products. It also binds and inures to the benefit of Supplier, its successors and assigns. Supplier may not assign any right or interest in this Agreement or delegate the performance of any of its obligations, except with Customer's prior written consent.

15.       Force Majeure

Customer and Supplier will be excused for delay or failure to make or accept delivery hereunder if such delay or failure results from acts or omissions that are beyond the reasonable control and without the fault or negligence of the delayed party. This includes without limitation, Government embargoes, blockades, seizure or freeze of assets, delays or refusals to grant an export license or the suspension or revocation thereof, or other acts of the Government, fires, floods, severe weather conditions, or any other acts of God, quarantines, labor strikes or lockouts, riots, strife, insurrection, civil disobedience, war, material shortages or delays in deliveries to Supplier by third parties. Each party shall promptly notify the other of any such delay or failure and the cause thereof.

16.       Termination

Either party may terminate this agreement by receipt of written notice to the other in the event that production is not possible. Written notice may be delivered by regular mail or fax. Such termination will become effective one hundred eighty (180) days after receipt by the other party.

(a) Supplier Initiated Termination:

Supplier may terminate this Agreement immediately and cancel any Order issued hereunder by giving written notice to Customer if:

(1) Customer refuses or fails to make payment for conforming Products within the time due under this Agreement or an extension thereof; or

(2) Customer fails to comply with provisions of this Agreement and does not cure any such failure within a period often days after written notice from Supplier specifying such failure; or

(3) Customer becomes subject to bankruptcy, receivership, insolvency, or institutes or has instituted against it a proceeding for any of the foregoing or if Customer's assets are attached or assigned to creditors.

In the event of termination, Supplier shall resell any materials manufactured at the time often-termination for any pending Order or shall reconfigure them, as reasonably necessary for resale, and resell unfinished goods for scrap or salvage.

Customer shall be liable to Supplier for any excess cost incurred by Supplier as a result of such termination, unless the default of Customer is due to causes described in the section of this Agreement on Excusable Delay and without the fault or negligence of Customer.

(b) Customer Initiated Termination:

(1) Upon receipt of such notice, Supplier shall, to the extent specified in the notice, stop work and any placement of subcontracts for a pending Order, terminate work under outstanding subcontracts, and take any necessary action to protect property in Supplier's possession in which Customer has or may acquire an interest.

(2) In the event of Customer initiated termination, Customer shall pay to Supplier, without duplication:

(i) Amounts due for Products; and

(ii) Actual costs incurred by Supplier if properly allocable or apportioned under recognized commercial accounting practices to the terminated portion of the Order, including but not limited to liabilities to subcontractors that are allocable, and excluding any changes for interest or material or parts that may be delivered to another Order; and

(iii) Reasonable profit on work actually done by Supplier prior to such termination; and

(iv) Reasonable costs of settlement, provided that the total to be paid by Customer under this paragraph shall not exceed the Order price and provided further that if it appears that Supplier would have sustained a loss on the entire Order had it been completed, no profit shall be included or allowed, and an appropriate adjustment shall be made reducing the amount of the settlement to reflect the indicated rate of loss.

Termination of this Agreement by Customer will not affect a pending Order or custom Order.

17. Compliance with Laws

Products to be furnished under this Agreement shall be produced in compliance with all applicable federal, state and local laws, regulations and ordinances of the United States.

18. Choice of Law

This Agreement shall be governed by, and interpreted and construed in accordance with, the laws of the State of Texas and the parties hereby irrevocably consent to the jurisdiction of any state or federal court in Tarrant County, Texas for the resolution of any lawsuit brought to enforce any right or obligation arising hereunder.

19. Remedies

The remedies herein provided shall be cumulative and in addition to any other remedies allowed by law or in equity. No waiver of a breach of any provision of this Agreement by either party shall constitute a waiver of any other breach of this Agreement at the present or a future time of any other right. Failure by either party to assert all or any of its rights upon any breach of this Agreement shall not be deemed a waiver of such rights either with respect to such breach or any subsequent breach, nor shall any waiver be implied from the acceptance of any payment or service. No waiver of any right shall extend to or affect any other right either party may possess, nor shall such waiver extend to any subsequent similar or dissimilar breach.

20.       Indemnity

(a) Supplier agrees to indemnify, defend and hold harmless Customer, its directors, officers, agents and employees in all respects from and against any and all claims, demands, suits or causes of action and any resulting settlements, awards or judgments, together with all costs and expenses (including reasonable attorneys' fees) (collectively, "Claims") arising out of (i) Supplier's breach of its obligations under this

Agreement, (ii) the negligence or wrongful conduct of Supplier in its obligations under this Agreement, and (iii) the Products (including, but not limited to any property damage or bodily injury), but only to the extent that Supplier's negligence or wrongful conduct was the primary factor in the Products causing such property damage or bodily injury. This provision will survive the termination of this Agreement.

(b) Customer agrees to indemnify, defend and hold harmless Supplier, its directors, officers, agents and employees in all respects from and against any and all Claims arising out of (i) Customer's breach of its obligations under this Agreement, (ii) the negligence or wrongful conduct of Customer in its obligations under this Agreement; or (iii) the Products (including, but not limited to any property damage or bodily injury), but only to the extent that Supplier does not owe indemnification therefore to the Customer pursuant to subsection (a)(iii) above. This provision will survive the termination of this Agreement.

21. Limitations of Liability

Customer's liability to Supplier hereunder shall not, under any circumstances, be greater than the total dollar amount of a particular Order issued pursuant to this Agreement from which a dispute may arise.

22. Severability

If any provision of this agreement is found to be invalid or unenforceable, then the remainder shall have full force and effect, and the invalid provision shall be modified or partially enforced to the maximum extent permitted by law to effectuate the purpose of the agreement. To the extent permitted by law, each party hereby waives any provision of law that renders any provision of this Agreement prohibited or unenforceable in any respect.

23. Entire Agreement

This instrument contains the entire agreement between the parties, and it is expressly understood and agreed that no promises, provisions, terms, warranties, conditions or obligations whatsoever, whether express or implied, other than herein set f01th, shall be binding upon either party. Any subsequent additions, deletions or modifications to this agreement shall not be binding upon the parties unless the same are mutually agreed upon and incorporated herein in writing signed by both parties.

[Remainder of page intentionally blank]

IN WITNESS WHEREOF, the parties indicate their acceptance to the terms and conditions of this Agreement by signing and dating below.

	Water Now, Inc.
By

	Source One International Ltd.
By

Some of the consequences of unsafe drinking water are:

•        Unsafe water causes 80% of diseases and kills more people every year than all forms of violence, including war.

•        A third of the world's population endures some form of water scarcity due to unsafe water conditions.

•        Half of the world's hospital beds are filled with people suffering from water-related illnesses.

•        Dysentery remains the second leading cause of death among children under five globally and kills more children than AIDS, malaria and measles, combined.

The Aqua product line meets or exceeds EPA standards regarding the removal of the following regulated contaminants:

Contaminant	Aqua Base Model	Aqua+ Model
Pathogens	☐	☐
Microorganisms: Cryptosporidium, Giardia lamblia, Legionella, Coliforms, Viruses	☐	☐
Organic Chemicals: Benzene, Chloroform, Naphthalene, Phenol, Styrene, Toluene, Trichloroethene	☐	☐
Inorganic Chemicals: Antimony, Arsenic, Barium, Berylliam, Cadmium, Chloride, Chromium, Copper, Cyanide, Flourine, Lead, Inorganic Mercury, Selenium, Thallium	☐	☐
Salt		☐

The Aqua product line

EX-10

advisory agreement

THIS ADVISORY AGREEMENT (“Agreement”) is made and entered into on this 4th day of April 2016, by and between HFG Capital Investments, LLC, a Texas limited liability company (“HFG”) and Water Now, Inc., a Texas corporation (the “Company”).

W I T N E S S E T H:

WHEREAS, the Company desires to engage HFG to provide, during the Authorization Period, the advisory and consulting services specifically enumerated below related to the Going Public Transaction and the Post-Transaction Period (each as hereinafter defined), and HFG is willing to be so engaged.

NOW, THEREFORE, for and in consideration of the covenants set forth herein and the mutual benefits to be gained by the parties hereto, and other good and valuable consideration, the receipt and adequacy of which are now and forever acknowledged and confessed, the parties hereto hereby agree and intend to be legally bound as follows:

1.Retention. As of the date hereof, the Company hereby retains and HFG hereby agrees to be retained as the Company’s advisor during the term of this Agreement. The Company acknowledges that HFG shall have the right, at its own expense, to engage third parties to assist it in its efforts to satisfy its obligations hereunder. Except as otherwise provided for herein, HFG shall not be responsible for any costs of services of any other third parties (including but not limited to legal counsel or other financial advisors) retained directly by the Company, its management and/or shareholders. In its capacity as an advisor to the Company, HFG is hereby agrees to:

A. Going Public Transaction

Assist the Company in effecting a going public transaction (a “Going Public Transaction”) by acquiring a shareholder base (the “Shareholders”) necessary to qualify for listing on the OTC Marketplace and thereafter on either the NASDAQ Stock Market or the NYSE/AMEX Exchange. To acquire the Shareholders the Company will act as a “successor to the debtor” as contemplated by the confirmed Chapter 11 plan of bankruptcy of VICTORY MEDICAL CENTER MID-CITIES, LP, Case No. 15-42373-rfn in the United States Bankruptcy Court, Northern District of Texas, Fort Worth Division (the “Plan”) and will issue shares of its common stock to the Shareholders in satisfaction of their claims under the Plan. The issuance will be exempt from registration under Section 5 of the Securities Act of 1933, as amended, as the distribution to the Shareholders shall be effectuated pursuant to Section 1145 of the United States Bankruptcy Code. It is anticipated that the Going Public Transaction shall be completed on or before August 1, 2016. In the event that the Company is unable to effect a Going Public Transaction with an entity covered by the Plan, HFG shall provide a vehicle necessary to effect a Going Public Transaction in a fashion described above or via a combination with an existing public company.

As a result of the Going Public Transaction, the Shareholders, including HFG, shall collectively own 900,000 shares of the Company’s issued and outstanding common capital stock, which amount shall represent three percent (3%) of the Company’s anticipated issued and outstanding shares at the time of issuance.

ADVISORY AGREEMENT – Page 1

B. Post Transaction Period

Upon consummation of the Going Public Transaction, and until the end of the Authorization Period (as defined in Section 3, below) HFG shall:

(i)identify a law firm that shall prepare a registration statement on Form 10 so as to register the Company’s common stock under Section 12 of the Securities Exchange Act of 1934, as amended. HFG shall be responsible for the payment of all legal fees associated with the preparation, filing and clearing of all comments related to such registration statement. Edgarization and non-legal expenses shall be borne by the Company;

(ii)identify and help negotiate the retention of a PCAOB registered firm to act as the Company’s independent audit firm;

(iii)introduce registered broker/dealer that will file the Form 211 Application with FINRA so as to allow the Company’s common stock to be eligible for trading on the OTC Marketplace. HFG shall assist the Company in providing the information necessary to prepare and file the Form 211 Application.

(iv)assist in developing and implementing the Company’s investor relations efforts. The Company agrees that all costs and expenses charged by investor relations and press relations firms introduced by HFG and engaged by the Company will be the sole responsibility of the Company;

(v)identify candidates to serve as independent members of the Company’s Board of Directors;

(vi)assist in the engagement of Securities Transfer Corporation as the Company’s transfer agent and registrar;

(vii)at the appropriate time, provide assistance and guidance in the preparation and assembly of application materials for the listing of the Company’s common stock on either the NASDAQ or NYSE/AMEX stock markets; and

(viii)provide the Company with such additional advisory services as may be reasonably requested, to the extent HFG has the expertise or legal right to render such services.

ADVISORY AGREEMENT – Page 2

2.Authorization. Subject to the terms and conditions of this Agreement, the Company hereby appoints HFG to act on a best efforts basis as its consultant during the Authorization Period (as hereinafter defined, in Section 3, below). HFG hereby accepts such appoint, with it being expressly acknowledged that HFG is acting in the capacity of independent contractor and not as agent of the Company.

In addition, except in the event of an act constituting either negligence, willful misconduct or gross negligence on the part of HFG, the Company agrees that it will not hold HFG responsible in the event that the Going Public Transaction is not consummated, nor shall it hold HFG liable for any damages suffered by the Company, its managers and/or shareholders as a result of the Company’s inability to consummate the Going Public Transaction. It is expressly acknowledged by the Company that HFG shall not render legal or accounting advice in connection with the services to be provided herein.

3.Authorization Period. HFG’s engagement hereunder shall become effective on the date hereof (the “Effective Date”) and will automatically terminate (the “Termination Date”) on 12 months from the Effective Date. This Agreement shall also terminate immediately upon the decision of a party not to move forward with the Going Public Transaction.

4.Fees and Expenses. In consideration for the services to be provided by HFG under the terms of this Agreement, HFG shall be entitled to receive from the Company a fee of $ 225,000 (the “Fee”). The Company agrees to pay to HFG the amount of $10,000 for services that it will be required to perform advance of the Going Public Transaction. The balance of the Fee, or $215,000, less any other advances, shall be shall be immediately payable, via wire-transferred funds, upon the closing date of the Going Public Transaction.

In addition, the Company shall reimburse HFG for all documented expenses incurred by HFG personnel during the term of this Agreement. Prior to any incurrence of related expenses, HFG shall seek the Company’s permission. Reimbursement is to be made within 10 days of receipt of a written request for reimbursement.

5. Indemnification. The parties hereto shall indemnify each other to the extent provided for in this paragraph. Except as a result of an act of gross negligence or willful misconduct on the part of a party hereto, no party shall be liable to another party, or its officers, directors, employees, shareholders or affiliates, for any damages sustained as a result of an act or omission taken or made under this Agreement, nor for any loss or damage arising from the termination of this Agreement, for any cause whatsoever. In those cases where gross negligence or willful misconduct of a party is alleged and proven, the non-damaged party agrees to defend, indemnify and hold the damaged party harmless from and against any and all reasonable costs, expenses and liabilities suffered or sustained as a result of the act of gross negligence or willful misconduct.

ADVISORY AGREEMENT – Page 3

6.Governing Law and Dispute Resolution. The laws of the State of Texas shall govern this Agreement. The Parties agree that any dispute, claim or controversy arising out of, relating to, or in connection with this Agreement, or the breach, termination or validity thereof shall be finally settled by arbitration. The American Arbitration Association shall administer arbitration. The Arbitral Tribunal shall decide all issues based on the substantive laws of the State of Texas, without regard to conflict of laws principles. The Arbitral Tribunal will be composed of three arbitrators, with each party having the right to appoint one member. The first two appointees shall appoint the President of the Arbitral Tribunal. In case there is no agreement between the arbitrators as to the appointment of the President of the Arbitral Tribunal within the time frame established by AAA rules, the President of the Arbitral Tribunal shall be appointed as set forth by AAA rules. The parties shall bear the costs of the procedures, including the arbitrators’ fees, in the proportion to be determined by the Arbitral Tribunal or, in the absence of any such determination, the defeated party shall bear the costs of the procedures as well as reimburse the other party of all and any amounts disbursed pursuant to such arbitration proceeding, including but not limited to the arbitrators’ fees and any other amounts, costs and expenses. The arbitration shall be the exclusive method for resolution of any dispute, claim or controversy under this Agreement and the arbitration award shall be final, conclusive and binding.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

HFG:

HFG Capital Investments, LLC


By: _________________________________________
Kevin B. Halter, Jr., Manager

The Company:

Water Now, Inc.

By: _________________________________________
___________________________________
Its: ___________________________________

ADVISORY AGREEMENT – Page 4

EX-10

 

 

 

EX-10

   

CONTRACTOR AGREEMENT

This Contractor Agreement (hereinafter "Agreement") is made by and between Water Now Inc. hereinafter "Water Now"), a Texas Corporation, and Phil Marshall (hereinafter "Marshall"), is effective as of 9/8/16, 2016 (the "Effective Date").

WHEREAS, Water Now desires to contract Marshall in the position of Financial Consultant, pursuant to the terms of this Agreement.

NOW, THEREFORE, in consideration of the premises, mutual covenants, and agreements of the parties stated herein, Water Now and Marshall agree as follows:

1.1 Nature& Duties. Water Now Contracts Marshall in the capacity of Financial Consultant. Marshall will participate in the management of Water Now's business. Marshall will serve Water Now in a part-time capacity, diligently, and to the best of his ability, devoting his necessary time and attention to such Contractor. Marshall shall discharge his duties under the direction and supervision of the Chief Executive Officer (hereinafter "CEO") of Water Now, or such designee as the CEO may later name.

1.2 Term. This Agreement shall remain in effect for two (2) years, beginning on the Agreement's effective date. Upon the mutual agreement to be documented in writing, this Agreement may be extended thereafter by the parties.

2.1 Primary Compensation. Water Now shall pay to Marshall Seventy-Five Thousand (75,000) shares of its stock per each completed six (6) months as a satisfactory Contractor. The first installment shall be payable at such time as Water Now generates revenues from the sale of products manufactured by Water Now. In the event of termination of this Agreement, Marshall shall receive the pro-rated number of shares due to him as of the date of termination. Any share increases are at the sole discretion of the CEO of Water Now.

Marshall hereby acknowledges and agrees that these shares of stock, and all other shares of stock he receives during his Contract are transferred restricted for the immediate one (l) year period after his date of receipt by issuance or transfer.

2.2 Bonus Compensation. In addition to the primary compensation which Marshall is to receive hereunder, Water Now shall tender to Marshall, a one-time bonus payable upon execution of the agreement of One Hundred Thousand (100,000) shares of stock in Water Now. To the extent that Marshall continues to serve in the capacity of a Financial Consultant to Water Now on January 2, 2017, such shares shall vest and not be subject to forfeiture. If Marshall does not continue to serve in such capacity on January 2, 2017, such shares shall be forfeited to Water Now. These shares of stock are subject to the same transfer restriction as described in Section 2. l .

2.3 Health Insurance & Benefits. As of the effective date of this Agreement, Water Now affirms that it is not subject to the Employer Mandate pursuant to the Affordable Care Act. Water Now shall neither provide nor subsidize any health insurance policies or premiums for Marshall. If during the term of this Agreement, Water Now does become subject to such Employer Mandate, it agrees to provide at least the minimum required health insurance to Marshall.

As a Contractor Marshall shall not be entitled to any paid vacation days per. However, it is agreed that Marshall shall notify the CEO of any time off to be taken so that appropriate steps can be taken to resolve any duties under this agreement.

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 3.1 Termination. ln the event of voluntary resignation by Marshall or the termination of his Contract by Water Now for "Cause" prior the expiration of this Agreement's term, Marshall shall receive no severance compensation other than the fixed compensation and benefits eamed and accrued as of such termination date.

Termination for "Cause" means as follows: (i) any act or omission constituting misconduct or negligence, fraud, misappropriation, embezzlement, conflict of interest or competitive business activities, including but not limited to any arrest on criminal charges; (ii) any chemical dependence which materially adversely affects the performance of duties and responsibilities; (iii) breach of fiduciary obligations to Water Now in a material respect; (iv) repeated failure to perform the duties of Water Now after written notice of the alleged failure and a reasonable opportunity to cure; (v) material breach of Water Now's policies or any material provision of this Agreement; or (vi) gross misconduct resulting in substantial loss to Water Now or damage to its reputation.

4.1 Covenants Protecting Proprietary Assets. It is expressly understood by the parties that all covenants contain in Section 4 are essential components of this Agreement and that but for Marshall's agreement to comply with these covenants, Water Now would not enter into this agreement.

4.2 Confidentiality: Non-Disclosure. Water Now owns, controls, and has exclusive access to certain proprietary information including, but not limited to, patents, designs, plans, processes, and procedures. Marshall may through his Contractor agreement become privy to such proprietary infOrmation and, in addition, may learn or have access to other confidential information, including but not limited to, financial information, personnel information, customer and supplier lists, pricing schemes, sales information, manner of operation, know-how, and other trade secrets. Marshall hereby agrees not to disclose or otherwise reveal any information, materials, presentations, or any accompanying knowledge given to him or acquired through time at Water Now as a Contractor. Furthermore, Marshall agrees to not disclose the content or deliver copies of any confidential or financial information or materials to any third parties without the express written consent of the CEO.

4.3 Restrictions on Competition. During the term of Marshall's Contract with Water Now and for a period of two (2) years thereafter, Marshall agrees that he will not directly or indirectly, own, operate, manage, consult with, control, participate in the management or control of, be Contracted by, maintain or continue any interest whatsoever in any enterprise located with Water Now's geographic sales territory, which manufactures, processes, sells, distributes, or markets the same or similar products as Water Now, without the prior express written consent of the CEO.

4.4        Non-Solicitation. During the term of Marshall's Contract with Water Now and for a period of two (2) years thereafter, Contractor agrees that he will not solicit or contact any of the customers, clients, brokers, or affiliates with whom Marshall has had contact during the term of his Contractor with Water Now.

4.5 Remedies for Violation. Marshall acknowledges that his adherence to the terms of the covenants set forth in Sections 4.2, 4.3, and 4.4 are necessary to protect the value of Water Now's business, that a breach of such covenants will result in irreparable and continuing damage to Water Now, and that money damages would not adequately compensate Water Now for any such breach, and therefore that Water Now would not have an adequate remedy at law. In the event that Water Now must commence any action or proceeding to enforce such provisions, Marshall hereby waives his claims or defenses in such action that (i) money damages are adequate to compensate Water Now for the breach; and that (ii) there is an adequate remedy at law available to Water Now. In addition to any and all remedies at law, Water Now shall have the right, without bond or other security, to an injunction, both temporary and permanent, specific performance, and/or other equitable relief to prevent violation of such provisions. The parties agree that the remedies of Water Now are cumulative, and seeking or obtaining injunctive or other equitable relief shall not preclude the making of a claim for damages or other relief. The parties further agree that Water Now shall be entitled to such damages as it may show it has sustained by reason of such breach. In addition, Water Now shall be entitled to recover in any action brought to enforce such provisions its reasonable attorneys' fees and other expenses of litigation, together with such other and further relief as may be proper.

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 On termination of this Agreement, Marshall agrees that he will not engage in the business of financial consultant, or for an Employer, selling or manufacturing the same or similar products as Water Now within the sales territory of Water Now for a period of two (2) years (hereinafter "Non-Competition Period").

5.1 Binding Agreement. This Agreement and all rights of Water Now shall inure to the benefit of and be enforceable by Water Now, its successors and assigns. This Agreement and all rights of Marshall hereunder shall inure to his benefit and be enforceable by him, or his personal/legal representatives.

5.2 Entire Agreement. This Agreement constitutes the entire understanding of the parties and supersedes any prior agreements, written or oral. Past practice and course of dealings between the parties shall not be used to amend the terms of this Agreement. All amendments or modifications, including oral modification supported by new consideration, must be reduced to writing and be executed by duly authorized representatives in the same manner as this Agreement before becoming effective.

5.3 Governing Law & Severability. This Agreement shall be governed by the laws of the State of Texas. Venue shall be Dallas County, Texas. If any provision of the Agreement shall be held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall in no way be impaired thereby. The failure of either party to require the performance of any of the terms of this Agreement or the waiver by either party of any breach shall not prevent a subsequent enforcement of such terms, or be deemed a waiver of any subsequent breach.

5.4 Notices. All notices, demand, or other communication made or given in connection with this Agreement shall be in writing and personally delivered, sent by facsimile, or mailed by certified mail addressed to the respective parties as follows:

Water Now:	Water Now, Inc. 3530 Forest Lane, Suite 255 Dallas, Texas 75234 Fax: (214) 526-2156
Phil Marshall:	2906 Becket Ct. Garland, TX 75044

5.5 Language. The language in all of the Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against either party.

5.6 Binding Arbitration. Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by binding arbitration administered by the American Arbitration Association under its Rules. The venue for the arbitration shall be Dallas, Texas, applying the laws of the State of Texas. Judgment by the arbitrator(s) may be entered in any court having jurisdiction thereof.

 IN WITNESS WHEREOF, the parties executed this Agreement to be effective as of the Effective Date.

WATER NOW, INC.

By: _____________________________

DAVID G. KING, Chief Executive Officer 

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EX-10

Administration Agreement

State of Georgia

This Administration Agreement, hereinafter referred to as "Agreement," is entered into and made effective as of the date set forth at the end of this document by and between the following parties:

DATACOM WARRANTY CORP., a corporation, incorporated under the laws of the state of Georgia, having its principal place of business at the following address:

4080 MCGINNIS FERRY RD

SUITE 502

ALPHARETTA, GA 30005 and

WATER NOW INC., a corporation, incorporated under the laws of the state of Texas, having its principal place of business at the following address:

4145 TRAVIS STREET

SUITE 201

DALLAS. TEXAS 75204

Hereinafter, "Client" will refer to and be used to describe the following party: WATER NOW INC.

"Service Provider" will refer to and be used to describe the following party: DATACOM WARRANTY CORP. Client and Service Provider may be referred to individually as "Party" and collectively as the "Parties."

RECITALS:

WHEREAS, Client wishes to retain the Services (as defined below) of Service Provider;

WHEREAS, Service Provider has the skills, qualifications, and expertise required to provide the

Services to the Client;

WHEREAS, Service Provider wishes to render such Services to Client.

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NOW, therefore, in consideration of the promises and covenants contained herein, as we// as other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the Parties do hereby agree as follows:

Article 1 - DEFINITIONS:

As used in this Agreement:

A)"Services" shall be used to refer to the following specific services that the Service Provider will provide to the Client under the terms and conditions set forth herein:

ADMINISTRATION OF MANUFACTURER'S WARRANTIES FOR THE WATER NOW

MACHINE. EACH MACHINE WARRANTY WILL BE FOR 12 MONTHS FROM SHIP DATE.

B)"Commencement Date" shall be used to refer to the date the Service Provider begins work on the Services for the Client. The Commence Date shall be __________.

C)"Completion Date" shall be used to refer to the date that the Service Provider will complete or cease the provision of Services to the Client. The Completion Date is currently unknown, and for the purposes of this Agreement, will mean the date in the future that the Service Provider has completed the rendering of all services to the Client.

D)"Fees" shall be used to refer to the payment Client will pay to Service Provider for the rendering of the Services. Specifically, the fees shall be as follows:

$30.00 (THIRTY dollars), as a fixed fee for all WATER NOW MACHINES SHIPPED

Article 2 - AGREEMENT:

Subject to the terms and conditions of this Agreement, Service Provider hereby agrees to render the Services to Client, beginning on the Commencement Date and ending on the Completion date, , and Client agrees to pay Service Provider the Fees required for the Services.

Article 3 - LOCATION:

Service Provider will render the Services anywhere the Service Provider considers appropriate to the type and nature of the work required to complete the Services.

Article 4 - SUBCONTRACTORS

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The Service Provider shall be permitted to use subcontractors in the provision of Services to the Client. The Service Provider shall be responsible for the work of a subcontractor whose work shall be undertaken to the same standard as required by this Agreement. However, the Parties acknowledge and agree that some subcontractors have their own terms and conditions on which they trade and which are more restrictive than the provisions in this Agreement. For example, without limiting the generality of the foregoing, a subcontractor may have more restrictive wording as to the standard it will meet in work it performs (as to timing or quality), what is to happen if that standard is not met, and the restriction and exclusion of liability. Where the terms and conditions of a subcontractor are more restrictive or exclusory than the provisions of this Agreement, the Parties agree that work provided by a subcontractor will be governed by the terms and conditions of the subcontractor rather than the provisions of this Agreement.

Article 5 - STAFF OR EMPLOYEES:

The Service Provider may use any staff or employees that the Service Provider deems fit and capable in the provision of the Services to the Client.

Article 6 - FEES:

The Client agrees to pay the Service Provide the required Fees, as outlined elsewhere in this Agreement, for the provision of the Services, subject to the following terms and conditions:

A)Invoice Interval: The Service Provider will be entitled to invoice the client at the following time period: Monthly.

B)    Invoice Period: The Client shall have the following time period in which to pay the Service Provider's invoice:

EACH MONTH CLIENT WILL PROVIDE SERVICE PROVIDER A LIST OF SERIAL NUMBERS OF ALL MACHINES SHIPPED WITH NAME AND CONTACT OF PURCHASER. A CHECK FOR

$30.00 FOR EACH MACHINE WILL BE TRANSFERRED TO SERVICE PROVIDER'S BANK ACCOUNT

C) Method of Payment: Service Provider will accept the following forms of payment:

BANK TRANSFER.

D)Expenses: The Service Provider is responsible for the management and payment of any and all expenses incurred in the rendering of the Services and is not permitted to charge is any such expenses back to the Client.

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E) Penalties: If the Client does not pay the invoiced and required amount by the date stated in the invoice or as otherwise provided for in this Agreement, the Service Provider shall be entitled to:

l) require Client to pay for the Services, or any remaining part of the Services, in advance;

Il) Cease performance of the Services completely or until payment is made, at the Service Provider's sole and exclusive discretion.

F) Tax Statement: Any and all charges payable under this Agreement are exclusive of taxes, surcharges, or other amounts assessed by state or federal governments. Taxes imposed upon or required to be paid by Client or Service Provider shall be the sole and exclusive responsibility of each, respectively.

Article 7 - CLIENT OBLIGATIONS:

During the provision of the Services, the Client hereby agrees to:

A)Cooperate with the Service Provider for anything the Service Provider may reasonably require;

B)Provide any information and/or documentation needed by the Service Provider relevant to the provision of Services or payment for the provision of Services;

C)Require any staff or agents of the Client to co-operate with and assist the Service Provider as the Service Provider may need;

Article 8 - INTELLECTUAL PROPERTY:

In accordance with the terms and conditions of this Agreement, the Service Provider may create certain intellectual property ("Created IP"), including, but not limited to, plans, drawing, specifications, reports, advice, analyses, designs, methodologies, code, artwork, or any other intellectual property as required to render the provision of Services to the Client. Unless the Parties otherwise agree, any such Created IP generated by the Service Provider in connection with the provision of Services to the Client shall belong to the Client.

Any intellectual property provided by the Client to the Service Provider to assist in the provision of Services, that was not created by Service Provider pursuant to this Agreement, shall belong to the Client. Any ancillary intellectual property belonging to the Service Provider, provided or shown to the Client in any way, that was not created by the Service Provider pursuant to this Agreement, shall belong to the Service Provider.

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Article 9 - CONFIDENTIALITY:

Each Party hereby acknowledges and agrees that they and the other party each possess certain non-public Confidential Information (as hereinafter defined) and may also possess Trade Secret Information (as hereinafter defined) (collectively the "Proprietary Information") regarding their business operations and development. The Parties agree that the Proprietary Information is secret and valuable to each of their respective businesses and the Parties have entered into a business relationship, through which they will each have access to the other party's Proprietary Information. Each of the Parties desires to maintain the secret and private nature of any

Proprietary Information given. "Receiving Party" refers to the Party that is receiving the Proprietary Information and "Disclosing Party" refers to the Party that is disclosing the Proprietary Information.

A)Confidential Information refers to any information which is confidential and commercially valuable to either of the Parties. The Confidential Information may be in the form of documents, techniques, methods, practices, tools, specifications, inventions, patents, trademarks, copyrights, equipment, algorithms, models, samples, software, drawings, sketches, plans, programs or other oral or written knowledge and/or secrets and may pertain to, but is not limited to, the fields of research and development, forecasting, marketing, personnel, customers, suppliers, intellectual property and/or finance or any other information which is confidential and commercially valuable to either of the Parties.

Confidential Information may or may not be disclosed as such, through labeling, but is to be considered any information which ought to be treated as confidential under the circumstances through which it was disclosed.

Confidential Information shall not mean any information which:

I)is known or available to the public at the time of disclosure or became known or available after disclosure through no fault of the Receiving Party;

II) is already known, through legal means, to the Receiving Party;

III) is given by the Disclosing Party to third parties, other than the Receiving Party, without any restrictions;

IV)is given to the Receiving Party by any third party who legally had the Confidential Information and the right to disclose it; or

V)is developed independently by the Receiving Party and the Receiving Party can show such independent development.

B) "Trade Secret Information" shall be defined specifically as any formula, process, method, pattern, design or other information that is not known or reasonably ascertainable by the

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public, consumers, or competitors through which, and because of such secrecy, an economic or commercial advantage can be achieved.

C) Both Parties hereby agree they shall:

I)Not disclose the Proprietary Information via any unauthorized means to any third parties throughout the duration of this Agreement and the Parties' relationship with each other;

Il) Not disclose the Confidential Information via any unauthorized means to any third parties for a period of 3 (three) years following the termination of this Agreement;

Ill) Not disclose the Trade Secret Information forever, or for as long as such information remains a trade secret under applicable law, whichever occurs first, to any third party at any time;

IV) Not use the Confidential Information or the Trade Secret Information for any purpose except those contemplated herein or expressly authorized by the Disclosing Party.

Article 10 - COMPETITION

During the course of this Agreement and for a period of one year following the termination of this Agreement, the Service Provider agrees to refrain from engaging, directly or indirectly, in any form of commercial competition (including, but not limited to, through business, marketing, investment or financial activities) with the Client. The Service Provider, as well as their employees, agents, and/or representatives, agree not to engage in any form of commercial competition either single-handedly or through the employment or contracting with a third-party or organization. Specifically, the Service Provider shall not:

A) Use any of the Proprietary Information directly or indirectly to procure a commercial advantage over the Client or otherwise use any designs, ideas or concepts created by or belonging to the Client without the express written consent of the Client;

B)Solicit the clients or customers of the Client to provide services or supply goods to them of the same or a similar type to those provided by the Client during the course of this Agreement and for a period of one year following the termination of this Agreement;

C)Endeavour to entice away from the Client or employ or offer to employ any person who is employed by the Client during the term of this Agreement and for one year following the termination of this Agreement, whether or not the person would commit a breach of his or her contract of employment by being enticed or accepting employment with them. This prohibition shall not apply to the recruitment of any such employee who has answered a bona fide advertisement or been recruited by an agency to the Service Provider, if the Service Provider has not given directly or indirectly any form of encouragement to that employee to do so.

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Article 11 - WARRANTIES:

The Service Provider represents and warrants that it will perform the Services using reasonable care and skill for a Service Provider in their field and that any end products or materials given by the Service Provider to the Client under the terms and conditions of this Agreement will not infringe on or violate the intellectual property rights or any other right of any third party.

Article 12 - LIMITATION OF LIABILITY

Except in cases of death or personal injury caused by either party's negligence, either party's liability in contract, tort or otherwise arising through or in connection with this Agreement or through or in connection with the completion of obligations under this Agreement shall be limited to Fees paid by the Client to the Service Provider.

To the extent it is lawful, neither Party shall be liable to the other Party in contract, tort, negligence, breach of statutory duty or otherwise for any loss, damage, costs or expenses of any nature whatsoever incurred or suffered by that other Party of an indirect or consequential nature including without limitation any economic loss, data loss, loss of goodwill, or other loss of turnover, profits, or business.

Article 13 - INDEMNITY:

Client hereby agrees to indemnify Service Provider, and all of Service Provider's agents, employees, and representatives against any and all damage, liability, and loss, as well as legal fees and costs incurred, as a result of the Services rendered this Agreement or any transaction or matter connected with the Services or the relationship between Service Provider and client. This clause shall not be read to provide indemnification for any Party in the event that a competent court of law, rendering a final judgment, holds that the bad faith, gross negligence, or willful misconduct of the Party caused the damage, liability, or loss.

Article 14 - TERMINATION:

A)This Agreement may be terminated be either party, upon notice in writing:

I) if the other party commits a material breach of any term of this Agreement that is not capable of being remedied within fourteen (14) days or that should have been remedied within fourteen (14) days after a written request and was not;

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II) if the other party becomes unable to perform its duties hereunder, including a duty to pay or a duty to perform;

III) if the other party or its employees or agents engage in any conduct prejudicial to the business of the other, or in the event that either party considers that a conflict or potential conflict of interest has arisen between the parties.

B)This Agreement may be terminated by the Service Provider if the Client fails to pay any requisite Fees within seven (7) days after the date they are due. The Service Provider may terminate the Agreement immediately, with no notice period, in writing.

If this Agreement is terminated before the expiration of its natural term, Client hereby agrees to pay for all Services rendered up to the date of termination, and for any and all expenditure due for payment after the date of termination for commitments reasonably made and incurred by Service Provider related to the rendering of Services prior to the date of termination.

Any termination of under this subpart shall not affect the accrued rights or liabilities of either Party under this Agreement or at law and shall be without prejudice to any rights or remedies either Party may be entitled to. Any provision or subpart of this Agreement which is meant to continue after termination or come into force at or after termination shall not be affected by this subpart.

Article 15 - RELATIONSHIP OF THE PARTIES:

The Parties hereby acknowledge and agree that nothing in this Agreement shall be deemed to constitute a partnership, joint venture, agency relationship or otherwise between the Parties and that this Agreement is for the sole and express purpose of the rendering of the specific Services by the Service Provider to the client under the terms and conditions herein.

Article 16 - GENERAL PROVISIONS:

A)GOVERNING LAW: This Agreement shall be governed in all respects by the laws of the state of Georgia and any applicable federal law. Both Parties consent to jurisdiction under the state and federal courts within the state of Georgia. The Parties agree that this choice of law, venue, and jurisdiction provision is not permissive, but rather mandatory in nature.

B) LANGUAGE: All communications made or notices given pursuant to this Agreement shall be in the English language.

C) ASSIGNMENT: This Agreement, or the rights granted hereunder, may not be assigned, sold, leased or otherwise transferred in whole or part by either Party.

D)AMENDMENTS: This Agreement may only be amended in writing signed by both Parties.

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E) NO WAIVER: None of the terms of this Agreement shall be deemed to have been waived by any act or acquiescence of either Party. Only an additional written agreement can constitute waiver of any of the terms of this Agreement between the Parties. No waiver of any term or provision of this Agreement shall constitute a waiver of any other term or provision or of the same provision on a future date. Failure of either Party to enforce any term of this Agreement shall not constitute waiver of such term or any other term.

F)SEVERABILITY: If any provision or term of this Agreement is held to be unenforceable, then this Agreement will be deemed amended to the extent necessary to render the otherwise unenforceable provision, and the rest of the Agreement, valid and enforceable. If a court declines to amend this Agreement as provided herein, the invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the remaining terms and provisions, which shall be enforced as if the offending term or provision had not been included in this Agreement.

G)PUBLIC ANNOUNCEMENT: Neither Party will make any public announcement or disclosure about the existence of this Agreement or any of the terms herein without the prior written approval of the other Party.

H)ENTIRE AGREEMENT: This Agreement constitutes the entire agreement between the Parties and supersedes any prior or contemporaneous understandings, whether written or oral.

I) HEADINGS: Headings to this Agreement are for convenience only and shall not be construed to limit or otherwise affect the terms of this Agreement.

J)COUNTERPARTS: This Agreement may be executed in counterparts, all of which shall constitute a single agreement. If the dates set forth at the end of this document are different, this Agreement is to be considered effective as of the date that both Parties have signed the agreement, which may be the later date.

K)FORCE MAJEURE: Service Provider is not liable for any failure to perform due to causes beyond its reasonable control including, but not limited to, acts of God, acts of civil authorities, acts of military authorities, riots, embargoes, acts of nature and natural disasters, and other acts which may be due to unforeseen circumstances.

L) NOTICES ELECTRONIC COMMUNICATIONS PERMITTED: i) Any notice to be given under this Agreement shall be in writing and shall be sent by first class mail, air mail, or e-mail, to the address of the relevant Party set out at the head of this Agreement, or to the relevant email address set out below or other email address as that Party may from time to time notify to the other Party in accordance with this clause. The relevant contact information for the Parties is as follows:

Service Provider:

RBRYAN@DWCREVENUE.COM

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Client:

MDYOS@WATERNOW.COM

Notices sent as above shall be deemed to have been received 3 working days after the day of posting (in the case of inland first class mail), or 7 working days after the date of posting (in the case of air mail), or next working day after sending (in the case of e-mail).

In proving the giving of a notice it shall be sufficient to prove that the notice was left, or that the envelope containing the notice was properly addressed and posted, or that the applicable means of telecommunication was addressed and dispatched and dispatch of the transmission was confirmed and/or acknowledged as the case may be.

EXECUTION:

Name: DATACOM WARRANTY CORP.

Representative Name: RUSTY BRYAN

Representative Title: FOUNDER

Date: JULY 29, 2017

Name: WATER NOW INC.

Representative Name:

Representative Title:

Date:

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EX-10

MANUFACTURING LICENSE AND DISTRIBUTION AGREEMENT

THIS AGREEMENT is made this 1^st day of July 2016, by and between Cloudburst Solutions, LLC, ("CBS") and Water Now, Inc., ("WNI").

WHEREAS, CBS is the developer and owner of all intellectual property related to a water treatment/reclamation process (the "Technology");

WHEREAS, the CBS has designed a water treatment unit designed for mass distribution to the retail market that utilizes the Technology ("Retail Unit" ^l);

WHEREAS, WNI wishes to obtain certain rights as more fully set forth below to manufacture the Retail Units and to distribute the Retail Units to commercial retailers in certain parts of the world on an exclusive basis ("Exclusive Area");

NOW, THEREFORE, in consideration of the promises hereinafter made by the parties hereto, it is agreed as follows:

ARTICLE 1

DEFINITIONS

(a)"Agreement" means this Manufacturing License and Distribution Agreement and any Exhibits hereto.

(b)"Business Day" means Monday through Friday except for public holidays. A public holiday is a day that is a public holiday in the United States of America.

(c)"Confidential Information" means any and all information that is disclosed by one Party to the other Party and that relates to the Parties' business relationship hereunder, including, but not limited to, information relating to the manufacturing, testing, labeling, packaging, storing or supply of Product and any and all information exchanged between the Parties pursuant to Article 4 (c) hereof. Any Confidential Information disclosed in tangible form shall be marked as "CONFIDENTIAL" or "PROPRIETARY" or by a similar legend by the disclosing Party prior to disclosure. Any Confidential Information disclosed orally or visually shall be identified as such prior to, concurrent with or following disclosure and summarized in writing by the disclosing Party to the receiving Party within thirty (30) calendar days of the disclosure. Confidential Information shall not include information which (i) is in or comes into the public domain without breach of this Agreement by the receiving Party; (ii) was in the possession of the receiving Party prior to receipt from the disclosing Party and was not acquired by the receiving Party from the disclosing Party under an obligation of confidentiality or non-use; (iii) is acquired by the receiving Party from a third party not under an obligation of

___________________

¹ "Retail Unit" is further defined to be a water reclamation device utilizing CBS's Technology that has the capacity to treat 400 gallons of water a day or less and is packaged and marketed for sale through traditional retail outlets.

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confidentiality or non-use to the disclosing Party; or (iv) is independently developed by the receiving Party without use of any Confidential Information of the disclosing Party.

(d)'Effective Date" means the date first written above.

(e)"Intellectual Property Rights" means all intellectual or proprietary rights including, without limitation, any patents, patent applications, trademarks, trademark applications, trade names, service marks, service applications, copyrights, copyright applications, know-how, drawings, prints, specifications, reports, software for operating the water reclamation systems, and other technical information, trade secrets, manufacturing processes and formulas, customer and prospective customer lists, components supplier lists, manufacturer's lists and/or derivative processes, equipment ideas, and related rights and information related to the Technology, and specifically includes, but is not limited to, the Patents.

(f)"Non-Retail Units" means a water reclamation device utilizing CBS's Technology that has the capacity to treat up to 2500 gallons of water a day.

(g)   "Patents" means U.S. Patent No. 7,959,814 B2, and U.S. Patent No. 7,866,380 B2, of which W. James Masters, Douglas W. Fugate, Edwin W. [sic, E.] Wilson, John T. Johnson, Ill, and Jason Masters (collectively. "Masters") are the named inventors, and to which CBS is assignee holds an exclusive license that includes the right to sub-license. As used herein, the term "Masters Patent" is deemed to include presently pending U.S. Application No. 14/946,010, and International Application No. PCT/US2015/____, both filed 19 November 2015, of which Edwin E. Wilson is the sole named inventor, and any and all divisions, continuations, continuations-in-part and foreign applications claiming priority to either of these pending applications.

(h) "Term" means the period commencing on the Effective Date and terminating as set forth below.

ARTICLE 1

APPOINTMENT OF DISTRIBUTORSHIP

1.Distribution Right. For and in consideration of the sum of $500,000.00 paid to CBS no later than thirty (30) days from the execution of this agreement and the issuance of 500,000, zero par value, additional shares of WNI stock to CBS, which shares will be issued immediately upon the execution of this agreement², CBS hereby appoints and grants WNI the exclusive and non-assignable right to sell Retail Units on a worldwide basis other than in those geographical areas set forth on Exhibit A ("Exclusive Area"). The distribution right shall be limited to customers who have places of business in or intend to operate the Retail Units in the Exclusive Area. Any requests or orders for Retail Units from areas for which CBS retained exclusive distribution rights received by WNI (whether directly or electronically) will be referred to CBS. CBS retains the worldwide rights to distribute Retail Units, except in the geographic area for which WNI has exclusive rights.

__________________________ 

² These shares are in addition to the 750,000 shares issued by WNI in favor of CBS upon the execution of the term sheet 

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2.Retail Units Only. Nothing herein grants or otherwise conveys any rights to WNI for the distribution of any other applications, equipment, processes or products that incorporate the Technology, the Patents, the Intellectual Property or the Confidential Information other than the distribution of Retail Units in the Exclusive Area.

3.Competitive Products. agrees not to represent or sell other products which are deemed to be competitive with the Retail Unit unless agreed to by CBS by written notice.

ARTICLE 11

LICENSE TO MANUFACTURE RETAIL UNITS

1.Grant of License. For and in consideration of the additional sum of $1,000,000 ($500,000.00 of which shall be the Advance Royalty as provided for in Article Ill, Section 3 below), to be paid by WAI to CBS after the completion of a production plan by WNI or its affiliate, but in no event later than sixty (60) days from the Effective Date of this Agreement, CBS hereby grants to WNI an exclusive, nonassignable license to manufacture Retail Units for Distribution in the Exclusive Area. This license includes such rights in the Technology, the Intellectual Property Rights and Patents as may be necessary for WNI to manufacture the Retail Units.

2.Design of Retail Units. All Retail Units manufactured by WNI must conform to specifications dictated by CBS and any proposed changes to the design or configuration of the Retail Units must be approved by CBS.

3.Branding and Labeling. Each Retail Unit will have appropriate patent notices as determined by CBS and will also have a label or legend displayed in a prominent place that reads: "Powered by Cloudburst Technologies". The naming of the Retail Units for marketing and distribution purposes shall will be in the discretion of WNI, with CBS's approval which will not be unreasonably withheld.

4.Manufacturing for CBS. At CBS' option, WNI will be obligated to manufacture Retail Units for distribution by CBS. The cost of such Retail Units to CBS shall be at the same cost as being charged WNI by any third party manufacturer and in no event more than cost (parts, direct labor and assembly overhead only) plus fifteen percent (15%). No royalties will be due from WAI on any Retail Units ordered by or manufactured for CBS.

___________________________ 

³ CBS has exclusive distribution rights in the Middle East and the Caribbean.

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ARTICLE 111

LIMITED LICENSE ON NON-RETAIL UNITS

1.Grant of Limited License. CBS will grant to WNI a non-exclusive license to manufacture and distribute Non-Retail Units in the Exclusive Area only for Permitted Applications, as defined below. Nothing in this grant is intended nor should it be construed to limit the right of CBS or any assignee of CBS from selling Non-Retail Units anywhere in the World.

2.Permitted Applications. WNI can only manufacture, sell and distribute Non-Retail Units for non-commercial purposes which may include provisioning of water for agricultural and human consumption purposes. WNI will not have any rights to utilize the Technology or to manufacture or distribute any water treatment unit for use in the oil & gas industry; environmental remediation; water treatment in conjunction with an industrial facility of any nature, including but not limited to landfills, mines, desalination plants, and wastewater treatment ("Permitted Applications").

3.Applicability of Other Provisions of Agreement. The royalty provisions of Article IV as well as the provisions of paragraphs 2, 3, and 4 of Article Il related to the design, labeling and manufacturing option to CBS apply to Non-Retail Units as if specifically set forth in such provisions.

ARTICLE IV

ROYALTY TO CBS

1.      Base Royalty. agrees to pay a royalty equal to ten percent (10%) of the gross dollar sales of Retail Units by WNI, or any other entity operating in affiliation with WNI, though in no event will the royalty to be paid to CBS be less than seventy five dollars ($75.00) per Retail Unit sold ("Base Royalty"). The Base Royalty shall also include ten percent (10%) of any revenue received by WNI related to the Technology including revenue received from any sub distributor or other distribution media (including but not limited to online sales). This base royalty is payable on or before the 19 day of the month following the end of each calendar quarter (i.e. April 15, July 15, October 15, and January 15). Revenue generated by WNI that is unrelated to the Technology and/or the Retail Units or Non-Retail Units (i.e. storage tanks, mineral/vitamin packets) is not subject to the Base Royalty.

2.Minimum Annual Royalty. Notwithstanding the foregoing, WNI agrees to pay a minimum royalty of $500,000.00 per year ("Annual Minimum Royalty") to CBS payable quarterly with the first such quarterly payment of the minimum royalty due on or before April 15, 2017, at which time WNI will pay CBS the greater of $125,000.00 or the Base Royalty for all sales through March, 2017.

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3.Advance of Royalties. WNI will pay to CBS the sum of $500,000.00 ("Advance Royalty") on or before sixty (60) days from the Effective date and such Advance Royalty will be an advance against future Base Royalty or Annual Minimum Royalty and will be allocated to such future Base Royalty or Annual Minimum Royalty equally over the first four years of the Term of this Agreement (i.e. $31,250.00 per quarter for each quarter in years 2017, 2018, 2019, and 2020).

4.No Right of Offset. WNI shall pay to CBS the full amount of the Base Royalty and the Minimum Annual Royalty, without deduction, recoupment or offset. WNI hereby acknowledges and agrees that CBS is not responsible for any amounts, costs, charges, expenses and outlays of any nature whatsoever arising from or relating to this Agreement, except as expressly agreed herein to the contrary. If WNI fails to pay amounts when due hereunder, interest will accrue at the rate of one and one-half percent (1.5%) per month or the highest rate permitted by Texas law, whichever is lower, from the original due date until paid. If MINI fails to pay amounts due hereunder resulting in termination of this Agreement, the amounts due, including interest, remain payable to CBS.

5.Tax Responsibility of WNI. WNI shall bear and pay all taxes (including, without limitation, sales and use, withholding, gross receipts, and value added taxes) imposed by the government, including any political subdivision thereof, of any country or jurisdiction in which W\^TI is doing business as the result of the existence of this License Agreement, payments made hereunder or the exercise of rights hereunder, and WNI shall indemnify CBS to the extent any such taxes (including interest and penalties thereon) are imposed on CBS, other than income taxes imposed upon CBS. If any applicable law requires WNI to withhold amounts from any payments to CBS hereunder (i) will effect such withholding and remit such amounts, and (ii) the sum payable by WNI upon which the deduction or withholding is based will be increased to the extent necessary to ensure that, after such deduction or withholding, CBS receives and retains, free from liability for such deduction or withholding, a net amount equal to the amount CBS would have received and retained in the absence of such required deduction or withholding.

ARTICLE V

PROPRIETARY RIGHTS

1.Use of Company Name. CBS expressly prohibits any direct or indirect use, reference to, or other employment of its name, trademarks, or trade name exclusively licensed to CBS, except as specified in this Agreement or as expressly authorized by CBS in writing. All advertising and other promotional material will be submitted to CBS at least two weeks in advance and will only be used if CBS consents thereto, which consent shall not be unreasonably withheld. CBS hereby authorizes and requires WAI's use of CBS's insignia or lettering which will be on the Retail Units at the time of the delivery.

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CBS hereby authorizes the WNI's use of the legend set forth below. CBS shall submit to the WNI in writing full particulars prior to any use of the authorized legends, on stationery, invoices, promotion material or otherwise, and shall not proceed with such use unless and until CBS's written approval shall have been received.

2.Drawings and Data. CBS will assist in providing necessary data for the proper manufacture, installation, test, operation and maintenance of the Retail Units. Portions of this data are proprietary in nature and will be so marked. WNI agrees to abide by the terms of such markings and to be liable for all loss or damage incurred by CBS as a result of the improper or unauthorized use of such data. CBS retains for itself all proprietary rights in and to all designs, engineering details, and other data pertaining to any Retail Units specified in the contract and to all discoveries inventions, patent rights, etc., arising out of work done in connection with the contract and to any and all Retail Units developed as a result thereof, including the right to manufacture any and all such Retail Units.

ARTICLE VI

WARRANTIES AND INSURANCE

1. Disclaimer of Warranties. CBS DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF QUALITY OR PERFORMANCE, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

2.Warranties to Consumers. WNI, as manufacturer of the Retail Units, is solely responsible for any liabilities arising as a result of any claims from purchasers of the Retail Units arising out of breach of warranty, negligence, products liability or any other cause of action whether in tort or in contract. WNI will fully indemnify CBS from any such claims.

3.Intellectual Property. CBS represents and warrants that (a) prior to the execution of this Agreement, CBS owned and has independently developed or acquired all of the Technology and Intellectual Property Rights; (b) CBS has not transferred ownership of any of the Intellectual Property Rights or Patents to which a license is being granted to WNI in this Agreement or knowingly permitted its rights in any such intellectual property to enter the public domain; and (c) to CBS's knowledge, none of the material intellectual property rights or Patents violates or infringes upon, and WNI's contemplated use of such rights does not and will not violate or infringe upon, the rights of any person or entity, and, to CBS's knowledge, no third party is currently infringing upon any of such Patents or other intellectual property.

4.Insurance. agrees to maintain product liability insurance in an amount not less than one million dollars ($1,000,000 per occurrence and ten million dollars ($10,000,000) in aggregate.

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ARTICLE VII

DURATION OF AGREEMENT

1.Term. The term of this Agreement shall be for a period often (10) years from the date hereof, unless sooner terminated and may be extended for an additional ten (10) years, at WNI's option provided that WNI has complied with all terms and conditions during the initial ten year term and further provided that during such optional additional ten year term the Minimum Annual Royalty provided for in Article 111.2 above will be increased to $600,000.00 per year for the extended ten year term of the Agreement. Termination shall not relieve either party of obligations incurred prior thereto.

2.Termination. This Agreement may be terminated only:

(a)By either party for substantial breach of any material provision of this Agreement by the other, provided due notice has been given to the other of the alleged breach and such other party has not cured the breach within thirty (30) days thereof; or

(b)By CBS if: there is an unacceptable change in the control or management of the WNI• if the ceases to function as a going concern or makes an assignment for the benefit of creditors; if a petition in bankruptcy is filed by or against the WNI, resulting in an adjudication of bankruptcy; or, if the WNI fails to pay its debts as they become due and provided due notice has been given by CBS to the WNI and the MINI has not cured such breach within thirty (30) days thereof;

(c)Upon termination of this Agreement all further rights and obligations of the parties shall cease, except that WNI shall not be relieved of (i) its obligation to pay any monies due, or to become due, as of or after the date of termination, and (ii) any other obligation set forth in this Agreement which is to take effect after the date of termination.

ARTICLE VIII

NOTICES

1.Notice or Communication. Any notice or communication required or permitted hereunder shall be in writing and shall be sent by registered mail, return receipt requested, postage prepaid and addressed to the addresses set forth below or to such changed address as any party entitled to notice shall have communicated in writing to the other party. Notices and communications to Company shall be sent to:

Cloudburst Solutions, LLC

6300 Ridglea Place, Suite 620

Fort Worth, Texas 76116

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Notices and communications to WNI shall be sent to:

Water Now, Inc.

____________________

____________________ 

Any notices or communications to either party hereunder shall be deemed to have been given when deposited in the mail, addressed to the then current address of such party.

2.Date of Effectiveness. Any such notice or communication so mailed shall be deemed delivered and effective seventy-two (72) hours after mailing thereof in the United States.

ARTICLE IX

GENERAL PROVISIONS

1.Relationship of Parties. The relationship between the parties established by this Agreement shall be solely that of licensor and licensee and all rights and powers not expressly granted to WNI are expressly reserved to CBS. YVNI shall have no right, power or authority in any way to bind CBS to the fulfillment of any condition not herein contained, or to any contract or obligation, expressed or implied.

2.Independence of Parties. Nothing contained in this Agreement shall be construed to make the WNI the agent for CBS for any purpose, and neither party hereto shall have any right whatsoever to incur any liabilities or obligations on behalf or binding upon the other party. The WNI specifically agrees that it shall have no power or authority to represent CBS in any manner; that it will solicit orders for Retail Units as an independent contractor in accordance with the terms of this Agreement; and that it will not at any time represent CBS in any manner; that it will solicit orders for Retail Units as an independent contractor in accordance with the terms of this Agreement; and that it will not at any time represent orally or in writing to any person or corporation or other business entity that it has any right, power or authority not expressly granted by this Agreement.

3.Indemnity. The WNI agrees to hold CBS free and harmless from any and all claims, damages, and expenses of every kind or nature whatsoever (a) arising from acts of the WAI; (b) as a direct or indirect consequence of termination of this Agreement in accordance with its terms; or (c) arising from acts of third parties in relation to Retail Units sold to the WNI under this Agreement, including, but not limited to execution of liens and security interests by third parties with respect to any such Retail Units.

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4.Assignment. This Agreement constitutes a personal contract and WNI shall not transfer or assign same or any part thereof without the advance written consent of Company.

5.Entire Agreement. The entire Agreement between CBS and the WAI covering the Retail Units is set forth herein and any amendment or modification shall be in writing and shall be executed by duly authorized representatives in the same manner as this Agreement. The provisions of this Agreement are severable, and if any one or more such provisions are determined to be illegal or otherwise unenforceable, in whole or in part, under the laws of any jurisdiction, the remaining provisions or portions hereof shall, nevertheless, be binding on and enforceable by and between the parties hereto. Any provisions, terms or conditions of WNI's Purchase Orders which are, in any way contradicting of this Agreement, except those additional provisions specifying quantity and shipping instructions, shall not be binding upon Company and shall have no applicability to the sale of goods by Company to WNI.

6.Applicable Law. This Agreement shall be governed by the laws of the United States and more specifically the laws of the State of Texas and venue for any and all disputes related to this Agreement shall be resolved in the appropriate state or federal courts in Tarrant County, Texas.

7.Separate Provisions. If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers as of the date and year indicated above.

Cloudburst Solutions, LLC Water Now, Inc.

 

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EXHIBIT A

Water Now, Inc.'s rights to distribute Retail Units shall be worldwide, save and except the following geographical areas and countries:

 •    The continent of Africa⁴

 •    All countries situated in Caribbean Sea

 •    China⁵

 •    The Middle East (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE, Iran, Iraq, Yemen)

___________________________ 

4Water Now will have non-exclusive rights in Africa, but nothing in the Agreement will in any way limit or prohibit CBS from directly or indirectly distributing Retail Units or other applications or embodiments of the Technology in the African Continent.

5Water Now will have non-exclusive rights in China, but nothing in the Agreement will in any way limit or prohibit CBS from directly or indirectly distributing Retail Units or other applications or embodiments of the Technology in China.

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EX-23

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Form 10, General Form for Registration of Securities Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934, of our report dated _______, 2017 with respect to the consolidated financial statements of Water Now, Inc. as of and for the year ended December 31, 2016, which appear in such General Form for Registration of Securities for the registration of Water Now, Inc. common stock.

/s/ Montgomery Coscia Greilich LLP

MONTGOMERY COSCIA GREILICH LLP

Certified Public Accountants

Plano, Texas

August 11, 2017