The following discussion and analysis by our management of our financial
condition and results of operations should be read in conjunction with our
unaudited condensed interim financial statements and the accompanying related
notes included in this quarterly report and our audited financial statements and
related notes and Management's Discussion and Analysis of Financial Condition
and Results of Operations included in our Annual Report on Form 10-K for the
year ended December 31, 2020 filed with the Securities and Exchange Commission.
Cautionary Statement Regarding Forward-Looking Statements
This report may contain forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act, and we
intend that such forward-looking statements be subject to the safe harbors
created thereby. These forward-looking statements are based on our management's
beliefs and assumptions and on information currently available to our
management. Any such forward-looking statements would be contained principally
in “Management's Discussion and Analysis of Financial Condition and Results of
Operations.” Forward-looking statements include information concerning our
possible or assumed future results of operations, business strategies, financing
plans, competitive position, industry environment, potential growth
opportunities and the effects of regulation. Forward-looking statements include
all statements that are not historical facts and can be identified by terms such
as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,”
“intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,”
“will,” “would” or similar expressions.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Given these
uncertainties, you should not place undue reliance on these forward-looking
statements. Also, forward-looking statements represent our management's beliefs
and assumptions only as of the date of this report. You should read this report
and the documents that we reference in this report, completely and with the
understanding that our actual future results may be materially different from
what we expect. Except as required by law, we assume no obligation to update
these forward-looking statements publicly, or to update the reasons actual
results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.
In March 2020 the Director General of the World Health Organization declared
COVID-19 a pandemic. We are still assessing the impact COVID-19 may have on our
business, but there can be no assurance that this analysis will enable us to
avoid part or all of any impact from the spread of COVID-19 or its consequences,
including downturns in business sentiment generally. The extent to which the
COVID-19 pandemic and global efforts to contain its spread will impact our
operations will depend on future developments, which are highly uncertain and
cannot be predicted at this time, and include the duration, severity and scope
of the pandemic and the actions taken to contain or treat the COVID-19 pandemic.
Overview
Unless otherwise indicated or the context otherwise requires, all references in
this Form 10-Q to “we,” “us,” “our,” “our company,” “Fourth Wave” or the
“Company” refer to Fourth Wave, Inc.
We were incorporated in Nevada on January 21, 2011. Since our incorporation, we
have attempted to become involved in a number of business ventures, all of which
were unsuccessful and which we have abandoned.
Residential Energy Efficiency and Renewable Energy Overview
Homes and buildings use energy for heating, cooling, hot water, and
electrification. A number of factors determine how much energy is required to
deliver these services including the age of the structure, type of construction,
heating, ventilation, and air conditioning (HVAC) equipment used and its
condition, lighting, appliances, and electronics used. Different types of energy
are used for these end-uses, which is often based on regional energy production
and availability, historical construction preferences, and local legislation.
Energy sources include, but are not limited to natural gas, heating oil, utility
electricity, and on-site renewable energy generation.
Based on home conditions and energy sources, energy efficiency improvements are
often the lowest way to reduce ongoing utility and maintenance costs. Energy
efficiency improvements often result in improved living comfort, for example
enhanced heating, cooling, lighting, and air quality. Energy efficiency upgrades
have an up-front cost but are designed to reduce ongoing utility and maintenance
costs. Upgrades also often result in increased home values.
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Homes and commercial buildings consume 40% of the energy used in the United
States. Most homeowners could save between 15-25% of their utility bills by
addressing wasted energy from drafts, air leaks, and outdated heating and
cooling systems. Typical energy efficiency upgrades include sealing air leaks,
adding insulation, installing more efficiency windows, doors, and skylights,
installing and properly setting programmable thermostats, sealing ducts, tuning
or upgrading heating and cooling systems, installing energy efficiency hot water
heaters, upgrading household appliances and electronics, and installing energy
efficient lighting.
Improvements in electric heat exchanger (also known as heat pump) technology
have increased their usage across the country. Different types of heat pump
technologies exist. Some transfer energy from water sources and others directly
from the air. Water source heat pumps are often connected to geothermal systems,
also known as ground source heating and cooling. Since geothermal technologies
rely on transferring energy from the earth instead of creating energy, they are
widely considered the most efficient heating and cooling system.
On-site renewable energy generation has been improving greatly for years with
gains in performance and reductions in cost. The most typical type of on-site
generation is photovoltaics, also known as solar energy. Panels are typically
installed on a roof-mounted configuration or on an adjacent ground-mounted
system. Inverters capture the solar energy and transform it into electricity.
Most residential systems are tied to the existing electrical utility grid for
back-up and resiliency when solar energy is not being generated.
There are many trade-offs when determining the most appropriate energy
generation systems for residences. Upfront cost, maintenance, replacement cost,
environmental and health impacts much all be considered. Environmental health
and greenhouse gas emissions associated with the production of utility
electricity is a regional consideration based on how energy is produced and
distributed in different regions. How utility-scale electricity is generated can
make a large different in associated emissions. On-site renewable energy has a
significantly lower carbon footprint than most utility-scale generation, though
many utilities are transitioning to cleaner sources such as solar and wind as
they move away from coal-fired power plants.
Indoor air quality in a home can also be impacted by the type of HVAC system
installed. Unless fresh outdoor is brought into through an intake system before
being distributed, air will be recirculated within a home, which can compromise
air quality. The use of natural gas for cooking and clothes dryers can also
adversely impact indoor air quality. Typically, electrified HVAC, cooking, and
clothes dryers offer the highest quality indoor air quality, but there are many
factors including air infiltration, sealing, and opening of windows and doors
that will impact conditions. The use of building materials, paints, and stains
with high levels of volatile organic compounds can also contribute to degraded
indoor air quality.
Homeowners must weight all factors when it comes to heating, cooling, and
electrification of their homes. Choosing systems that minimize the use of fossil
fuels and maximize airflow will often lead to the best indoor air quality.
Fourth Wave Energy
On March 16, 2020 we acquired all of the outstanding shares of Fourth Wave
Energy, Inc. (“FWI”) for 6,200,000 restricted shares of our common stock.
FWI has designed an energy system which is based on combining solar power and
other energy efficient technologies into one fully integrated system. The FWI
energy system is designed to significantly reduce energy consumption and
associated carbon emissions in residences and commercial buildings.
In connection with this acquisition we entered into consulting agreements with
certain founders of FWI. The consulting agreements required us to collectively
pay $379,500 in consulting fees during the terms of the consulting agreements,
all but one of which expire between May 31 and June 30, 2020. One consulting
agreement was for a twelve month period and expired in March of 2021.
DeSol Power Tile
On August 18, 2020 we entered into a non-binding Letter of Intent to acquire
DeSol Power Tiles, LLC for $900,000 in cash and shares of our common stock
having a value of $100,000.
DeSol Power Tiles is based in Atlanta, Georgia and has developed solar panels
which act as the actual roof of a building.
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Although traditional solar panels provide financial benefits to their owners and
solar systems help the environment, they are not aesthetically pleasing to look
at. Some communities and subdivisions even have rules against installing them.
The DeSol solar roof system integrates design and functionality. The patented
system uses roof tiles, not solar panels, so it won't affect the aesthetic or
architectural appeal of the roof. With a simple, flat design, based on the
classic Nordic style, DeSol roof tiles will complement the home with a
beautiful, completely sealed, walkable surface that covers the entire roof.
The DeSol solar roof system captures sunlight and the inverter converts the
sunlight into electric current that can be used in the home. An electric panel
in the home feeds the energy from the inverter to the home's electric circuits.
The electric meter monitors energy usage, so excess power can be sent to the
utility company, giving the homeowner energy credits.
A solar roof installation from DeSol Power Tiles is 100% passive. Unlike wind
energy systems or heat pumps, there are no moving parts that require technical
service or maintenance, which is the main reason for the 30-year performance
guarantee which is offered by DeSol Power Tiles.
For more information concerning DeSol Power Tile visit its website at
https://www.desolpowertiles.com/.
The acquisition of DeSol Power Tile is subject to a number of conditions,
including the execution of a definitive agreement between the parties. As of
this filing, the Company had not entered into a definitive agreement to acquire
DeSol Power Tile LLC.
Spin-Off
We plan to concentrate on the sale of solar panel roofs and no longer plans to
pursue the GSP System. As a result, on March 10, 2021, we transferred all of the
rights to the GeoSolar Plus System (“GSP”) to GeoSolar Technologies, Inc.
(“GST”) in exchange for 10,000,000 shares of GST's common stock. We plan to
distribute (“Spin-Off”) these shares to our shareholders on the basis of one
share of GST's common stock for each four shares held by each of our
shareholders.
GST also assumed all liabilities of $379,850 associated with the consulting
agreements previously signed by us.
The Spin-Off is subject to the effectiveness of a registration statement that
GST will file with the Securities and Exchange Commission. The date for
determining which of our shareholders will receive shares of GST in the Spin-Off
(the “Record Date”) will be determined shortly before the effective date of
GST's registration statement.
Critical Accounting Policies
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States (“GAAP”) requires management to make
estimates and assumptions that affect (i) the reported amounts of assets and
liabilities, and (ii) the reported amount of expenses recognized during the
periods presented. Adjustments made with respect to the use of estimates often
relate to improved information not previously available. Uncertainties with
respect to such estimates and assumptions are inherent in the preparation of
financial statements; accordingly, actual results could differ from these
estimates.
These estimates and assumptions also affect the reported amounts of costs and
expenses during the reporting period. Management evaluates these estimates and
assumptions on a regular basis. Actual results could differ from those
estimates.
Results of Operations for the three months ended March 31, 2021, compared to
three months ended March 31, 2020.
During the three months ended March 31, 2021 general and administrative expenses
were $456,043 compared to $3,203,521 in 2020. The $2,747,478 decrease is due to
the decrease in stock based compensation during the three months ended March 31,
2021.
During the three months ended March 31, 2021 other expenses was $1,000,601
compared to $104,188 in 2020. The $896,413 increase in other expenses are the
result of amortization of discounts, derivative liability expense, interest and
loss on conversion of debt.
Net loss for the three months ended March 31, 2021 and 2020, was $1,456,644 and
$3,307,709, respectively.
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Liquidity and Capital Resources
Our sources and (uses) of cash for the three months ended March 31, 2021 and
2020 were:
2021 2020
Cash used in operations $ (221,711 ) $ (185,518)
Payments on notes payable $ – $ (3,000)
Payments on convertible notes payable $ (135,000) $ –
Proceeds from convertible notes payable $ 150,000 $ 199,000
Proceeds from sale of common stock $ 204,000 $ –
Going Concern
The unaudited financial statements accompanying the report have been prepared on
a going concern basis, which assumes that our company will be able to meet our
obligations and continue our operations for our next fiscal year. Realization
values may be substantially different from carrying values as shown and the
financial statements do not give effect to adjustments that would be necessary
to the carrying values and classification of assets and liabilities should we be
unable to continue as a going concern. At March 31, 2021, we have had no revenue
and have not yet achieved profitable operations and expect to incur further
losses in the development of our business, all of which raise substantial doubt
about our ability to continue as a going concern. Our ability to continue as a
going concern is dependent upon our ability to generate future profitable
operations and/or to obtain the necessary financing to meet our obligations and
repay our liabilities arising from normal business operations when they come
due. Management has no formal plan in place to address this concern but
considers that we will be able to obtain additional funds by equity financing
and/or related party advances, however there is no assurance of additional
funding being available.
There is no assurance that we will be able to obtain further funds required for
our continued operations. We are pursuing various financing alternatives to meet
our immediate and long-term financial requirements. There can be no assurance
that additional financing will be available to us when needed or, if available,
that it can be obtained on commercially reasonable terms. If we are not able to
obtain the additional financing on a timely basis, we will be forced to scale
down or perhaps even cease the operation of our business
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