EESTech, Inc. (the "Company"), a Delaware corporation, was incorporated on April 26, 2000.

Methgen Inc. and its wholly ownedwholly-owned subsidiary, Methgen Limited, were acquired in July 2006 and worked in tandem with the Company in marketing the Hybrid Coal and Gas Turbine System in the United States and China.

On July 25, 2007, for cash of $461,881, the Company completed the acquisition for cash of $461,881 of the 50% interest that CSIROthe Australian Government’s Research entity the Commonwealth Scientific and Industrial Research Organization (CSIRO) held in ComEnergy Pty Ltd. At the time of the acquisition ComEnergy Pty Ltd held the exclusive international license for the Hybrid Coal & Gas Turbine Technology (“HCGT”) from the Australian Government’s Research entity the Commonwealth Scientific and Industrial Research Organization (CSIRO).CSIRO. Subsequently, the Company achieved a post settlement condition in the fourth quarter of the 2007 fiscal year that initiated the CSIRO transferring its rights and interests in the HCGT technology to EESTech Inc. As at the date of this filing CSIRO have signed a Deed of Assignment transferring all rights and ownership of the registration of Patents in 12 jurisdictions world wide. Consequently, the Company has valued the patents transferred to it from CSIRO as the payment made for the acquisition of the CSIRO’s interest in ComEnergy.

The accompanying consolidated financial statements include the accounts of the Company and its wholly ownedwholly-owned subsidiaries. The financial statements have been consolidated with the parent company and all inter-company transactions and balances have been eliminated in consolidation.

Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which is three to seven years. The Company has no equipmentEquipment recorded under capital lease.capitalized leases totaled $31,322 and $39,924 at September 30, 2008 and December 31, 2007, respectively.

The Company’s wholly ownedwholly-owned subsidiary, Methgen Limited, in Australia, has entered into two leases in Australia, one for a motor vehicle and the other for a boiler. They are the subject of financial lease arrangements and are each for duration of 60 months.

The cost of the intellectual property acquired is beingto be amortized on a straight-line basis over its useful life of 20 years. No amortization expense was charged to operations for the quartersnine months ended March 31,September 30, 2008 and 2007. An amount of $1,200,466 was charged through the period from inception to March 31, 2008.June 30, 2006. In relation to the Intellectualintellectual property for the HCGT Patents, it is intended that there will be an amortization charge effective from 2008 for a period ofthe Company intends to amortize such intellectual property over 20 years. In relation to the CCS license it is a perpetual license with no definitive termination period. The Board has not at this time addressed the issue of an amortization program for this asset. The Company intends to make a decision, regarding further amortization during the last quarter of the 2008 fiscal year.

The preparation of financial statements, in accordance with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. The Company has only used estimates for relatively minor accruals when they areit is not in possession of actual invoices after the balance date. The Company accounts for all its foreign subsidiaries on the same basis. Actual results could differ from those estimates.

Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. The components of the deferred tax assets and liabilities are classified as current and non-current based on their characteristicscharacteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management it is more likely than not that some portion or all of the deferred tax assets will not be realized through future operations. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

In accordance with Statement of Financial Accounting Standard (SFAS) No. 128 “Earnings Per Share,” the Company presents basic and diluted earnings per share for all periods presented. The computation of loss per common share (basic and diluted) is based on the weighted average number of shares actually outstanding during the period. The Company has no common stock equivalents, whichthat would dilute earnings per share.

Financial instruments consist principally of cash and payables. The estimated fair values of these instruments approximate their carrying value.

The functional currency of the Company's foreign operations is Australian Dollars. The Company translates the foreign currency financial statements of its foreign operations in accordance with generally accepted accounting principles by translating balance sheet accounts at the appropriate historical or currentclosing exchange rate on the balance sheet date and the income statement accounts using the prevailing exchange rates at the transaction date. Translation gains and losses are recorded in stockholders’ equity and realized gains and losses are reflected in operations. The translation exchange gain (loss) for the quarternine months ended MarchSeptember 30, 2008 was

The Company is continuing to evaluate the commercial process of establishing the technological feasibility of its purchased water purification system. All costs incurred related to the purification system have been charged to expense. There have been no research and development expenses incurred in fiscal year 2007 or in the quarternine months ended March 31,September 30, 2008. There have been no research and development costs incurred by the Company in relation to the HCGT technology.technology or the CCS technology in those periods either.

The Company has not engaged inincurred any advertising expenditureexpense during the quarternine months ended September 30, 2008, as it has focused on achieving marketable products. The board of directors does not have a defined policy at this stage in relation toregarding marketing and advertising expenses. However, it has identified those markets where it will have itsanticipates the most success, including, but not limited to, China.China, Australia and the United States. Marketing will be conducted on a direct basis.basis with key corporate and government agencies.

The Company has acquired the patents for the HCGT technology and the license for the CCS technology. In both cases, the Company is of the opinion that the technologies are in an advanced stage that would facilitate their commercialization without the need for further research and development. The balance sheet value of these assets is based upon their respective purchase prices. The Company has concluded that both technologies have a market value as at March 31,September 30, 2008, that wouldcould be generatedachieved, should they be disposed of. Consequently, the Company does not consider that impairment should be made.them impaired.

On September 29, 2007, HTC entered into a CCS Technology License Agreement with CO2 Technologies (CO2) to grant to CO2, under all of HTC’s intellectual property licensing rights, an exclusive, perpetual non-restrictive, sub licensable, fully paid up License to use in People’s Republic of China, India and Asia Pacific (including Australia, New Zealand, Malaysia, Singapore, Brunei, Indonesia, Philippines, Thailand and Japan).

Since the Company entered into the License Agreement, the Licensor (HTC) has successfully introduced the CCS technology internationally. This success has been reflected in theThe HTC market capitalization risinghas risen from CAD$27.8million to a current CAD$55.9million52.9 million on AprilSeptember 30, 2008. This indicates theThe Company believes that this may indicate market acceptance of the intrinsic value of the technology.

The directors of the Company have viewed the increase in the HTC market capitalization to have a complementary increase in the CCS License value. Hence the original value of USD6,000,000 is assessed as being commercial.

The Board concluded at the time of the negotiations that the geographical area covered by the CO2 License could reasonably represent 25% of the then perceived license value. Consequently the Company issued 10 million shares valued at a strike price of USD0.60.

The Company further concluded that with its ability to interface the CCS technology with its own HCGT technology in the territories available under the CCS License would significantly enhance the revenue stream flowing to the Company.

In accordance with SFAS 144, “Accounting for the Impairment or Disposal of Long-lived Assets” the Company quarterly reviews its long-lived assets to be held and used by the Company to determine whether any events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company bases its evaluation on such impairment indicators as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. If such impairment indicators are present or other factors exist that indicate that the carrying amount of the asset may not be recoverable, the Company determines whether impairment has occurred through the use of an undiscounted cash flow analysis of assets at the lowest level for which identifiable cash flows exist. If impairment has occurred, the Company recognizes a loss for the difference between the carrying amounts and the estimated value of the asset. The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, fair value is based on an estimated discounted cash flow analysis. The Company reduced the carrying value of the intellectual property to its net realizable value and recorded an impairment loss of $1,000,000 and $3,300,000 for the years ended December 31, 2001 and 2004, respectively, in accordance with SFAS 121, which was superseded by SFAS 144.

The Company accounts for stock-based compensation in accordance with SFAS 123(R). In determining stock-based compensation, the Company considers various factors in the calculation of fair value using the Black-Scholes pricing model. These factors include volatility, expected term of the options and forfeiture rates. A change in these factors could result in differences in the stock-based compensation expense.  The Company amortizes stock-based compensation expense on a straight-line basis over the requisite service period. There is no stock-based compensation expense for the periodsnine months ended March 31,September 30, 2008 and 2007. 

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”). SFAS 141R revises the principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree, and the goodwill acquired in a business combination or gain from a bargain purchase. SFAS 141R also revises the principles and requirements for how the acquirer determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This pronouncement will be effective for usthe Company on January 1, 2009. We areThe Company is currently evaluating the impact, if any, that SFAS 141R will have on ourits financial position or results of operations.

Also in December 2007, the FASB issued SFAS No. 160, “Non controlling Interest in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 amends ARB No. 51 to establish accounting and reporting standards for the non controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This pronouncement will be effective for usthe Company on January 1, 2009. We areThe Company is currently evaluating the impact, if any, that SFAS 160 will have on ourits financial position or results of operations.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS No. 161"). SFAS 161 requires companies with derivative instruments to disclose information that should enable financial-statement users to understand how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities" and how derivative instruments and related hedged items affect a company's financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We areThe Company is currently evaluating the impact, if any, that SFAS 161 will have on ourits financial position or results of operations.

The accompanying financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America, contemplates the continuation of the Company as a going concern. However, the Company has been in the development stage since its inception (April 26, 2000), sustainedsustaining significant losses, $21,583,791$23,429,070 through September 30, 2008, and has used capital raised through the issuance of stock to fund these activities. Continuation of the Company as a going concern is contingent upon establishing and achieving profitable operations. Such operations will require management to secure additional financing for the Company in the form of debt or equity.

Management believes that actions currently being taken to revise the Company’s funding requirementsraise capital will allow the Company to continue its development stage operations. However, there iscan be no assurance that the necessary funds will be realized by securing debt or through stock offerings.

On June 8, 2000, the Company purchased ownership rights to certain water purification intellectual property and technology, and a related system from Global Power & Water, Inc. (Global), which includes a pending Australian patent application, certain other patent rights, copyrights, design rights, trademark rights, and any other rights that may exist at any time in relation to this product. The Company issued 4,000,000 shares of common stock valued at $4,000 for the purchase of this technology. In addition, the agreement called for the Company to issue 1,000,000 shares when the technology has reached a point of technological feasibility and 1,000,000 shares when Global has produced a fully working prototype of the JetWater System that is ready for large scale production and deployment in commercial applications. The first 1,000,000 shares were issued in January 2001. The second 1,000,000 shares were issued in March 2004.

In addition, the Company entered into a five year agreement in June 2000 with Global to assist in the development of a workable prototype. The Company paid Global $80,000 per year until the marketable prototype was completed in 2002. The Company paidmade annual payments of $100,000 until June 2005 when the agreement ran out and was not renewed. During the year ended December 31, 2005, the Company paid $50,000 under the agreement.

In July 2006, the Company acquired the exclusive license for North America to exploit the Hybrid Coal and Gas Turbine Technology (HCGT) for electricity generation by acquiring the common stock of Methgen, Inc. for 763,700 shares of common stock of the Company, which were valued at $496,405 based on the closing price of the shares on the date of acquisition. The Company’s acquisition included a license recorded by Methgen valued at $536,373. The Company believes that it may not be able to recover the carrying amounts of these assets and has charged income for impairment of the license.

On June 1, 2007, the Company acquired the balance of the equity it did not already hold in Liquatech Pty Ltd. (Liquatech). Through its wholly ownedwholly-owned subsidiary, Liquatech Turbine Pty Ltd, it held a 50% interest in ComEnergy Pty Ltd. The remaining 50% was held by the Commonwealth Scientific & Industrial Research Organisation (CSIRO). As of September 30, 2008, Liquatech Turbine held no assets other than the shares in ComEnergy Pty Ltd. ComEnergy had not generated any revenues. Its intrinsic value related to its future income generation . Liquatech or Comenergy did not have any business as defined by SFAS141 and therefore the entities were not consolidated in the Company’s Accounts as at March 31,September 30, 2008.

On June 1, 2007, the Company acquired the 50% interest that the Australian Government’s Research entity, Commonwealth Scientific and Industrial Research Organisation (CSIRO)CSIRO held in ComEnergy Pty Ltd for $461,881. ComEnergy heldholds an exclusive international license for the HCGT technology. The shareholding in ComEnergy is now held directly by the Company (50%) and Liquatech Turbine Pty Ltd (50%). Liquatech Turbine Pty Ltd is a wholly owned subsidiary of the Company.

On September 24, 2007, the Company entered into a Share Swap Agreement with Canadian company HTC Hydrogen Technologies Corporation to providethat provided for the Company to issue 10,000,000 shares of its common stock (valued as at settlement date at $6,000,000) to HTC in exchange for it receiving all the issued shares in CO2 Technologies Pty Ltd. CO2 Technologies holds the exclusive Licenselicense for the commercialization of the Carbon Capture and Storage technology for The People’s Republic of China, India and East Asia. CO2 Technologies Pty Ltd is the holder of a License and did not have any business as defined by SFAS141 and thereforeSFAS141. Therefore, the entity was not consolidated in the Company’s Accounts as at March 31,September 30, 2008.

On October 22, 2007, the Company completed itssatisfied a condition precedent to permit the CSIRO to assign the rights and ownership of patents for the HCGT technology. As at March 31,July 1, 2008, the formal process to assignDeed of Assignment for the Patents registered in 12 international jurisdiction has been executed and instructions are being issued to EESTech Inc is still incomplete.the Patent Attorney to register such assignments. The actual registration has not been completed as at September 30, 2008.

During the year ended December 31, 2003, the Company issued 583,985 shares of common stock for cash at $1.50 per share for total proceeds of $876,054.

In November 2003, the Company issued 50,000 shares of common stock in payment for services, which it valued at fair market value at the date of issuance for $190,000.

During the year ended December 31, 2004, the Company issued 1,000,000 shares of common stock in payment of intellectual property and 30,000 shares of common stock for services at the closing stock price on the date of issue, $3,300,000 and $37,500, respectively. The Company issued 978,370 shares of common stock for cash proceeds of $617,127 and 29,398 shares of common stock that had been subscribed in 2003, for total proceeds of $44,097.

During the year ended December 31, 2005, the Company issued 78,784 shares of common stock for services valued at the closing stock price on the date of issue of $97,838. The Company issued 1,840,750 shares of common stock for cash proceeds of $967,288, 2,004,888 shares of common stock that had been subscribed in 2004 for total proceeds of $890,230 and 588,235 shares of common stock for a note payable of $300,000$300,000.

During the year ended December 31, 2006, the Company issued 622,627 shares of common stock for services, valued as at the closing stock price on the date of issue of $541,225. The Company issued 2,192,691 shares of common stock for cash proceeds of $936,823 including 62,500 shares of common stock that had been subscribed in 2005 for $50,000. The Company issued 763,700 shares of common stock to acquire the licenses held by Methgen, Inc. valued at the closing stock price on the date of acquisition orof $496,405.

During the year ended December 31, 2007, the Company issued 6,489,989 shares of common stock for services valued at the closing stock price on the date of issue of $5,521,282. The Company issued 8,224,322 shares of common stock for cash proceeds of $3,115,465. The Company issued 10,000,000 shares of common stock for the purchase of the License from HTC for the Carbon Capture and Storage technology valued at the closing stock price on the date of issue of $6,000,000. 

During the quarternine months ended March 31,September 30, 2008, the Company issued 2,567,4403,148,650 shares of common stock for cash proceeds of $2,058,892.$2,535,484. The Company issued 441,6681,039,293 shares of common stock, for services, to Directors, Officers and Consultants valued at the closing price on the date of issue of $290,151.$568,993. Under the amended Agreement with HTC PurEnergy Inc 5,000,000 shares valued at a price of USD0.60 are to be returned to the Company in exchange for it relinquishing its exclusive rights to exploit the CCS technology in China, India, South Asia and Australasia. As the Agreement has been executed there is a contractual obligation for its completion and consequently the Company has recorded the transaction. The actual return of the certificate for 10,000,000 shares and the reissue of 5,000,000 shares will be completed before December 31, 2008.

During the year ended December 31, 2005, the Company converted a shareholder loan of $300,000 into shares of common stock. The conversion ratio was the principal balance of the loan divided by the current market price of the Company’s common stock on the conversion date.

During the year ended December 31, 2005, the Company received additional shareholder loans were receivedfrom shareholders in an amount of $245,249. The loans bear no interest and are due on demand.

During the year ended December 31, 2006, additional shareholder loans were received in an amount of $29,970. These loans bear no interest and are due on demand.

During the year ended December 31, 2007, the shareholder loans were reduced by repayments of $52,162.

During the quarternine months ended March 31,September 30, 2008, the shareholderCompany received additional loans were increased by $6,241.from shareholders in an amount of $39,495.

The Company has adopted FAS Statement No. 131, “Disclosures about Segments of a Business Enterprise and Related Information.” The Company’s marketing and research and development activity is administered in two operating segments: United States and Australia.