UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Amendment 1)
[X] Quarterly report filed under Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2006
or [ ] Transitional report filed under Section 13 or 15(d) of the Exchange Act.
Commission File No. 0-32863
Aqua Dyne, Inc.
(Name of Small Business Issuer in its Charter)
Delaware | 33-0922627 | |
State or other jurisdiction of | I.R.S. Employer | |
incorporation or organization | Identification Number |
23011 Moulton Parkway A-10, Laguna Hills, Ca. 92653
(Address of principal executive office)
Issuer's telephone number: (949) 380 4033
Former address and telephone number
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) been subject to such filing requirements for the past ninety (90) days.
Yes x No o
Indicate by check mark whether the registrant is a small company As defined in Rule 12b-2 of the Exchange Act) o Yes x No
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date:
As of November 9, 2006, there were 16,970,691 shares of Common Stock, par value $.001 per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes o No x
Form 10-QSB/A
EXPLANATORY NOTE
This Amendment No.1 on Form 10-QSB/A amends our Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31, 2006, which was originally filed with the Securities and Exchange Commission(“SEC”) on May 11, 2006. The purpose of this Amendment No.1 is primarily to address the comments received by us from the staff of the SEC. Specifically, we have amended and restated the disclosure required by Part II, Item 8A “Controls and Procedures” and amended the Section 302 Certification of our principal executive officer and principal financial officer. In addition, this Amendment No.1 reports the information contained in Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds. This Amendment No.1 does not reflect any events occurring after the filing of the original Form 10-QSB, nor does it modify or update (or seek or update to modify or update) in any way the disclosures contained in the original Form 10-QSB filing. This Amendment No. 1 continues to speak as of the date of the original Form 10-QSB filing. This Amendment No.1 should be read in conjunction with our filings made with the SEC subsequent to the date of the original Form 10-QSB filing, including any amendments to those filings.
TABLE OF CONTENTS
PAGE | ||||
PART I. FINANCIAL INFORMATION | ||||
Item 1. Financial Statements | ||||
(a) Consolidated Balance Sheets | 3 | |||
(b) Consolidated Statements of Operations | 4 | |||
(c) Consolidated Statements of Stockholders' Equity (Deficit) | 5 | |||
(d) Consolidated Statements of Cash Flows | 6 | |||
(e) Notes to Consolidated Financial Statements | 7 | |||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 8 | |||
Item 3. Controls and Procedures | 10 | |||
PART II. OTHER INFORMATION | 10 | |||
Item 1. Legal Proceedings | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | ||||
Item 3. Defaults On Senior Securities | ||||
Item 4. Submission of Items to a Vote | ||||
Item 5. Other Information | ||||
Item 6. | ||||
(a) Exhibits (b) Reports on Form 8K | ||||
SIGNATURES | 11 |
2
AQUA DYNE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2006 UNAUDITED | DECEMBER 31, 2005 | ||||||
Current assets: | |||||||
Cash | $ | -- | $ | 1,828 | |||
Prepaid expenses | 17,274 | 26,424 | |||||
Total current assets | 17,274 | 28,252 | |||||
Property and equipment, net | 30,607 | 34,089 | |||||
Intellectual property, net of amortization | 2,837 | 2,887 | |||||
Total assets | $ | 50,718 | $ | 65,228 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 104,433 | $ | 164,930 | |||
Bank overdraft | 4,233 | -- | |||||
Payroll and payroll taxes payable | 4,326 | 11,381 | |||||
Shareholder loans | 241,847 | 245,429 | |||||
Total current liabilities | 354,839 | 421,740 | |||||
Stockholders' equity: | |||||||
Common Stock, $0.001 par value, 20,000,000 shares authorized; | |||||||
15,141,483 and 14,416,410 shares issued and outstanding at | |||||||
March 31, 2006 and December 31, 2005, respectively | 15,140 | 14,415 | |||||
Additional paid in capital | 10,237,778 | 9,892,369 | |||||
Common stock subscribed, 62,500 shares at December 31, 2005 | -- | 50,000 | |||||
Deficit accumulated during development stage | (10,631,300 | ) | (10,324,295 | ) | |||
Accumulated other comprehensive income | 74,261 | 10,999 | |||||
Total stockholders' equity (deficit) | (304,121 | ) | (356,512 | ) | |||
Total liabilities and stockholders' equity | $ | 50,718 | $ | 65,228 |
The accompanying notes are an integral part of these financial statements
3
AQUA DYNE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2006 | FOR THE THREE MONTHS ENDED MARCH 31, 2005 | CUMULATIVE AMOUNTS FROM APRIL 26, 2000 TO MARCH 31, 2006 | ||||||||
Operating expenses: | ||||||||||
General and administrative | $ | 322,045 | $ | 686,248 | $ | 5,160,048 | ||||
Research and development | -- | 25,000 | 1,200,466 | |||||||
Impairment loss on intellectual property | -- | -- | 4,300,000 | |||||||
Total operating expenses | 322,045 | 711,248 | 10,660,514 | |||||||
Loss from operations | (322,045 | ) | (711,248 | ) | (10,660,514 | ) | ||||
Other income (expense) | ||||||||||
Interest income | 124 | 2,110 | 34,517 | |||||||
Interest expense | -- | -- | (644 | ) | ||||||
Gain (loss) on disposition of assets | 15,210 | -- | (3,490 | ) | ||||||
Provision for taxes | (294 | ) | -- | (1,169 | ) | |||||
Net loss | $ | (307,005 | ) | $ | (709,138 | ) | $ | (10,631,300 | ) | |
Loss per share | $ | (0.02 | ) | $ | (0.06 | ) | ||||
Weighted average number of common shares outstanding | 14,711,967 | 11,386,461 | ||||||||
The accompanying notes are an integral part of these financial statements
4
AQUA DYNE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock | Deficit accumulated | |||||||||||||||||||||
Shares issued | Par value $0.001 | Additional paid-in capital | Shares subscribed | during development stage | Comprehensive income | Total stockholders' equity | ||||||||||||||||
Balance at inception- | ||||||||||||||||||||||
April 26, 2000 | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | $ | -- | |||||||||
Issuance of stock for | ||||||||||||||||||||||
intellectual property | 4,000,000 | 4,000 | -- | -- | -- | -- | 4,000 | |||||||||||||||
Issuance of stock to directors | 650,000 | 650 | -- | -- | -- | -- | 650 | |||||||||||||||
Net loss | -- | -- | -- | -- | (18,973 | ) | -- | (18,973 | ) | |||||||||||||
Balance December 31, 2000 | 4,650,000 | 4,650 | -- | -- | (18,973 | ) | -- | (14,323 | ) | |||||||||||||
Issuance of stock for cash | 997,000 | 997 | 996,003 | -- | -- | -- | 997,000 | |||||||||||||||
Issuance of stock for | ||||||||||||||||||||||
intellectual property | 1,000,000 | 1,000 | 999,000 | -- | -- | -- | 1,000,000 | |||||||||||||||
Net loss | -- | -- | -- | -- | (1,638,743 | ) | -- | (1,638,743 | ) | |||||||||||||
Balance December 31, 2001 | 6,647,000 | 6,647 | 1,995,003 | -- | (1,657,716 | ) | -- | 343,934 | ||||||||||||||
Issuance of stock for cash | 585,000 | 585 | 584,415 | -- | -- | -- | 585,000 | |||||||||||||||
Net loss | -- | -- | -- | -- | (662,710 | ) | -- | (662,710 | ) | |||||||||||||
Balance December 31, 2002 | 7,232,000 | 7,232 | 2,579,418 | -- | (2,320,426 | ) | -- | 266,224 | ||||||||||||||
Issuance of stock for cash | 583,985 | 584 | 875,470 | -- | -- | -- | 876,054 | |||||||||||||||
Issuance of stock for services | 50,000 | 50 | 189,950 | -- | -- | -- | 190,000 | |||||||||||||||
Common stock subscribed | -- | -- | -- | 44,097 | -- | -- | 44,097 | |||||||||||||||
Net loss | -- | -- | -- | -- | (1,106,906 | ) | -- | (1,106,906 | ) | |||||||||||||
Adjust for foreign | ||||||||||||||||||||||
currency translation | -- | -- | -- | -- | -- | 23,637 | 23,637 | |||||||||||||||
Comprehensive loss | -- | -- | -- | -- | -- | -- | (1,083,269 | ) | ||||||||||||||
Balance December 31, 2003 | 7,865,985 | 7,866 | 3,644,838 | 44,097 | (3,427,332 | ) | 23,637 | 293,106 | ||||||||||||||
Issuance of stock for | ||||||||||||||||||||||
intellectual property | 1,000,000 | 1,000 | 3,299,000 | -- | -- | -- | 3,300,000 | |||||||||||||||
Stock subscribed issued | 29,398 | 29 | 44,068 | (44,097 | ) | -- | -- | -- | ||||||||||||||
Issuance of stock for cash | 978,370 | 978 | 616,149 | -- | -- | -- | 617,127 | |||||||||||||||
Issuance of stock for services | 30,000 | 30 | 37,470 | -- | -- | -- | 37,500 | |||||||||||||||
Common stock subscribed | -- | -- | -- | 890,230 | -- | -- | 890,230 | |||||||||||||||
Net loss | -- | -- | -- | -- | (5,159,117 | ) | -- | (5,159,117 | ) | |||||||||||||
Adjustment for foreign | ||||||||||||||||||||||
currency translation | -- | -- | -- | -- | -- | 135,903 | 135,903 | |||||||||||||||
Comprehensive loss | -- | -- | -- | -- | -- | -- | (5,023,214 | ) | ||||||||||||||
Balance December 31, 2004 | 9,903,753 | 9,903 | 7,641,525 | 890,230 | (8,586,449 | ) | 159,540 | 114,749 | ||||||||||||||
Issuance of stock for cash | 3,845,638 | 3,845 | 1,853,673 | (890,230 | ) | -- | -- | 967,288 | ||||||||||||||
Issuance of stock for note | 588,235 | 588 | 299,412 | -- | -- | -- | 300,000 | |||||||||||||||
Issuance of stock for services | 78,784 | 79 | 97,759 | -- | -- | -- | 97,838 | |||||||||||||||
Common stock subscribed | ||||||||||||||||||||||
(62,500 shares) | -- | -- | -- | 50,000 | -- | -- | 50,000 | |||||||||||||||
Net loss | -- | -- | -- | -- | (1,737,846 | ) | -- | (1,738,846 | ) | |||||||||||||
Adjustment for foreign | ||||||||||||||||||||||
currency translation | -- | -- | -- | -- | -- | (148,541 | ) | (148,541 | ) | |||||||||||||
Comprehensive loss | -- | -- | -- | -- | -- | -- | (1,886,387 | ) | ||||||||||||||
Balance December 31, 2005 | 14,416,410 | $ | 14,415 | $ | 9,892,369 | $ | 50,000 | $ | (10,324,295 | ) | $ | 10,999 | $ | (356,512 | ) | |||||||
Issuance of stock for cash | 618,073 | 618 | 205,346 | (50,000 | ) | -- | -- | 155,964 | ||||||||||||||
Issuance of stock for services | 107,000 | 107 | 140,063 | -- | -- | -- | 140,170 | |||||||||||||||
Net loss | -- | -- | -- | -- | (307,005 | ) | -- | (307,005 | ) | |||||||||||||
Adjustment for foreign currency | ||||||||||||||||||||||
translation | -- | -- | -- | -- | -- | 63,262 | 63,262 | |||||||||||||||
Comprehensive loss | -- | -- | -- | -- | -- | -- | (243,743 | ) | ||||||||||||||
Balance March 31, 2006 | ||||||||||||||||||||||
(unaudited) | 15,141,483 | $ | 15,140 | $ | 10,237,778 | $ | -- | $ | (10,631,300 | ) | $ | 74,261 | $ | (304,121 | ) | |||||||
The accompanying notes are an integral part of these financial statements
5
AQUA DYNE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
CUMULATIVE AMOUNTS | ||||||||||
FROM INCEPTION | ||||||||||
FOR THE THREE | FOR THE THREE | (APRIL 26, 2000) | ||||||||
MONTHS ENDED | MONTHS ENDED | THROUGH | ||||||||
MARCH 31, 2006 | MARCH 31, 2005 | MARCH 31 2006 | ||||||||
UNAUDITED | UNAUDITED | UNAUDITED | ||||||||
Cash flows from operating activities: | ||||||||||
Net loss | $ | (307,005 | ) | $ | (709,138 | ) | $ | (10,631,300 | ) | |
Adjustments to reconcile net loss to net cash | ||||||||||
used in operating activities: | ||||||||||
Amortization and depreciation | 3,532 | 3,005 | 36,502 | |||||||
Impairment of intellectual property | -- | -- | 4,300,000 | |||||||
Shares issued for services | 140,170 | 97,838 | 466,158 | |||||||
Disposition of property | -- | -- | 18,700 | |||||||
Changes in assets and liabilities: | ||||||||||
Decrease (increase) in prepaid expenses | 9,150 | (27,537 | ) | (17,274 | ) | |||||
Increase (decrease) in accounts payable | (60,497 | ) | (70,716 | ) | 104,433 | |||||
Increase (decrease) in accrued payroll taxes | (7,055 | ) | 2,171 | 4,326 | ||||||
Net cash used in operations | (221,705 | ) | (704,377 | ) | (5,718,455 | ) | ||||
Cash flows used by investing activities: | ||||||||||
Acquisition of fixed assets | -- | (2,921 | ) | (84,646 | ) | |||||
Net cash used in investing activities | -- | (2,921 | ) | (84,646 | ) | |||||
Cash flows from financing activities: | ||||||||||
Issuance of common stock | 155,964 | 533,819 | 5,482,760 | |||||||
Loan from shareholder | (3,582 | ) | -- | 241,847 | ||||||
Stock subscribed | -- | 71,284 | -- | |||||||
Overdraft | 4,233 | -- | 4,233 | |||||||
Net cash from financing activities | 156,615 | 605,103 | 5,728,840 | |||||||
Comprehensive gain (loss) on translation | 63,262 | (32,529 | ) | 74,261 | ||||||
Net increase (decrease) in cash | (1,828 | ) | (134,724 | ) | -- | |||||
Cash, beginning of period | 1,828 | 401,202 | -- | |||||||
Cash, end of period | $ | -- | $ | 266,478 | $ | -- | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH | ||||||||||
INVESTING AND FINANCING ACTIVITIES: | ||||||||||
Issuance of stock for intellectual property | $ | -- | $ | -- | $ | 4,304,000 | ||||
= | ||||||||||
Issuance of stock for services | $ | 140,170 | $ | 79,838 | $ | 466,158 | ||||
Issuance of stock subscribed | $ | 50,000 | $ | 890,230 | $ | -- | ||||
Issuance of stock for loan payable | $ | -- | $ | 300,000 | $ | -- |
The accompanying notes are an integral part of these financial statements
6
AQUA DYNE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
AND CUMULATIVE FROM INCEPTION APRIL 26, 2000 TO MARCH 31, 2006
(UNAUDITED)
1. INTERIM FINANCIAL INFORMATION
The consolidated financial statements of Aqua Dyne, Inc. (the Company) and its wholly-owned subsidiary Aqua Dyne Australia Pty Ltd as of March 31, 2006 and related footnote information are unaudited. All adjustments (consisting only of normal recurring adjustments) have been made which, in the opinion of management, are necessary for a fair presentation. Results of operations for the three months ended March 31, 2006 and 2005 are not necessarily indicative of the results that may be expected for any future period. The balance sheet at December 31, 2005 was derived from audited financial statements.
Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted. These financial statements should be read in conjunction with the financial statements and notes for the year ended December 31, 2005.
2. ISSUE OF COMMON STOCK FOR INTELLECTUAL PROPERTY
The Company acquired the JetWater System in its final stages of prototype development from Global Power & Water, Inc. ("Global") in fiscal year 2000 in exchange for issuance to Global of 6,000,000 shares of common stock, 4,000,000 of our shares of common stock initially, 1,000,000 shares following the successful testing of the system and another 1,000,000 shares to be issued upon the successful demonstration that the JetWater System is ready for large scale production and deployment in commercial operations.
During the year ended December 31, 2004 the Company issued 1,000,000 shares of common stock at a par value of $0.001 per share in payment of intellectual property acquired in 2000. Since the fair market value of the stock on the date issued was $3.30 the Company was required to value the intellectual property acquired at $3,300,000 and the Company was not able to substantiate that it would be able to realize revenues to recover the investment. Therefore, the Company was required to recognize an impairment of long-lived asset of $3,300,000.
3. SHARE BASED PAYMENTS
“Prior to January 1, 2006, the Company accounted for employee stock-based compensation using the intrinsic value method supplemented by pro forma disclosures in accordance with APB 25 and SFAS 123 “Accounting for Stock-Based Compensation” (“SFAS 123”) Under the intrinsic value based method, compensation cost is the excess, if any, of the quoted market price of the stock at grant date or other measurement date over the amount an employee must pay to acquire the stock. Under the intrinsic value method, the Company has recognized stock-based compensation common stock on the date of grant.
Effective January 1, 2006 the Company adopted SFAS 123R using the modified prospective approach and accordingly prior periods have not been restated to reflect the impact of SFAS 123R. Under SFAS 123R, stock-based awards granted prior to its adoption will be expensed over the remaining portion of their vesting period. These awards will be expensed under the straight line amortization method using the same fair value measurements which were used in calculating pro forma stock-based compensation expense under SFAS 123. For stock-based awards granted on or after January 1, 2006, the Company will amortize stock-based compensation expense on a straight-line basis over the requisite service period, which is generally a five-year vesting period.
SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Stock-based compensation expense was recorded net of estimated forfeitures for the quarter ended March 31, 2006 such that expense was recorded only for those stock-based awards that are expected to vest. Previously under APB 25 to the extent awards were forfeited prior to vesting, the corresponding previously recognized expense was reversed in the period of forfeiture.
If the fair value based method under FAS 123 had been applied in measuring stock-based compensation expense for the quarter ended March 31, 2005, there would still have been no compensation expense recorded, thus the pro-forma net loss and pro-forma basic and diluted loss per share will equal the amounts as reported.”
4. SEGMENTED INFORMATION
The Company's marketing and research and development activity is administered in two operating segments: United States and Australia.
United States | Australia | |||||||||
Net Loss, three months ended March 31, | 2006 | $ | 159,946 | $ | 147,059 | |||||
2005 | $ | 124,096 | $ | 585,042 | ||||||
Long lived assets (net) March 31, | 2006 | $ | 0 | $ | 30,607 | |||||
2005 | $ | 0 | $ | 46,966 |
7
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this Plan of Operation of this Quarterly Report on Form 10-QSB include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the actual results of the Company (sometimes referred to as "we", "us" or the "Company"), performance (financial or operating) or achievements expressed or implied by such forward-looking statements not to occur or be realized. Such forward-looking statements generally are based upon the Company's best estimates of future results, general merger and acquisition activity in the marketplace, performance or achievement, based upon current conditions and the most recent results of operations. Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "project," "expect," "believe," "estimate," "anticipate," "intends," "continue", "potential," "opportunity" or similar terms, variations of those terms or the negative of those terms or other variations of those terms or comparable words or expressions. (See the Company's Form 10SB for a description of certain of the known risks and uncertainties of the Company.)
Overview of the Company's Business
Aqua Dyne, Inc. ("Company", "us" or "we") was incorporated and commenced operations on April 26, 2000. The Company was formed to seek out and acquire promising technologies with the intent of bringing them to commercialization. The first such technology we acquired was the JetWater System for water purification. This technology was acquired from Global Power & Water, Inc., a Nevada corporation ("Global"). As a result of the acquisition Global became our controlling shareholder. Following the acquisition of the patent rights and complete ownership of this technology, we have been working to complete development and testing of the JetWater System process. The Company acquired the JetWater System in its final stages of prototype development from Global Power & Water, Inc. ("Global") in fiscal year 2000 in exchange for issuance to Global of 6,000,000 shares of common stock, 4,000,000 of our shares of common stock initially, 1,000,000 shares following the successful testing of the system and another 1,000,000 shares to be issued upon the successful demonstration that the JetWater System is ready for large scale production and deployment in commercial operations.
To date a total of 6,000,000 of our shares of common stock have been issued to Global, following the successful independent testing of the JetWater System. The acquisition of JetWater System from Global was accounted for as a purchase of an asset for stock.
In December 2002, Aqua Dyne Australia Pty Ltd., a wholly-owned subsidiary of the Company was formed under the laws of Australia. The subsidiary had been formed to conduct the Company's operations in Australia. During the three months ended March 31, 2006, most of the operations were conducted in Australia.
8
Plan of Operations
Management's goal is to keep costs to a minimum, but to do sufficient marketing to successfully sell the JetWater System for commercial use. Now that the completion of the testing is over, the JetWater System planned activities are as follows:
1) initial production of the first commercial version of the JetWater System is ready to start if the Company can sell or lease the system to a commercial buyer.
2) continue to do demonstrations to parties that have a need for the JetWater System;
3) work with Global to continue to improve and modify the JetWater System; and
4) seek out potential joint venture partners to market the JetWater System to selective industries and territories.
There are still no assurances that we will be successful in our marketing efforts, concluding any contracts or joint venture arrangements.
Results of operations
The Company has been in the developmental stage since its inception.
Our net loss from inception (April 26, 2000) until March 31, 2006 was $10,631,000. Our net loss for the three months ended March 31 2006 was $307,000 as compared to $709,000 for the three months ended March 31, 2005.
Our general and administrative expenses from inception (April 26, 2000) until March 31, 2006 were $5,160,000. Our general and administrative expenses for the three months ended March 31, 2006 were $322,000 as compared to $686,000 for the three months ended March 31, 2005. The reduction in expenses of $364,000 is due to the decrease in the use of contract labor ($189,000)and other consultants ($88,000), the use of less facilities reducing rent by $13,000 and a general decline in all other general expense due to reduced activity.
Our research and development expenses from inception (April 26, 2000) until March 31, 2006 were $1,200,000. All costs through December 31, 2002 were related to the process of establishing the technological feasibility of the water purification system. There were no research and development costs for the three months ended March 31, 2006 as the research contract with Global ended in June of 2005, which was $25,000 per quarter.
The Company had an impairment loss on intellectual property of $4,300,000 since inception due to the issuance of 2,000,000 shares of stock that was agreed upon when the Company acquired the intellectual property in 2000. The 2,000,000 shares issued were valued at the current market price of the stock when issued.
9
Liquidity and Capital Resources
The Company had a bank overdraft of $4,233 at March 31, 2006, as compared to cash of $1,828 at December 31, 2005.
To date the Company continues to fund its operations from private placements of common shares. During the three months ended March 31, 2006 the Company substantially covered the three month loss of $307,000 issuing common shares for cash $156,000 and issuing common stock for services $140,000.
ITEM 3. CONTROLS AND PROCEDURES.
“Evaluation of Disclosure Controls and Procedures. The Chief Executive Officer and Chief Financial officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-QSB1A, have concluded that its disclosure controls and procedures are effective to reasonably ensure that material information required to be disclosed by the Company in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specific by Securities and Exchange Commissions’ rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting. There were no changes made during our most recently completed fiscal quarter in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.”
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS- NONE
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS-NONE
Date Issued | Amount | Name of stockholder | Cash/Services | Purpose | ||||
January 18 2006 | 300,000 | Mr Murray Bailey | Cash | |||||
January 18 2006 | 300,000 | Ms Monica Bailey | Cash | |||||
January 18 2006 | 18,073 | Dial-A-Plumber | Cash | |||||
February 15 2006 | 5,000 | Mr Greg Paxton | Services | Director Entitlement | ||||
February 15 2006 | 10,000 | Mr Tom Svalberg | Services | Director Entitlement | ||||
February 15 2006 | 15,000 | Mr Murray Bailey | Services | Director Entitlement | ||||
February 15 2006 | 15,000 | Mr Gaylord Beeson | Services | Director Entitlement | ||||
February 15 2006 | 62,000 | Ms Colleen McCafferty | Services | Consulting Contract dated January 10 2005 |
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES- NONE
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS- NONE
ITEM 5 - OTHER INFORMATION- NONE
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number | Description | |
3.1 | Articles of Incorporation* | |
3.2 | Bylaws* | |
4.1 | Form of the Stock Certificate* | |
4.2 | Form of Subscription Agreement executed by investors in the Private Placement* | |
10.1 | Deed of Agreement for Assignment of Intellectual Property* | |
10.2 | Agreement for Performance of Services by Independent Contractor* | |
10.3 | Employment Agreement with JamesWilson** | |
10.4 | Promissory Note to Global Power& Water, Inc.** | |
31 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302of the Sarbanes-Oxley Act | |
32 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906of the Sarbanes-Oxley Act |
* Previously filed with the Securities and Exchange Commission on Form 10-QSB.
** Previously filed with the Securities and Exchange Commission on Form 10-KSB
(b) Reports on Form 8-K.
8-K filed on January 4, 2006 Resignation of Director 8-K filed on February 10, 2006 Resignation of Director
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: January 3 , 2007 | AQUA DYNE, INC. | |
| | |
By: | /s/ Murray Bailey | |
Murray Bailey | ||
Chief Executive Officer and Chief Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE | TITLE | DATE | ||
/s/ Murray Bailey | Chief Executive Officer and Director | January 3 , 2007 | ||
Murray Bailey | (PRINCIPAL EXECUTIVE OFFICER) | |||
11