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EESTech, Inc
23011 Moulton Parkway, Suite A-10
Laguna Hills, California 92653
Tel : 1 (949) 380-4033
Fax : 1 (949) 380-1781
www.eestechinc.com
March 6, 2007
VIA EDGAR
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
Attention: Mr. James A. Allegretto
Mr. Adam Phippen
Re: | EESTech, Inc. (f/k/a Aqua Dyne, Inc.) | ||
Form 10-KSB for Fiscal Year Ended December 31, 2005 Filed March 20, 2006 | |||
Form 10-QSB for Quarterly Period Ended March 31, 2006 | |||
File No. 000-3286 |
Dear Messrs. Allegretto and Phippen:
The letter responds to the letter dated August 8, 2006 from your office with respect to our Form 10-KSB for the fiscal year ended December 31, 2005 and our Form 10-QSB for the quarterly period ended March 31, 2006. For your convenience, the text of your letter has been included and our response is presented below each comment in boldface type.
Form 10-KSB for Year Ended December 31, 2005
1. | We note your response to comments 1,3,4,5,9,10 and 11 in our letter dated June 30, 2006 and your intent to file amendments to your filings on Form 10-KSB and Form 10-QSB upon completion of our review of your response letter. Please do so. |
As requested, we believe that we have complied with all outstanding comments that were issued in connection with our Form 10-KSB for fiscal year ended December 31, 2005 and Forms 10-QSB for fiscal quarters ended March 31, 2006 and June 30, 2006. We filed an amended Form 10-KSB with the Commission on December 19, 2006 and filed amended Forms 10-QSB with the Commission on January 3, 2007 and January 5, 2007, respectively. |
U.S. Securities and Exchange Commission
March 6, 2007
Page 2
Exhibit 31 | |
2. | We note your response to comment 6 in our letter dated June 30, 2006 and the proposed revisions to the certifications to be included in amendments to Form 10-KSB and Form 10-QSB. Please eliminate the reference to the title of the CEO and CFO in the introductory paragraph to conform to the format provided in Item 601(b)(31) of Regulation S-B. |
As requested, we have eliminated the reference to the title of the CEO and CFO in the introductory paragraph to conform to the format provided in Item 601(b)(31) of Regulation S-B. Revised certifications were included in the amended Form 10-KSB and Form 10-QSBs. | |
Form 10-QSB for Quarterly Period Ended March 31, 2006 | |
Consolidated Statements of Cash Flows, page 6 | |
3. | We note your response to comment 8 in our letter dated June 30, 2006. The affect of exchange rate changes on cash balances held in foreign currency should be separately reported, and that amount should not include foreign currency translation adjustments of assets and liabilities. Please refer to paragraph 25 of SFAS 95. Please revise the statements of cash flows included in the filing and in Form 10-KSB for the year ended December 31, 2005 to eliminate foreign currency translation adjustments of the balance sheet items from reported cash flows or tell us why the classification errors are not material and revisions are not necessary. In addition, please tell us what translation adjustments to equity represent given that equity accounts should be translated at historical rates. Please tell us the functional currency of Aqua Dyne Australia Pty Ltd. |
The Company has reviewed the staff’s comment regarding the effect of exchange rate changes on cash balances held in foreign currency. Please note that the Company has been in the development stage since its inception on April 26, 2000. Of the $3.2 million cash received by the foreign subsidiary, Aqua Dyne Australia, through June 30, 2006, only $66,000 has been expensed as a fixed asset. Because only AUD$90,000 has been expensed as fixed assets out of the AUD$4.5 million received through June 30, 2006, the effect of the exchange rate on cash approximates the effect of the exchange rate on cash by using the difference in the translation gain or loss change in the period. | |
In light of the staff’s comment, the Company calculated the effect of exchange rate changes for the fiscal year ended December 31, 2005 applying SFAS 95. The effect on cash was ($148,327). As disclosed in the statement of cash flows in our Form 10-KSB, the effect on cash reported was ($148,541). This represents a variance of 0.14%. In addition, the effect of the translation adjustment on equity is equal to $33,423. Because all of the foreign subsidiary's equity consists of accumulated losses, the translation adjustment effect is already reflected under the "Operating Activities" portion of the statement of cash flows. For these reasons, management believes the classification errors are not material and revisions to the statement of cash flows is not necessary. In future filings, however, the Company will calculate the effect on cash of exchange rate changes in accordance with SFAS 95 and consider additional disclosure, if appropriate, to the extent such amounts are deemed material to investors by management. | |
In addition, please note that the functional currency of Aqua Dyne Australia Pty Ltd is Australian Dollars (AUD). |
U.S. Securities and Exchange Commission
March 6, 2007
Page 3
In the event that the staff has any further requests or matters seeking clarification, please feel free to contact our Company Secretary, Ian Hutcheson, at your earliest convenience at 61 7 3832 9883 or by fax 61 7 3832 1336.
Yours Sincerely,
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Ian L. Hutcheson
Company Secretary