UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report filed under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2006
or [ ] Transitional report filed under Section 13 or 15(d) of
the Exchange Act.
Commission File No. 0-32863
EESTech, 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
--------------
Aqua Dyne, Inc.
----------------------------------------------------------
Former name
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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date:
As of September 30, 2006, there were 16,955,839 shares of Common Stock,
par value $.001 per share, outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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 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 9
Item 3. Controls and Procedures 11
PART II. OTHER INFORMATION 11
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults On Senior Securities 11
Item 4. Submission of Items to a Vote of security holders 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits (b) Reports on Form 8K 12
SIGNATURES 13
2
EESTECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
- - -------------------------------------------------------------------------------------------------------
ASSETS
September 30, 2006 DECEMBER 31,
UN-AUDITED 2005
------------ ------------
Current assets:
Cash $ 11,599 $ 1,828
Prepaid expenses 17,882 26,424
------------ ------------
Total current assets 29,481 28,252
------------ ------------
Property and equipment, net of depreciation 71,961 34,089
Intellectual property, net of amortization 362,737 2,887
Other assets
Goodwill 603,927 --
------------ ------------
Total assets $ 1,068,106 $ 65,228
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 36,387 $ 164,930
Payroll and payroll taxes payable 4,326 11,381
Shareholder loans 246,200 245,429
------------ ------------
Total current liabilities 286,913 421,740
------------ ------------
Long term liabilities 507,566 --
------------ ------------
Total liabilities 794,479 421,740
Stockholders' equity:
Common Stock, $0.001 par value, 20,000,000 shares authorized; 16,955,839 and
14,416,410 shares issued and outstanding at September 30, 2006 and
December 31, 2005,
respectively 16,954 14,415
Additional paid in capital 11,251,819 9,892,369
Common stock subscribed, none and 62,500 shares at
September 30, 2006 and December 31, 2005, respectively -- 50,000
Deficit accumulated during development stage (11,139,269) (10,324,295)
Accumulated other comprehensive income 144,123 10,999
------------ ------------
Total stockholders' equity (deficit) 273,627 (356,512)
------------ ------------
Total liabilities and stockholders' equity $ 1,068,106 $ 65,228
============ ============
The accompanying notes are an integral part of these financial statements
3
EESTECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
FOR THE FOR THE FOR THE FOR THE AMOUNTS FROM
NINE MONTHS NINE MONTHS THREE MONTHS THREE MONTHS APRIL 26,
ENDED ENDED ENDED ENDED 2000 TO
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
30, 2006 30, 2005 30, 2006 30, 2005 30, 2006
------------ ------------ ------------ ------------ ------------
Operating expenses:
General and administrative $ 815,254 $ 1,288,853 $ 219,165 $ 207,925 $ 5,653,257
Research and development -- 75,000 -- 25,000 1,200,466
Impairment loss on
intellectual property -- -- -- -- 4,300,000
------------ ------------ ------------ ------------ ------------
Total operating expenses 815,254 1,363,853 219,165 232,825 11,153,723
Loss from operations (815,254) (1,363,853) (219,165) (232,925) (11,153,723)
Other income (expense)
Interest income 574 3,264 194 -- 34,967
Interest expense -- -- -- -- (644)
Loss on disposition of assets -- -- -- -- (18,700)
Provision for taxes (294) -- -- -- (1,169)
------------ ------------ ------------ ------------ ------------
Net loss $ (814,974) $ (1,360,589) $ (218,971) $ (232,925) $(11,139,269)
============ ============ ============ ============ ============
Loss per share $ (0.05) $ (0.10) $ (0.01) $ (0.02)
============ ============ ============ ============
Weighted average number of
common shares outstanding 15,567,423 13,231,290 16,661,698 14,003,932
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements
4
EESTECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Deficit
----------------------------------------------------- accumulated
Par Additional during Total
Shares value paid-in Shares development Comprehensive stockholders'
issued $0.001 capital subscribed stage income 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) -- (1,737,846)
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 1,474,966 1,475 578,249 (50,000) -- -- 529,724
Issuance of stock for services 300,763 301 285,559 -- -- -- 285,860
Issuance of stock for acquisition 763,700 763 495,642 -- -- -- 496,405
Net loss -- -- -- -- (814,974) -- (814,974)
Adjustment for foreign currency
translation -- -- -- -- -- 133,124 133,124
------------
Comprehensive loss -- -- -- -- -- -- (681,850)
------------ ------------ ------------ ----------- ------------ ------------ ------------
Balance September 30, 2006
(unaudited) 16,955,839 $ 16,954 $ 11,251,819 $ -- $(11,139,269) $ 144,123 $ 273,627
============ ============ ============ =========== ============ ============ ============
The accompanying notes are an integral part of these financial statements
5
EESTECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
CUMULATIVE AMOUNTS
FOR THE NINE FOR THE NINE APRIL 26, 2000
MONTHS ENDED MONTHS ENDED THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2006 2005 2006
UNAUDITED UNAUDITED UNAUDITED
------------ ------------ ------------
Cash flows from operating activities:
Net loss $ (814,974) $ (1,360,589) $(11,139,269)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization and depreciation 10,583 12,668 43,554
Impairment of intellectual property -- -- 4,300,000
Shares issued for services 285,860 97,838 611,848
Disposition of property -- -- 18,700
Changes in assets and liabilities:
Decrease (increase) in prepaid expenses 8,542 (6,384) (17,882)
Increase (decrease) in accounts payable (128,543) (90,501) 36,385
Increase (decrease) in accrued payroll taxes (7,055) 4,496 4,326
------------ ------------ ------------
Net cash used in operations (645,587) (1,342,472) (6,142,338)
------------ ------------ ------------
Cash flows used by investing activities:
Disposition (acquisition) of fixed assets (134) (4,339) (84,780)
------------ ------------ ------------
Net cash used by investing activities (134) (4,339) (84,780)
------------ ------------ ------------
Cash flows from financing activities:
Issuance of common stock 529,724 940,982 5,856,520
Loan from shareholder 771 223,025 246,200
------------ ------------ ------------
Net cash from financing activities 530,495 1,164,007 6,102,720
------------ ------------ ------------
Comprehensive gain (loss) on translation 124,997 (185,148) 135,997
Net increase (decrease) in cash 9,771 (367,952) 11,599
Cash, beginning of period 1,828 401,202 --
------------ ------------ ------------
Cash, end of period $ 11,599 $ 33,250 $ 11,599
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for intellectual property $ -- $ -- $ 4,300,000
============ ============ ============
Issuance of stock for services $ 285,860 $ 97,838 $ 611,848
============ ============ ============
Issuance of stock for loan payable $ -- $ 300,000 $ 300,000
============ ============ ============
Issuance of stock subscribed $ 50,000 $ 890,230 $ --
============ ============ ============
Issuance of stock for acquisition of Methgen $ 496,405 $ -- $ 496,405
============ ============ ============
The accompanying notes are an integral part of these financial statements
6
ESSTECH, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
AND CUMMULATIVE FROM INCEPTION APRIL 26, 2000 TO SEPTEMBER 30, 2006
(UN-AUDITED)
- --------------------------------------------------------------------------------
1. INTERIM FINANCIAL INFORMATION
-----------------------------
The consolidated financial statements of EESTech, Inc. (the Company)
and its wholly-owned subsidiaries EESTech Australia Pty Ltd, Methgen
Inc and Methgen Limited as of September 30, 2006 and related footnote
information are un-audited. 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 nine months ended September 30, 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 nine months ended September 30, 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. STOCK BASED COMPENSATION
------------------------
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.
7
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. Had there been stock-based compensation
in 2006, stock-based compensation expense would have been recorded net
of estimated forfeitures for the period ended September 30, 2006 such
that expense would be 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 period ended
September 30, 2005, the pro forma on net loss and net loss per share
would have been as follows:
Nine-month Nine-month
period ended period ended
September 30, 2005 September 30, 2005
------------ ------------
Net loss, as reported $ (232,925) $(1,360,589)
Add: Stock based employee compensation
expense included in reported net loss,
net of related tax effects -- --
Deduct: Total Stock-based employee
compensation expense determined under
fair-value based method for all awards not
included in net loss -- (1,557)
----------- -----------
Pro-forma net loss $ (232,925) $(1,362,146)
=========== ===========
Loss per share:
Basic and diluted - as reported $ (0.02) $ (0.10)
----------- -----------
Basic and diluted - pro-forma $ (0.02) $ (0.10)
----------- -----------
4. SEGMENT INFORMATION
-------------------
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.
United States Australia
------------- ---------
Net Loss- September 30, 2006 $ 330,817 $ 484,157
September 30, 2005 $ 214,770 $ 1,145,819
------------ ------------
Long lived assets (net)
September 30, 2006 $ 0 $ 23,789
September 30, 2005 $ 0 $ 38,821
5. ACQUISTION OF LICENSING AGREEMENT
---------------------------------
In July 2006 the Company issued 763,700 shares of common stock to
acquire Methgen, Inc. that holds the license for marketing and
exploitation of the Hybrid Coal Gas Turbine Technology in the United
States.
6. METHGEN INC VALUATION
---------------------
In July 2006 EESTech, Inc acquired all the capital stock in Methgen
Inc. This event resulted in the creation of an amount of $603,917 as
Goodwill. Methgen Inc holds the exclusive License to exploit the Hybrid
Coal Gas Turbine Technology in the United States. The Board considers
that this license will result in the Company selling up to five systems
over the next two years. The unit selling price for a 10Mw plant is
$17.5m (incl profit). The Board understands that the first sale may not
achieve the benchmark profit, but believes that all future plants will
achieve the target. A forecast profit for this period could be expected
to exceed the level of Goodwill crested at the time of the acquisition
and hence the Board does not consider it necessary to account for an
impairment of capital.
8
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 10-KSB for a description of certain of the known risks and uncertainties of
the Company.)
Overview of the Company's Business
- - ----------------------------------
EESTech, 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 period to 30 June 2006, most of the operations were conducted in
Australia.
In July 2006, EESTech, Inc. acquired all the issued stock in Methgen Inc through
a share swap. This provided EESTech, Inc. with the rights to market and exploit
the Hybrid Coal Gas Turbine Technology in North America. In addition EESTech,
Inc. has entered into an agreement to acquire 58% of the issued shares in an
Australian investment company Liquatech Ltd that holds a 50% interest in
Comenergy Pty Ltd. Comenergy holds the world wide license for the Hybrid Coal
Gas Turbine Technology.
During the period to 30 September 2006, most of the operations were conducted in
Australia.
9
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.
In relation to the HCGT electricity generation technology the Company has signed
a Letter of Intent to proceed to a purchase contract with Liaiong Fuxin Coal
Group in China to supply a 10Mw power plant. The Company management propose to
create the initial facility and then provide an operating plant that can be
evidenced to North American customers who currently experience environmentally
"unfriendly" mining practices.
The Company is also currently undertaking evaluation of a number of other
economically and environmentally sustainable technologies. These will be
complementary to the company's existing products and will ensure the development
of a wider product range.
Results of operations
- ---------------------
The Company has been in the developmental stage since its inception.
Our net loss from inception (April 26, 2000) until September 30, 2006 was
$11,139,000. Our net loss for the nine months ended September 30 2006 was
$815,000 as compared to $1,360,000 for the nine months ended September 30, 2005.
Our general and administrative expenses from inception (April 26, 2000) until
September 30, 2006 were $5,653,000. Our general and administrative expenses for
the nine months ended September 30, 2006 were $815,000 as compared to $1,289,000
for the nine months ended September 30, 2005. The reduction in expenses of
$474,000 was due primarily to the reduction of expenses in Australia of contract
labor $332,000, wages $69,000 and consulting fees $75,000.
Our research and development expenses from inception (April 26, 2000) until
September 30 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 have been no research and development expenses
in 2006 as the contract with Global for research and development came to an end
in June 2005.
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.
10
Liquidity and Capital Resources
- -------------------------------
The Company had a cash balance of $11,599 at September 30 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. For the nine months ended September 30, 2006 the Company issued
shares for cash in the amount of $529,724.
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 September 30, 2006, 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 specified 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.
The Chief Executive Officer and Chief Financial Officer confirm that the review
of the Controls and Procedures was conducted at 30 June 2006.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS- NONE
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS-NONE
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES- NONE
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS-
On June 15, 2006, at a Special Meeting of Stockholders, a resolution was passed
unanimously to permit an amendment to the Company's Amended and Restated
Certificate of Incorporation to change the name of the Company to "EESTech, Inc"
The State of Delaware was advised and a new certificate was issued on June 26
2006
The NASDAQ was subsequently informed and it approved the name change on July 7
2006, confirming that the new Trading symbol would be EESH.OB
The significance of this is to broaden the Company's activities into
economically and environmentally sustainable technologies
11
ITEM 5 - OTHER INFORMATION-
On July 3, 2006 the Board approved the following:
(a) The issue of 763,700 restricted shares of common stock to eight
Stockholders in Methgen Inc. In exchange EESTech Inc received all the
issued stock in Methgen Inc. This company holds a license to exploit
HCGT technology in the United States.
(b) The entering into an agreement for the issue of 999,268 restricted
shares of common stock to Mr Gregory Paxton and 552 restricted shares
of common stock to Global Power and Water. In exchange EESTech, inc
received 1,392 shares in Liquatech Pty Ltd, This represents 58% of that
company's issued stock. Liquatech Pty Ltd holds a 50% interest in
ComEnergy Pty Ltd, a company that holds a world-wide license to exploit
the HCGT technology. The actual settlement date for the transaction has
been deferred to a date to be agreed by all parties. The Board has
identified the transaction but as the completion has not been affected
the accounts do not include the consolidation of Liquatech Pty Ltd.
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 James Wilson**
10.4 Promissory Note to Global Power & Water, Inc.**
31 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to Section 906 of 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.
8/3/2006 8.01 Acquisition of company
8/3/2006 8.01 Possible acquisition of company
8/10/06 8.01 Resignation of Director
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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: November 13, 2006 EESTECH, 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 November 13, 2006
- --------------------- Director (PRINCIPAL EXECUTIVE
Murray Bailey OFFICER)
/s/ Murray Bailey Chief Financial Officer (PRINCIPAL November 13, 2006
- --------------------- FINANCIAL OFFICER AND PRINCIPAL
Murray Bailey ACCOUNTING OFFICER)
13