ThZeal - The Zeal

10-Q 1 v131846_10q.htm Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter ended September 30, 2008.

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 0-32863

EESTECH, INC.

(Name of small business issuer in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		33-0922627 (I.R.S. Employer Identification No.)

1105 North Market Street, Suite 1300 Wilmington, Delaware, (Address of principal executive offices)		19801 (Zip Code)

Issuer’s telephone number (including area code): (302) 427 2360

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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer’ and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer o
Non -accelerated filer o	(do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

o Yes x No

The number of shares outstanding of the registrant’s common stock, $0.001 par value per share, was 41,897,682 at September 30, 2008.

TABLE OF CONTENTS

	Page
PART I FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)		2

Consolidated Balance Sheets		2
Consolidated Statements of Operations		3
Consolidated Statements of Stockholders' Equity (Deficit)		4
Consolidated Statements of Cash Flows		6
Notes to Consolidated Financial Statements		8

Item 2. Management's Discussion and Analysis or Plan of Operation		17

Item 3. Quantitative and Qualitative Disclosures About Market Risk		29

Item 4. Controls and Procedures		29

PART II OTHER INFORMATION		29

Item 1. Legal Proceedings		29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30

Item 3. Defaults Upon Senior Securities		30

Item 4. Submission of Matters to a Vote of Security Holders		30

Item 5. Other Information		30

Item 6. Exhibits		30

SIGNATURES		31

EESTECH, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

	SEPTEMBER 30, 2008			DECEMBER 31, 2007
	(Unaudited)
ASSETS
Current Assets:
Cash	$	7,777		$	8,079
Prepaid expenses and other current assets		229,631			114,355
Total Current Assets	$	237,408		$	122,434

HCGT Patent		461,881			461,881
Investment in Liquatech Pty Ltd		8			8
Property and equipment, net of accumulated depreciation		48,109			47,415
CO2 License		3,000,000			6,000,000
Intellectual property, net of amortization		7,500			7,500
Total Assets	$	3,754,906		$	6,639,238
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	358,297		$	978,473
Accrued expenses		95,100			26,620
Capital lease		31,322			39,924
Shareholder loans		244,715			223,057
Total Current Liabilities	$	729,434		$	1,268,074

Stockholders' Equity:
Common stock, $0.001 par value, 100,000,000 shares authorized; 41,897,682 and 42,709,739 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively		41,898			42,709
Additional paid-in capital		26,580,563			26,475,275
Deficit accumulated during development stage		(23,429,070	)		(20,547,037	)
Accumulated other comprehensive income		(167,919	)		(599,783	)
Total Stockholders' Equity		3,025,472			5,371,164
Total Liabilities and Stockholders' Equity	$	3,754,906		$	6,639,238

The accompanying notes are an integral part of these unaudited consolidated financial statements.

EESTECH, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	FOR THE THREE MONTHS ENDED						FOR THE NINE MONTHS ENDED						CUMULATIVE AMOUNTS FROM APRIL 26, 2000 TO SEPTEMBER 30,
	SEPTEMBER 30						SEPTEMBER 30,						2008
	2008			2007			2008			2007
Operating Expenses:
General administrative	$	585,402		$	1,834,111		$	2,498,952		$	3,611,369		$	17,025,321
Write off of China Joint Venture Investment		-			419,805			-			419,805			477,252
Unrealised foreign exchange (gain)/loss		663,592			-			394,570			-			(164,251	)
Research and development		-			-			-			-			1,200,466
Impairment loss on intellectual property		-			-			-			-			4,836,373
Total Operating Expenses		1,248,994			2,253,916			2,893,522			4,031,174			23,375,161
Loss from operations		(1,248,994	)		(2,253,916	)		(2,893,522	)		(4,031,174	)		(23,375,161	)
Other income (expense)
Write back director’s loan		-			-			-			-			25,682
Interest income		19			2,446			14,237			4,014			54,023
Interest expense		(1,146	)		(203,444	)		(2,748	)		(203,770	)		(109,851	)
Gain (loss) on disposition of assets		-			-			-			-			(22,594	)
Provision for taxes		-			-			-			-			(1,169	)
Net loss	$	(1,250,121	)	$	(2,454,914	)	$	(2,882,033	)	$	(4,230,930	)	$	(23,429,070	)

Loss per share	$	(0.03	)	$	(0.13	)	$	(0.06	)	$	(0.23	)

WWeighted average number of common shares outstanding		45,355,263			19,612,088			45,415,899			18,509,198

The accompanying notes are an integral part of these unaudited consolidated financial statements.

EESTECH, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) AND COMPREHENSIVE LOSS

				Common Stock
	Shares issued Par			Par Value $0.001			Additional paid-in capital			Shares subscribed			Deficit accumulated during development stage			Accumulated other comprehensive income/(loss)			Total Stockholders' equity (deficit)
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	)
Adjustment 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		2,192,691			2,194			934,629			(50,000	)		—			—			886,823
Issuance of stock for acquisition of Methgen Inc		763,700			764			495,641			—			—			—			496,405
Issuance of stock for services		622,627			623			540,602			—			—			—			541,225
Net loss		—			—			—			—			(1,873,231	)		—			(1,873,231	)
Adjustment for foreign currency translation		—			—			—			—			—			25,622			25,622
Comprehensive loss		—			—			—			—			—			—			(1,847,609	)
Balance December 31, 2006		17,995,428			17,996			11,863,241			—			(12,197,526	)		36,621			(279,668	)
Issuance of stock for cash		8,224,322			8,224			3,107,241			—			—			—			3,115,465
Issuance of stock for services		6,489,989			6,489			5,514,793			—			—			—			5,521,282
Issuance of stock for license		10,000,000			10,000			5,990,000			--			--			--			6,000,000
Net loss		—			—			—			—			(8,349,511	)		—			(8,349,511	)
Adjustment for foreign currency translation		—			—			—			—			—			(636,404	)		(636,404	)
Comprehensive loss		—			—			—			—			—			—			(8,985,915	)
Balance December 31, 2007		42,709,739			42,709			26,475,275			—			(20,547,037	)		( 599,783	)		5,371,164
Issuance of stock for cash		3,148,650			3,149			2,532,335												2,535,484
Issuance of stock for services		1,039,293			1,040			567,953												568,993
Return of stock for License		(5,000,000	)		(5,000	)		(2,995,000	)											(3,000,000	)
Net loss		-			-			-			-			(2,882,033	)		-			(2,882,033	)
Adjustment for foreign currency translation																	431,864			431,864
Comprehensive loss																				(2,450,169	)
Balance September 30, 2008 (Unaudited)		41,897,682		$	41,898		$	26,580,563			-		$	(23,429,070	)	$	(167,919	)	$	3,025,472

The accompanying notes are an integral part of these unaudited consolidated financial statements.

EESTECH, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,						CUMULATIVE AMOUNTS FROM INCEPTION (APRIL 26, 2000) THROUGH SEPTEMBER 30,
	2008			2007			2008
Cash flows from operating activities:
Net loss	$	(2,882,033	)	$	(4,230,930	)	$	(23,429,070	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation		13,420			19,898			82,239
Amounts credited to provisions		2,127			-			3,904
Impairment of intellectual property		-			-			4,836,373
Shares issued for services		568,993			324,063			6,957,487
Disposition of property		-			-			22,594
Unrealized foreign exchange gains on intercompany loans		394,569						(164,251	)
Write Back of Director Loan		-			-			(25,682	)
Write off of deposit for China joint venture		-			419,805			419,805
Adjustment of conversion option liability in excess of authorized shares		-			1,316,808			-
Amortisation of debt discount		-			138,143			-
Changes in assets and liabilities:
Decrease/(increase) in Accruals		67,196			45,928			53,213
Decrease/(increase) in prepaid expenses and Other Current Assets		(125,063	)		(264,547	)		(240,437	)
Other Accounts Receivable		(144	)		(234,403	)		(1,886	)
Deposit to escrow account for China joint venture		-			(419,805	)		(419,805	)
Decrease/(increase) in other Accounts Receivable
Increase (decrease) in Accounts Payable		(587,926	)		397,398			390,548
Increase (decrease) in accrued payroll taxes		-			(19,307	)		22,210
Net cash used in operations		(2,548,861	)		(2,506,949	)		(11,492,758	)

Cash flows used by investing activities
Acquisition of HCGT Patent		-			-			(461,881	)
Investment in Liquatech Pty Ltd		-			(8	)		(8	)
Investment in ComEnergy Pty Ltd		-			(261,091	)		-
Disposal/(Acquisition) of equipment		(11,768	)		(3,592	)		(147,580	)
Acquisition of intangible asset- license		-			(7,500	)		(7,500	)
Net cash used in investing activities		(11,768	)		(272,191	)		(616,969	)

Cash flows from financing activities:
Issuance of common stock		2,535,484			614,675			11,864,568
Loan from shareholders (including note payable)		39,495			2,247,165			269,540
Principal repayment of finance lease		(5,212	)		-			(9,990	)
Deferred lease		-			(5,205	)		46,703
Net cash from financing activities		2,569,767			2,856,635			12,170,821
Comprehensive gain/(loss) on foreign currency translation		(9,441	)		(36,167	)		(53,317	)
Net increase (decrease) in cash		(303	)		41,328			7,777
Cash, beginning of period		8,080			5,517			-
Cash, end of period	$	7,777		$	46,845		$	7,777
Supplemental Disclosure of non-cash
Investing and financing activities:
Issuance of stock for intellectual property	$	-		$	-		$	4,836,373
Issuance of stock for services	$	568,993		$	324,063		$	6,957,487
Issuance of stock subscribed		-			-			50,000
Issuance of stock for acquisition of Methgen Inc.		-			-			496,405
Beneficial conversion feature of Notes					442,846
Conversion option liability in excess of authorized shares		-			1360,421			-
Return of stock for CO2 License		(3,000,000	)		-			3,000,000

The accompanying notes are an integral part of these unaudited consolidated financial statements.

EESTECH, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

AND CUMULATIVE FROM INCEPTION APRIL 26, 2000 TO SEPTEMBER 30, 2008

(UNAUDITED)

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, 2008, and for the three and nine months ended September 30, 2008 and 2007, and related footnote information are unaudited. All adjustments (consisting only of normal recurring adjustments) have been made that, in the opinion of management, are necessary for a fair presentation. Results of operations for the interim period are not necessarily indicative of the results that may be expected for any other interim period or any full year. The balance sheet at December 31, 2007, was derived from audited financial statements.

The unaudited consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. 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 unaudited consolidated financial statements should be read in conjunction with the financial statements and notes for the fiscal year ended December 31, 2007, included in the Company's Annual Report on Form 10-KSB.

2.	ORGANIZATION AND HISTORY

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

On June 8, 2000, the Company acquired the water purification technology, which removes impurities from water and improves the quantity of usable water. The Company proposes to sell directly or otherwise provide on a revenue-producing basis, systems, which will allow customers to purify water at the source. The Company has completed its prototype units and has the capability of marketing a commercial product. No additional research and development is required to fully commercialize the “JetWater” system.

The Company has been in the development stage since its inception, April 26, 2000. It has been primarily engaged in raising capital and developing a marketable commercial water purification product.

EESTech Australia Pty Ltd. (a wholly-owned subsidiary) was formed in December 2002. EESTech Australia Pty. Ltd. worked with the Company to market the JetWater System in Australia.

Methgen Inc. and its wholly-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 of the 50% interest that the 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 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.

On August 2, 2007, the Company incorporated three wholly-owned subsidiaries, EESTech Technologies Pty Ltd, EESTech Research Pty Ltd and EESTech Commercial Pty Ltd. These entities have been established to manage the Company’s intellectual property assets. As at September 30, 2008, the subsidiaries had not engaged in any activities and none of the Company’s intellectual property had been transferred into the entities.

On September 24, 2007, the Company entered into a Share Swap Agreement with HTC Hydrogen Technologies Corp., a Canadian company (HTC), to enable EESTech Inc. to gain access to a technology for carbon catchment and storage (CCS). The Agreement involved the Company issuing 10 million shares of its common stock to HTC in exchange for it being issued all the capital in CO2 Technologies Pty Ltd, a special purpose company that holds the License to commercialize the CCS technology in The People’s Republic of China, India and Asia Pacific.

On September 3, 2008 HTC and EESTech agreed to amend the License Deed to commercialize the CCS Technology in The People's Republic of China, India and Asia Pacific to permit HTC to grant a worldwide license for the technology to two third parties, Doosan Babcock Energy Limited (“DBEL”), a company incorporated in England, and Doosan Heavy Industries & Construction Co., Ltd. (“DHI”), a company incorporated in Korea (the “Doosan License”). CO2 Technologies Pty Ltd will continue to have a non-exclusive License.

In consideration of the Company relinquishing its exclusive geographical rights HTC undertakes to return 5,000,000 of the Company’s shares to EESTech. These shares are proposed to be returned before December 31, 2008. In addition HTC and the Company have agreed to enter into a royalty sharing agreement in relation to any use by DBEL and DHI of the CCS Technology in the Territory as identified in the original License Agreement. DBEL and DHI are required to make a royalty payment to HTC for any plants that DBEL and DHI install in PRC, India and Asia Pacific. The Company will receive a royalty stream for a share of these payments.

3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the Company and its wholly-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

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. Equipment recorded under capitalized leases totaled $31,322 and $39,924 at September 30, 2008 and December 31, 2007, respectively.

CAPITAL LEASE

The Company’s wholly-owned subsidiary, Methgen Limited, 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.

INTELLECTUAL PROPERTY

The cost of the intellectual property acquired is to be amortized on a straight-line basis over its useful life of 20 years. No amortization expense was charged to operations for the nine months ended September 30, 2008 and 2007. An amount of $1,200,466 was charged through the period from inception to June 30, 2006. In relation to the intellectual property for the HCGT Patents, the 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.

USE OF ESTIMATES

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 accruals when it 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.

INCOME TAXES

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 characteristics. 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.

NET LOSS PER SHARE

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, that would dilute earnings per share.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

FOREIGN CURRENCY TRANSLATION

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 closing 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 nine months ended September 30, 2008 was

$431,864 compared with the full year to December 31, 2007 of ($636,404) .

RESEARCH AND DEVELOPMENT COSTS

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 nine months ended September 30, 2008. There have been no research and development costs incurred by the Company in relation to the HCGT technology or the CCS technology in those periods either.

ADVERTISING EXPENSES

The Company has not incurred any advertising expense during the nine 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 regarding marketing and advertising expenses. However, it has identified those markets where it anticipates the most success, including, but not limited to, China, Australia and the United States. Marketing will be conducted on a direct basis with key corporate and government agencies.

VALUATION OF LICENSES AND PATENTS

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 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 September 30, 2008, that could be achieved, should they be disposed of. Consequently, the Company does not consider 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. The HTC market capitalization has risen from CAD$27.8million to CAD$52.9 million on September 30, 2008. The 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 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.

As the License does represent a significant value of the Company’s assets, the board intends to obtain an independent valuation of the License before the end of the current fiscal year.

On September 3, 2008 HTC and EESTech agreed to amend the License Deed to permit HTC to grant a worldwide license for the technology to two third parties, Doosan Babcock Energy Limited (“DBEL”), a company incorporated in England, and Doosan Heavy Industries & Construction Co., Ltd. (“DHI”), a company incorporated in Korea (the “Doosan License”). CO2 Technologies Pty Ltd will continue to have a non-exclusive License.

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 and South Asia. 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 is expected to be completed before December 31, 2008. In addition, HTC and the Company have agreed to enter into a royalty sharing agreement in relation to any use by DBEL and DHI of the CCS Technology in the Territory as identified in the original License Agreement. DBEL and DHI are required to make a royalty payment to HTC for any plants that DBEL and DHI install in PRC, India and Asia Pacific. The Company will receive a royalty stream for a share of these payments.

IMPAIRMENT OF LONG-LIVED ASSETS

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.

STOCK-BASED COMPENSATION

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 nine months ended September 30, 2008 and 2007.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements . SFAS No. 157 provides accounting guidance on the definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. SFAS 157 is effective for the Company starting January 1, 2008 and did not have an impact on the Company as the Company does not have financial instruments subject to the expanded disclosure requirements of SFAS 157. In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which provides a one year delay of the effective date of FAS 157 as it relates to nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of SFAS 157 relating to nonfinancial assets and liabilities will be effective as of the beginning of the Company’s 2009 fiscal year.

Effective January 1, 2008, the Company adopted SFAS No. 159 (“FAS 159”), “The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115.” FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value, and establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The adoption of FAS 159 had no impact on the Company’s financial statements as the Company did not elect the fair value option.

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 the Company on January 1, 2009. The Company is currently evaluating the impact, if any, that SFAS 141R will have on its 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 the Company on January 1, 2009. The Company is currently evaluating the impact, if any, that SFAS 160 will have on its 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. The Company is currently evaluating the impact, if any, that SFAS 161 will have on its financial position or results of operations.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles (“SFAS No. 162”). SFAS 162 identifies a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities (the “Hierarchy”). The Hierarchy within SFAS 162 is consistent with that previously defined in the AICPA Statement on Auditing Standards No. 69, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles” (“SAS 69”). SFAS 162 is effective 60 days following the United States Securities and Exchange Commission’s (the “SEC”) approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of SFAS 162 will not have a material effect on the Consolidated Financial Statements because the Company has utilized the guidance within SAS 69.

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60 (“SFAS No. 163”). SFAS 163 requires recognition of an insurance claim liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured financial obligation. SFAS 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years. Early application is not permitted. The Company’s adoption of SFAS 163 will not have a material effect on the Consolidated Financial Statements.

4.	GOING CONCERN

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), sustaining significant losses, $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 to accommodate both corporate and project requirements. The Company has completed a detailed Business Plan that it is using to engage in equity raisings from a number of investor sources. Whilst the Board considers these fundings to have strong potential, they cannot be absolutely certain. The company is seeking a staged funding for a total of USD7.8 million. If raised, these funds are expected to facilitate funding of the current strategic plan for the next 2-3 years.

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

5.	INTELLECTUAL PROPERTY

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 made 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-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. 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 September 30, 2008.

On June 1, 2007, the Company acquired the 50% interest that CSIRO held in ComEnergy Pty Ltd for $461,881. ComEnergy holds 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 that 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 license 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. Therefore, the entity was not consolidated in the Company’s Accounts as at September 30, 2008.

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

On September 3, 2008 HTC and EESTech agreed to amend the current License Deed to permit HTC to grant a worldwide license for the technology to two third parties, Doosan Babcock Energy Limited (“DBEL”), a company incorporated in England, and Doosan Heavy Industries & Construction Co., Ltd. (“DHI”), a company incorporated in Korea (the “Doosan License”). CO2 Technologies Pty Ltd will continue to have a non-exclusive License.

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. In addition HTC and the Company have agreed to enter into a royalty sharing agreement in relation to any use by DBEL and DHI of the CCS Technology in the Territory as identified in the original License Agreement. DBEL and DHI are required to make a royalty payment to HTC for any plants that DBEL and DHI install in PRC, India and Asia Pacific. The Company will receive a royalty stream for a share of these payments.

6.	COMMON STOCK

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.

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 of $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 nine months ended September 30, 2008, the Company issued 3,148,650 shares of common stock for cash proceeds of $2,535,484. The Company issued 1,039,293 shares of common stock, for services, to Directors, Officers and Consultants valued at the closing price on the date of issue of $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.

7.	SHAREHOLDER LOANS

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 loans from 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 nine months ended September 30, 2008, the Company received additional loans from shareholders in an amount of $39,495.

8.	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 for nine months ended September 30	2008	$	(2,297,080	)	$	(584,953	)
	2007	$	(3,275,503	)	$	(955,427	)
Long lived assets (net)	2008	$	3,469,389		$	48,109
	2007	$	268,599		$	51,771

9.	COMMITMENTS AND CONTINGENCIES

Power Supply Agreements

The Supply Agreement represents agreed model terms and conditions upon which S&T would enter into Power Purchase & Fuel Supply Agreements. The agreed model terms provide for Power Purchase & Fuel Supply Agreements having a term of 20 years, and provides the specific volumes of low grade coal, low density methane gas, and fresh water (collectively, the “inputs”) that each of the Groups will deliver to the Company during the 20-year term of the Projects. The Supply Agreement also details the quality of each of the inputs to be delivered by each of the Groups. The Supply Agreement also obligates each of the groups to purchase 100% of the electric power generated by the Projects at that Group’s coal mining site, as well as the estimated amount of electric power to be delivered by each Project. Finally, the Supply Agreement sets forth the general rights and obligations of each of the Company, S&T, and the Groups with respect to the Projects’ sites and the delivery of the electricity generated by the Projects.

While these agreements remain , as of September 30, 2008, the Company does not have any quantifiable contingent liabilities as the supply agreements are only in “draft” form. It will not be until the actual Power purchase Agreements are entered into formal commitments and contingencies will arise.

Other

On June 13, 2008, the Company entered into a Share Settlement Agreement, that amended the original agreements with Global Power and Water and Gregory Paxton dated July 3, 2006. The agreements was entered into in connection with the exchange of shares of the Company’s common stock for shares of Liquatech Pty Ltd. common stock. The Company is in dispute regarding to the issue of 236,120 shares of the Company’s common stock. As at September 30, 2008, the actual issuance of the stock has been mutually deferred to the final quarter of fiscal year 2008.

On August 4, 2008, the Company entered into a Project Development and Feasibility Agreement (the “Agreement”) with Datong Coal Mine Group (“Datong Coal”) in the People’s Republic of China (the “PRC”).

In the Agreement, the parties acknowledged that there is an opportunity to establish a project that will involve the use of vented coalmine methane and waste coal to deliver cleaner energy for mining operations. Methane has a global warming potential that is more damaging to the atmosphere than carbon dioxide, and the parties believe that by utilizing the Company’s Hybrid Coalmine Gas Technology (“HCGT”) to destroy coalmine methane the project contemplated by the Agreement has the ability to deliver significant environmental benefits to the PRC.

The parties intend for the project (the “project”) contemplated by the Agreement to establish a collaboration between the parties that will foster shared learning through the cross transfer of technologies and skill sets, that the parties hope will collectively advance and optimize the application of the HCGT to destroy coal mine methane that would otherwise be released into the atmosphere.

Datong Coal has agreed to work exclusively with the Company in relation to the project until the earlier to occur of 12 months following the date of the Agreement, the termination of the Agreement, or the execution of a binding agreement intended to supersede the Agreement. Further, Datong Coal has agreed to negotiate the terms of a Certified Emissions Reductions purchase agreement with the Company until the earlier of 12 months after the date of the Agreement or the Agreement’s termination or rescission.

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

All forward-looking statements contained herein are deemed by the Company to be covered by and to quality for the safe harbor protection provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "project," "expect," "believe," "estimate," "anticipate," "intend," "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. Shareholders and prospective shareholders should understand that several factors govern whether any forward-looking statement contained herein will be or can be achieved. Any one of those factors could cause actual results to differ materially from those projected herein. These forward-looking statements include plans and objectives of management for future operations, including plans and objectives relating to the products and the future economic performance of the Company. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development projects, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of those assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in any of the forward-looking statements contained herein will be realized. Based upon actual experience and business development, the Company may alter its marketing, capital expenditure plans or other budgets, which may in turn affect the Company’s results of operations. In light of the significant uncertainties inherent in the forward-looking statements included therein, the inclusion of any such statement should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. See the Company's Annual Report on Form 10-KSB for fiscal year ended December 31, 2007 for a description of certain of the known risks and uncertainties of the Company.

Company History

EESTech Inc.

EESTech, Inc. (the “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. In June 2006, the Company changed its name from “Aqua Dyne, Inc.” to “EESTech, Inc.”

EESTech Australia Pty Ltd.

In December 2002, a wholly-owned subsidiary of the Company, Aqua Dyne Australia Pty Ltd. (now EESTech Australia Pty Ltd.), was formed under the laws of Australia. EESTech Australia Pty Ltd. was formed to conduct the Company’s operations in Australia. Since then, a management and operations team has been assembled that includes experienced persons in the areas of product development, sales and marketing, project analysis and feasibility, quality and compliance, production and engineering, and office management.

Methgen, Inc.

On July 3, 2006, the Company completed the acquisition of Methgen Inc. (“Methgen”) by acquiring 100% of the issued and outstanding shares of common stock of Methgen. Pursuant to the transaction, the Company issued 763,700 shares of its common stock to eight shareholders of Methgen. In exchange, the Company received 763,700 shares of common stock of Methgen. Methgen’s sole asset was a license for the marketing and production rights to the Hybrid Coal Gas Turbine (HCGT) intellectual property in the United States. The license was subsequently rescinded in February 2007 and the outstanding licence fee, payable to the Licensor ComEnergy Pty Ltd, was waived.

Liquatech Pty Ltd

On July 3, 2006, the Company entered into a Share Sale Agreement with Global Power and Water, Inc. and Liquatech Pty Ltd. and a Share Sale Agreement with Gregory Paxton and Liquatech Pty Ltd. Under the agreements, the Company will acquire a 58% interest in Liquatech Pty Ltd. In accordance with the terms and conditions of the agreements, the Company will issue 999,268 shares of its common stock to Greg Paxton, a consultant to the Company’s Research & Development Division, and 552 shares of its common stock to Global Power and Water, Inc. In exchange, the Company will receive 999,820 shares of common stock of Liquatech Pty Ltd. The final settlement has been delayed pending resolution of a number of due diligence matters.

On June 1, 2007, the Company completed a transaction involving the acquisition by EESTech Inc. of 42% of the issued capital of Liquatech Pty Ltd from two shareholders John Hocken and Jovecroft Pty Ltd. This required an outlay by EESTech Inc of $8.

Liquatech Pty Ltd. is a holding company that has a wholly-owned subsidiary, Liquatech Turbine Pty Ltd. As at December 31, 2007, Liquatech Turbine Pty Ltd. and EESTech Inc each own 50% of a joint venture entity known as ComEnergy Pty Ltd. EESTech Inc, in July 2007, acquired the 50% in ComEnergy Pty Ltd previously held by the Australian Government’s Commonwealth Scientific and Industrial Research Organisation (CSIRO). In January 2008, Liquatech Turbine’s stockholding in ComEnergy Pty Ltd. was transferred to EESTech Inc. The transaction did not involve any monetary consideration.

As the Company has now acquired the patents for the HCGT technology, it is no longer necessary to complete the acquisition of the remaining equity in Liquatech Pty Ltd. The Company is currently considering various options relating to its contractual obligations to Global Power and Water Pty Ltd and Greg Paxton and the need to complete the acquisition of the company’s issued capital.

ComEnergy Pty Ltd

On July 25, 2007, the Company completed the acquisition for cash ($461,881) of the 50% interest that CSIRO held in ComEnergy Pty Ltd (ComEnergy), which at that time held the international license from CSIRO for the HCGT technology. The HCGT technology involves the burning of vented air methane and/or coal mine methane along with waste coal to drive a gas or steam turbine. The technology also enables the burning of a range of biomass products. We believe there are opportunities for synergy between the HCGT technology and the JetWater System (owned by EESTech) by operating as a “closed circuit” to produce electricity and use desalinated ground water for turbine cooling.

As ComEnergy has not begun any commercial operations since the date of acquisition and its sole activity has been as the holder of the international license for the HCGT technology from the CSIRO, the Company has concluded that it has acquired an asset, not a business. Consequently, the Company has not consolidated the accounts of ComEnergy.

ComEnergy Pty Ltd. held the exclusive international marketing and production licence to the HCGT technology issued by the CSIRO. Following the completion of an agreement by EESTech Inc with CSIRO the license, held by ComEnergy from CSIRO, was terminated. EESTech Inc currently holds the patent ownership and all rights to the HCGT technology. The Company considers that the amount of $461,881 represents the value attributable to the HCGT Patents acquired from the CSIRO as part of the conditions of acquiring the CSIRO interest in ComEnergy.

CO2 Technologies Pty Ltd

On September 20, 2007, EESTech, Inc. entered into a Share Swap Agreement with HTC Hydrogen Technologies Corp (“HTC”), enabling the acquisition of HTC’s wholly-owned Australian subsidiary CO2 Technologies Pty Ltd (“CO2”). CO2 is a company formed under Australian law whose only asset is an exclusive license to commercialize the carbon capture and storage technology (the “CCS Technology”) in the following regions: The People’s Republic of China, India and the Asia Pacific region (including Australia, New Zealand, Malaysia, Singapore, Brunei, Indonesia, the Philippines, Thailand, and Japan). This transaction involved EESTech Inc issuing 10,000,000 shares of its Common Stock to HTC.

As CO2 has not begun its commercial operations since the date of acquisition and its sole activity has been as the holder of the Licence for the CCS Technology, the Company has concluded that it has acquired an asset, not a business. Consequently the Company has not consolidated the accounts of CO2.

EESTech Technologies Pty Ltd:

On August 2, 2007, this company was incorporated. This entity is proposed to be the holder of all the company’s technology, intellectual property, trade marks and copyright. It will license the intellectual property to EESTech Commercial Pty Ltd to interface with international project proponents in the use of the technologies.

EESTech Commercial Pty Ltd:

This entity was incorporated on August 2, 2007. This entity is proposed to be the holder of licences for the commercialisation and marketing of the technologies held by EESTech Technologies Pty Ltd. The Company will issue sub-licences to project proponents and will in turn receive licence fees.

EESTech Research Pty Ltd:

This entity was incorporated on August 2, 2007. This entity is proposed to be engaged in the research and development to enhance the technologies controlled by EESTech Technologies Pty Ltd.

Company Overview

EESTech Inc. is in the business of providing solutions utilizing Economic and Environmentally Sustainable Technologies. The Company does not intend to, itself, manufacture or fabricate any products. The Company’s core business model is to provide engineering advice for solution solving, including the identification of appropriate equipment. The Company may identify the appropriate equipment through its own products, other compatible products from direct purchase, licenses, alliances with other companies, design customization, engagement of suppliers and management of quality assurance, sale of selected primary and secondary equipment and the management and appointment of professionals involved in the construction and project management function.

The Company will primarily generate revenue through the engagement of suppliers, selling selected primary and secondary equipment for each project, managing the appointment of professionals involved in the construction and project management, providing engineering expertise for commissioning of projects and management of “after sales” services.

The Company intends to pursue a strategic relationship with entities in The People’s Republic of China (PRC) in the commercialization of the initial HCGT Plant.

In November 2007, the Company acquired a License from HTC Hydrogen Technologies Corp (“HTC”) to commercialize the Carbon Capture and Storage technology (CCS). The License allows the Company to commercialize the CCS technology in The People’s Republic of China, India and the Asia Pacific region (including Australia, New Zealand, Malaysia, Singapore, Brunei, Indonesia, the Philippines, Thailand and Japan).

Sales and Marketing

The Company is currently engaged in promoting the commercialization of its three primary products: a Hybrid Coal and Gas Turbine (HCGT) power plant; Carbon Capture and Storage (CCS) and the JetWater System (JWS). These are Economic and Environmentally Sustainable Technologies that are being introduced to markets in Australia, PRC, South America, the United Arab Emirates and the United States.

The Company has a strategy for future expansion and commercialization of the technologies to additional countries as the markets demand. The Company intends to progressively target the eighteen signatory countries to the International Methane to Market Program.

During the year, the Company focused its marketing effort on businesses and governments that have an imperative need to utilize waste gas and/or combustible waste materials as an economical way to generate electricity and to address impure water issues. A special effort has been focused on The People’s Republic of China where there is a significant demand for the Company’s HCGT technology.

The Company will seek to engage external specialists to complete construction and project management functions. These specialists will be engaged on the capability of their regional representations and skills base. The Company will manage such appointments.

The Company will initially utilize specialized technical personnel to carry out all commissioning functions. The Company plans to recover costs associated with their personnel through project revenues. These responsibilities will be carried out by the external engineers so as to mitigate risks associated with quality assurance and performance.

The Company plans to provide customers with contracted services on maintenance and repair of its equipment. These services would be provided by “local” suitably qualified entities that had been approved by the Company’s technical support team.

Methgen, Inc.

On July 3, 2006, the Company completed the acquisition of Methgen Inc. (“Methgen”) by acquiring 100% of the issued common stock of Methgen. Pursuant to the transaction, the Company issued 763,700 shares of its common stock to eight shareholders of Methgen. In exchange, the Company received 763,700 shares of common stock of Methgen. Methgen held a license for the marketing and production rights to the Hybrid Coal and Gas Turbine intellectual property in the United States.

In February 2007 the license was rescinded.

Liquatech Pty Ltd.

On July 3, 2006, the Company entered into a Share Sale Agreement with Global Power and Water, Inc. and Liquatech Pty Ltd. and a Share Sale Agreement with Gregory Paxton and Liquatech Pty Ltd. Under the agreements, the Company will acquire a 58% interest in Liquatech Pty Ltd. In accordance with the terms and conditions of the agreements, the Company will issue 999,268 shares of its common stock to Greg Paxton, a consultant to the Company’s Research & Development Division, and 552 shares of its common stock to Global Power and Water, Inc. In exchange, the Company will receive 999,820 shares of common stock of Liquatech Pty Ltd. There is a matter of dispute that has resulted in the company’s potential obligation to be reduced to 236,120. However there continues to be a negotiation that may lead to the termination of the balance of the obligation.

Liquatech Pty Ltd. is a holding company that operates its business through its wholly-owned subsidiary, Liquatech Turbine Pty Ltd. As at December 31, 2007, Liquatech Turbine Pty Ltd. had transferred its 50% interest in ComEnergy Pty Ltd to EESTech Inc. ComEnergy Pty Ltd,. until September 2007, held the exclusive international marketing and production rights to the HCGT intellectual property. Following the transfer of the patents and other intellectual property associated with the HCGT technology to the Company, the license held by ComEnergy Pty Ltd lapsed.

The HCGT technology involves the burning of vented air methane and/or coal mine methane along with waste coal to drive a gas or steam turbine. The technology also enables the burning of a range of biomass products. We believe there are opportunities for synergy between the HCGT technology and JetWater by operating as a “closed circuit” to produce electricity and use desalinated ground water for turbine cooling.

CO2 Technologies Pty Ltd

On November 29, 2007, the Company entered into a Share Swap Agreement for CO2 Technologies Pty Ltd and a CCS Technology Licence Deed with HTC Hydrogen Technologies Corp. This Agreement entitles EESTech to engage in the commercialization of the CCS technology in a number of territories including PRC, India, and Asia Pacific region (including Australia, New Zealand, Malaysia, Singapore, Brunei, Indonesia, the Philippines, Thailand, and Japan).

On September 3, 2008 HTC and EESTech agreed to amend the CCS Technology License Deed to permit HTC to grant a worldwide license for the technology to two third parties, Doosan Babcock Energy Limited (“DBEL”), a company incorporated in England, and Doosan Heavy Industries & Construction Co., Ltd. (“DHI”), a company incorporated in Korea (the “Doosan License”). CO2 Technologies Pty Ltd will continue to have a non-exclusive License.

Product and Technology Solutions

The Company is currently engaged in promoting the commercialization of its three primary products: a Hybrid Coal and Gas Turbine, or HCGT, power plant; Carbon Capture and Storage and the JetWater System, all Economically and Environmentally Sustainable Technologies, to markets in Australia, PRC, South America, the United Arab Emirates and the United States. The HCGT system and the JetWater System have the capability to provide two different but compatible benefits, or value propositions, to customers. The Company believes that the CCS technology has the capability to offer a cost effective solution to managing carbon emissions.

JetWater System

The first technology the Company acquired was the JetWater System (“JetWater”), an evaporation-based technology for water purification. The JetWater technology is used for the recovery of near ultra pure quality water (i.e., distilled water) from a range of water and wastewater sources. The JetWater System purifies and desalinates seawater, brackish groundwater, treated sewage effluent and other types of wastewater to produce near ultra-pure quality fresh water. The JetWater System is based on mechanical vapour compression (MVC) technology. The JetWater System actually replicates nature’s own water purification process - evaporation and condensation to produce fresh water.

The JetWater System technology was acquired from Global Power & Water, Inc., a Nevada corporation (“Global”), a corporation controlled by Greg Paxton, the co-inventor of the JetWater System, for 4,000,000 shares of common stock of the Company. The agreement also called for Global to receive an additional 1,000,000 shares after the JetWater System passed an independent test proving the technology and another 1,000,000 shares when Global produced a fully working prototype that would be ready for large scale production and deployment in commercial applications. The final 1,000,000 shares were issued in the first quarter of 2004. A total of 6,000,000 shares have been issued pursuant to the Global agreement. In addition to selling to us all rights, ownership and interest in the JetWater System, Greg Paxton, the inventor and principal shareholder of Global assigned the rights to any improvements he may make in the technology in the future. Mr. Paxton and Global have also agreed to continue on an ongoing basis to perform engineering and technical support services exclusively for the Company. The Company agreed to pay Global $80,000 per year until a working prototype was developed. After the prototype was developed the annual payments increased to $100,000 per year. The agreement expired in June 2005 and was not renewed.

Following the acquisition of the patent rights and complete ownership of this technology, the Company commenced testing JetWater. After completion of the independent testing of the process, it designed, constructed and commissioned a pilot unit with a capacity of 0.5Ml/d. JetWater that has been used to demonstrate the technology’s capabilities to potential customers who provide us with samples of their water which requires purification. The feedwater supplied is processed under operational conditions to determine whether JetWater can achieve the outcome sought by the potential customer. The JetWater System provides solutions to customers who wish to purify, desalinate or reuse water from a variety of sources. The Company believes that the JetWater System is particularly relevant to environmentally sensitive situations where the client would like to maximize fresh water recovery and minimize the volume of waste water. The JetWater System is based on a modular design. The production capacity of each module is 0.5 ML per day. The total system production capacity can be increased incrementally up to 5ML/d total production capacity, with 0.5, 1.0 and 1.5 ML per day being the most common system configurations. A 0.5 ML/d JetWater System is capable of providing potable water to a community of approximately 2,000 to 3,000 people. The JetWater System uses electrical power as its main energy supply.

The pilot unit has proved up the technology but, with the Company’s change in focus to the HCGT and CCS technologies, it has not actively pursued markets for the JetWater system. It has explored scope for JetWater to interface with the other two technologies as opposed to looking for stand alone applications. Consequently while the technology is capable of full commercialization it has not generated any sales revenues in the 2007 year.

Future specific sales of JetWater Systems are expected to be driven by:

·	Tighter environmental regulations governing the disposal of waste water;

·	Rising demand for fresh water;

·	Scarcity of new water supplies; and

·	Strong political support for water reuse in the United States, Europe and Australia.

Hybrid Coal and Gas Turbine

The Hybrid Coal and Gas Turbine, or HCGT, can use biomass or a combination of fugitive methane from underground coal mines and waste coal as the fuel source to generate between 5 megawatts and 30 megawatts of electric power, per generating module. A typical system has an operating cost which is competitive with large power stations. The HCGT technology has been developed over the past six years as part of a collaborative environmental research project with the Australian Government’s leading Science and Industry Research Organization and industry groups.

The Company anticipates that this technology should significantly reduce the environmental impact of coal mining by lowering fugitive methane emissions from underground mines and reducing acid run-off and gaseous emissions from waste coal stockpiles. At the same time it should deliver potentially significant savings on power and waste coal management costs.

The key features of the HCGT technology are:

·	5-30MW electrical output;

·	Utilizes waste products for fuel;

·	Destroys methane at the sub-combustible concentrations in mine vent air;

·	Stable operation with variable and low quality fuels, including biomass;

·	Based on proven mainstream technology;

·	Economically viable and sustainable; and

·	Able to satisfy qualification requirements for greenhouse gas trading schemes.

Detailed research by the CSIRO indicates that the HCGT plant could enable coal miners to efficiently produce electric power using low cost fuel sources such as ventilation, air methane, coal mine methane and waste coal. The HCGT process is expected to contribute significantly to improved environmental outcomes and reduced greenhouse gas emissions. In many countries, HCGT projects may be eligible to generate and trade carbon credits (depending on government regulations) thereby creating an additional revenue stream for the mine. HCGT also has application in biomass power generation industry.

The HCGT technology has received the following international endorsements:

·	Recognition under the U.S. and Australian Federal Government’s joint “Climate Action Partnership” as one of seven technologies selected for collaborative assistance to encourage rapid up take in the market place;

·	Recognized as a potential “Clean Development Mechanism” under the United Nations Framework Convention for Climate Change; and

·	A Clean Coal Technology recognized under the Methane to Markets program.

The HCGT system sales are expected to be driven by the world’s rapidly growing demand for electric power, which is expected to increase significantly by 2020. The global renewable energy is expected to grow at an even faster pace during this period.

While the Company’s sales effort may include Australia and the United States its primary focus is going to be the People’s Republic of China (PRC) in the short to medium term.

The Company anticipates that markets in the United States for both coal and biomass will be affected by the successes in China.

Together the HCGT and JetWater technologies should allow EESTech to simultaneously take full advantage of the global commercial opportunities offered by the exciting high-growth renewable energy and water reuse market sectors. The Company intends to focus its initial primary sales efforts in Australia, China and the United States where it believes it can efficiently and economically manage the initial commercialization of its primary products, the JetWater and the HCGT systems.

Carbon Capture and Storage

The coal and gas fired electricity generation sector remains a major provider of base load power throughout the world, due largely to the abundance of coal and gas, the low cost of generation and the maturity of the technology. However as international consensus builds around the need to reduce Greenhouse Gas (GHG) / CO2 Emissions in the face of ever increasing concerns over global warming, significant pressure has been placed on operators of GHG emitting plants, industry groups, state and federal government to respond accordingly.

HTC’s business is the development, aggregation and commercialization of proprietary technologies, relating to carbon dioxide (CO2) capture and storage and enhanced oil recovery utilizing captured CO2. These technologies have been acquired, licensed, developed internally and developed in partnership with the University of Regina and The International Test Centre for CO2 Capture, a leading centre of research for CO2 capture and storage.

The Company and HTC have signed Memoranda of Understandings (MOU) with two Chinese Coal and Power Groups and expect to sign MOUs with other Chinese coalmines for methane mitigation and the use of the C02 generated in the mitigation process for enhanced oil recovery. The Company believes that for these initiatives will form the cornerstone for the Company’s marketing and production activities in the PRC.

Over 12 years of CO2 Capture and Storage process development positions HTC as a leading provider of cost effective CO2 management systems utilising advanced solvent- based CO2 separation processes that can be scaled to meet the clean up requirements required by industry.

Market Overview

JetWater

The principal markets for the JetWater System are centered upon providing environmental solutions to problematic wastewater issues.

Specific applications examples include:

·	Mine sites (with surplus saline mine water and processing water);
·	Pulp mills and wood pulp products;
·	Mineral processing;
·	Power generation;
·	Food manufacture;
·	Municipal landfill leachate; and
·	Other water desalination processes (e.g..reverse osmosis).

The JetWater System facilitates zero liquid discharge and at the same time provides pure distilled water, which is suited to a range of applications including potable water supply, cooling tower makeup, industrial or mine reuse and even restoring environmental flows to natural water courses. In Australia alone, there are nearly 180 coal mines either operating, under construction or planned. Of these, the Company estimates that at least 30 mines have environmental issues associated with disposal or discharge of saline mine water. In the United States, there are environmental issues with acid mine leachate water causing environmental damage to thousands of miles of otherwise pristine river systems. The Company believes the JetWater System (in conjunction with our HCGT technology) could provide a permanent and environmentally sound solution to this problem.

One of the limiting factors that govern the implementation of reverse osmosis desalination plants is the disposal of its reject brine water. The JetWater System is expected, in many cases, to reduce or eliminate this environmental issue through:

·	Greatly reducing the volume of reject brine water;
·	In some cases facilitating the recovery of valuable salt by-products; and
·	Recovering additional pure water.

In addition, the Company has also identified two particular and highly attractive market opportunities for JetWater, which we believe combine with the traditional market for MVC systems to form a much larger and exciting market potential. These two opportunities are the United Arab Emirates and the Persian Gulf Region and market synergies with the HCGT system. The Company believes that there are significant marketing synergies between the HCGT system and the JetWater System because of the overlap of the prospective client base for each of these technologies. However, specific marketing effort will not be devoted to these markets in the immediate short term unless there are strong commercial approaches.

HCGT

The HCGT technology has a number of applications both in Australia and internationally. It provides a capability to utilize vent air methane or coal mine methane with waste coal or biomass fuels. Each of these applications possesses significant capabilities in Australia and overseas. The World Energy Council reports biomass resources, excluding forest plantations and municipal solid waste, are potentially the world’s largest and most sustainable energy resource, a renewable resource comprising 220 billion oven-dry tonnes of annual primary production. Predicated upon the CSIRO research, the annual bio-energy potential is approximately 2900 EJ with 270 EJ being considered available on a sustainable basis and at competitive prices. The Company believes that the problem is not availability but the management and delivery of energy to those who need it. Agricultural biomass residues are a large and under-exploited potential energy resource, and present many opportunities for better utilization. Calculations in the mid-1990’s show that crop residues amounted to approximately 3.5 to 4 billion tonnes annually, with energy content representing 65 EJ, or equivalent to 12 billion barrels of oil. For biomass energy to have a future, the Company believs that it must be able to provide people with things they want, e.g. lighting, electricity, water pumping, etc. The Company believs that modern applications simply mean clean, convenient, efficient, reliable, economically and environmentally sustainable.

The Company intends to make the PRC its primary market focus because it considers this to be the most favourable source of unit sales. The Company has already negotiated three MOU’s and others are pending. The Company anticipates that these market efforts should provide the Company with a steady sales program over the next 3-5 years.

Carbon Capture and Storage (CCS)

Worldwide, coal-fired power generation presently accounts for roughly 38% of total electricity production. In some countries, such as China and India, it accounts for as much as 50%, in Australia 70%. While coal use in some of the more developed countries remains static, significant increases in coal-fired generation capacity are taking place in many of the developing nations and large capacity increases are planned. As a consequence of the extensive investments being made in many parts of the world, and because coal resources are far more abundant than other fossil fuel resources, also because power plants have a long working life, coal is expected to remain an important source of energy for many years. Coal’s on-going role underlines the importance of the minimization of its environmental impacts, for both economic and environmental reasons. Power plants emit large quantities of CO₂and the rapid emergence of a carbon-constrained economy is bringing rise to regulatory requirements calling for the reduction of CO2 emissions.

Utilization of CO2 for Enhanced Oil Recovery (EOR) is creating a rapidly developing market where depleted oil fields are suited to CO2 flooding. While a majority of existing EOR projects utilize naturally existing CO2 supplies, the future demand for use of anthropogenic sources of CO2 is forecasted to be significant.

The Company believes that these events are providing significant commercial opportunities for the deployment of carbon capture and storage technologies. While the market is in a formative stage, the majority of revenues are expected to come from advisory and consulting contracts to provide CO2 emitters with front end engineering and design services.

In the near-term, the Company intends to target markets where the major depleting oil and gas fields are situated, namely China, North America and Northern Europe, and the Middle East.

Intellectual Property

There are three basic families of patents/patent applications with respect to the JetWater System:

	·	Water Distillation System (all based on Australian Provisional Patent Application PQ5402/Filing date 02.02.00)
	·	Water Distillation System (a different design to PQ5402 based on Australian Provisional Patent Application 2004905255/Filing date 14.09.04)
	·	A Distributor for a Flowable Medium (based on Aust Provisional Patent Application 2005904279/Filing date 09.08.05)

The patents have been lodged in Australia and other selected international locations where the board of directors believes they afford the Company market protection. These include China, the European Union, GCC, Africa, Japan, Singapore and the United States.

The Company owns the rights and title to the intellectual property for the HCGT technology having acquired same in the second half of 2007 from one of the Australian Government’s Scientific and Industrial Research entities. This includes a Combustion Apparatus based upon Australian Provisional Patent Application 2006907028

The Company has acquired an exclusive license for the Carbon Capture and Storage technology from Hydrogen Technologies Corporation for commercialization in The Peoples’ Republic of China, India and Asia Pacific.

Product Warranties

We have not yet determined what type of warranty, if any, will be offered on our HCGT, CCS and JetWater System units. We anticipate that performance guarantees will apply to most of our systems.

Employees

Our operations have been conducted by utilizing the services of specialist consultants and contractors. The Company has only one direct employee, the Company’s accountant. The CEO and CFO are employed as independent consultants.

Financings

In order to raise funds necessary to complete tasks associated with the commercialization of the Company’s initial technology, JetWater System, the Company completed an offering pursuant to Regulation D at $1.00 per share for 997,000 shares of common stock solely to accredited investors. As of March 31, 2001, $997,000 was raised in the offering. In fiscal year 2002, the Company raised a total of $585,000 in a private placement at $1.00 per share. In fiscal year 2003 the Company borrowed $300,000 from its largest stockholder and raised $876,054 in a private placement at $1.50 per share. In fiscal year 2004, the company raised $617,127 from private placements. In fiscal year 2005, the Company raised $917,288 from private placements. In fiscal year 2006, the Company raised $936,823 from private placements. In fiscal year 2007, the Company raised $3,115,465 from private placements of common stock and the issuance of Convertible Notes and an Unsecured Convertible Loan. As at December 31, 2007 the Convertible instruments had all been converted into common stock.

In January 2008 the Company entered into a Subscription Agreement for the issuance of 2,500,000 shares at a strike price of $0.80. This raised an amount of $2,000,000.

During the nine months ended September 30, 2008, the Company raised an additional $535,484 from several other private placements.

Plan of Operations for the Fiscal Year ending December 31, 2008.

The Company is pursuing opportunities in India for the commercialization of the HCGT and CCS technologies.

The Company has also been approached by entities in the PRC to conduct feasibility studies associated with the provision of the JetWater technology to remediate contaminated ground water in one of its provinces.

The component supply period for all these technologies is expected to be approximately 18 months with a further 5 months for construction and commissioning. The Company currently anticipates that progress payments from one or more international financiers will fund the project commitments without the need to have recourse to the Company. The strength of the anticipated projects is the power purchase agreements with the end user entities.

Management intends to continue its review of all activities of the Company. That process includes: evaluating all professional relationships, reviewing the by-laws and all SEC regulatory and compliance issues required by SOX Regulation 404, preparing a mission statement and corporate value statement, and assessing the financing requirements. Management believes that further funds will be required to continue marketing the two technologies and to commence deliveries.

Results of Operations

The Company has been in the developmental stage since its inception.

Net Loss. The Company’s net loss from inception (April 26, 2000) until September 30, 2008, was $23,429,070. The net loss for the three months ended September 30, 2008 and 2007 was $1,250,121 and $2,454,914, respectively, and for the nine months ended September 30, 2008, and 2007 was $2,882,033 and $4,230,930, respectively. The net loss for the three months ended September 30, 2008 include unrealised foreign exchange losses of $663,592. The accumulated loss to date includes a $4,836,373 loss on impairment of intellectual property, for the JetWater technology and goodwill.

General Administrative Expenses. The Company’s general administrative expenses from inception (April 26, 2000) until September 30, 2008 were $17,025,321. It’s general administrative expenses for the three months ended September 30, 2008 and 2007 were $585,402 and $1,834,111 respectively. During the quarter ended September 30, 2008 the company incurred $335,336 consulting fees and $150,576 legal and patent fees compared with $973,603 consulting fees and $485,416 legal and patent fees for the same period in 2007. For the nine months ended September 30, 2008 and 2007, the expenses were $2,498,952 and $3,611,369, respectively. The decrease of $1,112,417 in 2008 is as a result of decreases in consulting and legal fees.

Research and Development Expenses. The Company’s research and development expenses from inception (April 26, 2000) until September 30, 2008 were approximately $1,200,466. All costs were related to the process of establishing the technological feasibility of the water purification system and consisted of approximately $697,000 for purchases of materials and equipment to develop a prototype of the water purification machine, $400,000 in payments to Global Power & Water, Inc. and $103,000 in payments to other consultants. There were no research and development expenses for the nine months ended September 30, 2008 and 2007.

Impairment loss on intellectual properties from inception (April 26, 2000) until September 30, 2008, was $4,836,373. There were no impairment losses for the nine months ended September 30, 2008 and 2007.

Currently, there are no signed contracts that will produce revenue and there can be no assurances that management will be successful in negotiating such contracts. Management is pursuing other opportunities for CCS, JetWater, HCGT and other related technologies.

Liquidity and Capital Resources

As of September 30, 2008, the Company had a cash balance of $7,777. This has been increased with additional funds since the balance sheet date of $100,000.

From the inception of the Company, through September 30, 2008, net cash used in operations of $11,492,759 and net cash used in investing activities of $616,969 were financed almost entirely by the issuance of shares of common stock in various private placements for a total of $11,864,568 and a loan from a shareholder in the amount of $269,540.

Working Capital Balance

As at September 30, 2008, the Company had a negative working capital balance of $492,026. This is reflective of the Shareholder loans of $244,715. These loans do not bear interest and have no repayment conditions hence they could be treated as subordinated debt (equity).

Additional Equity/Debt Financings

The Company has a “burn rate” that requires funding from either new equity raises and or debt. The Company had carried out this activity over the past 4 years on a planned funding approach. The Board is engaged in a strategy to continue to raise equity or use debt instruments to meet its funding needs. The Company is working on expanding its funding sources, including the United Kingdom, United States and the PRC

Going Concern Considerations

Management is cognizant of its obligations regarding the going concern considerations of the Company. The directors monitor the financial obligations of the Company to help ensure that the Company is able to meet all its liabilities when they fall due.

Management believes that actions currently being taken to revise the funding requirements will allow the introduction of debt utilizing various financial instruments.

Off-Balance Sheet Arrangements

At September 30, 2008, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

N/A

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation as of September 30, 2008, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be disclosed in our reports under the Securities Exchange Act of 1934. In addition based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

There have been no changes in our internal control over financial reporting that occurred during the six months ended September 30, 2008 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. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the quarterly period ended September 30, 2008, the Company issued shares of its common stock in the following transactions:

Date Issued	Amount	Name of Stockholder	Cash/Services	Description of Transaction
July 1 2008	28,000	Montrose Partners LLP	Services	Consulting Fees
July 7, 2008	243	Global Power and Water	Services	Consulting Fee
July 7, 2008	103,650	Gregory Paxton	Services	Consulting Fee
July 7, 2008	1,320	Australia Corp. Consulting Pty Ltd	Services	Consulting Fee
July 7, 2008	9,167	Murray Bailey	Services	Consulting Fee
July 7, 2008	2,200	Gaylord Beeson	Services	Director Entitlement
July 7, 2008	2,200	Murray Bailey	Services	Director Entitlement
Sept. 3, 2008	-3,000,000	HTC PurEnergy Inc	Services	As per Agreement dated Sept 3, 2008
Sept. 11, 2008	1,050	Australia Corporation Consulting	Services	Consulting Fee
Sept. 11, 2008	1,050	Australia Corporation Consulting	Services	Consulting Fee
Sept. 11, 2008	7,292	Murray Bailey	Services	Consulting Fee
Sept. 11, 2008	7,292	Murray Bailey	Services	Consulting Fee
Sept. 11, 2008	1,050	Alex Krem	Services	Advisory Board Entitlement
Sept. 11, 2008	1,050	Eryl Edwards	Services	Advisory Board Entitlement
Sept. 11, 2008	1,050	Graham Harris	Services	Advisory Board Entitlement
Sept. 11, 2008	1,050	Anthony Harris	Services	Advisory Board Entitlement
Sept. 11, 2008	1,050	Steve Anderson	Services	Advisory Board Entitlement
Sept. 11, 2008	1,050	Steve Symms	Services	Advisory Board Entitlement
Sept. 11, 2008	1,050	Paul McCafferty	Services	Advisory Board Entitlement

The common stock in each of transactions described above was issued pursuant to an exemption provided by Section 4(2) of the Securities Act of 1933, as amended.

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.

Exhibit Number		Description
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

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.

Dated: November 13, 2008.


	EESTECH, INC.

	By:	/s/ Murray Bailey
		Name: Murray Bailey Title: Chief Executive Officer


		/s/ Ian Hutcheson
		Name: Ian Hutcheson Title: Chief Financial Officer