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Share Name | Share Symbol | Market | Type |
---|---|---|---|
EAU Technologies Inc (CE) | USOTC:EAUI | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
þ
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2014
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or
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
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000-51807
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(Commission File No.)
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(exact name of registrant as specified in its charter)
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Delaware
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87-0654478
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1890 Cobb International Blvd, Suite A, Kennesaw Georgia
(Address of principal executive offices)
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30152
(Zip Code)
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Issuer’s telephone number:
(678) 388-9492
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Large accelerated filer o | Accelerated filer o |
Non-accelerated filer o | Smaller reporting company þ |
(Do not check if a smaller reporting company)
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Page
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PART I. FINANCIAL INFORMATION
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ITEM 1.
Financial Statements
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Balance Sheets – June 30, 2014 (unaudited) and December 31, 2013
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3
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Unaudited Statements of Operations – Three and Six months ended June 30, 2014 and 2013
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5
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Statement of Stockholders’ Equity (Deficit) – Six months ended June 30, 2014 (unaudited)
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6
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Unaudited Statements of Cash Flows – Six months ended June 30, 2014 and 2013
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7
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Condensed Notes to Unaudited Financial Statements
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9
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ITEM 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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15
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ITEM 3.
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Quantitative and Qualitative Disclosures About Market Risk
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20
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ITEM 4.
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Controls and Procedures
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21
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PART II. OTHER INFORMATION
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ITEM 1.
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Legal Proceedings
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21
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ITEM 1A.
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Risk Factors
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22
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ITEM 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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22
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ITEM 3.
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Defaults Upon Senior Securities
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22
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ITEM 4.
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Mine Safety Disclosures
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22
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ITEM 5.
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Other Information
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22
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ITEM 6.
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Exhibits
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23
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SIGNATURES
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24
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June 30,
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December 31,
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|||||||
2014
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2013
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|||||||
CURRENT ASSETS
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(Unaudited)
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|||||||
Cash
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$ | 131,286 | $ | 2,654 | ||||
Accounts receivable, net
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7,673 | 29,705 | ||||||
Accounts receivable – related party, net
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2,996 | 1,500 | ||||||
Prepaid expense
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20,707 | 60,210 | ||||||
Inventory, net
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594,712 | 653,967 | ||||||
Total current assets
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757,374 | 748,036 | ||||||
PROPERTY AND EQUIPMENT, net of
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||||||||
accumulated depreciation of $120,721 and $120,721
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- | - | ||||||
OTHER ASSETS
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||||||||
Intellectual property, net
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127,336 | 123,547 | ||||||
Total other assets
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127,336 | 123,547 | ||||||
Total assets
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$ | 884,710 | $ | 871,583 |
June 30,
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December 31,
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|||||||
2014
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2013
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|||||||
CURRENT LIABILITIES
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(Unaudited)
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|||||||
Accounts payable
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$ | 184,428 | $ | 325,623 | ||||
Accrued expenses
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55,390 | 41,098 | ||||||
Accrued interest
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2,314,093 | 2,043,671 | ||||||
Warranty reserve
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160,000 | 160,000 | ||||||
Advance deposits on machine orders
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356,915 | 554,618 | ||||||
Advance deposits on machine orders – related party
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433,540 | 433,540 | ||||||
Short term notes payable – related party
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130,000 | 130,000 | ||||||
Unsecured short term advances – related party
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565,000 | 5,000 | ||||||
Convertible notes payable – related party, net of
discounts of $26,539 and $0, respectively
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4,960,288 | 4,986,827 | ||||||
Total current liabilities
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9,159,654 | 8,680,377 | ||||||
LONG TERM LIABILITIES
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||||||||
Total long term liabilities
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- | - | ||||||
Total liabilities
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9,159,654 | 8,680,377 | ||||||
STOCKHOLDERS’ EQUITY (DEFICIT)
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||||||||
Common stock, $.0001 par value; 50,000,000 shares authorized;
28,575,371 and 28,575,371 issued and outstanding, respectively
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2,858 | 2,858 | ||||||
Additional paid in capital
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45,725,159 | 45,681,729 | ||||||
Accumulated deficit
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(54,002,961 | ) | (53,493,381 | ) | ||||
Total stockholders’ equity (deficit)
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(8,274,944 | ) | (7,808,794 | ) | ||||
Total liabilities and stockholders’ equity (deficit)
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$ | 884,710 | $ | 871,583 |
Three Months Ended
June 30,
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Six Months Ended
June 30,
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|||||||||||||||
2014
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2013
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2014
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2013
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NET REVENUES – RELATED PARTY
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$ | 1,496 | $ | - | $ | 1,496 | $ | 88,473 | ||||||||
NET REVENUES
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304,455 | 714,787 | 795,429 | 1,258,167 | ||||||||||||
TOTAL REVENUES
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305,951 | 714,787 | 796,925 | 1,346,640 | ||||||||||||
COST OF GOODS SOLD
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109,193 | 589,667 | 277,912 | 879,182 | ||||||||||||
GROSS PROFIT
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196,758 | 125,120 | 519,013 | 467,458 | ||||||||||||
OPERATING EXPENSES
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||||||||||||||||
Depreciation and amortization
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339 | 339 | 678 | 678 | ||||||||||||
Research and development
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- | 1,000 | - | 9,838 | ||||||||||||
General and administrative
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369,056 | 445,482 | 745,982 | 927,672 | ||||||||||||
Total operating expenses
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369,395 | 446,821 | 746,660 | 938,188 | ||||||||||||
LOSS FROM OPERATIONS
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(172,637 | ) | (321,701 | ) | (227,647 | ) | (470,730 | ) | ||||||||
OTHER INCOME (EXPENSE)
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Interest expense
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(153,288 | ) | (142,309 | ) | (286,767 | ) | (276,183 | ) | ||||||||
Interest income
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9 | 49 | 34 | 146 | ||||||||||||
Rental Income
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2,400 | - | 4,800 | - | ||||||||||||
Impairment of leased equipment
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- | (301,474 | ) | - | (301,474 | ) | ||||||||||
Total other income (expense)
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(150,879 | ) | (443,734 | ) | (281,933 | ) | (577,511 | ) | ||||||||
INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES
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(323,516 | ) | (765,435 | ) | (509,580 | ) | (1,048,241 | ) | ||||||||
PROVISION FOR INCOME TAXES
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- | - | - | - | ||||||||||||
NET LOSS
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$ | (323,516 | ) | $ | (765,435 | ) | $ | (509,580 | ) | $ | (1,048,241 | ) | ||||
NET LOSS PER SHARE
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$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.04 | ) | ||||
WEIGHTED AVERAGE OF
SHARES OUTSTANDING
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28,575,371 | 28,567,460 | 28,575,371 | 28,567,460 |
COMMON STOCK | ||||||||||||||||||||
SHARES
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AMOUNT
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ADDITIONAL
PAID IN
CAPITAL
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ACCUMULATED
DEFICIT
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TOTAL
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||||||||||||||||
Balance, December 31, 2013
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28,575,371 | $ | 2,858 | $ | 45,681,729 | $ | (53,493,381 | ) | $ | (7,808,794 | ) | |||||||||
Vesting of options for services (unaudited)
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- | - | 968 | - | 968 | |||||||||||||||
Issuance of warrants in connection with Note Payable (unaudited)
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- | - | 42,462 | - | 42,462 | |||||||||||||||
Net loss for the six months ended June 30, 2014 (unaudited)
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- | - | - | (509,580 | ) | (509,580 | ) | |||||||||||||
Balance, June 30, 2014 (unaudited)
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28,575,371 | $ | 2,858 | $ | 45,725,159 | $ | (54,002,961 | ) | $ | (8,274,944 | ) | |||||||||
For the Six Months
Ended June 30,
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||||||||
2014
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2013
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss
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$ | (509,580 | ) | $ | (1,048,241 | ) | ||
Adjustments to reconcile net loss to net cash
used in operating activities:
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Depreciation
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678 | 678 | ||||||
Warrants and options vested or issued for services
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968 | 31,936 | ||||||
Discount of note payable
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15,923 | 35,697 | ||||||
Impairment of leased equipment
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- | 301,474 | ||||||
Changes in operating assets and liabilities:
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(Increase) decrease in accounts receivable
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22,032 | (21,194 | ) | |||||
(Increase) decrease in accounts receivable – related party
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(1,496 | ) | 4,000 | |||||
Decrease in prepaid expense
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39,503 | 769 | ||||||
Decrease in inventory
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59,255 | 387,463 | ||||||
Decrease in deposits
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- | 144,273 | ||||||
Increase (decrease) in accounts payable
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(141,195 | ) | 15,716 | |||||
(Decrease) in warranty reserve
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- | 15,000 | ||||||
(Decrease) in advance deposits for machine orders
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(197,703 | ) | (679,102 | ) | ||||
(Decrease) in advance deposits for machine orders –
related party
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- | (38,494 | ) | |||||
Increase in accrued expenses
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14,292 | 4,496 | ||||||
Increase in accrued interest
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270,422 | 235,677 | ||||||
Net cash (used) in operating activities
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(426,901 | ) | (609,852 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES
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Payments for intellectual property
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(4,467 | ) | (5,436 | ) | ||||
Net cash (used) in investing activities
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(4,467 | ) | (5,436 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from unsecured short term advances - related party
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560,000 | 130,000 | ||||||
Net cash provided by financing activities
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560,000 | 130,000 | ||||||
NET INCREASE (DECREASE) IN CASH
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128,632 | (485,288 | ) | |||||
Cash, beginning of period
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2,654 | 753,348 | ||||||
Cash, end of period
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$ | 131,286 | $ | 268,060 |
Six Months Ended
June 30,
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||||||||
2014 | 2013 | |||||||
Supplemental Disclosures of Cash Flow Information:
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Cash paid during the period for:
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Interest
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$ | 422 | $ | 4,809 | ||||
Income taxes
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$ | - | $ | - |
June 30,
2014
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December 31,
2013
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Finished goods
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$ | 507,105 | $ | 536,207 | ||||
Raw materials
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603,862 | 634,015 | ||||||
Allowance for obsolete inventory
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(516,255 | ) | (516,255 | ) | ||||
$ | 594,712 | $ | 653,967 |
June 30,
2014
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December 31,
2013
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|||||||
Warranty reserve at beginning of period
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$ | 160,000 | $ | 145,000 | ||||
Costs accrued for additional warranties
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- | 16,864 | ||||||
Service obligations honored
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- | (1,864 | ) | |||||
Warranty reserve at end of period
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$ | 160,000 | $ | 160,000 |
For the Three Months Ended
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For the Six Months Ended
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|||||||||||||||
June 30,
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June 30,
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|||||||||||||||
2014
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2013
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2014
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2013
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|||||||||||||
Net Income (loss) (numerator)
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$ | (323,516 | ) | $ | (765,435 | ) | $ | (509,580 | ) | $ | (1,048,241 | ) | ||||
Shares (denominator)
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28,575,371 | 28,567,460 | 28,575,371 | 28,567,460 | ||||||||||||
Per share amount
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$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.04 | ) |
Number of Options
and Warrants
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Weighted
Average
Exercise Price
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|||||||
Outstanding at beginning of period
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6,609,854 | $ | 0.31 | |||||
Granted
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303,300 | $ | 0.31 | |||||
Exercised
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- | $ | - | |||||
Forfeited
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- | $ | - | |||||
Expired
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- | $ | - | |||||
Outstanding at end of period
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6,913,154 | $ | 0.31 |
Oustanding |
Exercisable
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||||||||||||||||||
Range of
Exercise
Prices
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Number
Outstanding
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Weighted-Average
Remaining
Contractual Life
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Weighted-Average
Exercise
Price
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Number
Exercisable
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Weighted-Average
Exercie
Price
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||||||||||||||
$ | .01-.50 | 6,913,154 |
3.8 years
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$ | 0.31 | 6,719,604 | $ | 0.31 |
EXHIBIT NO.
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DESCRIPTION OF EXHIBIT
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3(i).1
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Certificate of Incorporation (Incorporated by reference from registration statement on Form SB-1 filed with the SEC on July 29, 2002 (File No.
333-86830
)
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3(i).2
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Certificate of Amendment of Certificate of Incorporation (Incorporated by reference from registration statement on Form SB-1 filed with the Securities and Exchange Commission on July 29, 2002 (File No.
333-86830
)
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3(i).3
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Certificate of Amendment of Certificate of Incorporation (Incorporated by reference from current report on Form 8-K filed with the Securities and Exchange Commission on January 17, 2007)
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3(ii).1
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Amended and Bylaws (Incorporated by reference from registration statement on current report on Form 8-K filed with the Securities and Exchange Commission on September 12, 2007)
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10.1
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2013 Advances Loan Agreement between the Company and Peter F. Ullrich dated as of April 10, 2014. (Incorporated by reference to Ex. 10.25 to the Company’s Form 10-K filed with the Securities and Exchange Commission on April 15, 2014)
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10.2
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Warrant between the Company and Peter F. Ullrich dated as of April 10, 2014. (Incorporated by reference to Ex. 10.26 to the Company’s Form 10-K filed with the Securities and Exchange Commission on April 15, 2014)
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10.3
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Second Amendment to Third Amended and Restated Senior Secured Convertible Promissory Note dated as of April 10, 2014 between the Company and Water Science LLC. (Incorporated by reference to Ex. 10.27 to the Company’s Form 10-K filed with the Securities and Exchange Commission on April 15, 2014)
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10.4
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Amended and Restated $358,527 Loan Agreement dated April 10, 2014 between the Company and Peter F. Ullrich. (Incorporated by reference to Ex. 10.28 to the Company’s Form 10-K filed with the Securities and Exchange Commission on April 15, 2014)
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10.5
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Amended and Restated $1,325,000 Loan Agreement between the Company and Peter F. Ullrich dated as of April 10, 2014 (Incorporated by reference to Ex. 10.29 to the Company’s Form 10-K filed with the Securities and Exchange Commission on April 15, 2014)
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Second Amended and Restated Promissory Note between the Company and Peter F. Ullrich dated as of August 7, 2014.
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Second Amended and Restated Promissory Note between the Company and
Theodore C. Jacoby, Jr.
dated as of August 7, 2014.
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Certification by Peter F. Ullrich under Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification by Brian D. Heinhold under Section 302 of the Sarbanes-Oxley Act of 2002.
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Certification of Peter F. Ullrich pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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Certification of Brian D. Heinhold pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.INS**
|
XBRL Instance Document
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
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101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
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101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
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**
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Furnished herewith. Pursuant to applicable securities laws and regulations, the Company is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Company has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.
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EAU TECHNOLOGIES, INC.
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By:
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/s/ Peter F. Ullrich | |
Peter F. Ullrich
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Acting Chief Executive Officer
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(Principal Executive Officer)
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By:
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/s/ Brian D. Heinhold | |
Brian D. Heinhold
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|||
Chief Financial Officer
|
|||
(Principal Financial Officer) |
1 Year EAU Technologies (CE) Chart |
1 Month EAU Technologies (CE) Chart |
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