**UNITED STATES**

**S****ECURITIES AND****E****XCHANGE****C****OMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 
| **ý** |   | **Quarterly report pursuant to Section  13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period  ended March 31, 2003** |
|------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                        |
|       |   | **or**                                                                                                                                      |
|       |   |                                                                                                                                        |
| **o**      |   | **Transition report pursuant to Section  13 or 15(d) of the Securities Exchange Act of 1934.**                                              |

 

**333-86830**

**(Commission File No.)**

 

**ELECTRIC AQUAGENICS UNLIMITED, INC.**

(name of small business issuer in its charter)

 

| **Delaware**                                                     |   | **87-0654478**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or  organization) |   | (I.R.S. Employer  Identification No.) |
|                                                             |   |                                  |
| **1464  W. 40 S. Suite #200, Lindon, Utah**                      |   | **84042-1629**                        |
| **(Address  of principal executive offices)**                    |   | **(Zip  Code)**                       |
|                                                             |   |                                  |
| **Issuer’s  telephone number: **(801) 443-1031         |

 

As of May 12, 2003, theRegistrant had 2,810,535 shares of Common Stock, $0.0001 par value outstanding.

 

 

----

 

ElectricAquagenics Unlimited, Inc.

 

INDEX

 
| PART I                        | Financial Information                                                              |
|-------------------------------|------------------------------------------------------------------------------------|
|                          |                                                                               |
| Item 1. Financial  Statements |
|                          |                                                                               |
|                          | Balance Sheets -  March 31, 2003 (unaudited) and December 31, 2002 (audited)       |
|                          |                                                                               |
|                          | Statements  of Operations - Three months ended March 31, 2003 and 2002 (unaudited) |
|                          |                                                                               |
|                          | Statements  of Changes in Stockholders’ Equity (Deficit) (unaudited)          |
|                          |                                                                               |
|                          | Statements  of Cash Flows - Three months ended March 31, 2003 and 2003 (unaudited) |
|                          |                                                                               |
|                          | Notes  to Condensed Financial Statements  (unaudited)                              |
|                          |                                                                               |
| Item  2.                      | Management’s  Discussion and Analysis or Plan of Operation                    |
|                          |                                                                               |
| Item 3.                       | Controls and  Procedures                                                           |
|                          |                                                                               |
| PART II Other Information     |
|                          |                                                                               |
| Item 6.                       | Exhibits and  Reports on Form 8-K                                                  |
|                          |                                                                               |
| Signatures                    |
|                          |                                                                               |
| Certifications                |

 

2

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**PART I -FINANCIAL INFORMATION**

 

**Item 1.    Financial Statements**

 

**ElectricAquagenics Unlimited, Inc.**

**Balance Sheets**

***See Notes to Financial Statements***

 
|                                                                                  |   | **March****31,****2003** |       | **December 31,****2002** |       |
|---------------------------------------------------------------------------------------|--------|--------------------------|------------|--------------------------|------------|
|                                                                                  |   | **(unaudited****)**      | ** ** |                     | ** ** |
|                                                                                  |   |                     |       |                     |       |
| **ASSETS**                                                                            |   |                     |       |                     |       |
| Current assets:                                                                       |   |                     |       |                     |       |
| Cash                                                                                  |   | $                        | 45,751     |                     | $          | 29,432 |   |
| Accounts receivable, less  allowance for doubtful accounts of $1,000 in 2003 and 2002 |   | 82,500                   |       | 25,000                   |       |
| Accounts receivable-related  parties                                                  |   | 120,955                  |       | 120,635                  |       |
| Inventories                                                                           |   | 127,471                  |       | 158,583                  |       |
| Total current assets                                                                  |   | 376,677                  |       | 333,650                  |       |
|                                                                                  |   |                     |       |                     |       |
| Fixed  assets:                                                                        |   |                     |       |                     |       |
| Computers                                                                             |   | 18,944                   |       | 18,944                   |       |
| Furniture & fixtures                                                              |   | 1,390                    |       | 1,390                    |       |
| Machinery & equipment                                                             |   | 5,377                    |       | 1,372                    |       |
| Total fixed assets                                                                    |   | 25,711                   |       | 21,706                   |       |
| Less accumulated depreciation                                                         |   | (17,580                  | )          | (15,480                  | )          |
| Net fixed assets                                                                      |   | 8,131                    |       | 6,226                    |       |
|                                                                                  |   |                     |       |                     |       |
| Other assets:                                                                         |   |                     |       |                     |       |
| Deposits                                                                              |   | —                   |       | 2,052                    |       |
| Total other assets                                                                    |   | —                   |       | 2,052                    |       |
|                                                                                  |   |                     |       |                     |       |
| Total assets                                                                          |   | $                        | 384,808    |                     | $          | 341,928 |   |

 

3

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|                                                                                                              |   | **March****31,****2003** |    | **December 31,****2002** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|--------------------------|--------|
|                                                                                                              |   | **(unaudited)**          |    |                     |   |
|                                                                                                              |   |                     |    |                     |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                                          |   |                     |    |                     |   |
| Current liabilities:                                                                                              |   |                     |    |                     |   |
| Accounts payable and accrued  expenses                                                                            |   | $                        | 149,569 |                     | $      | 104,927 |   |
| Accounts payable-related  parties                                                                                 |   | 10,644                   |    | 10,644                   |   |
| Accrued interest-related party  loans                                                                             |   | 41,832                   |    | 34,097                   |   |
| Short-term notes                                                                                                  |   | 45,700                   |    | 45,700                   |   |
| Short-term notes-related  parties                                                                                 |   | 51,200                   |    | 26,200                   |   |
| Convertible bridge loans-other                                                                                    |   | 50,000                   |    | 50,000                   |   |
| Convertible bridge loans-  related parties                                                                        |   | 236,000                  |    | 236,000                  |   |
| Current portion of long-term  debt                                                                                |   | 5,900                    |    | 4,704                    |   |
| Total current liabilities                                                                                         |   | 590,845                  |    | 512,272                  |   |
|                                                                                                              |   |                     |    |                     |   |
| Long-term debt:                                                                                                   |   |                     |    |                     |   |
| Notes payable-less current  portion                                                                               |   | 137,822                  |    | 140,100                  |   |
|                                                                                                              |   |                     |    |                     |   |
| Stockholders equity (deficit):                                                                                    |   |                     |    |                     |   |
| Common stock, par value $.0001  per share; 50,000,000 authorized shares; 2,810,535 shares issued and  outstanding |   | 281                      |    | 281                      |   |
| Additional paid in capital                                                                                        |   | 1,019,930                |    | 1,019,930                |   |
| Retained earnings (deficit)                                                                                       |   | (1,364,070               | )       | (1,330,655               | )      |
| Total stockholders’ equity  (deficit)                                                                        |   | (343,859                 | )       | (310,444                 | )      |
| Total liabilities and  stockholders’ equity (deficit)                                                        |   | $                        | 384,808 |                     | $      | 341,928 |   |

 

4

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**ElectricAquagenics Unlimited, Inc.**

**Statements of Operations**

***See Notes to Financial Statements***

 
|                                                                      |   | **For the Three Months  Ended March 31,** |       |
|---------------------------------------------------------------------------|--------|-------------------------------------------|------------|
|                                                                      |   | **2003**                                  |       | **2002** |   |
|                                                                      |   | **(unaudited)**                           |       |
| **Revenues**                                                              |   |                                      |       |   |   |
| Regular sales                                                             |   | $                                         | 100,000    |   | $ | — |   |
| Cost of goods sold                                                        |   | (31,112                                   | )          | — |   |
| **Gross Profit**                                                          |   | 68,888                                    | ** ** | **—** |   |
|                                                                      |   |                                      |       |   |   |
| **Other Expenses**                                                        |   |                                      |       |   |   |
| Other general and administrative                                          |   | 35,526                                    |       | 19,895 |   |
| Advertising                                                               |   | 7,028                                     |       | 5,000 |   |
| Management, legal and consulting fees paid to affiliates  or shareholders |   | 27,492                                    |       | 13,798 |   |
| Research and development                                                  |   | 6,913                                     |       | 65,075 |   |
| Depreciation                                                              |   | 2,100                                     |       | 1,530 |   |
| Rents                                                                     |   | 4,948                                     |       | 3,000 |   |
| Total other expenses                                                      |   | 84,007                                    |       | 108,298 |   |
| Net operating loss                                                        |   | (15,119                                   | )          | (108,298 | ) |
| Other income (expense)                                                    |   |                                      | ** ** |   | ** ** |
| Interest - related party                                                  |   | (7,735                                    | )          | (59,080 | ) |
| Interest - other                                                          |   | (10,561                                   | )          | — |   |
| Net loss before income taxes                                              |   | (33,415                                   | )          | (167,378 | ) |
| Income tax (expense) benefit                                              |   | —                                    |       | — |   |
| Net loss                                                                  |   | $                                         | (33,415    | ) | $ | (167,378 | ) |
|                                                                      |   |                                      |       |   |   |
| Net loss per share                                                        |   | $                                         | (.01       | ) | $ | (.06 | ) |
|                                                                      |   |                                      |       |   |   |
| Weighted average shares outstanding                                       |   | 2,810,535                                 |       | 2,599,535 |   |

 

5

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**ElectricAquagenics Unlimited, Inc.**

**Statements of Changes inStockholders’ Equity (Deficit) (unaudited)**

***See Notes to Financial Statements***

 
|                                                               |   |       |   |   |   | **Additional****Paid in  Capital** |   | **Retained  Earnings (deficit)** |   | **Total** |   |
|--------------------------------------------------------------------|--------|------------|--------|--------|--------|------------------------------------|--------|----------------------------------|--------|-----------|--------|
| **Common Stock**                                                   |
| **Shares**                                                         |   | **Amount** |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Balance at January 1, 2002                                         |   | 2,599,535  |   | 260    |   | 935,740                            |   | (656,730                         | )      | 279,270   |   |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Exercise of Common Stock  warrants                                 |   | 211,000    |   | 21     |   | 190                                |   | —                           |   | 211       |   |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Detachable warrants issued for  bridge loan-related party          |   | —     |   | — |   | 14,000                             |   | —                           |   | 14,000    |   |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Detachable warrants issued  with convertible debt                  |   | —     |   | — |   | 28,000                             |   | —                           |   | 28,000    |   |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Issuance of debt with  beneficial conversion feature-related party |   | —     |   | — |   | 14,000                             |   | —                           |   | 14,000    |   |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Issuance of debt with  beneficial conversion feature               |   | —     |   | — |   | 28,000                             |   | —                           |   | 28,000    |   |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Net loss - December 31, 2002                                       |   | —     |   | — |   | —                             |   | (673,925                         | )      | (673,925  | )      |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Balance at December 31, 2002                                       |   | 2,810,535  |   | 281    |   | 1,019,930                          |   | (1,330,655                       | )      | (310,444  | )      |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Net loss – March 31, 2003                                     |   | —     |   | — |   | —                             |   | (33,415                          | )      | (33,415   | )      |
|                                                               |   |       |   |   |   |                               |   |                             |   |      |   |
| Balance at March 31, 2003                                          |   | 2,810,535  |   | 281    |   | 1,019,930                          |   | (1,364,070                       | )      | (343,859  | )      |

 

6

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**ElectricAquagenics Unlimited, Inc.**

**Statements of Cash Flows**

***See Notes to Financial Statements***

 
|                                                                         |   | **For the Three Months Ended  March 31,** |       |
|------------------------------------------------------------------------------|--------|-------------------------------------------|------------|
|                                                                         |   | **2003**                                  |       | **2002** |   |
|                                                                         |   | **(unaudited)**                           |       |
|                                                                         |   |                                      | ** ** |   | ** ** |
| **Operating activities**                                                     |   |                                      | ** ** |   | ** ** |
| Net loss                                                                     |   | $                                         | (33,415    | ) | $ | (167,377 | ) |
| Adjustments to reconcile net  loss to net cash used in operating activities: |   |                                      |       |   |   |
| Depreciation                                                                 |   | 2,100                                     |       | 1,530 |   |
| Allowance for doubtful  accounts                                             |   | —                                    |       | — |   |
| Amortization of debt discount  (interest)                                    |   | —                                    |       | 59,080 |   |
| Changes in operating assets  and liabilities:                                |   |                                      |       |   |   |
| Accounts receivable                                                          |   | (57,500                                   | )          | — |   |
| Accounts receivable-related  parties                                         |   | (320                                      | )          | 4,939 |   |
| Inventories                                                                  |   | 31,112                                    |       | — |   |
| Prepaid rent                                                                 |   | —                                    |       | 3,000 |   |
| Accounts payable and accrued  expenses                                       |   | 44,642                                    |       | 1,501 |   |
| Accounts payable-related  parties                                            |   | —                                    |       | (3,518 | ) |
| Accrued interest-related party  loans                                        |   | 7,735                                     |       | — |   |
| Net cash used in operating  activities                                       |   | (5,646                                    | )          | (100,845 | ) |
|                                                                         |   |                                      | ** ** |   | ** ** |
| **Investing activities**                                                     |   |                                      | ** ** |   | ** ** |
| Decrease in deposits                                                         |   | 2,052                                     |       | — |   |
| Purchase of property, plant  and equipment                                   |   | (4,005                                    | )          | — |   |
| Net cash used in investing  activities                                       |   | (1,953                                    | )          | — |   |
|                                                                         |   |                                      |       |   |   |
| **Financing activities**                                                     |   |                                      | ** ** |   | ** ** |
| Proceeds from short-term  notes-related parties                              |   | 25,000                                    |       | — |   |
| Principal payments on  long-term debt                                        |   | (1,082                                    | )          | — |   |
| Net cash provided by financing  activities                                   |   | 23,918                                    |       | — |   |
| Net increase (decrease) in  cash                                             |   | 16,319                                    |       | (100,845 | ) |
| Cash at beginning of period                                                  |   | 29,432                                    |       | 105,330 |   |
| Cash at end of period                                                        |   | $                                         | 45,751     |   | $ | 4,485 |   |
|                                                                         |   |                                      | ** ** |   | ** ** |
| **Supplemental disclosures:**                                                |   |                                      | ** ** |   | ** ** |
| Interest paid in cash                                                        |   | $                                         | 7,918      |   | $ | — |   |

 

7

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**Electric Aquagenics Unlimited, Inc.**

**Notes toCondensed Financial Statements (unaudited)**

**March 31, 2003 and 2002**

 

**1.     Presentation**

 

Thefinancial statements as of March 31, 2003 and 2002 and for the three monthsended March 31, 2003 and 2002 were prepared by the Company without auditpursuant to the rules and regulations of the Securities and Exchange Commission(SEC).  Certain information and footnotedisclosures normally included in financial statements prepared in accordancewith accounting principles generally accepted in the United States of Americahave been condensed or omitted pursuant to such rules and regulations.  In the opinion of management, all necessaryadjustments, which consist primarily of normal recurring adjustments, to thefinancial statements have been made to present fairly the financial positionand results of operations and cash flows. The results of operations for the respective periods presented are notnecessarily indicative of the results for the respective complete years.  The Company has previously filed with theSEC an annual reports on Form 10-KSB which included audited financialstatements for the two years ended December 31, 2002.  It is suggested that the financial statements contained in thisfiling be read in conjunction with the statements and notes thereto containedin the Company’s 10-KSB filing.

 

**2.     Net income percommon share**

 

Netincome per common share is computed based on the weighted-average number ofcommon shares and, as appropriate, dilutive common stock equivalentsoutstanding during the period.  Stockoptions and warrants are considered to be common stock equivalents.

 

Basicnet loss per common share is the amount of net loss for the period available toeach share of common stock outstanding during the reporting period.  Diluted net loss per common share is theamount of net loss for the period available to each share of common stockoutstanding during the reporting period and to each share that would have beenoutstanding assuming the issuance of common shares for all dilutive potentialcommon shares outstanding during the period.

 

Nochanges in the computation of diluted earnings per share amounts are presentedsince warrants granted would have been anti-dilutive due to the Company’s netreported loss.  Such warrants couldpotentially dilute basic EPS in the future.

 

**3.     Cash held inescrow**

 

Included in cash and cashequivalents are deposits held totaling $43,226 in escrow pending the completionof a registered offering in which a minimum of $400,000 of capital must beraised (200,000 shares) before the funds can be used for operations.  Included in accounts payable and accruedexpenses are offsetting encumbrances for the same amount.

 

8

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**Item 2.    Management’s Discussion and Analysis or Plan of Operation**

 

We are an early stagecompany that designs and develops sanitizing products that are free of toxinsand harmful residues associated with traditional chemically based disinfectingand cleaning agents.  Our products areintended to replace many of the traditional methods used in commercial andindustrial disinfecting and cleaning in industries such as food processing,medical services and household cleaning. Our products also have many consumer household applications such ascarpet and upholstery cleaning.  Ourproducts have been tested in laboratories and have been used in some commercialapplications.   Our products range fromcarpet cleaning agents to products used for the sanitation of agriculturalproducts, red meats and poultry.

#### ** **

#### **Results of Operations**

 

Thefollowing discussion should be read in conjunction with selected financial dataand the financial statements and notes to financial statements.

 

###### SelectedFinancial Information

 
|                    |   | **Three  months ended  March 31,** |    |
|-------------------------|--------|------------------------------------|---------|
|                    |   | **2003**                           |    | **2002** |   |
| Revenue,  net           |   | $                                  | 100,000 |   | $ | 0 |   |
|                    |   |                               |    |   |   |
| Gross  profit (loss)    |   | 68,888                             |    | 0 |   |
|                    |   |                               |    |   |   |
| Operating  expenses     |   | 84,007                             |    | 108,298 |   |
|                    |   |                               |    |   |   |
| Net  Operating Loss     |   | (15,119                            | )       | (108,298 | ) |
|                    |   |                               |    |   |   |
| Other  Income (Expense) |   | (18,296                            | )       | (59,080 | ) |
|                    |   |                               |    |   |   |
| Net  loss               |   | (33,415                            | )       | (167,378 | ) |
|                         |        |                                    |         |  |  |  |  |

 

 
|                             |   | **March 31,  2003** |   | **December 31,  2002** |   |
|----------------------------------|--------|---------------------|--------|------------------------|--------|
| Balance  Sheet Data:             |   |                |   |                   |   |
|                             |   |                |   |                   |   |
| Cash  and Cash Equivalents       |   | $                   | 45,751 |                   | $      | 29,432 |   |
|                             |   |                |   |                   |   |
| Total  Current Assets            |   | 376,677             |   | 333,650                |   |
|                             |   |                |   |                   |   |
| Total  Assets                    |   | 384,808             |   | 341,928                |   |
|                             |   |                |   |                   |   |
| Total  Current Liabilities       |   | 590,845             |   | 512,272                |   |
|                             |   |                |   |                   |   |
| Long  Term Debt                  |   | 137,822             |   | 140,100                |   |
|                             |   |                |   |                   |   |
| Total  stockholders’ equity |   | (343,859            | )      | (310,444               | )      |
|                                  |        |                     |        |                        |        |  |  |

 

9

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### Discussion

 

Revenuesfor the three months ended March 31, 2003 were $100,000, compared to zero forthe three months ended March 31, 2002. The increase in revenues was due primarily to the fact that the Companywas still primarily in a research and development mode one year ago, whereas itis now beginning to sell products.  Mostof the Company’s sales during the first quarter of 2003 were sales ofgenerators to carpet cleaning companies. It is anticipated that such sales will continue to improve as theCompany’s affiliate H2O Aqua Care Franchising Systems begins to sell carpet andupholstery cleaning franchises that will use the Company’s products.

 

In addition, we expectrevenues from the sale of disinfectant products to commence later in 2003.  The disinfectant products are beingdeveloped with the intention to target businesses in the meat industry thatrequire chemicals to disinfect their meat products and processingfacilities.  We have not yet fullydeveloped our disinfectant products, nor have we completed any packagingdesigns for such products.  A failure todevelop products, bring them to market or obtain market acceptance willnegatively affect our revenue related projections.

 

Cost of goods sold as apercentage of revenues during the three months ended March 31, 2003 was 31.1%,compared to 45.9% for the year ended December 31, 2002.  The reduction in cost of sales as apercentage of revenues is a result of increased efficiencies and improvedvendor selection.  Our increasedefficiencies was also reflected in the 22.4% decrease in operating expenses inthe third quarter of 2003 as compared to the third quarter of 2002, from$108,298 during the three months ended March 31, 2002 compared to $84,007during the three months ended March 31, 2003.

 

The Company’s net lossfor the first three months of 2003 was $33,415, compared to a net loss of $167,378for the same three month period in 2002. This decrease in net loss is directly attributable to an increase insales and a decrease in operating expenses.

 

#### **Liquidity And CapitalResources**

 

At March 31, 2003, we hadcash and cash equivalents of $45,751, compared to $29,432 at December 31, 2002,an increase of 55.5%.  Our accountsreceivable increased 330% from December 31, 2002 to March 31, 2003, from$25,000 to $82,500, and our total assets increased 12.5%, from $341,928 to$384,808, in the three months between December 31, 2002 and March 31,2003.  During that same period, ourtotal current liabilities increased 15.3%, from $512,272 at December 31, 2002to $590,845 at March 31, 2003.

 

We are currentlyattempting to raise $2,000,000 through a registered offering of 1,000,000shares of our common stock.  As of May14, 2003, investors have subscribed for a total of more than 200,000 shares,and approximately $315,000 has been paid into the escrow account.  The registered offering requires all moneyraised to be held in an escrow account until such time as a total of $400,000has been paid into the escrow account. We anticipate exceeding $400,000 in the escrow account no later than theend of May, 2003.  Proceeds from theregistered offering should be sufficient to fund our continuing operations attheir current level through the remainder of 2003.  Management recognizes that additional funding will be required tofinance growth and to achieve our strategic objectives. Management is activelypursuing additional sources of funding. In addition, management is also lookingto increases in cash flows through increases in revenue.

 

If we do not raisesufficient funds, we also may not be able to fund expansion, take advantage offuture opportunities, meet our existing debt obligations or respond tocompetitive pressures or unanticipated requirements. Financing transactions inthe future may include the issuance of equity or debt securities, obtainingcredit facilities, or other financing mechanisms. However, inability toestablish a public market for our common stock, or once we have a market forour common stock, a subsequent decline in the trading price of our common

 

10

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stock and the downturn inthe U.S. stock and debt markets could make it more difficult for us to obtainfinancing through the issuance of equity or debt securities. Even if we areable to raise the funds required, it is possible that we could incur unexpectedcosts and expenses, fail to collect significant amounts owed to us, orexperience unexpected cash requirements that would force us to seek alternativefinancing. Further, if we issue additional equity or debt securities,stockholders may experience additional dilution or the new equity securitiesmay have rights, preferences or privileges senior to those of existing holdersof our common stock.

 

***All forward-looking statements contained herein are deemedby the Company to be covered by and to qualify for the safe harbor protectionprovided by the Private Securities Litigation Reform Act of 1995. Prospectiveshareholders should understand that several factors govern whether anyforward-looking statement contained herein will be or can be achieved.  Any one of those factors could cause actualresults to differ materially from those projected herein. These forward-lookingstatements include plans and objectives of management for future operations,including plans and objectives relating to the products and the future economicperformance of the Company.  Assumptionsrelating to the foregoing involve judgments with respect to, among otherthings, future economic, competitive and market conditions, future businessdecisions, and the time and money required to successfully complete developmentprojects, all of which are difficult or impossible to predict accurately andmany of which are beyond the control of the Company. Although the Companybelieves that the assumptions underlying the forward-looking statementscontained herein are reasonable, any of those assumptions could proveinaccurate and, therefore, there can be no assurance that the resultscontemplated in any of the forward-looking statements contained herein will berealized. Based on actual experience and business development, the company mayalter its marketing, capital expenditure plans or other budgets, which may inturn affect the company’s results of operations. In light of the significantuncertainties inherent in the forward-looking statements included therein, theinclusion of any such statement should not be regarded as a representation bythe Company or any other person that the objectives or plans of the companywill be achieved.***

 

**Item 3.   Controls and Procedures**

 

Within the ninety (90)day period prior to the date of this report, the Company carried out anevaluation, under the supervision and with the participation of the Company’smanagement, including the principal executive officer and principal financialofficer, of the effectiveness of thedesign and operation of the Company’s disclosure controls and procedurespursuant to the Exchange Act Rule 13a-14. Based upon that evaluation, the Company’s principal executive officerand principal financial officer concluded that the Company’s disclosurecontrols and procedures are effective in timely alerting them to materialinformation relating to the Company required to be included in the Company’speriodic SEC filings. It should be noted that the design of any system ofcontrols is based in part upon certain assumptions about the likelihood offuture events, and there can be no assurance that any design will succeed inachieving its stated goals under all potential future conditions, regardless ofhow remote.

 

There have been no significant changes in the Company’sinternal controls or in other factors which could significantly affect internalcontrols subsequent to the date the Company carried out its evaluation.

 

11

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PART II – OTHER INFORMATION

 

**Item 6.    Exhibits and Reports on Form 8-K**

 

(a)                                  Exhibits.

 

99.1                           Certification of Chief Executive Officer and Chief Financial Officer

 

(b)                                 Reports on Form 8-K.

 

None

 

12

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SIGNATURES

 

Pursuant to the requirements ofSection 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned;thereunto duly authorized, on May 14, 2003.

 

 
|   | ELECTRIC  AQUAGENICS UNLIMITED, INC. |
|--------|--------------------------------------|
|   |                                 |   |
|   |                                 |   |
|   | By:                                  | /s/ | Gaylord  M. Karren |   |
|   |                                 |   | Gaylord  M. Karren |
|   |                                 |   | Chief  Executive Officer |
|   |                                 |   | Principal  Executive Officer and |
|   |                                 |   | Principal  Financial Officer |

 

**CERTIFICATION**

 

I, Gaylord M. Karren,certify that:

 

1.          I have reviewed thisquarterly report on Form 10-QSB of Electric Aquagenics Unlimited, Inc. (the *“registrant”*); 

 

2.          Based on my knowledge,this quarterly report does not contain any untrue statement of a material factor omit to state a material fact necessary to make the statements made, inlight of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this quarterly report; 

 

3.          Based on my knowledge,the financial statements, and other financial information included in thisquarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report; 

 

4.          I am responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and I have: 

 

a)                   designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to meby others within those entities, particularly during the period in which thisquarterly report is being prepared; 

 

b)                  evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this quarterly report (the *“Evaluation Date”*); and 

 

c)                   presented inthis quarterly report my conclusions about the effectiveness of the disclosurecontrols and procedures based on my evaluation as of the Evaluation Date; 

 

5.          I have disclosed, basedon my most recent evaluation, to the registrant’s auditors and the auditcommittee of the registrant’s board of directors (or persons performing theequivalent function): 

 

a)                   all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the

 

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registrant’s auditors any material weaknesses ininternal controls; and 

 

b)                  any fraud,whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and 

 

6.          I have indicated in thisquarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including any correctiveactions with regard to significant deficiencies and material weaknesses. 

 

 

Date: May 14, 2003

 

 
| /S/   Gaylord  M. Karren |                                             |
|-----------------------------------------|--------------------------------------------------|
| Name:                                   | Gaylord M. Karren                                |
| Title:                                  | Chief Executive Officer  Chief Financial Officer |
|                                         |                                                  |  |

 

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