UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: June 30, 2012

 

OR

 

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File No. 333-147367

 

AQUALIV TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		38-3767357
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

 

4550 NW Newberry Hill Road, Suite 202

Silverdale, WA 98383

(Address of principal executive offices)

 

(360) 473-1160

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes S No £

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes £ No S

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or 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	£	Accelerated filer	£
Non-accelerated filer	£	Smaller reporting company	S

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No S

 

As of August 16, 2012, there were 511,059,215 shares outstanding of the registrant’s common stock.

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION
		PAGE
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	7
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	11
Item 4.	Controls and Procedures.	11
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	12
Item 1A.	Risk Factors.	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	12
Item 3.	Defaults Upon Senior Securities.	13
Item 4.	Mine Safety Disclosures.	13
Item 5.	Other Information.	13
Item 6.	Exhibits.	13
Signatures		14

  

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

AQUALIV TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
		June 30, 2012				September 30, 2011
		(Unaudited)				(Audited)
CURRENT ASSETS:
Cash		$	72,467			$	3,732
Accounts receivable			3,613				1,968
Total Current Assets			76,079				5,700
PROPERTY AND EQUIPMENT, net			26,591				8,427
INVENTORY			7,484				723
TOTAL ASSETS		$	110,154			$	14,850
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable		$	131,442			$	107,438
Credit cards payable			19,350				17,187
Notes payable			311,464				189,179
Derivative liability			149,072				111,111
Other liabilities			7,951				20,746
Total Current Liabilities			619,279				445,661
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value,
50,000,000 shares authorized,
923,618 and 911,618 shares issued and
outstanding, respectively			924				912
Common stock, $0.001 par value, 1,000,000,000
shares authorized,
491,089,215 and 291,617,428 shares issued
and outstanding, respectively			491,089				291,617
Additional paid in capital			2,027,631				1,907,365
Retained (deficit)			(2,987,585	)			(2,612,390	)
Noncontrolling interest			(41,184	)			(18,315	)
Total Stockholders' (Deficit)			(509,125	)			(430,811	)
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT)		$	110,154			$	14,850
The accompanying notes are an integral part of these financial statements

 

 

AQUALIV TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE AND NINE MONTHS ENDED JUNE 30, 2012 AND 2011
		For the Three Months								For the Nine Months
		Ended June 30,								Ended June 30,
		2012				2011				2012				2011
REVENUES:
Sales		$	98,812			$	103,719			$	345,130			$	337,929
Service			8,706				11,531				26,555				33,549
Royalty			—				53,600				—				100,000
Total Revenues			107,518				168,850				371,685				471,478
COST OF GOODS SOLD			20,722				45,756				92,531				151,802
GROSS PROFIT			86,796				123,094				279,154				319,677
OPERATING EXPENSES:
Consulting fees			3,190				34,910				33,675				57,038
Management fees			30,000				26,190				90,000				71,110
Payroll expense			39,585				32,904				131,299				86,407
Professional fees			123,401				14,332				160,716				73,250
Research and development			188				1,146				1,175				8,243
Travel, meals, and entertainment			1,937				3,115				18,724				9,955
Loss on goodwill impairment, AquaLiv			—				—				—				315,484
Other general and administrative			62,858				64,126				209,412				210,428
Total Operating Expenses			261,159				176,724				645,001				831,916
LOSS FROM OPERATIONS			(174,363	)			(53,630	)			(365,847	)			(512,239	)
OTHER INCOME (EXPENSE):
Recapture prior expense			—				—				12,522				19,400
Gain on distribution of IAI, net			—				74,353				—				74,353
Interest expense			(2,354	)			(4,551	)			(44,740	)			(10,895	)
NET INCOME (LOSS) BEFORE INCOME
TAX PROVISION			(176,717	)			16,172				(398,064	)			(429,381	)
PROVISION FOR INCOME TAXES			—				—				—				—
CONSOLIDATED NET LOSS			(176,717	)			16,172				(398,064	)			(429,381	)
Add: Net loss attributable to
noncontrolling interest, AquaLiv			4,691				8,074				22,868				15,680
NET INCOME (LOSS) ATTRIBUTABLE
TO COMPANY		$	(172,026	)		$	24,246			$	(375,196	)		$	(413,701	)
BASIC AND DILUTED LOSS PER SHARE			*				*				*				*
WEIGHTED AVERAGE SHARES
OUTSTANDING			472,804,300				229,270,190				412,789,200				209,253,370
*-less than $0.01
The accompanying notes are an integral part of these financial statements

 

 

AQUALIV TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		For the Nine Months
		Ended June 30,
		2012				2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(375,196	)		$	(413,701	)
Adjustments to reconcile net loss to net cash
provided by
(used in)  operating activities:
Noncontrolling interest in income (loss) of
consolidated subsidiary			(22,868	)			(15,680	)
Depreciation			2,100				2,746
Loss (recapture) of prior expense			—				(19,400	)
Issuance of stock for services received			52,500				—
Loss on derivative liability, net			29,961				—
Impairment of goodwill-Aqualiv			—				315,484
Gain on distribution of IAI, net of intercompany transfers			—				(18,298	)
Net (increase) decrease in operating assets:
Accounts receivable			(1,645	)			9,613
Net changes in inventory			(6,761	)			(14,513	)
Net increase (decrease) in operating liabilities:
Accounts payable and credit cards payable			26,167				(40,782	)
Other liabilities			(12,795	)			(10,019	)
Net Cash  (Used in) Operating Activities			(308,537	)			(204,550	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property and equipment			(20,264	)			(6,873	)
Net Cash (Used in) Investing Activities			(20,264	)			(6,873	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes, net			285,036				24,916
Proceeds of capital stock issuance			112,500				189,000
Net Cash Provided by Financing Activities			397,536				213,916
NET INCREASE IN CASH			68,735				2,493
CASH AT BEGINNING OF PERIOD			3,732				1,034
CASH AT END OF PERIOD		$	72,467			$	3,528
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest		$	—			$	—
Income taxes		$	—			$	—
NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of stock to retire notes payable and
accrued interest		$	155,000			$	45,000
Issuance of common stock for acquisition		$	—			$	400,000
The accompanying notes are an integral part of these financial statements

 

  

AQUALIV TECHNOLOGIES, INC. AND ITS SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

AS OF JUNE 30, 2012

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying financial statements have been prepared by the Company in accordance with Article 8 of U.S. Securities and Exchange Commission Regulation S-X. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2012 and 2011 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s September 30, 2011 audited financial statements. The results of operations for the periods ended June 30, 2012 and 2011 are not necessarily indicative of the operating results for the full year.

 

NOTE 2 – GOING CONCERN

 

The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. At June 30, 2012, the Company had a retained deficit of $2,987,585 and current liabilities in excess of current assets by $509,125.  During the nine months ended June 30, 2012, the Company incurred a net loss of $375,196 and negative cash flows from operations of $308,537. These factors create an uncertainty about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

The Company’s continuation as a going concern is dependent upon its ability to increase revenues, decrease or contain costs, and achieve profitable operations.  In this regard, Company management is focused on the development and expansion of the Company’s technology, including water filtration and purification, bioinformation and life sciences, the deployment of its technology platform in the agricultural and medical fields, the licensing of patents, remote desktop and cloud computing, and VoIP telephony, as well as exploring strategic acquisitions in the technology field. Should the Company’s financial resources prove inadequate to meet the Company’s needs before additional revenue sources can be realized, the Company may raise additional funds through loans or through sales of common or preferred stock. There is no assurance that the Company will be successful in achieving profitable operations or in raising any additional capital.

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

Shareholder Loans - During the three months ended June 30, 2012, the Company’s officer extended an additional use of credit in the amount of $793.37. The credit carries an interest rate of 15.24%.

 

Management Compensation - During the three months ended June 30, 2012 and 2011, respectively, the Company and its subsidiaries paid or accrued salary and management fees of $69,585 and $59,094 to its officers.

 

NOTE 4 – PROPERTY AND EQUIPMENT

  

Estimated Useful Lives						June 30, 2012
Optical equipment			5 years			$	39,386
Office equipment			3 - 10 years				8,231
Computers and peripherals			5 years				16,000
Furniture and fixtures			5 years				27,137
Total property and equipment							90,754
Less accumulated depreciation							(64,163	)
Net property and equipment						$	26,591

 

Depreciation expense for the three months ended June 30, 2012 and 2011 was $2,100 and $2,746, respectively.

 

NOTE 5 – AQUALIV ACQUISITION

 

		December 31, 2010
Acquisition value
Preferred shares (per contract)		$	400,000
Total Acquisition value		$	400,000
Valuation classification
Physical assets		$	5,516
Cash			79,000
Goodwill			315,484
Impairment of Goodwill			(315,484	)
Goodwill, net			—
Net value		$	84,516

 

We have concluded, pursuant to the guidance in FASB ASC 810-10-25-38 (previously FIN 46R) that AquaLiv, Inc. is a Variable Interest Entity, that we are the primary beneficiary with a controlling financial interest in AquaLiv, Inc. and we are required to consolidate its financials accordingly. Additionally, the acquisition was recorded at its fair market value in that the cash, computer equipment, and inventory were recorded at their fair market value on the date of the acquisition. Impairment of goodwill from the date of acquisition was written off to its net realizable value in the accompanying statements of operations.

 

NOTE 6 – INVENTORY

 

		June 30, 2012
Inventory - beginning of period		$	5,523
Change in inventory			1,961
Inventory - end of period		$	7,484

 

NOTE 7 – NOTES PAYABLE AND DERIVATIVE LIABILITY

 

At fiscal quarter ended June 30, 2012, the Company had notes payable in the amount of $311,464, compared to $221,329, in the prior fiscal quarter ended June 30, 2011. The notes included a note payable to an unaffiliated party in the amount of $102,376, which is not secured by collateral of the company, carries accrued interest of 6%and is due on demand by the holder. The second note payable is to an affiliated company of our President in the amount of $9,088, is not secured by collateral of the company, carries no interest, and is due on demand by the holder.

 

A third note payable was issued to an unaffiliated party on February 27, 2012 in the aggregate amount of $58,000. The note carries an interest rate of 8%, is not secured by collateral of the company, and has a maturity date of November 29, 2012. The note has conversion rights beginning after month six (6). The variable conversion price is 58% of the market price, which is calculated by the average three (3) lowest closing bid prices as quoted on the applicable trading market (the “OTCBB”) during the previous ten (10) trading days. The note holder may not own any more than 4.99% of the company’s outstanding common stock. The Company recognizes the conversion option of the note (an embedded derivative) as a derivative liability.

 

Derivative Liability

 

ASC Topic 815 (“ASC 815”) requires that all derivative financial instruments be recorded on the balance sheet at fair value. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

 

The Company issued convertible notes and has evaluated the terms and conditions of the conversion features contained in the notes to determine whether they represent embedded or freestanding derivative instruments under the provisions of ASC 815. The Company determined that the conversion features contained in the notes represent freestanding derivative instruments that meet the requirements for liability classification under ASC 815. As a result, the fair value of the derivative financial instruments in the notes is reflected in the Company’s balance sheet as a liability. The fair value of the derivative financial instruments of the convertible notes was measured at the inception date of the notes and warrants and each subsequent balance sheet date. Any changes in the fair value of the derivative financial instruments are recorded as non-operating, non-cash income or expense at each balance sheet date.

 

The Company valued the conversion features in its convertible notes using the Black-Scholes model. The Black-Scholes model values the embedded derivatives based on a risk-free rate of return ranging from 0.29% to 0.30%, grant dates at 2/27/2012 and 6/30/2012, the term of convertible note, conversion prices is 58% of stock bid price at date of note conversion, current stock prices on the measurement date ranging from $0.0019 to $0.0070, and the computed measure of the Company’s stock volatility, ranging from 2,342.87% to 2,242.33%. 

 

Included in the June 30, 2012 financial statements is a derivative liability in the amount of $149,072 to account for this transaction. It will be revalued quarterly henceforth and adjusted as a gain or loss to the consolidated statements of operations depending on its value at that time.

 

Included in our Consolidated Statements of Operations for the quarter ended June 30, 2012 are $(2,840) in change of fair value of derivative and $91,072 of total accrued debt discount amortization in non-cash charges pertaining to the derivative liability as it pertains to the changes on derivative liability and debt discount, respectively.

 

TCA Agreement

 

On April 27, 2012, Company entered into a securities purchase agreement (the “Purchase Agreement”) with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership (“TCA”), pursuant to which TCA purchased from the Company a two hundred thousand dollar ($200,000) senior secured redeemable debenture (the “Debenture”). As consideration for entering into the Purchase Agreement, the Company paid to TCA (i) a transaction advisory fee in the amount of six thousand dollars ($6,000), (ii) a due diligence fee equal to four thousand dollars ($4,000), and (iii) document review and legal fees in the amount of ten thousand dollars ($10,000).

 

As further consideration, the Company agreed to issue to TCA that number of shares of the Company’s common stock that equals twenty five thousand dollars ($25,000) (the “Incentive Shares”). It is the intention of the Company and TCA that the value of the Incentive Shares shall equal $25,000. In the event the value of the Incentive Shares issued to TCA does not equal $25,000 after a nine month evaluation date, the Purchase Agreement provides for an adjustment provision allowing for necessary action (either the issuance of additional shares to TCA or the return of shares previously issued to TCA to the Company’s treasury) to adjust the number of Incentive Shares issued.

 

First Pledge and Escrow Agreement

 

On April 27, 2012, in connection with the Purchase Agreement, the Company entered into a pledge and escrow agreement (the “First P&E Agreement”), by and among the Company, TCA and David Kahan, P.A., as escrow agent (the “Escrow Agent”). Pursuant to the terms of the First P&E Agreement, and in order to secure the full and prompt payment when due of all of the Company’s obligations to TCA under the Debenture, the Purchase Agreement and any other transaction documents, the Company agreed to issue and irrevocably pledge to TCA the lesser of (i) 4.99% of the Company’s common stock and (ii) 200% of the outstanding amount under the Debenture, subject to adjustment pursuant to the terms of the Purchase Agreement. Upon timely payment in full of all obligations under the transaction documents, TCA will notify the Escrow Agent in writing and the Escrow Agent shall return the pledged materials to the Company and all of TCA’s rights in and to the pledged materials and other collateral shall be terminated. As of the period ending June 30, 2012, the Company has issued 11,516,104 Common shares to the Escrow Agent under this First P&E Agreement.

 

Second Pledge and Escrow Agreement

 

On April 27, 2012, in connection with the Purchase Agreement, the Company entered into a pledge and escrow agreement (the “Second P&E Agreement”), by and among the Company, TCA and the Escrow Agent. Pursuant to the terms of the Second P&E Agreement, and in order to secure the full and prompt payment when due of all of the Company’s obligations to TCA under the Debenture, the Purchase Agreement and any other transaction documents, the Company agreed to irrevocably pledge to TCA its entire ownership in Aqualiv, Inc., a Washington corporation (“Aqua Sub”), consisting of 50,000 shares of Aqua Sub’s common stock. Upon timely payment in full of all obligations under the transaction documents, TCA will notify the Escrow Agent in writing and the Escrow Agent shall return the pledged materials to the Company and all of TCA’s rights in and to the pledged materials and other collateral shall be terminated.

 

First Security Agreement

 

On April 27, 2012, the Company entered into a security agreement (the “First Security Agreement”) with TCA, related to the issuance of the Debenture. As security for the Company’s obligations to TCA under the Debenture, the Purchase Agreement and any other transaction document, the First Security Agreement grants to TCA a continuing, first priority security interest in all of the Company’s assets, wheresoever located and whether now existing or hereafter arising or acquired.

 

Second Security Agreement

 

On April 27, 2012, Focus Systems, Inc., a Washington corporation and wholly-owned subsidiary of the Company (“Focus”) entered into a security agreement (the “Second Security Agreement”) with TCA, related to the issuance of the Debenture. As security for the Company’s obligations to TCA under the Debenture, the Purchase Agreement and any other transaction document, the Second Security Agreement grants to TCA a continuing, first priority security interest in all of the Focus’s assets, wheresoever located and whether now existing or hereafter arising or acquired.

 

Guaranty Agreement

 

On April 27, 2012, Focus entered into a guaranty agreement (the “Guaranty Agreement”) with TCA, in connection with the Company’s issuance of the Debenture. Pursuant to the terms of the Guaranty Agreement, Focus has guaranteed and is to act as surety to TCA for the payment of the Liabilities (as defined below) when they become due. The “Liabilities” includes, collectively, (i) the repayment of all sums due under the Debenture and other transaction documents and (ii) the performance and observance of all terms, conditions, covenants, representations and warranties set forth in the transaction documents.

 

Auctus Agreement

 

On April 27, 2012, the Company finalized an equity facility (the “Equity Facility”) with Auctus Private Equity Fund, LLC, a Massachusetts corporation (“Auctus”), whereby the parties entered into (i) a drawdown equity financing agreement (the “Equity Agreement”) and (ii) a registration rights agreement (the “Registration Rights Agreement”).

 

Drawdown Equity Financing Agreement

 

On April 27, 2012, the Company entered into the Equity Agreement with Auctus. Pursuant to the terms of the Equity Agreement, for a period of twenty-four (24) months commencing on the date of effectiveness of the Registration Statement (as defined below), Auctus shall commit to purchase up to $3,500,000 of the Company’s common stock, par value $0.001 per share (the “Shares”), pursuant to an Advance Request (as defined below) contained in a drawdown notice (“Drawdown Notice”), covering the Registrable Securities (as defined below). The purchase price of the Shares under the Equity Agreement is equal to ninety-three percent (93%) of the average daily bid prices of the Company’s common stock during the five (5) consecutive trading days immediately following the day on which an estimated amount of advance shares have been deposited into Auctus’s brokerage account pursuant to the delivery by the Company of a Drawdown Notice to Auctus in accordance with the terms of the Equity Agreement.

 

The “Registrable Securities” include (i) the Shares; and (ii) any securities issued or issuable with respect to the Shares by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.

 

As further consideration for Auctus entering into and structuring the Equity Facility, the Company shall pay to Auctus the following fees: (i) five percent (5%) of the Advance Request amount specified in each Drawdown Notice; (ii) a non-refundable origination fee equal to $7,500; (iii) that number of shares of the Company’s common stock that is equal to $57,500.

 

Registration Rights Agreement

 

On April 27, 2012, the Company entered into the Registration Rights Agreement with Auctus. Pursuant to the terms of the Registration Rights Agreement, the Company is obligated to file a registration statement (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC’) to cover the Registrable Securities within 45 days of closing. The Company must use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the SEC by a date that is no later than 180 days following closing.

 

On May 3, 2012, the Company filed Form 8-K with the Securities and Exchange Commission.

 

NOTE 8 – SHAREHOLDERS’ EQUITY

 

From October 1, 2011 through December 31, 2011, the Company issued 45,500,000 shares of Common stock to repay $16,750 in debt.

 

From October 1, 2011 through December 31, 2011, the Company issued 5,000,000 shares of Common stock for $20,000 in cash.

 

From January 1, 2012 through March 31, 2012, the Company issued 64,157,197 shares of Common stock to repay $75,000 in debt.

 

From January 1, 2012 through March 31, 2012, the Company issued 5,250,000 shares of Common stock for $52,500 in cash.

 

From January 1, 2012 through March 31, 2012, the Company issued 2,500,000 shares of Common stock for $15,000 in consulting services.

 

On April 10, 2012, the Company issued 4,615,385 shares of Common stock to Asher Enterprises, Inc. to retire $12,000 in debt.

 

On April 16, 2012, the Company issued 4,285,714 shares of Common stock to Asher Enterprises, Inc. to retire $12,000 in debt.

 

On April 18, 2012, the Company issued 5,357,143 shares of Common stock to Asher Enterprises, Inc. to retire $15,000 in debt and accrued interest.

 

On April 19, 2012, the Company issued 480,759 shares of Common stock to Terry and Pam Morrow in exchange for 4,000 shares of Preferred stock (valued at $4,000).

 

On April 19, 2012, the Company issued 2,403,846 shares of Common stock to Greg and Melissa Morrow in exchange for 20,000 shares of Preferred stock (valued at $20,000).

 

On April 19, 2012, the Company issued 240,385 shares of Common stock to Joyce Morrow in exchange for 2,000 shares of Preferred stock (valued at $2,000).

 

On April 19, 2012, the Company issued 961,538 shares of Common stock to Rafa Parra in exchange for 8,000 shares of Preferred stock (valued at $8,000).

 

On April 19, 2012, the Company issued 675,676 shares of Common stock to Andrew Dempsey in exchange for 4,000 shares of Preferred stock (valued at $4,000).

 

On April 19, 2012, the Company issued 3,378,378 shares of Common stock to Muris Bisic in exchange for 20,000 shares of Preferred stock (valued at $20,000).

 

On April 19, 2012, the Company issued 238,095 shares of Common stock to John and Vickie Cooper in exchange for 2,000 shares of Preferred stock valued at $2,000.

 

On April 19, 2012, the Company issued 675,676 shares of Common stock to Carl Bolstad in exchange for 4,000 shares of Preferred stock (valued at $4,000).

 

On April 19, 2012, the Company issued 625,000 shares of Common stock to Sean Sleight in exchange for 4,000 shares of Preferred stock (valued at $4,000).

 

On April 23, 2012, the Company issued 14,000,000 shares of Common stock to Blulife, Inc. to retire $7,000 in debt.

 

On April 30, 2012, the Company issued 7,000,000 shares of Common stock to Blulife, Inc. to retire $3,500 in debt.

 

On May 1, 2012, the Company issued 5,555,556 shares of Common stock to TCA Global Credit Master Fund as incentive shares valued at $25,000 as part of a Securities Purchase Agreement.

 

On May 1, 2012, the Company issued 11,516,104 shares of Common stock to TCA Global Credit Master Fund in escrow as part of our financing agreement with TCA Global.

 

On May 1, 2012, the Company issued 3,571,429 shares of Common stock to Auctus Private Equity Management as professional fees valued at $12,500 as part of a Securities Purchase Agreement.

 

On June 5, 2012, the Company issued 23,000,000 shares of Common stock to Blulife, Inc. to retire $11,500 in debt.

 

NOTE 9 - CONCENTRATIONS

 

At June 30, 2012, 49% of the Company’s accounts receivable was due from a single customer. During the three months ended June 30, 2012, 38% of the Company’s service revenue was generated from a single customer, and less than 2% of sales revenue was generated from a single customer. Compared to total revenue, less than 3% was generated from a single customer during the three months ended June 30, 2012, compared to the three months ended June 30, 2011, where 38% of the Company’s revenues were generated from a single customer.

NOTE 10 – INCOME TAXES

 

At June 30, 2012, the Company has federal net operating loss carryovers of approximately $1,172,000 available to offset future taxable income and expiring as follows: $2,320 in 2026, $12,616 in 2027, $127,675 in 2028, $37,465 in 2029, and $428,000 in 2030 and $564,000 in 2031. The Company also has a federal contribution carryover of $150 that expires in 2029. At June 30, 2012, the Company had experienced losses since inception and had not yet generated any taxable income; therefore, the Company established a valuation allowance to offset the net deferred tax assets. The income tax provision consists of the following components for the three months ended June 30, 2012 and 2011:

 

			2012				2011
Current income tax expense (benefit)		$	—			$	—
Deferred income tax expense (benefit)			—				—
Net income tax expense (benefit) charged to operations		$	—			$	—

 

The income tax provision differs from the amounts that would be obtained by applying the federal statutory income tax rate to loss before income tax provision as follows for the nine months ended June 30, 2012 and 2011:

 

		2012				2011
Loss before income tax provision		$	(398,064	)		$	(429,381	)
Expected federal income tax rate			15.0	%			15.0	%
Expected income tax expense (benefit) at statutory rate		$	(59,710	)		$	(64,407	)
Tax effect of:
Meals and entertainment			2,809				1,493
Change in valuation allowance			56,901				62,914
Net income tax expense (benefit)		$	—			$	—

 

The Company’s deferred tax assets, deferred tax liabilities, and valuation allowance are as follows:

 

		June 30, 2012
Deferred tax assets:
Organization costs		$	60
Contribution carryover			23
Net operating loss carryovers			33,220
Total deferred tax assets		$	33,303
Deferred tax liabilities:
Book basis of patent application		$	(5,246	)
Tax depreciation in excess of book			(498	)
Total deferred tax liabilities		$	(5,744	)
Total deferred tax assets		$	33,303
Total deferred tax liabilities			(5,744	)
Valuation allowance			(27,559	)
Net deferred tax asset (liability)		$	—

 

These amounts have been presented in the financial statements as follows:

NOTE 11 – SUBSEQUENT EVENTS

 

None.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This quarterly report on Form 10-Q and other reports filed by AquaLiv Technologies, Inc. (the “Company”) from time to time with the SEC (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

 

Overview

 

The Company is the parent of AquaLiv, Inc. and Focus Systems, Inc. (“Focus Systems”). AquaLiv, Inc.’s technology alters the behavior of organisms, including plants and humans, without chemical interaction. From increased crop yields to drug-free medicine, AquaLiv, Inc. is providing innovative, ingredient-free solutions to the world's largest problems. The company’s platform technology influences biological processes naturally and without chemical interaction. To date, AquaLiv, Inc. has released products in the industries of water treatment, skincare, and agriculture. The company is primarily known for the AquaLiv Water System product which also produces the majority of the company’s revenue. Focus Systems, Inc. is a technology company providing customers with remote desktop services and Voice over Internet Protocol (VoIP) phone services. Focus Systems maintains servers that house data and applications that its customers can access remotely without the need for the customers to maintain a server. The company’s VoIP service utilizes the internet for phone service rather than through a traditional telecommunications company.

 

 

AquaLiv, Inc.

 

AquaLiv, Inc.’s scientists discovered that most substances and compounds have a unique information signature that influences biological processes via a magnetic cellular mechanism (non-chemical). The company’s technology records this biologically significant magnetic information (bioinformation) from a compound or substance and allows for the manipulation, combining, and subsequent transmittal to an organism. Bioinformation from a variety of sources are combined and/or altered to produce a bioinformation composite designed to influence specific biological processes. The composite can be transmitted to an organism via a variety of methods, including mineralized water, electromagnetic wave, or magnetic field.

 

The technology, while still at an early stage of development, already has direct applications in the industries of water purification, environmental science, agriculture, animal husbandry, personal use products, and medicine. Revenues generated from AquaLiv, Inc.’s products for the nine months ended June 30, 2012 were $345,130.

 

AquaLiv Water System

 

The AquaLiv Water System is a water purification and enhancement apparatus that produces a high-quality drinking water. A variety of technologies are utilized in the system to remove impurities from the water, add minerals to the water, alter the molecule to molecule bonding structure of the water molecules, reduce the surface tension, improve the Oxidation Reduction Potential, and increase the pH, dissolved oxygen, and dissolved hydrogen content in the water. Additionally, the water’s bioinformation is altered to resemble spring water before processing and treatment. Users of the AquaLiv Water System have reported stabilized blood sugar, improvements in both high and low blood pressure, reduced allergy symptoms, less headaches, better digestion, and healthy glowing skin. Some diabetics have even reported that AquaLiv Water System helped them decrease their insulin requirements. AquaLiv Water System testimonials are validated by a 3rd party to be 100% authentic. (testimonialshield.com). The AquaLiv Water System has approximately 400 users and produces approximately 99% of sales revenues.

 

Infotone Hydrating Mist

 

Infotone Hydrating Mist is a skincare product designed to clear blemishes, fade wrinkles, and even skin tone. Each mister contains a ceramic bead infused with AquaLiv, Inc.'s bioinformation technology. The technology allows simple spring water to activate skin's natural healing ability resulting in clear, youthful, and glowing skin. Infotone Hydrating Mist is refillable for a full year making it an economical and sustainable skincare product. The mist is 100% natural and hypoallergenic and contains no parabens, additives, chemicals, GMOs, fragrances or artificial ingredients. The benefits of using the product are primarily derived through the elimination of a common skin parasite responsible for irritation (found on 50% of all adults), decreasing the production of melanin in cells that are overproducing, and increasing skin hydration. The Infortone Hydrating Mist has approximately 850 users and produces approximately 1% of the sales revenues.

 

AgSmart Rice

 

AgSmart Rice is combined service and product offering that increases rice yields by 30-60% on average (data from actual commercial usage) while decreasing the duration before harvest by approximately one month. Treated rice crops are more resistant to pests, diseases, and wind/hail damage. AgSmart Rice is 100% natural and organic standards compliant and uses no chemical fertilizers, herbicides, or pesticides. AgSmart Rice benefits rice plants by encouraging greater root growth and photosynthesis ability. AgSMart Rice has been available since 2011 and is currently used by 2 farms at no charge for their aid in AgSmart Rice’s development. AgSmart Rice is not marketed due to a lack of financial resources and personnel. As of today, AgSmart Rice does not produce any revenue.

 

AgSmart Potato

 

AgSmart Potato is a combined service and product offering that has shown increases in potato yields by over 100% in market value (calculated using recent size/weight values coupled with average test results between treated and untreated test plots) under initial company testing. Treated potato crops have a consistent number of potatoes compared to untreated crops, however, the average size and weight are significantly increased while the normal counts of waste-sized potatoes are greatly reduced. Treated crops have also shown to be more resistant to pests and diseases caused by bacteria and viruses. AgSmart Potato is 100% natural and organic standards compliant and uses no chemical fertilizers, herbicides, or pesticides. AgSmart Potato benefits potato plants by encouraging greater root growth and photosynthesis ability while controlling bacterial and fungal activity.  The Company plans on performing further third party commercial tests of the product prior to commercial distribution. The product is still under development and not yet available to the general public.

 

NatuRx Medication Alternatives

 

Based on AquaLiv's bioinformation technology, NatuRx formulations utilize bioinformation composites in lieu of active-molecules (drugs) for treatment. The formulations are non-toxic and have no contraindications. NatuRx formulations are in development and not yet available to the general public.

 

 

Focus Systems, Inc.

 

Remote Desktop and Cloud Computing

 

Focus System’s Remote Desktop services provide authorized remote users the ability to connect to resources on an external network owned and managed by Focus Systems from any Internet-connected device. The remote user may access their account from their own device or one leased or purchased from Focus Systems. Once connected, the remote user has access to a number of software packages made available through Focus Systems as a Microsoft product reseller for a monthly fee. The remote user may also request that other software packages be installed to the user’s virtual server and maintained by Focus Systems. The Company believes that there are inherent benefits of operating in a completely portable desktop office environment. Access to central data and shared recourses can increase productivity and reduce cost for businesses.  The remote environment is controlled, managed and updated by Focus Systems from a centralized location, further reducing operating costs for its customers. Revenues generated from remote desktop and other services for the nine months ending June 30, 2012 were $14,148 and included service to approximately 20 users.

 

VOIP Phone Service

 

VoIP phone service is a method for taking analog audio signals (similar to the kind you hear when you talk on the phone) and turning them into digital data that can be transmitted over the Internet. This allows VoIP service to replace traditional landline service for business and residential customers. Since VoIP phone service is digital, companies can run both data and voice over the same network infrastructure greatly reducing costs. This reduction in cost is experienced in both the initial start-up phase, as well as the ongoing maintenance and services fees associated with phone service. Company management believes that the trend away from traditional phone service to digital VoIP services will continue to grow. 

Plan of Operation

 

Recent advancements in AquaLiv, Inc.’s technology uncovered a new field of biological information science. With direct applications in the industries of water purification, environmental science, agriculture, animal husbandry, personal use products, and medicine, AquaLiv, Inc. is ready to expand its innovative product offering. While the economy has slowed in recent years, recent sales campaigns have produced positive results for AquaLiv, Inc.

 

The technology industry, especially as it applies to the small business sector, has slowed drastically during the recession. New service orders for both remote desktop and VoIP products have been slow since acquisition. Management is working on increasing exposure for its remote desktop product and is working to expand its VoIP phone service from the small business market into the residential market as well. Additionally, management is investigating possible acquisitions that would be accretive to the core business and enable the growth of its revenues both locally and abroad.

 

Results of Operations

 

For the Three and Nine Months Ended June 30, 2012 Compared with the Three and Nine Months Ended June 30, 2011

 

Revenues

 

The revenues for the three months ending June 30, 2012 were $107,518 as compared to $168,850 in the quarter ending June 30, 2011. Revenues were $371,685 for the nine months ended June 30, 2012, as compared to $471,478 for the nine months ended June 30, 2011.  Sales revenue comprised of 91.9% and 92.9% of our revenue for the three and nine months ending June 30, 2012, respectively, compared to the same three and nine month periods in 2011, where sales revenue accounted for 61.4% and 71.7% of overall revenue, respectively. Service revenue accounted for 5.9% and 6.8% of our revenues for the three and nine months ending June 30, 2012, respectively, compared to the same three and nine month periods in 2011, where service revenue accounted for 6.8% and 7.1% of overall revenue, respectively. The Company stopped receiving royalty revenue on June 22, 2011 in conjunction with the distribution of Infrared Applications, Inc., therefore, royalty revenues were $0 for the three and nine months ended June 30, 2012, compared to $53,600 and $100,000 for the three and nine months ended June 30, 2011, respectively. Royalty revenue accounted for 0% of revenues for the three and nine months ended June 30, 2012, compared to the same three and nine month periods in 2011, where royalty revenue accounted for 31.7% and 21.1% of overall revenue, respectively. Sales revenues are a reflection of the revenues generated by AquaLiv, Inc. The Company accounts for revenues generated by Focus Systems as service revenue. These revenues included fees for remote desktop and VoIP services provided by Focus Systems. Royalty revenue is reflective of the revenue generated by Infrared Applications, Inc. Revenue recognition is accounted for as follow: Sales revenue is billed, paid, and shipped in the same period each month; Service revenue is billed in advance on the first day of the month that service is rendered; and royalty revenue is recorded as earned in the month it is received.

 

Cost of Goods Sold

 

Cost of goods sold for the three and nine months ending June 30, 2012 were $20,722 (19.2% of total revenues) and $92,531 (24.9% of total revenues), respectively, compared to $45,756 (27.1% of total revenues) and $151,802 (32.2% of total revenues), respectively, for the same three and nine month periods ending June 30, 2011. The improvement in cost of goods sold is associated with outsourcing changes made to operations related to Focus Systems.

 

Operating Expenses

 

Operating expenses for the three months ending June 30, 2012 were $261,159 as compared to $176,724 for the quarter ending June 30, 2011. The decrease of $31,720 in consulting fees, increase of $3,810 in management fees, increase of $6,681 in payroll expense, increase of $109,069 in professional fees, decrease of $985 in research and development, decrease of $1,187 in travel expense, and decrease of $1,268 in general and administrative fees is due in part to the increased costs of running the businesses compared to the quarter ending June 30, 2011. The operation expenses for the nine months ending June 30, 2012, were $365,847 as compared to $512,239 for the nine months ending June 30, 2011. The decrease of $23,363 in consulting fees, increase of $18,890 in management fees, increase of $44,892 in payroll expense, increase of $87,466 in professional fees, decrease of $7,068 in research and development, increase of $8,769 in travel expense, and decrease of $1,016 in general and administrative fees is due in part to the increased costs of running the businesses compared to the nine months ending June 31, 2011. The decrease of $315,484 in loss on goodwill impairment, AquaLiv, Inc., was due to the one time write down of goodwill attributed to the acquisition of that business during the nine months ending June 30, 2011.  The Company expects operating expenses to remain higher that previously comparable periods as the Company expands its services.

 

 

Other Income and Expense

 

Interest expense for the three months ended June 30, 2012 was $2,354 as compared to $4,551 for the three months ended June 30, 2011, and was $44,740 for the nine months ended June 30, 2012 as compared to $10,895 for the nine months ended June 30, 2011. The change in interest expense is due to adjustments in loss on derivative liability.

 

Net (Loss) Before Provision for Income Taxes

 

The net loss for the three months ended June 30, 2012 was $172,026 as compared to a net gain of $24,246 for the three months ended June 30, 2011.  The increase in net loss is attributed to the increase in our operating expenses due to the subsidiary changes and business additions to the Company, and increased professional fees for the quarter associated with our current financing. The net loss for the nine months ended June 30, 2012 was $375,196 as compared to $413,710 for the nine months ended June 30, 2011.  The one time write off of goodwill attributed to the AquaLiv, Inc. acquisition during the nine months ended June 30, 2011 accounted for the decrease in net loss between then and the same period ending June 30, 2012. Had that one time event not occurred, the company would have reported an increase in our operating expenses for the nine months ended June 31, 2012, as compared to the nine months ended June 30, 2011. The increase in normal operating expenses is due to the subsidiary changes and business additions to the Company, and increased professional fees during the period associated with our current financing.

 

Liquidity and Capital Resources

 

Operating expenses for the nine months ended June 30, 2012 and 2011, were $365,487 and $512,239, respectively. The net loss for the nine months ended June 30, 2012 and 2011 was $(375,196) and $(413,701), respectively.

 

As of June 30, 2012, the Company did not have and continues to not have sufficient cash on hand to pay present obligations as they become due. In addition, due to current economic conditions and the Company’s related risks and uncertainties, there is no assurance that we will be able to raise additional capital on acceptable terms, if at all, to meet our current obligation over the next 12 months. Because of the foregoing, the Company’s auditors have expressed substantial doubt about our ability to continue as a going concern.

 

If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy. Our estimated working capital requirement for the next 12 months is $500,000, with an estimated burn rate of $35,000 per month.

 

On April 27, 2012, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership (“TCA”), pursuant to which TCA purchased from the Company a two hundred thousand dollar ($200,000) senior secured redeemable debenture (the “Debenture”). The maturity date of the Debenture is April 24, 2013, subject to adjustment (the “Maturity Date”). The Debenture bears interest at a rate of twelve percent (12%) per annum.

 

Further, on April 27, 2012, the Company entered into an Equity Facility Agreement (the “Equity Agreement”) with Auctus Private Equity Fund, LLC, a Massachusetts corporation (“Auctus”). Pursuant to the terms of the Equity Agreement, for a period of twenty-four (24) months commencing on the date of effectiveness of the a registration statement, Auctus has committed to purchase up to $3,500,000 of the Company’s common stock, par value $0.001 per share.

 

Management has determined that general expenditures must be reduced and additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short term capital we will be forced to continue to further accrue liabilities due to our limited cash reserves. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

 

Going Concern

 

We have limited working capital and limited revenues from sales of products, services, or licensing. During the three months ended June 30, 2012, our operating expenses continued to be greater than our revenues. These factors have caused our accountants to express substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.

 

Our ability to continue as a going concern has caused the Board of Directors to continue to look for sources of investment capital, and investigate merger and acquisition opportunities. We will look to further diversify our holdings and sources of cash flow.

 

Off-Balance Sheet Arrangements

 

There are no off-balance sheet arrangements.

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We do not hold any derivative instruments and do not engage in any hedging activities.

 

Item 4. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures.

 

Pursuant to Rule 13a- 15(b) under the Exchange Act, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s PEO and PFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s PEO and PFO, as appropriate, to allow timely decisions regarding required disclosure.

 

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that material weaknesses exist due to a lack of segregation of duties, resulting from the Company's limited resources. Management’s assessment identified the following material weaknesses in internal control over financial reporting:

 

• The small size of our Company limits our ability to achieve the desired level of separation of internal controls and financial reporting. We do not have a separate PEO and PFO. Until such time as the Company is able to hire a Chief Financial Officer, we do not believe we meet the full requirement for separation; and

 

• We have not achieved the desired level of documentation of our internal controls and procedures. When the Company obtains sufficient funding, this documentation will be strengthened through utilizing a third party consulting firm to assist management with its internal control documentation and further help to limit the possibility of any lapse in controls occurring.

 

Management intends to mitigate the risk of the material weaknesses going forward provided the Company has sufficient funding by utilizing external financial consulting services, in a more effective manner, prior to the review by our principal independent accounting firm to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the Commission’s rule and forms.

 

   

(b) Changes in Internal Control over Financial Reporting.

 

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter 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.

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors.

 

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K/A for the year ended September 30, 2011, filed with the SEC on March 14, 2012.

 

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

 

During the three months ended June 30, 2012, we have issued the following securities which were not registered under the Securities Act. Unless otherwise indicated, all of the share issuances described below were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act for transactions not involving a public offering.

On April 10, 2012, the Company issued 4,615,385 shares of common stock to Asher Enterprises, Inc. (“Asher”) to retire $12,000 in debt.

 

On April 16, 2012, the Company issued 4,285,714 shares of common stock to Asher to retire $12,000 in debt.

 

On April 18, 2012, the Company issued 5,357,143 shares of common stock to Asher to retire $15,000 in debt and accrued interest.

 

On April 19, 2012, the Company issued 480,759 shares of common stock to Terry and Pam Morrow in exchange for 4,000 shares of preferred stock valued at $4,000.

 

On April 19, 2012, the Company issued 2,403,846 shares of common stock to Greg and Melissa Morrow in exchange for 20,000 shares of preferred stock valued at $20,000.

 

On April 19, 2012, the Company issued 240,385 shares of common stock to Joyce Morrow in exchange for 2,000 shares of preferred stock valued at $2,000.

 

On April 19, 2012, the Company issued 961,538 shares of common stock to Rafa Parra in exchange for 8,000 shares of preferred stock valued at $8,000.

 

On April 19, 2012, the Company issued 675,676 shares of common stock to Andrew Dempsey in exchange for 4,000 shares of preferred stock valued at $4,000.

 

On April 19, 2012, the Company issued 3,378,378 shares of common stock to Muris Bisic in exchange for 20,000 shares of preferred stock valued at $20,000.

 

On April 19, 2012, the Company issued 238,095 shares of common stock to John and Vickie Cooper in exchange for 2,000 shares of preferred stock valued at $2,000.

 

On April 19, 2012, the Company issued 675,676 shares of common stock to Carl Bolstad in exchange for 4,000 shares of preferred stock valued at $4,000.

 

On April 19, 2012, the Company issued 625,000 shares of common stock to Sean Sleight in exchange for 4,000 shares of preferred stock valued at $4,000.

 

On April 23, 2012, the Company issued 14,000,000 shares of common stock to Blulife, Inc. to retire $7,000 in debt.

 

On April 30, 2012, the Company issued 7,000,000 shares of common stock to Blulife, Inc. to retire $3,500 in debt.

 

On May 1, 2012, the Company issued 5,555,556 shares of common stock to TCA Global Credit Master Fund, LP (“TCA”) as incentive shares valued at $25,000 as part of a Securities Purchase Agreement.

 

On May 1, 2012, the Company issued 11,516,104 shares of common stock to TCA in escrow as part of our financing agreement with TCA Global.

 

On May 1, 2012, the Company issued 3,571,429 shares of common stock to Auctus Private Equity Management as professional fees valued at $12,500 as part of a Securities Purchase Agreement.

 

On June 5, 2012, the Company issued 23,000,000 shares of common stock to Blulife, Inc. to retire $11,500 in debt.

 

 

 Item 3. Defaults Upon Senior Securities.

 

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

There is no other information required to be disclosed under this item which was not previously disclosed.

 

Item 6. Exhibits.

 

Exhibit No.		Description
31.1		Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
31.2		Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *
32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

 

* Filed herewith

 

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.

 

			AQUALIV TECHNOLOGIES, INC.
Date: August 20, 2012
			By:	William Wright
				Name: William Wright
				Title: Chief Executive Officer
				(Principal Executive Officer)
				(Principal Financial Officer)
				(Principal Accounting Officer)

 

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