UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2016

 

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

 

 

ENERGY & TECHNOLOGY, CORP.

(Exact name of registrant as specified in Charter)

 

DELAWARE   333-143215   26-0198662

(State or other jurisdiction of

incorporation or organization)

  (Commission File No.)   (IRS Employee
Identification No.)

 

Petroleum Towers, Suite 530

3639 Ambassador Caffery Blvd

Mail to: P.O. Box 52523

Lafayette, LA 70505

 (Address of Principal Executive Offices)

 

 

 

+ 1-337- 984-2000

 (Issuer Telephone number)

 

+ 1-337- 988-1777

Issuer Fax Number

 

 

 

www.engt.com  

www.energyntechnology.com

 

Securities registered under Section 12(b) of the Exchange Act:     None.
   
Securities registered under Section 12(g) of the Exchange Act:     Common stock, par value $0.001 per share.
   (Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes ☐     No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐     No ☒

 

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 preceding twelve months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one): 

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
(Do not check if a smaller reporting company)      

 

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

 

According to the Company’s transfer agent of record, Olde Monmoth Stock Transfer Agent’s latest records, the number of shares outstanding of each of the Company’s classes of common equity, as of June 30, 2016, is 165,560,766 shares of common stock. The company has issued no stock since that date.

 

 

 

 

 

 

ENERGY & TECHNOLOGY, CORP.

 

FORM 10-Q

 

June 30, 2016

 

INDEX

  

PART I—FINANCIAL INFORMATION  
     
Item 1. Financial Statements 4
Item 2. Management’s Discussion and Analysis of Financial Condition 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Control and Procedures 16
     
PART II—OTHER INFORMATION  
   
Item 1. Legal Proceedings 17
Item 2. Risk Factors 17
Item 3. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 4. Defaults Upon Senior Securities 17
Item 5. Submission of Matters to a Vote of Security Holders 17
Item 6. Other Information 17
Item 7. Exhibits and Reports on Form 8-K 17
     
SIGNATURE 18

 

  2  

 

 

INTRODUCTORY NOTE

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 about Energy & Technology, Corp. (the “Company”) and our subsidiaries, Technical Industries, Inc. (TII), Energy Pipe, LLC (EP), (a variable interest entity), and Energy Technology Manufacturing & Threading, LLC (ETMT), (a variable interest entity), that are subject to risks and uncertainties. Forward-looking statements include information concerning future financial performance, business strategy, projected plans and objectives. Statements preceded by, followed by or that otherwise include the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “may increase,” “may fluctuate” and similar expressions of future or conditional verbs such as “will,” “should,” “would,” and “could” are generally forward-looking in nature and not historical facts. Actual results may differ materially from those projected, implied, anticipated or expected in the forward-looking statements. Readers of this quarterly report should not rely solely on the forward-looking statements and should consider all uncertainties and risks throughout this report. The statements are representative only as of the date they are made. The Company, Technical Industries, Inc. (TII), Energy Pipe, LLC (EP), and Energy Technology Manufacturing & Threading, LLC (ETMT), (sometimes referred to herein on a consolidated basis as the Company, we, us, or similar phrasing) undertakes no obligation to update any forward-looking statement.

 

These forward-looking statements, implicitly and explicitly, include the assumptions underlying the statements and other information with respect to the Company's beliefs, plans, objectives, goals, expectations, anticipations, estimates, financial condition, results of operations, future performance and business, including management's expectations and estimates with respect to revenues, expenses, return on equity, return on assets, efficiency ratio, asset quality and other financial data and capital and performance ratios.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, these statements involve risks and uncertainties that are subject to change based on various important factors, some of which are beyond the control of the Company. The following factors, among others, could cause the Company's results or financial performance to differ materially from its goals, plans, objectives, intentions, expectations and other forward-looking statements:

 

● general economic and industry conditions;
● our capital requirements and dependence on the sale of our equity securities;
● the liquidity of the Company’s common stock will be affected by the lack of a trading market;
● industry competition;
● shortages in availability of qualified personnel;
● legal and financial implications of unexpected catastrophic events;
● regulatory or legislative changes effecting the industries we serve; and
● reliance on, and the ability to attract, key personnel.

 

For a discussion of these and other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s S-1 Report filed with the SEC, which is available on the SEC’s website at www.sec.gov . All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update this Quarterly Report on Form 10-Q to reflect events or circumstances after the date hereof. New factors emerge from time to time, and it is not possible for us to predict which factors, if any, will arise. In addition, the Company cannot assess the impact of each factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

  3  

 

 

PART I. Financial Information 

 

ITEM 1. Financial Statements

 

ENERGY & TECHNOLOGY, CORP.
Consolidated Balance Sheets
As of June 30, 2016 and December 31, 2015

 

    June 30,     December 31,  
    2016     2015  
          (Unaudited)  
Assets            
Current Assets            
Cash and Cash Equivalents   $ 117,248     $ 38,981  
Investments     5,216       48,450  
Accounts Receivable                
Trade, Net     273,123       246,668  
Inventory, Net     1,008,123       1,008,123  
Prepaid Expenses     29,020       13,106  
Patent     26,061       0  
Other Current Assets     6,622       191,887  
                 
Total Current Assets     1,465,412       1,547,215  
                 
Property and Equipment, Net                
Held for Operations, Net     2,590,036       2,735,886  
Construction in Progress     347,628       349,304  
      2,937,664       3,085,190  
                 
Total Assets   $ 4,403,076     $ 4,632,405  
                 
Liabilities and Stockholders' Equity                
Current Liabilities                
Accounts Payable   $ 525,805     $ 597,466  
Accrued Liabilities     49,584       70,262  
Accrued Rent     2,182,500       2,107,500  
Current Maturities of Notes Payable     3,973,410       3,962,130  
Due to Affiliates     327,853       147,706  
Income Taxes Payable     25,287       25,287  
                 
Total Current Liabilities     7,084,439       6,910,351  
                 
Long-Term Liabilities                
Notes Payable     26,440       33,413  
                 
Total Liabilities   $ 7,110,879     $ 6,943,764  
                 
Stockholders' Equity                
Preferred Stock - $.001 Par Value; 10,000,000 Shares Authorized, None Issued     -       -  
Common Stock - $.001 Par Value; 250,000,000 Shares Authorized, 169,198,117 Shares and 169,186,117 shares Issued at June 30, 2016 and December 31, 2015, respectively     169,198       169,186  
Paid-In Capital     4,209,592       4,204,565  
Treasury Stock, at cost (3,637,351 Shares)     (4,076,441 )     (4,076,441 )
Retained Earnings     (3,010,152 )     (2,608,669 )
                 
Total Stockholders' Equity     (2,707,802 )     (2,311,359 )
                 
Total Liabilities and Stockholders' Equity   $ 4,403,076     $ 4,632,405  

 

See notes to consolidated financial statements.

 

  4  

 

 

ENERGY & TECHNOLOGY, CORP.
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended June 30, 2016 and June 30, 2015
For the Six Months Ended June 30, 2016 and June 30, 2015

 

    Three Months Ended     Six Months Ended  
    June 30,     June 30,     June 30,     June 30,  
    2016     2015     2016     2015  
                         
Revenues   $ 436,674     $ 669,023     $ 856,362     $ 1,148,570  
Cost of Revenues                                
Materials and Supplies     23,251       41,114       36,452       56,015  
Subcontract Labor     80,418       124,651       153,521       245,489  
Depreciation     70,780       125,694       140,759       251,404  
Employees and Related Costs     84,172       108,484       173,738       259,252  
Repairs and Maintenance     5,218       33,494       7,401       65,007  
Insurance     19,513       37,209       40,266       75,210  
Other Costs     94,993       167,853       180,543       304,424  
Patent Amortization             (7,196 )             0  
                                 
Total Cost of Revenues     378,345       631,303       732,679       1,256,801  
                                 
Gross Profit     58,329       37,720       123,684       (108,231 )
                                 
Operating Expenses                                
Selling, General, and Administration     205,281       464,951       454,765       778,568  
Depreciation     27,525       30,192       55,450       60,421  
                                 
Total Operating Expenses     232,806       495,143       510,215       838,989  
                                 
Loss from Operations     (174,477 )     (457,423 )     (386,531 )     (947,220 )
                                 
Other Income (Expense)                                
Income from Lawsuit Settlement             2,402,936               2,402,936  
Gain (Loss) on Sale of Assets     -       -               2,105  
Investment Income (Expense)     (1,330 )     1,650       (1,760 )     4,679  
Interest Expense     (4,089 )     (6,569 )     (8,152 )     (9,526 )
                                 
Total Other Income (Expense)     (5,419 )     2,398,017       (9,912 )     2,400,194  
                                 
Loss Before Provision for Income Taxes     (179,896 )     1,940,594       (396,443 )     1,452,974  
                                 
Benefit for Income Taxes     0       0               (172,712 )
                                 
Income/(Loss)   $ (179,896 )   $ 1,940,594     $ (396,443 )   $ 1,625,686  
                                 
Loss per Share - Basic   $ NM     $ NM     $ NM     $ NM  
                                 
Loss per Share - Diluted   $ NM     $ NM     $ NM     $ NM  

 

See notes to consolidated financial statements.

 

  5  

 

 

ENERGY & TECHNOLOGY CORP.
Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2015 and the Six Months Ended June 30, 2016

 

    Common Stock     Treasury Stock     Additional
Paid-In 		    Retained     Total
Stockholders' 		 
    Shares     Amount     Shares     Amount     Capital     Earnings     Equity  
                                           
Balance at January 1, 2015     169,186,117     $ 169,186       (3,637,351 )   $ (4,076,441 )   $ 4,204,565     $ (3,250,793 )   $ (2,953,483 )
                                                         
Net Income     -       -       -       -       -       642,124     $ 642,124  
                                                         
Balance at December 31, 2015     169,186,117     $ 169,186       (3,637,351 )   $ (4,076,441 )   $ 4,204,565     $ (2,608,669 )   $ (2,311,359 )
                                                         
Balance at January 1, 2016     169,186,117     $ 169,186       (3,637,351 )   $ (4,076,441 )   $ 4,204,565     $ (2,608,669 )   $ (2,311,359 )
                                                         
Stock Issued     12,000     $ 12       -       -     $ 5,027       -       -  
                                                         
Net (Loss)     -       -       -       -       -     $ (396,443 )   $ (396,443 )
                                                         
Balance at June 30, 2016     169,198,117     $ 169,198       (3,637,351 )   $ (4,076,441 )   $ 4,209,592     $ (3,005,112 )   $ (2,707,802 )

 

See notes to consolidated financial statements.

 

  6  

 

 

ENERGY & TECHNOLOGY, CORP.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2016 and 2015

 

    Six Months Ended  
    June 30,     June 30,  
    2016     2015  
Cash Flows from Operating Activities            
Net Income (Loss)     (401,483 )     1,625,687  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities                
Depreciation     196,209       311,825  
Fair Value of Investments     43,235       -  
Prior Period Audit Adjustments             (3,005,589 )
Loss on disposal of asset             2,105  
Deferred Income Taxes             544,852  
Changes in Assets and Liabilities                
Trade Receivables     (26,455 )     69,404  
Other Receivables             52,905  
Prepaid Expenses     (15,914 )     (45,043 )
Accounts Payable     (71,661 )     156,862  
Accrued Payroll and Payroll Liabilities     (20,678 )     (13,057 )
Accrued Rent     75,000       75,000  
                 
Net Cash Provided by Operating Activities     (221,747 )     (225,049 )
                 
Cash Flows from Investing Activities                
Other Assets     185,265       (2,290 )
Patent Cost     (26,061 )     13,150  
Purchase of Property and Equipment     (48,683 )     (422,504 )
                 
Net Cash Provided by (Used in) Investing Activities     110,521       (411,644 )
                 
Cash Flows from Financing Activities                
Issuance of Stock     5,039          
Borrowings (Principal Repayments) to Affiliates     180,147       (88,105 )
Borrowings (Principal Repayments) on Notes Payable     4,307       64,491  
                 
Net Cash Provided by (Used in) Financing Activities     189,493       (23,614 )
                 
Net Increase (Decrease) in Cash and Cash Equivalents     78,267       (660,307 )
                 
Cash and Cash Equivalents, Beginning of Year     38,981       1,083,840  
                 
Cash and Cash Equivalents, End of Year   $ 117,248     $ 423,533  
                 
Supplemental Disclosure of Cash Flow Information                
Cash Paid During the Period for Interest   $ 8,152     $ 9,526  
                 
Cash Paid During the Period for Income Taxes   $ -     $ -  

 

See notes to consolidated financial statements.

 

  7  

 

 

ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 1. Organization

 

This Financial statement is unaudited.

 

Energy and Technology, Corp. (the Company) was formed November 29, 2006 under the laws of the State of Delaware in order to acquire and to take over the assets and business of Technical Industries, Inc. (TII). On that date, the Company issued 125,000,000 shares of common stock to American Interest, LLC, in exchange for founder services rendered. The fair value of these services was considered immaterial, and no amounts were recognized in the financial statements. At the time the shares were issued to American Interest, LLC, the Company had no assets, operations, or cash flows. As such, the stock had no value at the time the Company was established. The par value was arbitrarily established in order to comply with the State of Delaware laws. In order to reflect the par value of the shares issued, the Company recognized a discount on capital stock as a contra-equity account within the equity section of the consolidated balance sheets. 

 

On January 3, 2007, the Company entered into a Stock Exchange Agreement and Share Exchange (the Agreement) whereby the sole shareholder of TII exchanged all of the outstanding shares of TII to the Company in exchange for 50,000,000 shares of Company stock. Accordingly, TII became a wholly-owned subsidiary of the Company. The assets acquired and liabilities assumed were recorded at the carrying value to TII since TII and the Company were under common control prior to the acquisition.

 

TII specializes in the non-destructive testing of vessels, oilfield equipment and mainly pipe, including ultrasonic testing, utilizing the latest technologies. These technologies enable TII to (i) provide detailed information to customers regarding each pipe tested, and (ii) reach energy reserves present technology cannot reach without extra cost to the oil and gas companies. Because of the intense scrutiny applied to each section of pipe, TII is able to generate data which allows the pipe to be used in the most extreme conditions, and has been proven especially useful in deep water drilling operations in the Gulf of Mexico.

 

On August 29, 2009, the Company effected a name change from Technical Industries & Energy Corp. to Energy & Technology, Corp. to better reflect the nature of the Company’s business.

 

Note 2. Summary of Significant Accounting Policies

 

Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Technical Industries, Inc., the accounts of Energy Pipe, LLC (a variable interest entity), and the accounts of Energy Technology Manufacturing & Threading, LLC (a variable interest entity). All significant intercompany balances and transactions have been eliminated.

 

The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of financial information for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.

 

Basis of Accounting

Assets, liabilities, revenues and expenses are recognized on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the financial statements. Accordingly, actual results could differ from those estimates due to information that becomes available subsequent to the issuance of the financial statements or for other reasons.

 

Revenue Recognition

Revenue for inspection services and manufacturing and threading services is recognized upon completion of the services rendered. Revenue for the sales of pipe is recognized when pipe is delivered and the customer takes ownership and assumes the risks of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable.

 

Trade Receivables

Trade accounts receivable are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus receivables do not bear interest, although a finance charge may be applied to amounts past due. Trade accounts receivable are periodically evaluated for collectability based on past credit.

 

Allowance for Doubtful Accounts

The company calculates the allowance based on the history with customers and their current financial condition. Provisions of uncollectible amounts are determined based on management’s estimate of collectability. Allowance for doubtful accounts was $3,078 and $3,078 at June 30, 2016 and at December 31, 2015, respectively.

 

  8  

 

 

ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 2. Summary of Significant Accounting Policies (Continued)

 

Inventory

Inventory is stated at the lower of cost determined by the specific identification method or market. At June 30, 2016 and at December 31, 2015, inventory consisted of pipe available for sale.

 

Property and Equipment

Property and equipment are stated at cost. Expenditures for property and equipment and items that substantially increase the useful lives of existing assets are capitalized at cost and depreciated. Routine expenditures for repairs and maintenance are expensed as incurred. The cost and related accumulated depreciation of property and equipment disposed of are eliminated from the accounts, and any resulting gain or loss is recognized. Depreciation is provided utilizing the straight-line method over the estimated useful lives of the assets capitalized.

 

Valuation of Long-Lived Assets

In the event facts and circumstances indicate that carrying amounts of long-lived assets may be impaired, the Company evaluates the recoverability of its long-lived assets using the estimated future undiscounted cash flows associated with the asset compared to the asset’s carrying amount to determine if a write-down is required, pursuant to the provisions of Financial Accounting Standards Board (FASB) ASC 360-10-35. Any impairment loss is measured as the difference between the carrying amount and the fair value of the impaired asset.

 

Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade receivables. Concentration of credit risk with respect to trade receivables is limited due to the Company’s large number of customers. At June 30, 2016, the balance due from four customers represented 61% of receivables, and sales to two customers represented 60% of revenues for the six months ended June 30, 2016.

 

The Company maintains cash balances at several financial institutions, and periodically maintains cash in bank accounts in excess of insured limits. The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice.

 

Advertising

The Company charges the costs of advertising to expense as incurred. Advertising expense was $3,424 and $3,429, for the six months ended June 30, 2016 and 2015, respectively.

 

Cash Flows

For purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

 

Income Taxes

The Company recognizes income taxes in accordance with FASB ASC 740, “Income Taxes” (formerly Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes). ASC 740 uses the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to the difference between financial statement carrying amounts and the tax basis of existing assets and liabilities. Deferred taxes are also recognized for operating losses and tax credits that are available to offset future income taxes.

 

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

 

Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized tax benefits in the consolidated balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits would be classified as additional income taxes in the statement of operations.

 

Emerging Growth Company Critical Accounting Policy Disclosure

The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company may elect to take advantage of the benefits of this extended transition period in the future.

    

  9  

 

 

ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 2. Summary of Significant Accounting Policies (Continued)

 

Recent Accounting Pronouncements

Management does not expect any impact from the adoption of new accounting pronouncements.

 

Comprehensive Income

The Company had no components of comprehensive income. Therefore, net income (loss) equals comprehensive income (loss) for the periods presented.

 

Note 3. Patent

 

On September 4, 2007, the Company’s chief executive officer was awarded a patent from the United States Patent and Trademark Office pertaining to his development of specialized testing procedures for tubing casing, line pipe, and expandable liners utilized by oil-exploration companies which was subsequently transferred to the Company.

 

In a prior year, the Company’s costs associated with its development of these testing procedures and application for patent have been capitalized and recognized as an asset in the Company’s balance sheet, and was being amortized over 20 years. Audit findings for 2014 resulted in the write off of the Patents and the related Accumulated Amortization due to the fact that they were internally created. The Company has capitalized all legal expenses incurred in the defense of the Patent.

 

Note 4. Property and Equipment

 

Property and equipment consists of the following at June 30, 2016 and December 31, 2015, respectively:

 

      2016     2015  
               
  Buildings and Improvements   $ 3,157,938     $ 3,157,938  
  Equipment     5,929,340       5,878,980  
  Autos and Trucks     260,932       260,932  
  Office Furniture     34,025       34,025  
  Construction in Progress     347,628       349,304  
        9,729,863       9,681,179  
  Less: Accumulated Depreciation     -6,792,198       -6,595,989  
  Total   $ 2,937,664     $ 3,085,190  

 

Depreciation expense amounted to $196,209 and $311,825 for the six months ended June 30, 2016 and 2015, respectively.

 

Note 5. Related Party Transactions

 

Energy & Technology, Corp is a holding company. Its subsidiaries include: Technical Industries, Inc. (NDT Inspection Services are done in this company), Energy Technology Manufacturing & Threading, LLC (threading and manufacturing services are done in this company), and Energy Pipe, LLC (pipe sales are done in this company). All significant intercompany transactions are eliminated in consolidation.

 

Additionally, St. Charles Real Estate Corp LLC owns the land in Houston, Texas where the Company maintains its pipe inventory, as well as the Houston facility. The Company has a month to month lease for $12,500 with St. Charles Real Estate but is accruing rent instead of paying. As of June 30, 2016 and December 31, 2015 the total owed is $2,182,500 and $2,107,500, respectively. St. Charles Real Estate Corp LLC is owned by various members of the Sfeir family.

 

The Company has one balance due American Interest LLC (AIC) the majority stockholder of the Energy & Technology, Corp.: A note AIC, LLC. purchased from Mustang for the original purchase of the Company which bears interest at 8%. Included in due to affiliates at June 30, 2016 and December 31, 2015 respectively, is $327,853 and $147,706, respectively, in acquisition debts paid by affiliates upon the acquisition of the Company in 1999. The affiliates maintain a lien on the Company’s accounts receivable and equipment to secure this loan. The amounts due to the affiliates have no set terms of repayment and bear interest at 8.00%. Interest expense associated with this obligation totaled $5,581 and $11,161 for the periods ended June 30, 2016 and December 31, 2015, respectively.

 

  10  

 

 

ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 6. Notes Payable

 

Notes payable at June 30, 2016 and December 31, 2015 consist of the following:

 

      2016     2015  
  Secured fixed term note of $48,601.50 due November 2020; fixed interest rate of 3.39%     34,986       39,151  
  Unsecured variable term note of $3,935,217 ; due on demand     3,935,217       3,935,217  
  Secured fixed term note of $31,905.36 due March 2018; fixed interest rate of 5.4%     12,044       21,174  
  Secured fixed term note of $38,287 due November 2016; fixed interest rate of 5.94%     17,603       -  
      $ 3,999,850     $ 3,995,542  
  Less: Current Portion     3,973,410       3,962,130  
  Long-Term Portion   $ 26,439     $ 33,412  

 

Following are maturities of long-term debt at December 31, 2015:

 

  Fiscal Year Ending        
  December 31,     Amount  
  2017     $ 8,280  
  2018       8,280  
  2019       8,280  
  2020       8,572  
             
  Total     $ 33,412  

 

Note 7. Equity

 

The Company is authorized to issue 250,000,000 shares of common stock at a par value of $.001 per share. The number of shares issued and outstanding are 165,560,766 and 165,548,766 as of June 30, 2016 and December 31, 2015, respectively.

 

The Company issued 12,000 of stock in lieu of services performed on June 30, 2016.

 

The Company is authorized to issue 10,000,000 shares of preferred stock. As of June 30, 2016 and December 31, 2015, there were no shares issued and outstanding. In 2014, the company purchased 3,617,075 shares of common stock now in Treasury.

  

Note 8. Earnings per Share

 

Earnings (loss) per share are calculated in accordance with ASC 260 “Earnings per Share”. The weighted average number of common shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings per share are computed using the weighted average number of shares and potentially dilutive common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised. Potentially dilutive common shares consist of stock options and are excluded from the diluted earnings per share computation in periods where the Company has incurred a net loss, as their effect would be considered anti-dilutive.

 

There were no potentially dilutive common stock equivalents as of June 30, 2016, therefore basic earnings per share equals diluted earnings per share for the three months ended June 30, 2016. As the Company incurred a net loss during the three months ended June 30, 2016, the basic and diluted loss per common share is the same amount, as any common stock equivalents would be considered anti-dilutive.

 

As the Company incurred a net loss during the year ended December 31, 2015, the basic and diluted loss per common share is the same amount, as any common stock equivalents would be considered anti-dilutive.

 

The weighted average common shares outstanding were 168,332,493 and 168,332,363 for the six months ended June 30, 2016 and the year ended December 31, 2015.

 

Note 9. Commitments

 

The Company leases office premises, operating facilities, and equipment under operating leases expiring in various years through 2030. The Company also leases land for operating purposes on a month to month basis.

 

  11  

 

 

ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 10. Litigation and Contingent Liabilities

 

The Company was involved in litigation with a supplier regarding a contract agreement for the Company to serve as a distributor for the suppliers products but has been settled in 2015. The Company has reversed a liability of $2,252,936 for net proceeds due the supplier from sales of its product and has recorded Income from Lawsuit Settlement of $2,252,936.

 

Note 11. Major Customers

 

For the six months ended June 30, 2016, the Company had two customers which generated revenues in excess of 10% of the Company’s total revenues. Revenues for these two customer were approximately 60% of total revenues, and total balance due from this customer at June 30, 2016 was $187,709.

 

Note 12. Estimated Fair Value of Financial Instruments

 

The following disclosure is made in accordance with the requirements of FASB ASC 825, Financial Instruments . Financial instruments are defined as cash and contractual rights and obligations that require settlement, directly or indirectly, in cash. In cases where quoted market prices are not available, fair values have been estimated using the present value of future cash flows or other valuation techniques.

 

The result of these techniques are highly sensitive to the assumptions used, such as those concerning appropriate discount rates and estimates of future cash flows, which require considerable judgment. Accordingly, estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current settlement of the underlying financial instruments. ASC 825 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. These disclosures should not be interpreted as representing an aggregate measure of the underlying value of the Company.

 

While these estimates of fair value are based on management's judgment of appropriate factors, there is no assurance that if the Company had disposed of such items at June 30, 2016 or December 31, 2015, the estimated fair values would have been achieved. Market values may differ depending on various circumstances not taken into consideration in this methodology. The estimated fair values at June 30, 2016 and December 31, 2015, should not necessarily be considered to apply at subsequent dates.

 

      June 30,     December 31,  
      2016     2015  
      Carrying     Fair     Carrying     Fair  
      Amount     Value     Amount     Value  
  Financial Assets                        
  Investments   $ 5,216     $ 5,216     $ 48,450     $ 48,450  
                                   
      $ 5,216     $ 5,216     $ 48,450     $ 48,450  

 

The following methods and assumptions were used by the Company in estimating fair values for financial instruments:

 

Cash and cash equivalents: The carrying amount reported in the balance sheet approximates fair value.

 

Notes Payable: The fair value of notes payable approximates the carrying amount reported in the balance sheet.

 

Due to Affiliates: The carrying amount of due to affiliates approximates fair values.

 

Note 13. Subsequent Events

 

In accordance with the subsequent events topic of the FASB ASC, Topic No. 855, Subsequent Events , the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements. The effects of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of June 30, 2016. In preparing these financial statements, the Company evaluated the events and transactions through the date these financial statements were issued.

 

  12  

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

General

Headquartered in Lafayette, Louisiana, with production facilities in Houston, Texas and Abbeville, Louisiana, Energy & Technology, Corp. provides non-destructive testing (NDT) services, OCTG and oilfield pipe sales, service and storage, and rig and equipment sales. Originally founded on May 11, 1971 as an inspection company, Energy & Technology, Corp. currently serves customers throughout the oil patch of Louisiana and Texas as well as in Canada, Mexico, and in the Gulf of Mexico. The Company’s customer base of over 130 accounts consists of major oil companies, steel mills, material suppliers, drilling companies, tool rental companies, and natural gas storage operators. Due to the nature of its technology, the Company maintains competitive advantages in offshore deep water and other onshore critical projects.

 

Technical Industries, Inc., a wholly owned subsidiary of Energy & Technology, Corp., manufactures its own proprietary NDT equipment. The Company’s patented ultrasonic systems have some of the largest OD and pipe length capabilities in the industry and the deepest penetration capability offered for wall thickness measurement. The Company holds patents on certain exclusive inspection technology that allows oil and gas companies to use their current drill strings and other equipment to reach depths that were previously unreachable. This technology can make wells safer, increase the success rate for critical wells, and greatly reduce the chances of a failure. As the industry moves to ever deeper reserves and makes advances in horizontal drilling, oil and gas wells are becoming more and more expensive and difficult to drill, making this technology more of a necessity.

 

In the oilfield pipe sales and storage segment, Energy & Technology, Corp utilizes a state-of-the-art web based inventory management system that allows each client to view and track projects during processing, to locate inventory throughout the plant, and access reports, bill of ladings, tally sheets, logs and other required information.

 

Energy Technology Manufacturing & Threading, LLC’s new facility has been completed and is fully operational. This facility is capable of threading, bucking, and repair of drill pipe, casing, and tubing up to 11 7/8” diameter. The plant is equipped with a Computer Controlled lathe accurate to within the most critical of tolerances, and has the capability to manufacture, thread, repair, and manufacture pup joints and marker joints to any length the customer requires, as well as to machine any threads for which specs can be furnished. Technicians have between 10 and 34 years of experience in the manufacturing and threading industry. This new facility brings Energy & Technology, Corp. one step closer to its goal of supplying all tubular services under one roof.

 

Key Ongoing Operational Processes:

 

Update ISO Certification

Energy & Technology, Corp. recognizes that quality is every bit as important as price and prompt service. This is even truer of the Company’s typical client, who often contracts for services that other companies are not able to provide. In response to our clients’ requirements, the Company has obtained the latest ISO: 9001 certification by Moody’s, recognized in the industry as representing the highest quality control available. As the Company’s business lines are very synergistic, management feels that it can leverage this dominant position to increase share in the markets in which it competes, and likely more in the critical service arena.

 

Foreign Trade Zone Status

Energy & Technology, Corp. has selected the well-known auditing and financial consulting firm KPMG to assist the Company in meeting the requirements to establish a Foreign Trade Zone at its Houston, Texas facility. KPMG has started the initial feasibility analysis with the formal application to follow. The establishment of a Foreign Trade Zone is expected to produce a substantial increase in the Company’s ability to sell to overseas markets, and make the Company a far more attractive distribution partner for foreign manufacturers. Management feels that market share could be taken through a successful designation as an FTZ subzone.

 

Increased Sales and Marketing Effort

Energy & Technology, Corp. hired three qualified personnel in order to help the marketing and sales effort. New business was generated from referrals, technical sessions given to oil and gas and industry related companies, the Company website, and through the use of a marketing company on a limited basis. Recently, several new deep water well permits were issued in the Gulf of Mexico. As a result, ENGT has experienced significant new interest from major oil and gas companies - including site visits and evaluations - for its VisonArray™ deep water and critical well technologies, and ENGT Manufacturing facilities. Currently, there are several employees whose duties are focused on sales, and one marketing and promotional activity director. Management believes revenue can be greatly increased by expanding the Company's sales force.

 

Diversification

Energy & Technology, Corp. has diligently worked to diversify its business model by adding sales, service, and storage of OCTG and all types of oilfield pipe, as well as equipment leasing and sales. The Company’s new threading and repair facility, located on our Houston campus, became operational in July 2010 and on September 30, 2011 received numerous ISO and API certifications. Additional growth will come domestically, but management feels that overseas expansion is critical to the ultimate success of the business plan.

 

Critical Accounting Policies

The Company has identified the following accounting policies to be the critical accounting policies of the Company:

 

Revenue Recognition. Revenue for inspection services and manufacturing and threading services are recognized upon completion of the services rendered. Revenue for the sales of pipe is recognized when pipe is delivered and the customer takes ownership and assumes the risks of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable.

 

  13  

 

 

Inventory. Inventory is stated at the lower of cost determined by the specific identification method or market. At June 30, 2016 inventory consisted of pipe available for sale.

 

Property and Equipment. Property and equipment are stated at cost. Expenditures for property and equipment and items that substantially increase the useful lives of existing assets are capitalized at cost and depreciated. Routine expenditures for repairs and maintenance are expensed as incurred. The cost and related accumulated depreciation of property and equipment disposed of are eliminated from the accounts, and any resulting gain or loss is recognized. Depreciation is provided utilizing the straight-line method over the estimated useful lives of the assets capitalized.

 

Valuation of Long-Lived Assets. In the event facts and circumstances indicate that carrying amounts of long-lived assets may be impaired, the Company evaluates the recoverability of its long-lived assets using the estimated future undiscounted cash flows associated with the asset compared to the asset’s carrying amount to determine if a write-down is required, pursuant to the provisions of SFAS Financial Accounting Standards Board (FASB) ASC 360-10-35. Any impairment loss is measured as the difference between the carrying amount and the fair value of the impaired asset.

 

Discussion of Changes in Financial Condition from December 31, 2015 to June 30, 2016

 

At June 30, 2016, total assets amounted to $4,403,076 compared to $4,632,405 at December 31, 2015, a decrease of $229,329, or 4.95%. The decrease is primarily due to a decrease in other assets of $185,265, a decrease in property and equipment held for operations of $147,526, partially offset by an increase in cash and cash equivalents of $78,267, net accounts receivable of $26,455 and prepaid expenses of $15,914 and capitalized patent cost of $26,061.

 

Our liabilities at June 30, 2016, totaled $7,110,879 compared to $6,943,764 at December 31, 2015, an increase of $167,115, or 2.41%. The increase is primarily due to an increase in accrued rent of $75,000, and increase in current notes payable of $11,280, and an increase in due to affiliates of $180,147.

 

Total stockholder’s equity decreased from $4,632,405 at December 31, 2015, to $4,403,076 at June 30, 2016. This decrease was due to our net loss for the six months ended June 30, 2016.

 

Cash and Cash Equivalents

Cash and Cash Equivalents totaled $117,248 at June 30, 2016, an increase of $78,267 from the balance of $38,981 at December 31, 2015. The decrease in cash and cash equivalents was primarily due to amounts used to reduce debt, partially offset by the cash generated from operating activities for the six months ended June 30, 2016.

 

Inventory

Inventory consists primarily of pipe held for sale to our customers. We began purchasing pipe for sale to customers in December, 2007. This was an opportunity for us to expand our services to our customers. It is anticipated that the Company will continue its efforts to expand its sales of pipe.

 

Property and Equipment

The decrease in property and equipment is primarily due to depreciation for the six months ended June 30, 2016 of $196,209.

 

Accounts Payable

Accounts payable at June 30, 2016 totaled $525,805 compared to $597,466 at December 31, 2015, a decrease of $71,661. The decrease is primarily due to the payment of accounts owed in the course of operations.

 

Discussion of Results of Operations for the Three Months Ended June 30, 2016 compared to the Three Months Ended June 30, 2015

 

Revenues

Our revenue for the three months ended June 30, 2016, was $456,674, compared to $669,023, for the three months ended June 30, 2015, a decrease of $232,349, or 35%. The decrease is attributable primarily to a decrease in exploration technologies.

 

The following table presents the composition of revenue for the three months ended June 30, 2016 and 2015:

 

    2016     2015     Variance  
Revenue:   Dollars     Percentage     Dollars     Percentage     Dollars  
                               
Exploration Technologies   $ 197,770       45.3 %   $ 370,440       55.4 %   $ (172,670 )
Drilling, OCTG, & Equipment Sales   $ -       0.0 %   $ -       0.0 %   $ -  
Warehouse & Storage Fees   $ 68,820       15.8 %   $ 75,710       11.3 %   $ (6,890 )
Rebillable Income   $ 51,301       11.7 %   $ 85,066       12.7 %   $ (33,765 )
Manufacturing   $ 118,783       27.2 %   $ 137,807       20.6 %   $ (19,024 )
Total Revenue   $ 436,674       100.0 %   $ 669,023       100.0 %   $ (232,349 )

 

  14  

 

 

Cost of Revenue and Gross Profit

Our cost of revenue for the three months ended June 30, 2016, was $378,345, or 87% of revenues, compared to $631,303, or 94% of revenues, for the three months ended June 30, 2015. The overall decrease in our cost of revenue is primarily due to a decrease in Depreciation.

 

The following table presents the composition of cost of revenue for the three months ended June 30, 2016 and 2015:

 

    2016     2015     Variance  
Cost of Revenue:   Dollars     Percentage     Dollars     Percentage     Dollars  
                               
Employee and Related Costs   $ 84,172       22.2 %   $ 108,484       17.2 %   $ (24,312 )
Materials and Supplies     23,251       6.1 %     41,114       6.5 %   $ (17,863 )
Subcontract Labor     80,418       21.3 %     124,651       19.7 %   $ (44,233 )
Depreciation     70,780       18.7 %     118,498       18.8 %   $ (47,718 )
Repairs and Maintenance     5,218       1.4 %     33,494       5.3 %   $ (28,276 )
Insurance     19,513       5.2 %     37,209       5.9 %   $ (17,696 )
Other Costs     94,993       25.1 %     167,853       26.6 %   $ (72,860 )
Total Cost of Revenues   $ 378,345       100.0 %   $ 631,303       100.0 %   $ (252,958 )

 

Due to limitations with the pool of qualified individuals, we utilized the services of subcontractors to assist us in providing timely and quality service to our customers. We will continue our efforts to attract employ and retain qualified individuals to serve the needs of our customers.

 

Operating Expenses

For the three months ended June 30, 2016, our operating expenses totaled $232,806 as compared to $495,143 in 2015, representing a decrease of $262,337, or 52.98%. The largest components of our operating expense for 2016 consist of salaries and wages and professional services. Salaries and wages for general and administrative personnel was $91,049 for the three months ended June 30, 2016, compared to $196,477 the three months ended June 30, 2015, a decrease of $105,428, or 53.66%.

 

Professional services expense decreased from $75,259 for the three months ended June 30, 2015, to $15,220 for the three months ended June 30, 2016, a decrease of $60,039, or 79.78%. The decrease is primarily a result of a decrease in legal fees.

 

Other Income and Expense

Other income and expense consists of investment income, interest expense, and gains and losses from the sale and disposal of assets. Other expense, net, totaled $5,419 for the three months ended June 30, 2016, compared to other income, net, of $2,398,017, for the three months ended June 30, 2015, a decrease of $2,403,436 or 100.23%. This decrease is primarily due to income from lawsuit settlements.

 

Interest expense totaled $4,089 for the three months ended June 30, 2016, as compared to $6,569 for the three months ended June 30, 2015, a decrease of $2,480, or 37.75%. Interest expense pertains primarily to amounts due to affiliates as well as to our notes payable with third parties.

 

Discussion of Results of Operations for the Six Months Ended June 30, 2016 compared to the Six Months Ended June 30, 2015

 

Revenues

Our revenue for the six months ended June 30, 2016, was $856,362, compared to $1,148,571, for the six months ended June 30, 2015, a decrease of $292,209, or 25.44%. The decrease is attributable primarily to a decrease in exploration technologies.

 

The following table presents the composition of revenue for the six months ended June 30, 2016 and 2015:

 

    2016     2015     Variance  
Revenue:   Dollars     Percentage     Dollars     Percentage     Dollars  
                               
Exploration Technologies   $ 401,707       92.0 %   $ 598,777       89.5 %   $ (197,070 )
Drilling, OCTG, & Equipment Sales   $ -       0.0 %   $ -       0.0 %   $ -  
Warehouse & Storage Fees   $ 150,142       34.4 %   $ 149,120       22.3 %   $ 1,022  
Rebillable Income   $ 93,865       21.5 %   $ 124,240       18.6 %   $ (30,375 )
Manufacturing   $ 210,648       48.2 %   $ 276,434       41.3 %   $ (65,786 )
Total Revenue   $ 856,362       100.0 %   $ 1,148,571       171.7 %   $ (292,209 )

 

Cost of Revenue and Gross Profit

Our cost of revenue for the six months ended June 30, 2016, was $732,679, or 85.56% of revenues, compared to $1,256,801, or 1.09% of revenues, for the six months ended June 30, 2015. The overall decrease in our cost of revenue is primarily due to a decrease in other cost which includes transportation costs.

 

  15  

 

 

The following table presents the composition of cost of revenue for the six months ended June 30, 2016 and 2015:

 

    2016     2015     Variance  
Cost of Revenue:   Dollars     Percentage     Dollars     Percentage     Dollars  
                               
Employee and Related Costs   $ 173,738       23.7 %   $ 259,252       20.6 %   $ (85,514 )
Materials and Supplies     36,452       5.0 %     56,015       4.5 %   $ (19,563 )
Subcontract Labor     153,521       21.0 %     245,489       19.5 %   $ (91,968 )
Depreciation and Amortization     140,759       19.2 %     251,404       20.0 %   $ (110,645 )
Repairs and Maintenance     7,401       1.0 %     65,007       5.2 %   $ (57,606 )
Insurance     40,266       5.5 %     75,210       6.0 %   $ (34,944 )
Other Costs     180,543       24.6 %     304,424       24.2 %   $ (123,881 )
Total Cost of Revenues   $ 732,679       100.0 %   $ 1,256,801       100.0 %   $ (524,122 )

 

Due to limitations with the pool of qualified individuals, we utilized the services of subcontractors to assist us in providing timely and quality service to our customers. We will continue our efforts to attract employ and retain qualified individuals to serve the needs of our customers.

 

Operating Expenses

For the six months ended June 30, 2016, our operating expenses totaled $510,215 as compared to $838,989 in 2015, representing a decrease of $328,774, or 39.19%. The largest components of our operating expense for 2019 consist of salaries and wages and other costs. Salaries and wages for general and administrative personnel was $181,778 for the six months ended June 30, 2016, compared to $349,309 for the six months ended June 30, 2015, a decrease of $167,531, or 47.96%.

 

Other expenses decreased from $130,284 for the six months ended June 30, 2015, to $97,892 for the six months ended June 30, 2016, a decrease of $32,392, or 24.86%.

 

Other Income and Expense

Other income and expense consists of investment income, interest expense, and gains and losses from the sale and disposal of assets. Other expense, net, totaled $9,912 for the six months ended June 30, 2016, compared to other income, net, of $2,400,194, for the six months ended June 30, 2015, a decrease of $2,410,106 or 100.41%. This is primarily the result from Income from Lawsuits settled. Interest expense totaled $8,152 for the six months ended June 30, 2016, as compared to $9,526 for the six months ended June 30, 2015, a decrease of $1,374, or 14.43%. Interest expense pertains primarily to amounts due to affiliates as well as to our notes payable with third parties.

 

Capital Resources and Liquidity

As of June 30, 2016, we had $117,248 in cash and cash equivalents. Our cash outflows have consisted primarily of expenses associated with our operations. These outflows have been offset by the timely inflows of cash from our customers for sales that have been made. We have been able to utilize our relationships with affiliated entities to stabilize our liquidity needs.

 

We believe we can satisfy our cash requirements for the next twelve months only with our current cash and additional loans. However, completion of our plan of operation is subject to attaining adequate revenue. We cannot assure investors that adequate revenues will be generated. In the absence of our projected revenues, we may be unable to proceed with our plan of operations. Even without adequate revenues within the next twelve months, we still anticipate being able to continue with our present activities, but we will require financing to potentially achieve our growth goals.

 

In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we would likely seek additional financing to support the continued operation of our business.

 

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. Our management evaluated the effectiveness of our disclosure controls and procedures as of the end of our first fiscal quarter 2014 pursuant to Rule 13a-15(b) of the Securities and Exchange Act. Disclosure controls and procedures are controls and other procedures that are designed to ensure that 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 within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation, management concluded that our disclosure controls and procedures were effective as of June 30, 2016.

 

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our management team will continue to evaluate our internal control over financial reporting in 2015 as we implement our Sarbanes Oxley Act testing.

 

  16  

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

In the ordinary course of our business, we are, from time to time, subject to various legal proceedings, including matters involving employees, customers, and suppliers. We may enter into discussions regarding settlement of claims or lawsuits, and may enter into settlement agreements, if we believe settlement is in the best interest of our stockholders. We do not believe that any existing legal proceedings or settlements, individually or in the aggregate, will have a material effect on our financial condition, results of operations, or liquidity.

 

Item 1A. Risk Factors.

 

None.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None

 

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

 

None.

 

Item 5. Other Information.

 

None

 

Item 6. Exhibits and Reports of Form 8-K.

 

(a) Exhibits

 

31.1 Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002
   
32.1 Certifications pursuant to Section 906 of Sarbanes Oxley Act of 2002

 

(b) Reports of Form 8-K

 

None. 

 

Item 7. Up-dates and Clarifications to prior non-financial information

 

None.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  ENERGY & TECHNOLOGY, CORP.
   
Date: August 15, 2016 By: /s/ George M. Sfeir
    George M. Sfeir
   

Chief Executive Officer

 

 

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Energy and Technology (PK) (USOTC:ENGT)
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