UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-K

Amendment No. 1

 

(Mark One)

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

 

For The Fiscal Year Ended December 31, 2014

 

☐    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 Lafayette, LA 70503

Mail: P.O. Box 52523

Lafayette, LA 70505

(Address of Principal Executive Offices)

 

 

 

+1337- 984-2000

(Issuer Telephone number)

 

+1337- 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 if disclosure of delinquent filers pursuant to Item 405 of S-K (§229.405 of this chapter)  is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒ 

 

  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 ☒ 

 

As of June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates was approximately $1.85 million computed by reference to the price at which the common equity was last sold on the OTC (Other OTC) Capital Market. 

 

Number of the issuer’s Common Stock outstanding as of January 13, 2016: 165,548,766

 

Documents incorporated by reference: None. 

 

 

 

 

 

Explanatory Note

 

Energy & Technology Corp is filing the Amendment No. 1 on Form 10-K/A to amend our Annual Report on Form 10-K for the year ended December 31, 2014, originally filed with the Securities and Exchange Commission on April 15, 2015. Energy & Technology Corp’s previous auditors lost its PCAOB certification and the new auditors had to re-audit for two years which took a longer time.

 

 

 

 

TABLE OF CONTENTS

 

    PAGE
PART I    
ITEM 1. DESCRIPTION OF BUSINESS 3
ITEM 1A RISK FACTORS 4
ITEM 1B UNRESOLVED STAFF COMMENTS 5
ITEM 2. PROPERTIES 5
ITEM 3. LEGAL PROCEEDINGS 5
ITEM 4. MINE SAFETY DISCLOSURES 5
PART II    
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 5
ITEM 6. SELECTED FINANCIAL DATA 6
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 6
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 25
ITEM 9A. CONTROLS AND PROCEDURES 25
PART III    
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 26
ITEM 11. EXECUTIVE COMPENSATION 27
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 28
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 29
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 29
PART IV    
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 30
SIGNATURES    

 

 2 

 

 

PART I

 

ITEM 1. DESCRIPTION OF BUSINESS.

 

Technical Industries & Energy, Corp. (“TIE” or the “Company”) was founded in the State of Delaware on November 29, 2006. On January 3, 2007, we entered into a Stock Purchase and Share Exchange Agreement with Technical Industries, Inc., (“TII”) a Louisiana corporation founded May 11, 1971 whereby TII became our wholly owned operating subsidiary. On September 9, 2008 we changed our name to Energy & Technology Corp. The Company’s activities are directed towards manufacturing, reclamation of essential commodities, energy, technology, oil & gas equipment and products. We plan to expand our operations and may acquire other companies with services and products which complement existing services and products and offer our latest technology exploration in order to help energy companies reach deep energy reserves that present technology cannot reach, and increase opportunities for income, growth and financing. Our business offices are located at Petroleum Towers, Suite 530 P.O. Box 52523, Lafayette, LA, 70505. Our telephone number is (337) 984-2000.

 

We are headquartered in Lafayette, Louisiana with a branch office and production facilities in Houston, Texas and Abbeville Airport in Abbeville, Louisiana. We offer several services, which can be described as engineering, manufacturing, reclamation, sales, destructive, and non-destructive testing (“NDT”) and inspection services, storage, and maintenance for pipe and equipment utilized in the energy industry.

 

NDT is more fully described as the application of industry-wide and/or proprietary test methods to examine pipe and equipment utilized in the energy industry, or any object, material or system associated therewith, without impairing their future usefulness. An essential characteristic of NDT is that the examination process does not change the composition, shape, integrity or properties of the test object, thus allowing the object to be utilized for the purpose for which it was manufactured. The end result is less time involved in testing, lower costs, and less waste of materials than other forms of pipe inspection that require that the test object be destroyed.

 

Through our staff of industrial, electrical and computer engineers, we offer engineering services to assist our customers in the design, improvement, installation, and/or integration of NDT components and systems.  The services, which vary according to the needs of the customer, focus on design, layout, testing, and troubleshooting of NDT systems hardware and software.

 

We also manufacture our own proprietary ultrasonic NDT electronic equipment systems, which perform the NDT services including ultrasonic inspection, electromagnetic inspection, and others. The layout and design of the systems’ physical components are produced and tested by our engineers. Once the design has passed testing, the individual components are built into the design. Some of the components, such as the circuit boards, may be assembled by a third party before being incorporated into the design. Last, the final assembly is integrated with proprietary inspection software developed by our programmers.

 

Another component of our business consists of selling pipe and equipment used in exploration, drilling, and production of oil and gas.  The manufactured pipe and equipment is supplied to us by various steel mills in finished or unfinished form for us to process. Before the pipe and equipment is offered to our customers for sale, it must undergo further processing, such as blasting, threading, coating, and non-destructive testing inspection before being turned into a final product.  We sell oilfield pipe and equipment that has passed inspection and meets or exceeds API (American Petroleum Institute) and/or customer specifications.

 

Lastly, we provide manufacturing and reclamation including threading, machining of pipe and equipment, and ultrasonic pipe inspection technology. Services include full-length electromagnetic inspection for pipe and equipment utilized in the energy industry, and full length ultrasonic inspection systems for new and used pipe including drill stem, tubing, casing, and line pipe. We offer several different types of electromagnetic and ultrasonic inspection processes, each of which is tailored to the inspection of a particular pipe characteristic, such as size, length, wall thickness, ovality, or detection of a particular pipe defect. The type of process is determined by the customer according to their particular needs.

 

All of the pipe and equipment that enters our facilities are carefully documented and incorporated into our proprietary inventory tracking system, which is accessible to customers on the World Wide Web. Through this system, the customer is able to obtain real-time storage and inspection information on his pipe and equipment that is located at our facilities.

 

We operate year-round, 24 hours a day, seven days a week when needed, and the number of people employed averages 50.

 

Today, we continue to serve the energy industry by manufacturing and maintaining proprietary systems that detect and collect all available defects and wall thickness and outside diameter/ovality readings and store them in their proper position on the pipe, produce a three-dimensional image of the pipe, and allow the engineer to simulate burst, collapse, and pull apart the pipe on the computer prior to drilling. This helps energy companies reach reserves that otherwise cannot be reached with present technology. As a result of this advanced technology, the American Petroleum Institute (API) appointed Mr. George M. Sfeir, to serve on their 2008 committee for non-contact inspection. Technical Industries, Inc. developed US Patent No. 7,263,887 and international patent pending inspection technology needed in order to reach deep energy reserves present technology cannot reach. The U.S. patent is current until 2039.

 

 3 

 

 

We serve customers in Houston, Texas, Newfoundland, Canada, and Lafayette, Abbeville, Louisiana, the Rockies, and we plan on expanding to Saudi Arabia, Egypt, UAE, Mexico, and other parts of the World. Our customer base consists of oil companies, steel mills, material suppliers, drilling companies, material rental companies, and engineering companies. We provide basic NDT services as well as highly technical services requiring our patented technology for major companies’ critical projects including: BP Crazy Horse, ExxonMobil Alabama Bay and ExxonMobil Grand Canyon, Sakhalin Island and Caspian Sea, Texas A&M University Ocean Explorer, and Federal projects.

 

Additional services include full-length electromagnetic inspection for oil-field pipe and equipment and full length ultrasonic inspection systems for new and used tubing, casing and line-pipe, wet or dry Magnetic Particle Inspection ("MPI"); Dye Penetrant Testing ("PT"), or Ultrasonic Testing of the End Areas ("UT SEA") of plain end and threaded connections, including drill collars and drilling rig inspection; mill systems and mill surveillance; testing and consulting services. Today we continue to serve the energy industry niche by manufacturing and maintaining proprietary systems that are capable of detecting defects through the use of our patented technology.

 

ITEM 1A. RISK FACTORS

 

COMPETITORS MAY DEVELOP SIMILAR TECHNOLOGY OR PATENT SIMILAR TECHNOLOGY, AND MAKE THIS TECHNOLOGY AVAILABLE TO OUR CUSTOMERS.

 

Competitors may develop similar technology or similar patents and make the technology available to our current customers at a lower cost or on better contractual terms. If this were to occur, our customer base would be reduced which would in turn lower our revenues.

 

OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF GEORGE M. SFEIR. WITHOUT HIS CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS.

 

We are presently dependent to a great extent upon the experience, abilities, and continued services of George M. Sfeir, our Chief Executive Officer and director. We currently do not have an employment agreement with Mr. Sfeir. The loss of his services could have a material adverse effect on our business, financial condition, or results of operation.

 

GEORGE M. SFEIR HAS MAJORITY VOTING CONTROL OF OUR COMMON STOCK.

 

Mr. Sfeir and family members have the voting proxy for the majority of the voting stock of the Company.

 

WE ARE IN A HIGHLY COMPETITIVE MARKET AND WE ARE UNSURE AS TO WHETHER OR NOT THERE WILL BE ANY CONSUMER DEMAND FOR OUR PRODUCTS AND SERVICES.

 

Some of our competitors are much larger and better capitalized than we are. It may be possible that our competitors will better address the same market opportunities that we are addressing. These competitors, either alone or with collaborative partners, may succeed in developing business models that are more effective or have greater market success than our own. The Company is especially susceptible to larger manufacturers that invest more money in research and development. Moreover, the market for our products is large but highly competitive. There is little or no hard data that substantiates the demand for our products or how this demand will be segmented. It is possible that there will be low consumer demand for our products, or that interest in our products could decline or die out, which would cause us to be unable to sustain our operations.

 

We primarily serve the energy industry, which is a highly volatile and politically driven industry.  Significant decreases in oil prices or changes in the political landscape could adversely affect the demand for our products and services.

 

WHILE NO CURRENT LAWSUITS ARE FILED AGAINST THE COMPANY, THE POSSIBILITY EXISTS THAT A CLAIM OF SOME KIND MAY BE MADE IN THE FUTURE.

 

The Company has resolved several lawsuits, including one labor dispute, and prevailed in an oil rig equipment legal proceeding, and is in arbitration to settle a legal dispute. The possibility exists that additional claims of some kind may be made in the future.  While we will work to insure high product quality and accuracy in all marketing and labeling, no assurance can be given that some claims for damages will not arise. While we plan to properly insure ourselves with standard product liability insurance, there can be no assurance that this insurance will be adequate to cover litigation expenses and any awards to plaintiffs.

 

The types of claims that could be made against the Company consists primarily of product liability claims associated with a failure of pipe stem and oil country tubular products used for exploration.  The Company maintains general liability insurance of $6,000,000, including a $4,000,000 umbrella policy. 

 

 4 

 

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. DESCRIPTION OF PROPERTY.

 

We presently maintain our principal offices at Petroleum Towers, Suite 530 Lafayette, LA 70503, Mail: P.O. Box 52523, Lafayette, LA, 70505.  Our telephone number is (337) 984-2000.

 

Our main manufacturing, reclamation, inspection, and maintenance facility in Houston, Texas, consists of approximately 50 acres and includes a building capable of performing all inspection work in an environmentally protected area, and provides storage areas for pipe and equipment.

 

The Abbeville, Louisiana property is in the process of being purchased from the City of Abbeville. The facility consists of a building which houses the manufacturing, reclamation, testing, engineering, storage and maintenance and employs 12 people. Both facilities provide excellent year-round pipe and equipment storage, manufacturing, testing, and maintenance services.

 

ITEM 3. LEGAL PROCEEDINGS.

 

We are currently not involved in any litigation that we believe could have a materially 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 Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. Subsequently to year end, the company has resolved several legal proceedings that are discussed in Note 14. Subsequent Events.

 

ITEM 4. MINE SAFETY DISCLOURES.

 

None.

 

PART II

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

 

Market Information

A symbol was assigned for our securities so that our securities may be quoted for trading on the OTCBB under symbol ENGT. Minimal trading has occurred through the date of this Report.

 

The following table sets forth the high and low trade information for our common stock. The prices reflect inter-dealer quotations, do not include retail mark-ups, markdowns or commissions and do not necessarily reflect actual transactions.

 

Quarter ended  Low Price   High Price 
December 31, 2013  $0.30   $0.50 
March 31, 2014  $0.26   $0.50 
June 30, 2014  $0.26   $0.70 
September 30, 2014  $0.03   $1.15 
December 31, 2014  $0.76   $1.10 

 

Holders

As of December 31, 2014, in accordance with our transfer agent, Olde Monmouth’s, records, we had 174 Common Stock holders not including CEDE & Co.

 

Dividends

To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.

  

 5 

 

 

Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.

 

Stock Option Grants

To date, we have not granted any stock options.

 

Registration Rights

We have not granted registration rights to the selling shareholders or to any other persons.

 

ITEM 6. SELECTED FINANCIAL DATA.

 

Not required for a smaller reporting company.

 

ITEM  7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

 

General

 

We have a patented process which can help companies within the energy industry reach deep energy reserves other technology cannot. 

 

The following list highlights a few areas of opportunity to expand the Company's business:

 

Sales and marketing efforts: Although we have been impacted by the downturn in the national and global economies, we are now implementing an aggressive marketing and sales effort. We have hired a new sales team who are aggressively pursuing the market and have successfully recruited new clients and rejuvenated existing clients. Currently, we are focused on sales, marketing, and promotional activities for the Company. Management believes revenue can be increased by expanding the Company's sales force and organizing a marketing department in order to increase our market share.

 

Applying for additional patents to protect proprietary rights:  We have developed international patent-pending new inspection technology needed in order to reach deep energy reserves present technology cannot reach.  Our expandable inspection technology helps the companies in the energy industry retrieve a large amount of energy reserves that cannot be retrieved with current technology.  We have manufactured several pieces of equipment in-house that have enabled us to successfully serve the energy industry.  Due to proprietary infringement risk, we have discontinued manufacturing the equipment for sale to third parties.  By securing a patent protecting our proprietary technology, we could consider manufacturing equipment for sale again, which would open a new line of revenue.

 

Introduction of complementary services: We are continually adding new services in order to meet customer demand. Most recently, we began drilling equipment inspection services and added a manufacturing facility and pipe and equipment sales company. Other areas management has identified as potential growth avenues include vessel inspection and inspection of pipelines in service. In 2010, we opened our pipe threading facility containing threading equipment which can be attached to the inspection assembly line to provide additional services for a very low increased cost to our customers.

 

Geographic expansion in the domestic and international markets: We currently derive the majority of revenue from the Houston, Texas market, where many of our clients are based. There are several other markets that could be better served, such as in Louisiana where a new plant in Abbeville, Louisiana has been constructed in order to serve the deep wells in the Gulf of Mexico. This plant was ready for operations in 2008. Other expansions are being considered through the opening of additional full-service, local plants. Furthermore, we maintain relations with sales representatives in the Mexico, Saudi Arabia, Qatar, and Middle East markets that could be better utilized if we are able to locally serve customers. Lastly, we have Canadian customers that utilize our services on a limited basis, due to the high cost of shipping heavy pipes. To date, we have not had the capital or human resources to establish plants in these potential markets.

 

We continue to seek other companies which can complement essential commodities, energy, technology manufacturing, reclamation, pipe and inspection business with the goal of securing these businesses through a combination of cash and stock payments.  All of these expansion plans rely heavily on raising capital through a public offering of additional stock which would be used to fund our acquisitions. 

 

We have a customer base of over 150 accounts, and are continually expanding our customer base to increase revenue growth. Currently, we serve customers that are oil companies, steel mills, material suppliers, drilling companies, material rental companies and engineering companies. Our customer relationships average over ten years which provides us repeat business.

 

 6 

 

 

Critical Accounting Policies and Estimates

 

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

 

Revenue Recognition.  Revenue for Exploration Technologies is recognized upon completion of the services rendered.  Revenue for the sales of Drilling, OCTG, & Equipment is recognized when the product 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.

 

Inventory.  Inventory is stated at the lower of cost determined by the specific identification method or market.  At December 31, 2014 and 2013, 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.  Any impairment loss is measured as the difference between the carrying amount and the fair value of the impaired asset.

 

Estimates. We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. In doing so, we have to make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. In some cases, we could reasonably have used different accounting policies and estimates. In some cases changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate

these estimates on an ongoing basis.

 

Investments. We regularly review investment securities for impairment based on both quantitative and qualitative criteria that include the extent to which cost exceeds market value, the duration of that market decline, our intent and ability to hold to maturity or until forecasted recovery, and the financial health of and specific prospects for the issuer. We perform comprehensive market research and analysis and monitor market conditions to identify potential impairments.

 

Discussion of Changes in Financial Condition from December 31, 2013 to December 31, 2014

 

At December 31, 2014, total assets amounted to $5,923,599 compared to $7,878,457 at December 31, 2013, a decrease of $1,954,858, or 24.81%.  The decrease is primarily due to a decrease in the Company’s cash of $791,349, a decrease in property and equipment held for operations of $433,815, and a decrease in Net Accounts Receivable of $606,146. These decreases were partially offset by an increase in other assets of $87,684.

 

Our liabilities at December 31, 2014, totaled $8,877,082 compared to $5,315,551 at December 31, 2013, an increase of $3,561,531, or 67.00%.  The increase is primarily due to an increase in current notes payable of $3,587,342, an increase in accounts payable of $699,590, and an increase in rent of $20,000. These increases were partially offset by a decrease in due to affiliates of $629,091, a decrease in accrues liabilities of $22,747, and a decrease in income tax payable of $124,649.

 

Total stockholder’s equity decreased from $2,562,906 at December 31, 2013, to $(2,953,483) at December 31, 2014.  This decrease was due to net loss generated for the year ended December 31, 2014 of $1,560,793 and by the purchase of the Company’s common stock held in Treasury Stock in the amount of $3,955,596.

 

Cash and Cash Equivalents

 

The Company’s cash decreased from $1,875,188 at December 31, 2013, to $1,083,839 at December 31, 2014. The decrease in cash and cash equivalents was primarily due to the Company’s purchase of fixed assets and payment to reduce amounts owed to affiliates.

 

Inventory

 

We began purchasing pipe for sale to customers in late 2007.  This was an opportunity for us to expand our services to our customers.  Inventory of pipe at December 31, 2014 was $1,008,123 compared to $1,256,570 at December 31, 2013.  It is anticipated that the Company will continue its efforts to expand its sales of oilfield pipe. This decrease is primarily attributable to pipe sales.

 

 7 

 

 

Property and Equipment

 

The decrease in property and equipment of $433,815 is primarily due to depreciation of $868,802 at December 31, 2014 partially offset by the net purchase of equipment of $434,987.

 

Accounts Payable

 

Accounts payable at December 31, 2014 totaled $2,702,627 compared to $2,003,037 at December 31, 2013, an increase of $699,590. This increase is primarily attributable to the cost of a vendor’s pipe which was accrued as a liability when sold.

 

Common Stock Outstanding

 

On April 1, 2009, we entered into an agreement with our majority stockholders whereby the stockholders agreed to cancel 165,100,000 common shares, respectively, for the consideration to be re-issued in the future. In 2010, the Company re-issued 115,100,000 of those shares with 50,000,000 still owed to the stockholders. On December 30, 2009, we agreed to issue 5,580,000 shares of our common stock in exchange for the remaining balance due to a supplier of equipment to the Company, which totaled $3,935,217 at December 31, 2009. In 2011, the Company issued 256,900 shares to key managers and others who management felt were responsible for helping the company return to profitability. In 2012, the Company issued an additional 92,550 shares to key managers and others. In 2013, the Company issued an additional 41,167 shares to key managers and others in consideration for their help in returning the Company to profitability and purchased 20,270 shares of common stock now held in Treasury. In 2014, the company purchased 3,617,075 shares which are now held in treasury.

 

Discussion of Results of Operations for the Year Ended December 31, 2014 compared to the Year Ended December 31, 2013

 

Revenues

 

Our revenue for the year ended December 31, 2014, was $3,956,612 compared to $5,216,627 for the year ended December 31, 2013, a decrease of $1,260,015, or 24.15%.  The decrease is attributable primarily to the decrease in exploration technologies of $1,212,161, and a decrease in drilling, OCTG, & equipment sales which decreased $221,397 from $1,044,241 for the year ended December 31, 2013 to $822,844 for the year ended December 31, 2014. This decrease was a result of the industry’s market decline and increased market competition. 

 

The following table presents the composition of revenue for the year December 31, 2014 and 2013:

 

   2014   2013   Variance 
Revenue:   Dollars   Percentage   Dollars   Percentage   Dollars 
                     
Exploration Technologies  $1,281,077    32.4%  $2,493,238    47.8%  $(1,212,161)
Drilling, OCTG, & Equipment Sales  $822,844    20.8%  $1,044,241    20.0%  $(221,397)
Warehouse & Storage Fees  $435,400    11.0%  $437,592    8.4%  $(2,192)
Rebillable Income  $257,328    6.5%  $298,373    5.7%  $(41,045)
Manufacturing  $1,159,963    29.3%  $943,183    18.1%  $216,780 
Total Revenue  $3,956,612    100.0%  $5,216,627    100.0%  $(1,260,015)

 

Cost of Revenue and Gross Profit

 

Our cost of revenue for the year ended December 31, 2014, was $3,751,196, or 94.8% of revenues, compared to $3,654,980, or 70.1% of revenues, for the year ended December 31, 2013.  The overall increase in our cost of revenue is primarily due to the increase in Transportation Costs, which is included in the Other Costs of Revenue. The primary reason for the increase in cost of sales as a percentage of revenues was due to the decrease in inspection fees in relation to the amount of fixed costs included in our cost of revenue, such as depreciation on equipment and facilities, and insurance. Additionally, pipe is sold at a lower margin in relation to our service revenues.

 

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The following table presents the composition of cost of revenue for the year ended December 31, 2014 and 2013:

 

   2014   2013   Variance 
Cost of Revenue:  Dollars   Percentage   Dollars   Percentage   Dollars 
                     
Employee and Related Costs  $522,714    13.9%  $482,575    13.2%  $40,139 
Materials and Supplies   759,377    20.3%   1,089,814    29.9%  $(330,437)
Subcontract Labor   679,787    18.1%   823,462    22.5%  $(143,675)
Depreciation   749,869    20.0%   746,597    20.4%  $3,272 
Repairs and Maintenance   115,171    3.1%   98,435    2.7%  $16,736 
Insurance   157,926    4.2%   154,549    4.2%  $3,377 
Other Costs   766,352    20.4%   259,548    7.1%  $506,804 
Total Cost of Revenues  $3,751,196    100.0%  $3,654,980    100.0%  $96,216 

 

We have utilized the services of contractors to assist us as needed to provide timely and quality service to our customers.  We will continue our efforts to attract employees and retain qualified individuals to serve the needs of our customers.   The decrease in other materials and supplies is due primarily to the decrease in the sale of pipe.

 

Operating Expenses

 

For the year ended December 31, 2014, our operating expenses totaled $1,875,840, as compared to $2,977,757 in 2013, representing a decrease of $1,101,917, or 37.00%.  The largest component of our operating expenses for 2014 consists of salaries and wages, professional services, and other costs.  Salaries and wages for general and administrative personnel was $472,219 for the year ended December 31, 2014, compared to $540,264 for the year ended December 31, 2013, a decrease of $68,045, or 12.59%.  The decrease is attributable to the decrease in administrative pay pertaining to pipe sales.

 

Professional services expense increased from $442,755 for the year ended December 31, 2013, to $671,301 for the year ended December 31, 2014, an increase of $228,546, or 51.62%.  The increase is primarily a result of an increase in legal fees.

 

Other costs totaled $256,959 for the year ended December 31, 2014, as compared to $325,408 for the year ended December 31, 2013, a decrease of $68,449, or 21.03%.  Other costs for both the year ended December 31, 2014, and for the year ended December 31, 2013, pertain primarily to medical expense costs, property taxes, and marketing and advertising, among other costs associated to our operating expenses. 

 

Other Income and Expense

 

Other income and expense consists of investment income, gain or loss on sale of assets, and interest expense.  For the year ended December 31, 2014, other expense, net of other income, totaled $51,449, as compared to other expense, net of other income, totaled $70,642 for the year ended December 31, 2013. The decrease is attributable primarily to the decrease of interest expense.

 

Investment income, which consists of interest, dividends, realized gains and losses, and unrealized gains and losses, amounted to $13,226 for the year ended December 31, 2014, compared to investment income of $19,464 for the year ended December 31, 2013. For the year ended December 31, 2014, investment income consisted primarily of interest income of $13,159 and dividend income of $67.  At December 31, 2014, the investment account consisted solely of cash equivalents.

 

Interest expense totaled $64,461 for the year ended December 31, 2014, as compared to $160,106 for the year ended December 31, 2013, an increase of $95,645, or 59.74%.  Interest expense pertains primarily to amounts due to affiliates as well as to our notes payable with third parties.

 

Provision for income taxes

 

For the year ended December 31, 2014, we reported an income tax benefit of $161,080, compared to an income tax expense of $161,081, for the year ended December 31, 2013, which was attributable to the carry-back of the net operating loss for the year.

 

Capital Resources and Liquidity

 

At December 31, 2014, we had $1,083,839 in cash and cash equivalents. Our cash outflows have consisted primarily of expenses associated with continued operations.  Cash outflows for investing purposes have consisted primarily of the acquisition of equipment and other technology to better serve our customers.  Most of the costs of those acquisitions have been offset by the sale of excess equipment. Currently, we have been able to utilize our relationships with affiliated entities to stabilize our liquidity needs.

 

 9 

 

 

We believe we can satisfy our cash requirements for the next twelve months with our current cash and expected revenues. 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 may require financing to potentially achieve our growth goals.

 

The financial statements were prepared on a going concern basis. The going concern basis assumes that the company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. During the year ended December 31, 2014, the company had a net loss of $2,574,974, positive cash flow from operations of $664,210, and negative working capital of $6,196,025.

 

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.

 

Critical Accounting Policies

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk, and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

Our significant accounting policies are summarized in Note 2 of our consolidated financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that, given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position, or liquidity for the periods presented in this report.

 

Revenue Recognition

 

The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements and No. 104, Revenue Recognition.  In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability is reasonably assured.

 

Revenue for Exploration Technologies is recognized when persuasive evidence of an arrangement exists, services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

 

Revenue for manufacturing and threading services is recognized when persuasive evidence of an arrangement exist, services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

 

Revenue for Warehouse and Storage service is recognized at the beginning of the month when billed.

 

Revenue for the sales of Drilling, OCTG, & Equipment is recognized when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is reasonable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. The Company's pipe division sells pipe on trade accounts under terms common in the industry and the associated costs are included in cost of sales.

 

Recent Accounting Pronouncements

 

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

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

 

Item 7A.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

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

 

 10 

 

 

 

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

ENERGY & TECHNOLOGY, CORP.

 

Financial Statements

 

December 31, 2014 and 2013

 

Contents

 

 

Basic Financial Statements  
   
Audit Report 12
   
Consolidated Balance Sheets 13
   
Consolidated Statements of Operations 14
   
Consolidated Statements of Changes in stockholders’ Equity 15
   
Consolidated Statements of Cash Flows 16
   
Notes to Consolidated Financial Statements 17-24

 

 11 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of

Energy & Technology Corporation

Lafayette, Louisiana

 

We have audited the accompanying consolidated balance sheets of Energy & Technology Corporation and its subsidiary (collectively the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Energy & Technology Corporation and its subsidiary as of December 31, 2014 and 2013 and the results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, The Company has suffered recurring loss from operations and has a working capital deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

January 13, 2016

 

 12 

 

 

ENERGY & TECHNOLOGY, CORP.

Consolidated Balance Sheets

December 31, 2014 and 2013

 

   2014   2013 
       (Restated) 
Assets        
Current Assets        
Cash and Cash Equivalents  $1,083,839   $1,875,188 
Investments   58,490    4,393 
Accounts Receivable          
Trade, Net   304,691    910,837 
Inventory, Net   1,008,123    1,256,570 
Prepaid Expenses   20,291    37,173 
Other Current Assets   166,472    78,788 
           
Total Current Assets   2,641,906    4,162,949 
           
Property and Equipment, Net          
Held for Operations, Net   3,097,482    3,715,508 
Construction in Progress   184,211      
    3,281,693    3,715,508 
           
Total Assets  $5,923,599   $7,878,457 
           
Liabilities and Stockholders' Equity          
Current Liabilities          
Accounts Payable  $2,702,627   $2,003,037 
Accrued Liabilities   138,284    161,031 
Accrued Rent   1,957,500    1,937,500 
Current Maturities of Notes Payable   3,951,389    364,047 
Due to Affiliates   62,844    691,935 
Income Taxes Payable   25,287    149,936 
           
Total Current Liabilities   8,837,931    5,307,486 
           
Long-Term Liabilities          
Notes Payable   39,151    8,065 
           
Total Liabilities  $8,877,082   $5,315,551 
           
Stockholders' Equity          
Preferred Stock - $.001 Par Value; 10,000,000 Shares Authorized, None Issued   -    - 
Common Stock - $.001 Par Value; 250,000,000 Shares Authorized, 169,186,117 Shares and 169,186,117 shares Issued at December 31, 2014, and 2013, respectively   169,186    169,186 
Paid-In Capital   4,204,565    4,204,565 
Treasury Stock, at cost (20,276 and 3,637,351 Shares)   (4,076,441)   (120,845)
Retained Earnings   (3,250,793)   (1,690,000)
           
Total Stockholders' Equity   (2,953,483)   2,562,906 
           
Total Liabilities and Stockholders' Equity  $5,923,599   $7,878,457 

  

See Notes to Consolidated Financial Statements

 

 13 

 

 

ENERGY & TECHNOLOGY, CORP.

Consolidated Statements of Operations

For the Years Ended December 31, 2014 and 2013

 

   2014   2013 
         
Revenues  $3,956,612   $5,216,627 
Cost of Revenues          
Materials and Supplies   759,377    1,089,814 
Subcontract Labor   679,787    823,462 
Depreciation   749,869    746,597 
Employee and Related Costs   522,714    482,575 
Repairs and Maintenance   115,171    98,435 
Insurance   157,926    154,549 
Other Costs   766,352    259,548 
           
Total Cost of Revenues   3,751,196    3,654,980 
           
Gross Profit   205,416    1,561,647 
           
Operating Expenses          
Selling, General, and Administration   1,759,306    1,766,345 
Depreciation   118,933    144,906 
Loss on Inventory Valuation   -    1,052,478 
Bad Debts   (2,399)   14,028 
           
Total Operating Expenses   1,875,840    2,977,757 
           
Loss from Operations   (1,670,424)   (1,416,110)
           
Other Income (Expense)          
Gain (Loss) on Sale of Assets   (214)   70,000 
Interest Income   13,159    19,524 
Interest Expense   (64,461)   (160,106)
Other Income   67    (60)
           
Total Other Expense   (51,449)   (70,642)
           
Loss Before Provision for Income Taxes   (1,721,873)   (1,486,752)
           
Benefit for Income Taxes   (161,080)   161,081 
           
Net Income (Loss)  $(1,560,793)  $(1,647,833)
           
Loss per Share - Basic  $(0.01)  $(0.01)
           
Loss per Share – Diluted  $(0.01)  $(0.01)

 

See Notes to Consolidated Financial Statements

 

 14 

 

 

ENERGY & TECHNOLOGY CORP.

Consolidated Statements of Changes in Stockholders' Equity

For the Years Ended December 31, 2014 and 2013

 

           Additional       Total 
   Common Stock   Treasury Stock   Paid-In   Retained   Stockholders' 
   Shares   Amount   Shares   Amount   Capital   Earnings   Equity 
                             
Balance at January 1, 2013   169,144,950   $169,145        $-   $4,173,730   $(42,167)  $4,300,708 
                                    
Share buyback             (20,276)   (120,845)            $(120,845)
                                    
Bonus shares issued   41,167    41         -    30,835    -   $30,876 
                                    
Net (Loss)   -    -         -    -    (1,647,833)  $(1,647,833)
                                    
Balance at December 31, 2013   169,186,117   $169,186    (20,276)  $(120,845)  $4,204,565   $(1,690,000)  $2,562,906 
                                    
Balance at January 1, 2014   169,186,117   $169,186    (20,276)  $(120,845)  $4,204,565   $(1,690,000)  $2,562,906 
                                    
Share buyback   -    -    (3,617,075)   (3,955,596)   -    -   $(3,955,596)
                                    
Bonus shares issued   -    -    -    -    -    -   $- 
                                    
Net (Loss)   -    -    -    -    -    (1,560,793)  $(1,560,793)
                                    
Balance at December 31, 2014   169,186,117   $169,186   $(3,637,351)  $(4,076,441)  $4,204,565   $(3,250,793)  $(2,953,483)

 

See Notes to Consolidated Financial Statements

 

 15 

 

 

ENERGY & TECHNOLOGY, CORP.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2014 and 2013

 

   2014   2013 
Cash Flows from Operating Activities        
Net Loss  $(1,560,793)  $(1,647,833)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities          
Bad Debts   (2,399)   14,028 
Depreciation   868,802    891,503 
Gain Loss on sale of asset        (70,000)
Inventory Valuation        1,052,478 
Deferred Income Taxes          
Issuance of Stock as Bonus        30,876 
Changes in Assets and Liabilities          
Trade Receivables   608,545    (797,502)
Other Receivables   (87,684)     
Inventory   248,447    569,037 
Prepaid Expenses   16,882    63,100 
Accounts Payable   699,590    (169,694)
Accrued Payroll and Payroll Liabilities   (22,747)   123,574 
Income Taxes Payable   (124,649)   108,595 
Accrued Rent   20,000    150,000 
           
Net Cash Provided by Operating Activities   663,994    318,162 
           
Cash Flows from Investing Activities          
Decrease in Other Assets   (54,097)   1,051 
Other Receivable        (57,476)
Sale of Property and Equipment        70,000 
Purchase of Property and Equipment   (434,987)   (25,607)
           
Net Cash Provided by (Used in) Investing Activities   (489,084)   (12,032)
           
Cash Flows from Financing Activities          
Purchase of Treasury Stock   (20,379)   (120,845)
Borrowings (Principal Repayments) to Affiliates   (629,091)   (664,925)
Borrowings (Principal Repayments) on Notes Payable   (316,789)   (524,867)
           
Net Cash Provided by (Used in) Financing Activities   (966,259)   (1,310,637)
           
Net Increase (Decrease) in Cash and Cash Equivalents   (791,349)   (1,004,507)
           
Cash and Cash Equivalents, Beginning of Year   1,875,188    2,879,695 
           
Cash and Cash Equivalents, End of Year  $1,083,839   $1,875,188 
           
Supplemental Disclosure of Cash Flow Information          
Cash Paid During the Period for Interest  $64,462   $160,106 
           
Cash Paid During the Period for Income Taxes  $155,919   $47,978 
           
Non-Cash Investing and Financing Activity          
Transfer of Property for Reduction of Notes Payable   -   $1,095,583 
           
Issuance of Notes Payable to Purchase Treasury Stock  $3,935,217   $- 

 

See Notes to Consolidated Financial Statements

 

 16 

 

 

ENERGY &TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 1. Organization

 

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 the 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 Exploration Technologies is recognized when persuasive evidence of an arrangement exist, services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

 

Revenue for manufacturing services is recognized when persuasive evidence of an arrangement exist, services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

 

Revenue for Warehouse & Storage Fees is recognized at the beginning of the month when billed.

 

 17 

 

 

ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 2. Summary of Significant Accounting Policies (Continued)

 

Revenue for the sales of pipe is recognized when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is reasonable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. The Company's pipe division sells pipe on trade accounts under terms common in the industry and

the associated costs are included in cost of sales.

 

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 $9,035 for the years ended December 31, 2014 and 2013 respectively.

 

Inventory

Inventories are stated at the lower of cost or market. The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to Loss on Inventory Valuation under Operating Expenses. In the year ended December 31, 2013, the company experienced total write-downs of $1,052,478 attributable to the decline in the oil industry. At December 31, 2014 and 2013, 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 December 31, 2014, the balance due from two customers represented 49% of receivables, and sales to those two customers represented 54% of revenues for the year ended December 31, 2014

 

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 $32,264 and $34,455, for the year ended December 31, 2014 and 2013, 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

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.

 

 18 

 

 

ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 2. Summary of Significant Accounting Policies (Continued)

  

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.

 

Going Concern

The company is considered to be in the oil industry. Because of the recent downturn of the market, the financial statements were prepared on a going concern basis. The going concern basis assumes that the company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. During the year ended December 31, 2014, the company had a net loss of $2,574,974, positive cash flow from operations of $664,210, and negative working capital of $6,196,025. Given the company maintained positive cash flow from operations, it believes that it will have sufficient capital to operate over the next 12 months.

 

Historically, the company has had operating losses, negative cash flow from operations, and working capital deficiencies. Whether, and when, the company can attain profitability and positive working capital is uncertain. The company is also uncertain whether it can obtain funding to continue operations. These uncertainties cast significant doubt upon the company’s ability to continue as a going concern.

 

The company will need to raise capital in order to fund its operation. This need may be adversely impacted by uncertain market conditions and approval by regulatory bodies. To address its financing requirements, the company will seek financing from related parties, equity financing and asset sales. The outcome of these matters cannot be predicted at this time.

 

Patents

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. GAAP requires that internally created Patents be expensed as incurred instead of amortized. Our current year auditors’ correction reflects a prior year inappropriate Patent capitalization.

 

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. Restatement

 

The Company has restated its previously issued Consolidated Statements of Operations and Balance Sheets for the years ended December 31, 2012 and 2013. Most significantly, the company restated the reporting of Inventory Valuation, Patent Amortization, Deferred Tax Asset and Liability, and Depreciation.

 

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ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 3. Restatement (Continued)

  

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. GAAP requires that internally created Patents be expensed as incurred instead of amortized. Our current year auditors’ correction reflects a prior year inappropriate Patent capitalization.

 

The Company implemented new inventory valuation methods, processes and controls in the fourth quarter of 2014 that resulted in a material difference in the carrying value of its inventories. The Company has now preliminarily established the estimated impact of the inventory valuation adjustments on these prior periods. Due to the size of these adjustments, management has determined them to be material errors requiring restatements. The company has pushed back the loss of inventory valuation from year ending December 31, 2014 to year ending December 31, 2013 to properly reflect the value of inventory for 2013.

 

Restatement of the Deferred Tax Asset and Deferred Tax Liability accounts occurred due to the fact that a valuation allowance for a deferred tax asset is required if, based on the weight of available evidence, there is more than a 50% likelihood that some portion, or all, of the deferred tax asset will not be realized. The realizability of deferred tax assets depends on the existence of sufficient taxable income of the appropriate character in either the carryback or carryforward period under the tax law. Audit findings for 2014 resulted in the write-off of Deferred Tax Assets and Deferred Tax Liabilities to conform to the likelihood that they will potentially not be realized due to the estimated existence of insufficient taxable income in the future.

 

Depreciation had been restated to account for the error in depreciation method used. Audit findings for 2014 resulted in indentifying the use of an accelerated depreciation instead of using Straight-line for depreciation. This error was corrected in year ended December 31, 2013.

 

The following table summarizes the corrections on each of the affected financial statement line items for each period presented:

 

     As Previously Reported (1)   Restatement Adjustment   As Restated 
  For the year ended December 31, 2012            
  Deferred Tax Asset   875,441    (875,441)   - 
  Patents, Net   433,136    (433,136)   - 
  Deferred Taxes Payable   (811,025)   811,025    - 
  Amortization   28,786    (28,786)   - 
  Selling, General and Administrative   1,737,849    461,918    2,199,767 
  Benefit for Income Tax   (144,115)   64,416    (79,699)
                  
  For the year ended December 31, 2013               
  Accounts Receivable, Trade Net   1,029,761    (118,924)   910,837 
  Inventory, Net   2,309,048    (1,052,478)   1,256,570 
  Deferred Tax Asset   962,436    (962,436)   - 
  Held for Operations, Net   3,650,236    65,272    3,715,508 
  Patents, Net   409,539    (409,539)   - 
  Accounts Payable   2,109,713    (106,676)   2,003,037 
  Accrued Liabilities   54,357    106,674    161,031 
  Deferred Taxes Payable   604,271    (604,271)   - 
  Paid-In Capital   4,181,922    22,643    4,204,565 
  Revenue   5,440,621    (223,994)   5,216,627 
  Cost of Revenue   3,399,892    255,088    3,654,980 
  Selling, General and Administrative   1,953,834    (187,489)   1,766,345 
  Depreciation   382,031    (237,125)   144,906 
  Loss on Inventory Valuation   -    1,052,478    1,052,478 
  Benefit for Income Tax   (132,668)   293,749    161,081 

 

(1)Includes certain reclassification to conform to the current presentation

 20 

 

 

ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 4.  Property and Equipment

 

     2014   2013 
           
  Buildings and Improvements  $3,042,385   $3,042,385 
  Equipment   5,827,229    5,626,649 
  Autos and Trucks   304,495    255,894 
  Office Furniture   32,657    32,657 
  Construction in Progress   184,211      
      9,390,977    8,957,585 
  Less: Accumulated Depreciation   -6,109,284    -5,242,077 
  Total  $3,281,693   $3,715,508 

 

Depreciation expense amounted to $868,802 and $891,503 for the period ended December 31, 2014 and 2013, respectively.

 

During 2013, Property and Equipment held for investment were transferred for a reduction of Notes Payable, specifically Due to Affiliates, in the amount of $1,095,583. During 2014, the company purchased equipment in the amount of $435,203 and disposed of equipment resulting in decrease in Accumulated Depreciation of $1,595 and a loss of $214.

 

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 December 31, 2013 and December 31, 2014 the total owed is $1,937,500 and $1,957,200, 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 December 31, 2014 and 2013, is $62,844 and $691,935 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 $55,355 and $135,060 for the years ended December 31, 2014 and 2013, respectively.

 

Note 6. Notes Payable

 

Notes payable at December 31, 2014 and December 31, 2013 consist of the following:

 

     2014   2013 
  Secured fixed term note of $213,226 due October 2014; fixed interest rate of 5.98%       $27,241 
  Secured fixed term note of $340,990 due December 2014; fixed interest rate of 5.93%        63,525 
  Secured fixed term note of $260,000 due May 2015; fixed interest rate of 5.4%        66,554 
  Secured fixed term note of $60,303 due November 2015; fixed interest rate of 2.9%   4,248    18,312 
  Secured fixed term note of $23,968 due February 2016; fixed interest rate of 6.0%   3,801    9,397 
  Secured fixed term note of $449,000 due October 2014; fixed interest rate of 0.0%        187,083 
  Secured fixed term note of $48,601.50 due November 2020; fixed interest rate of 3.39%   47,274      
  Unsecured variable term note of $3,935,217 due on demand; fixed consulting fee of 4.0%   3,935,217      
  Secured fixed term note of $96,213 August 2013; fixed interest rate of 7.95%          
     $3,990,540   $372,112 
  Less: Current Portion   3,951,389    364,047 
  Long-Term Portion  $39,151   $8,065 

 

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ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 6. Notes Payable (Continued)

 

Following are maturities of long-term debt at December 31, 2014:

 

  Fiscal Year Ending December 31,  Amount 
  2016  $20,521 
  2017   18,630 
  Total  $39,151 

 

Note 7.  Income Taxes

 

For the year ended December 31, 2014, the Company reported an income tax benefit of $161,080 compared to income tax expense of $161,081 for the year ended December 31, 2013. This was the result of our net operating loss carry-back.

 

The provision for income taxes for 2014 and 2013 consist of the following:

 

     2014   2013 
  Current - Federal     $(161,080)  $161,081 
  Current - State        -    - 
  Deferred - Federal      -    - 
  Deferred - State        -    - 
  Provision for Income Taxes   $(161,080)  $161,081 

 

A reconciliation of income tax expense at the federal statutory rate to the Company’s actual income tax expense at December 31, 2013 and 2012 follows:

 

     2014   2013 
  Tax (Benefit) Expense Provsion at Expected Federal Statutory Rate of 34%   $(161,080)  $161,081 
             
  Deferred State Taxes and Adjustment of State Income Tax Allocation    -    - 
             
  Income Tax (Benefit) Expense  $(161,080)  $161,081 

 

Note 8. 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 165,548,766 and 169,165,841 as of December 31, 2014 and December 31, 2013 respectively.

 

The Company is authorized to issue 10,000,000 shares of preferred stock. As of December 31, 2014 and December 31, 2013, there were no shares issued and outstanding.

 

In 2013, the company issued a total of 41,167 shares of common stock valued at an average of $0.749 a share to employees as compensation. The company also purchased 20,270 shares of common stock now held in Treasury for $120,845. In 2014, the company issued an unsecured variable term note of $3,935,217 to purchase 3,580,000 shares of common stock which now is in Treasury. The company also purchased 37,075 shares of common stock for $20,379. These shares are also held in Treasury.

 

Note 9. 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 December 31, 2014, therefore basic earnings per share equals diluted earnings per share for the year ended December 31, 2014. As the Company incurred a net loss during the year ended December 31, 2014, the basic and diluted loss per common share is the same amount, as any common stock equivalents would be considered anti-dilutive.

 

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ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 9. Earnings per Share (Continued)

 

As the Company incurred a net loss during the year ended December 31, 2013, 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 168,332,363, and 169,149,947 for the years ended December 31, 2014 and 2013, respectively.

 

Note 10. 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. Rent expense for the year ended December 31, 2014 and 2013 was $209,860, and $219,798, respectively.

 

Minimum future rental payments under operating leases having remaining terms in excess of one year as of December 31, 2014 are as follows:

 

  2015   6,000 
  2016   6,000 
  2017   6,000 
  2018   6,000 
  Thereafter   70,500 
  Total  $94,500 

 

Note 11. Litigation and Contingent Liabilities

 

The Company is currently involved in litigation with a supplier regarding a contract agreement for the Company to serve as a distributor for the suppliers products. Because it is probable that the Company will be unsuccessful in defending its position, the Company has recorded a liability of $2,252,936 for net proceeds due the supplier from sales of its product.

 

Note 12. Major Customers

 

For the year ended December 31, 2014, the Company had two customers which generated revenues in excess of 10% of the Company’s total revenues. Revenues for these two customers were approximately 54% of total revenues, and total balance due from these two customers at December 31, 2014 was $151,582. For the year ended December 31, 2013, the Company had two customers for which revenue generated from the customer amounted to approximately 59% of the Company’s total revenue. At December 31, 2013, these customers had a trade receivable balance of $802,583

 

Note 13. 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.

 

     December 31, 
     2014   2013 
     Carrying   Fair   Carrying   Fair 
     Amount   Value   Amount   Value 
  Financial Assets                
  Investments  $58,490   $58,490   $4,393   $4,393 
                       
     $58,490   $58,490   $4,393   $4,393 

 

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

 

Investments: The carrying amount reported in the balance sheet approximates fair value.

 

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ENERGY & TECHNOLOGY, CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

 

Note 14. 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 December 31, 2014. In preparing these financial statements, the Company evaluated the events and transactions through the date these financial statements were issued. The following events should be noted:

 

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 the first quarter of 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 Settlement of $2,252,936.

 

The Company was involved in arbitration with an Insurance company regarding coverage of an insurance claim but has since been settled in the second quarter of 2015. The Company has recorded Income from Settlement of $150,000.

 

The Company was involved in a legal dispute concerning the use of land being used under a lease. A Related Party has purchased the property and all legal disputes have been dropped.

 

 24 

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

Our accountant was The Hall Group. The Hall Group lost its PCAOB certification which required the company to find new auditors. Our accountant is now MaloneBailey,LLP. We do not presently intend to change accountants. At no time have there been any disagreements with such accountants regarding any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures  

 

As of the end of the period covered by this Annual Report, under the supervision and with the participation of management, including our Chief Executive Officer and principal financial officer, we conducted an evaluation of the Company’s disclosure controls and procedures. As defined by Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act), the term “disclosure controls and procedures” means our controls and other procedures that are designed to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by 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 in the reports we file or submit under the Exchange Act is accumulated and communicated to our Company’s management, including Certifying Officers, to allow timely decisions regarding required disclosure. Based on this evaluation, we have concluded that our disclosure controls and procedures were ineffective as of December 31, 2014.

 

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

Our management is also responsible for establishing ICFR as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act. Our ICFR are intended to be designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our ICFR are expected to include those policies and procedures that management believes are necessary that:

 

(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
   
(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and our directors; and
   
(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect of financial statement preparation and may not prevent or detect misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

 

An internal control material weakness is a significant deficiency, or aggregation of deficiencies, that does not reduce to a relatively low level the risk that material misstatements in financial statements will be prevented or detected on a timely basis by employees in the normal course of their work. An internal control significant deficiency, or aggregation of deficiencies, is one that could result in a misstatement of the financial statements that is more than inconsequential.

 

The management of Energy & Technology Corp. assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2014, and this assessment identified the following material weakness in the company’s internal control over financial reporting.

 

●Restatement of previously issued financial statements to reflect the correction of a material misstatement. The correction of a misstatement includes restating Amortization of Patents, Depreciation Expense, and Deferred Tax Asset and Liability.
   
●Identification by the auditor of a material misstatement in the financial statements for the period under audit that was not initially identified by the entity’s internal control. This includes misstatements involving estimation and judgment for which the auditor identifies likely material adjustments and corrections of the recorded amounts regarding restating Amortization of Patents, Depreciation Expense, and Deferred Tax Asset and Liability.

 

Management has relied on external accounting firms and previous audit reports in determining accurate adjustments and corrections of financial statements. The Company has since hired a new Auditing firm and new external accounting firm to consult with in preparing financial statements in accordance with generally accepted accounting principles.

 

 25 

 

 

As of December 31, 2014, management assessed the effectiveness of our internal control over financial reporting (ICFR) based on the criteria for effective ICFR established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments by smaller reporting companies and non-accelerated filers. Because of the material weakness described in the preceding paragraph, management believes that, as of December 31, 2014, the company’s internal control over financial reporting was not effective based on those criteria.

 

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

 

Changes in internal controls

 

There have been no changes in our internal control over financial reporting that occurred during our fiscal quarter ended June 30, 2015 that have materially affected, or are likely to materially affect, our internal control over financial reporting.

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

 

Our executive officer’s and director’s and their respective ages as of December 31, 2014 are as follows:

 

NAME  AGE   POSITION
        
George Sfeir   58   President, Chief Executive Officer, Chief Financial Officer and Director
Edmund J. Baudoin, Jr.   58   Treasurer

 

Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.

 

George M. Sfeir is a 1972 graduate of Saint George College (Lebanon) and the University of Louisiana at Lafayette, Louisiana in general & legal studies.  He has worked in the oil and gas industry since May 1972.  He has worked for companies throughout the Middle East, North and South America, and Africa doing inspections on oil and gas fields.  Mr. Sfeir is fluent in English, French, Arabic, Spanish, and Italian.  Mr. Sfeir has worked with Technical Industries, Inc. as a consultant since January of 1980 and as CEO since 1998.

 

Edmund J. Baudoin, Jr., is a 1979 graduate of the University of Southwestern Louisiana where he earned a B.S. in Business Administration.  After graduation, Mr. Baudoin joined Technical Industries, Inc. and served as Vice President before resigning in 1999 to perform title research and abstracting work as a Landman, before rejoining Technical Industries, Inc. in 2009.  Mr. Baudoin has over 32 years of experience in the oilfield industry.  He currently serves as Administrator of Technical Industries, Inc., and was appointed Treasurer of the Company on August 29, 2009.

 

Amer Salhi was born in The Kingdom of Saudi Arabia. He attended Hashemite University of the Kingdom of Jordan 2002 to 2006, and received his Bachelor’s degree in Business Administration. Following graduation, Mr. Salhi enrolled at the Southeastern Louisiana University in Hammond Louisiana and received his MBA minor in accounting in December 2009. Mr. Salhi joined Energy & Technology, Corp. October of 2010, where he served in the capacity as Accountant. He was appointed C.F.O and Secretary of the company on April 12, 2011. Amer Salhi resigned his post, for personal reasons, after the completion of the 2013 audit and George M. Sfeir has filled his position.

 

Term of Office

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board

  

Compliance With Section 16(A) Of The Exchange Act.

 

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and are required to furnish copies to the Company. To the best of the Company’s knowledge, any reports required to be filed were timely filed in fiscal year ended December 31, 2014.

 

 26 

 

 

Code of Ethics

 

The Company has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief Financial Officer. This Code of Ethics is incorporated by reference to Form 10-K filed on March 30, 2009.

 

ITEM 11. EXECUTIVE COMPENSATION

 

The table below summarizes all compensation awarded to, earned by, or paid to our executive officers by any person for all services rendered in all capacities to us from the date of our inception until the fiscal year ended December 31, 2014 and 2013. The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended December 31, 2014, and 2013 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO): 

 

SUMMARY COMPENSATION TABLE

 

Name and Principal     Salary   Bonus   Stock
Awards		   Option Awards   Non-Equity Incentive Plan Compensation   Non-Qualified Deferred Compensation   All Other Compensation  Totals 
Position  Year   ($)   ($)   ($)   ($)   ($)   ($)   ($)   ($) 
George Sfeir, President, Chief Executive Officer   2014    120,640    0    0    0    0    0    0    120,640 
and Director   2013    92,800    0    0    0    0    0    0    92,800 
                                              
Amer Salhi,   2014    0    0    0    0    0    0    0    0 
Chief Financial Officer  and Secretary   2013    52,400    300    0    0    0    0    0    52,700 
                                              
Edmund J. Baudoin, Jr.,   2014    60,320    200    0    0    0    0    0    60,520 
Treasurer   2013    59,544    416    0    0    0    0    0    59,960 

 

Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officer named in the Summary Compensation Table through December 31, 2014.

 

Aggregated Option Exercises and Fiscal Year-End Option Value Table. There were no stock options exercised during period ending December 31, 2014 by the executive officer named in the Summary Compensation Table.

 

Long-Term Incentive Plan (“LTIP”) Awards Table. There were no awards made to a named executive officer in the last completed fiscal year under any LTIP

 

Compensation of Directors

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

 

Employment Agreements

We do not have any employment agreements in place with our officers or directors.

 

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of December 31, 2014 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly.

 

   Name and Address  Amount and Nature   Percent of
Title of Class  of Beneficial Owner  of Beneficial Owner   Class (1)
           
Common Stock  American Interest, LLC (2)   149,146,255   90.1%
Restricted  Petroleum Towers, Suite 530        
   P.O. Box 52523        
   Lafayette, LA 70505        
            
Common Stock  Sfeir Family Trust (2)   13,732,500   8.3%
Restricted  Petroleum Towers, Suite 530        
   P.O. Box 52523        
   Lafayette, LA 70505        
            
Common Stock  Edmund J. Baudoin, Jr.   3,000   Less than 1%
Restricted  Petroleum Towers, Suite 530        
   P.O. Box 52523        
   Lafayette, LA 70505        
            
Common Stock  George Sfeir   5,000   Less than 1%
Restricted  Petroleum Towers, Suite 530        
   P.O. Box 52523        
   Lafayette, LA 70505        
            
Common Stock  All executive officers   8,000   Less than 1%
Restricted  and directors as a group        

 

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS

 

In November of 2006, we issued 125,000,000 restricted shares of common stock to American Interest, LLC (controlled by George Sfeir) for founder services rendered pursuant to the exemption from registration set forth in section 4(2) of the Securities Act of 1933.  

 

On January 3, 2007 we entered into a Stock Purchase and Share Exchange agreement with TII, whereby TII became our wholly owned subsidiary.  We exchanged 50,000,000 restricted shares of common stock for all the issued and outstanding shares of TII.  Mr. George Sfeir was the sole shareholder of TII.

 

On June 17, 2009, American Interests, LLC and the Sfeir Family Trust agreed to cancel 165,100,000 shares of stock, effectively reducing the total shares outstanding to 10,000,000.

 

Subsequently, on December 17, 2009, the directors of the Company authorized a 5 for 1 stock split effective for shareholders of record dated January 15, 2010, raising the total issued and outstanding shares to 50,000,000.

 

The Company’s management negotiated a settlement whereby it issued 3,580,000 shares of stock in exchange for allowing the Company to return $3,300,500 of equipment ordered and cancellation of debt in the amount of $3,935,217, which represented the balance owed on equipment for the Abbeville facility.

 

On March 11, 2010, the Company issued 88,000 shares to 93 employees, advisors, and supporters for services rendered

 

On August 23, 2010 the Company reissued 115,100,000 shares to American Interest, LLC as per the cancellation agreement.

 

On October 6, 2010 the Company issued 50,000 shares to Globex transfer as part of a Service Agreement. Those shares were later returned and cancelled as no services were rendered.

 

 28 

 

 

On December 7, 2010 the Company issued 500 shares each to the 12 members of its Advisory Board for services rendered.

 

On January 19, 2011 the Company issued 100,000 shares as compensation to Mirador Consulting for services subsequently never rendered. Those shares are under litigation.

 

On January 14, 2011 the Company issued 14,000 shares as bonuses to key employees.

 

On April 25, 2011 the Company issued 54,400 shares as compensation for loss in value of shares.

 

On September 23, 2011 the Company issued 88,500 shares as bonuses to employees, advisors, and supporters for services rendered.

 

On August 20, 2012 the Company issued 92,550 shares as bonuses to employees, advisors, and supporters for services rendered.

 

On July 11, 2013, the Company issued 41,167 shares as bonuses to employees and compensation to supporters for services rendered.

 

Stock Option Grants

 

We have not granted any stock options to our executive officer since our incorporation. 

  

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR INDEPENDENCE 

 

None.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Audit Fees

 

This category includes the aggregate fees billed for professional services rendered for the audits of our financial statements for fiscal years 2014 and 2013, for the reviews of the financial statements included in our reports on Form 10-Q, and for services that are normally provided by the independent auditors in connection with statutory and regulatory filings or engagements for the relevant fiscal years.  Audit fees pertaining to services provided to the Company for the fiscal years ended December 31, 2014 and 2013, amount to $43,355 and $42,781, respectively.

 

Audit Related Fees

 

There were no fees for audit related services for the years ended December 31, 2014 and 2013.

 

 29 

 

 

Tax Fees

 

For the Company’s fiscal years ended December 31, 2014 and 2013, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2014 and 2013.

 

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.

 

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

-approved by our audit committee; or

 

-entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular  service,  the  audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

 

The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees was pre-approved.  However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

a) Documents filed as part of this Annual Report

 

1. Consolidated Financial Statements

 

2. Financial Statement Schedules

 

3. Exhibits

 

31.1 Certification of President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

32.1 Certification of President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 30 

 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

ENERGY & TECHNOLOGY CORP.  
   
Dated: January 13, 2016  
     
By /s/ George M. Sfeir   
  George M. Sfeir,  
  President,  
  Chief Executive Officer,  
  Chief Financial Officer  

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature   Title   Date
         
/s/ George M. Sfeir   President,  

January 13, 2016

George M. Sfeir  

Chief Executive Officer,

Chief Financial Officer,

Principal Accounting Officer

    

 

 

 

 

31

 



Exhibit 31.1

 

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER 

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, George M. Sfeir, certify that:

 

1. I have reviewed this Form 10-K of Energy & Technology Corp.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrantas of, and for, the periods present in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
   
  a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
     
  c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   
  a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  ENERGY & TECHNOLOGY CORP.
   
Date: January 13, 2016 By: /s/ George M. Sfeir
    George M. Sfeir
   

President, Chief Executive Officer,

Chief Financial Officer, and Director

 



Exhibit 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

 

In connection with this Annual Report of Energy and Technology, Corp. (the “Company”) on Form 10-K for the period ending December 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George M. Sfeir, Chief Executive Officer and Chief Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.

Such Annual Report on Form 10-K for the period ending December 31, 2014, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

   
2. The information contained in such Annual Report on Form 10-K for the period ending December 31, 2014, fairly presents, in all material respects, the financial condition and results of operations of Energy and Technology, Corp.

 

By: /s/ George M. Sfeir  
  George M. Sfeir  
 

President, Chief Executive Officer,

Chief Financial Officer, and Director

  

 

January 13, 2016

 



v3.3.1.900
Document and Entity Information - USD ($)
 12 Months Ended
Dec. 31, 2014
Jan. 13, 2016
Jun. 30, 2014
Document and Entity Information [Abstract]      
Entity Registrant Name ENERGY & TECHNOLOGY CORP.    
Entity Central Index Key 0001432963    
Amendment Flag true    
Amendment Description

Explanatory Note

 

Energy & Technology Corp is filing the Amendment No. 1 on Form 10-K/A to amend our Annual Report on Form 10-K for the year ended December 31, 2014, originally filed with the Securities and Exchange Commission on April 15, 2015. Energy & Technology Corp’s previous auditors lost its PCAOB certification and the new auditors had to re-audit for two years which took a longer time.

    
Current Fiscal Year End Date --12-31    
Document Type 10-K    
Document Period End Date Dec. 31, 2014    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2014    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Smaller Reporting Company    
Entity Public Float     $ 0
Entity Common Stock, Shares Outstanding   165,548,766  


v3.3.1.900
Consolidated Balance Sheets - USD ($)
Dec. 31, 2014
Dec. 31, 2013
Current Assets    
Cash and Cash Equivalents $ 1,083,839 $ 1,875,188
Investments 58,490 4,393
Accounts Receivable    
Trade, Net 304,691 910,837
Inventory, Net 1,008,123 1,256,570
Prepaid Expenses 20,291 37,173
Other Current Assets 166,472 78,788
Total Current Assets 2,641,906 4,162,949
Property and Equipment, Net    
Held for Operations, Net 3,097,482 $ 3,715,508
Construction in Progress 184,211
Total Property and Equipment 3,281,693 $ 3,715,508
Total Assets 5,923,599 7,878,457
Current Liabilities    
Accounts Payable 2,702,627 2,003,037
Accrued Liabilities 138,284 161,031
Accrued Rent 1,957,500 1,937,500
Current Maturities of Notes Payable 3,951,389 364,047
Due to Affiliates 62,844 691,935
Income Taxes Payable 25,287 149,936
Total Current Liabilities 8,837,931 5,307,486
Long-Term Liabilities    
Notes Payable 39,151 8,065
Total Liabilities $ 8,877,082 $ 5,315,551
Stockholders' Equity    
Preferred Stock - $.001 Par Value; 10,000,000 Shares Authorized, None Issued
Common Stock - $.001 Par Value; 250,000,000 Shares Authorized, 169,186,117 Shares and 169,186,117 shares Issued at December 31, 2014, and 2013, respectively $ 169,186 $ 169,186
Paid-In Capital 4,204,565 4,204,565
Treasury Stock, at cost (20,276 and 3,637,351 Shares) (4,076,441) (120,845)
Retained Earnings (3,250,793) (1,690,000)
Total Stockholders' Equity (2,953,483) 2,562,906
Total Liabilities and Stockholders' Equity $ 5,923,599 $ 7,878,457


v3.3.1.900
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2014
Dec. 31, 2013
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 250,000,000 250,000,000
Common stock, shares issued 169,186,117 169,186,117
Treasury Stock, at cost shares 20,276 3,637,351


v3.3.1.900
Consolidated Statements of Operations - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Income Statement [Abstract]    
Revenue $ 3,956,612 $ 5,216,627
Cost of Revenues    
Materials and Supplies 759,377 1,089,814
Subcontract Labor 679,787 823,462
Depreciation 749,869 746,597
Employee and Related Costs 522,714 482,575
Repairs and Maintenance 115,171 98,435
Insurance 157,926 154,549
Other Costs 766,352 259,548
Total Cost of Revenues 3,751,196 3,654,980
Gross Profit 205,416 1,561,647
Operating Expenses    
Selling, General, and Administration 1,759,306 1,766,345
Depreciation $ 118,933 144,906
Loss on Inventory Valuation 1,052,478
Bad Debts $ (2,399) 14,028
Total Operating Expenses 1,875,840 2,977,757
Loss from Operations (1,670,424) (1,416,110)
Other Income (Expense)    
Gain (Loss) on Sale of Assets (214) 70,000
Interest Income 13,159 19,524
Interest Expense (64,461) (160,106)
Other Income 67 (60)
Total Other (Expense) (51,449) (70,642)
Loss Before Provision for Income Taxes (1,721,873) (1,486,752)
Benefit for Income Tax (161,080) 161,081
Net Income (Loss) $ (1,560,793) $ (1,647,833)
Loss per Share - Basic $ (0.01) $ (0.01)
Loss per Share - Diluted $ (0.01) $ (0.01)


v3.3.1.900
Consolidated Statements of Changes in Stockholders' Equity - USD ($)
Total
Common Stock
Treasury Stock
Additional Paid-in Capital
Retained Earnings
Beginning Balance at Dec. 31, 2012 $ 4,300,708 $ 169,145 $ 4,173,730 $ (42,167)
Beginning Balance, shares at Dec. 31, 2012   169,144,950    
Share buyback (120,845) $ (120,845)
Share buyback, shares   (20,276)    
Bonus shares issued 30,876 $ 41 $ 30,835
Bonus shares issued, shares   41,167      
Net (Loss) (1,647,833) $ (1,647,833)
Balance at Dec. 31, 2013 2,562,906 $ 169,186 $ (120,845) $ 4,204,565 $ (1,690,000)
Balance, shares at Dec. 31, 2013   169,186,117 (20,276)    
Share buyback $ (3,955,596) $ (3,955,596)
Share buyback, shares   (3,617,075)    
Bonus shares issued
Bonus shares issued, shares      
Net (Loss) $ (1,560,793) $ (1,560,793)
Balance at Dec. 31, 2014 $ (2,953,483) $ 169,186 $ (4,076,441) $ 4,204,565 $ (3,250,793)
Balance, shares at Dec. 31, 2014   169,186,117 (3,637,351)    


v3.3.1.900
Consolidated Statements of Cash Flows - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Cash Flows from Operating Activities    
Net Loss $ (1,560,793) $ (1,647,833)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities    
Bad Debts (2,399) 14,028
Depreciation $ 868,802 891,503
Gain Loss on sale of asset (70,000)
Inventory Valuation $ 1,052,478
Deferred Income Taxes
Issuance of Stock as Bonus $ 30,876
Changes in Assets and Liabilities    
Trade Receivables $ 608,545 $ (797,502)
Other Receivables (87,684)
Inventory 248,447 $ 569,037
Prepaid Expenses 16,882 63,100
Accounts Payable 699,590 (169,694)
Accrued Payroll and Payroll Liabilities (22,747) 123,574
Income Taxes Payable (124,649) 108,595
Accrued Rent 20,000 150,000
Net Cash Provided by Operating Activities 663,994 318,162
Cash Flows from Investing Activities    
Decrease in Other Assets $ (54,097) 1,051
Other Receivable (57,476)
Sale of Property and Equipment 70,000
Purchase of Property and Equipment $ (434,987) (25,607)
Net Cash Provided by (Used in) Investing Activities (489,084) (12,032)
Cash Flows from Financing Activities    
Purchase of Treasury Stock (20,379) (120,845)
Borrowings (Principal Repayments) to Affiliates (629,091) (664,925)
Borrowings (Principal Repayments) on Notes Payable (316,789) (524,867)
Net Cash Provided by (Used in) Financing Activities (966,259) (1,310,637)
Net Increase (Decrease) in Cash and Cash Equivalents (791,349) (1,004,507)
Cash and Cash Equivalents, Beginning of Year 1,875,188 2,879,695
Cash and Cash Equivalents, End of Year 1,083,839 1,875,188
Supplemental Disclosure of Cash Flow Information    
Cash Paid During the Period for Interest 64,462 160,106
Cash Paid During the Period for Income Taxes $ 155,919 47,978
Non-Cash Investing and Financing Activity    
Transfer of Property for Reduction of Notes Payable $ 1,095,583
Issuance of Notes Payable to Purchase Treasury Stock $ 3,935,217


v3.3.1.900
Organization
 12 Months Ended
Dec. 31, 2014
Organization [Abstract]  
Organization
Note 1.Organization

 

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 the 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.


v3.3.1.900
Summary of Significant Accounting Policies
 12 Months Ended
Dec. 31, 2014
Summary Of Significant Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
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 Exploration Technologies is recognized when persuasive evidence of an arrangement exist, services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

 

Revenue for manufacturing services is recognized when persuasive evidence of an arrangement exist, services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

 

Revenue for Warehouse & Storage Fees is recognized at the beginning of the month when billed.

 

Revenue for the sales of pipe is recognized when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is reasonable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. The Company's pipe division sells pipe on trade accounts under terms common in the industry and

the associated costs are included in cost of sales.

 

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 $9,035 for the years ended December 31, 2014 and 2013 respectively.

 

Inventory

Inventories are stated at the lower of cost or market. The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to Loss on Inventory Valuation under Operating Expenses. In the year ended December 31, 2013, the company experienced total write-downs of $1,052,478 attributable to the decline in the oil industry. At December 31, 2014 and 2013, 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 December 31, 2014, the balance due from two customers represented 49% of receivables, and sales to those two customers represented 54% of revenues for the year ended December 31, 2014

 

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 $32,264 and $34,455, for the year ended December 31, 2014 and 2013, 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

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.

 

Going Concern

The company is considered to be in the oil industry. Because of the recent downturn of the market, the financial statements were prepared on a going concern basis. The going concern basis assumes that the company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. During the year ended December 31, 2014, the company had a net loss of $2,574,974, positive cash flow from operations of $664,210, and negative working capital of $6,196,025. Given the company maintained positive cash flow from operations, it believes that it will have sufficient capital to operate over the next 12 months.

 

Historically, the company has had operating losses, negative cash flow from operations, and working capital deficiencies. Whether, and when, the company can attain profitability and positive working capital is uncertain. The company is also uncertain whether it can obtain funding to continue operations. These uncertainties cast significant doubt upon the company’s ability to continue as a going concern.

 

The company will need to raise capital in order to fund its operation. This need may be adversely impacted by uncertain market conditions and approval by regulatory bodies. To address its financing requirements, the company will seek financing from related parties, equity financing and asset sales. The outcome of these matters cannot be predicted at this time.

 

Patents

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. GAAP requires that internally created Patents be expensed as incurred instead of amortized. Our current year auditors’ correction reflects a prior year inappropriate Patent capitalization.

 

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.


v3.3.1.900
Restatement
 12 Months Ended
Dec. 31, 2014
Restatement [Abstract]  
Restatement
Note 3.Restatement

 

The Company has restated its previously issued Consolidated Statements of Operations and Balance Sheets for the years ended December 31, 2012 and 2013. Most significantly, the company restated the reporting of Inventory Valuation, Patent Amortization, Deferred Tax Asset and Liability, and Depreciation.

 

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. GAAP requires that internally created Patents be expensed as incurred instead of amortized. Our current year auditors’ correction reflects a prior year inappropriate Patent capitalization.

 

The Company implemented new inventory valuation methods, processes and controls in the fourth quarter of 2014 that resulted in a material difference in the carrying value of its inventories. The Company has now preliminarily established the estimated impact of the inventory valuation adjustments on these prior periods. Due to the size of these adjustments, management has determined them to be material errors requiring restatements. The company has pushed back the loss of inventory valuation from year ending December 31, 2014 to year ending December 31, 2013 to properly reflect the value of inventory for 2013.

 

Restatement of the Deferred Tax Asset and Deferred Tax Liability accounts occurred due to the fact that a valuation allowance for a deferred tax asset is required if, based on the weight of available evidence, there is more than a 50% likelihood that some portion, or all, of the deferred tax asset will not be realized. The realizability of deferred tax assets depends on the existence of sufficient taxable income of the appropriate character in either the carryback or carryforward period under the tax law. Audit findings for 2014 resulted in the write-off of Deferred Tax Assets and Deferred Tax Liabilities to conform to the likelihood that they will potentially not be realized due to the estimated existence of insufficient taxable income in the future.

 

Depreciation had been restated to account for the error in depreciation method used. Audit findings for 2014 resulted in indentifying the use of an accelerated depreciation instead of using Straight-line for depreciation. This error was corrected in year ended December 31, 2013.

 

The following table summarizes the corrections on each of the affected financial statement line items for each period presented:

 

   As Previously Reported (1)  Restatement Adjustment  As Restated 
 For the year ended December 31, 2012         
 Deferred Tax Asset  875,441   (875,441)  - 
 Patents, Net  433,136   (433,136)  - 
 Deferred Taxes Payable  (811,025)  811,025   - 
 Amortization  28,786   (28,786)  - 
 Selling, General and Administrative  1,737,849   461,918   2,199,767 
 Benefit for Income Tax  (144,115)  64,416   (79,699)
              
 For the year ended December 31, 2013            
 Accounts Receivable, Trade Net  1,029,761   (118,924)  910,837 
 Inventory, Net  2,309,048   (1,052,478)  1,256,570 
 Deferred Tax Asset  962,436   (962,436)  - 
 Held for Operations, Net  3,650,236   65,272   3,715,508 
 Patents, Net  409,539   (409,539)  - 
 Accounts Payable  2,109,713   (106,676)  2,003,037 
 Accrued Liabilities  54,357   106,674   161,031 
 Deferred Taxes Payable  604,271   (604,271)  - 
 Paid-In Capital  4,181,922   22,643   4,204,565 
 Revenue  5,440,621   (223,994)  5,216,627 
 Cost of Revenue  3,399,892   255,088   3,654,980 
 Selling, General and Administrative  1,953,834   (187,489)  1,766,345 
 Depreciation  382,031   (237,125)  144,906 
 Loss on Inventory Valuation  -   1,052,478   1,052,478 
 Benefit for Income Tax  (132,668)  293,749   161,081 

 

(1)Includes certain reclassification to conform to the current presentation


v3.3.1.900
Property and Equipment
 12 Months Ended
Dec. 31, 2014
Property and Equipment [Abstract]  
Property and Equipment
Note 4. Property and Equipment

 

   2014  2013 
        
 Buildings and Improvements $3,042,385  $3,042,385 
 Equipment  5,827,229   5,626,649 
 Autos and Trucks  304,495   255,894 
 Office Furniture  32,657   32,657 
 Construction in Progress  184,211     
    9,390,977   8,957,585 
 Less: Accumulated Depreciation  -6,109,284   -5,242,077 
 Total $3,281,693  $3,715,508 

 

Depreciation expense amounted to $868,802 and $891,503 for the period ended December 31, 2014 and 2013, respectively.

 

During 2013, Property and Equipment held for investment were transferred for a reduction of Notes Payable, specifically Due to Affiliates, in the amount of $1,095,583. During 2014, the company purchased equipment in the amount of $435,203 and disposed of equipment resulting in decrease in Accumulated Depreciation of $1,595 and a loss of $214.


v3.3.1.900
Related Party Transactions
 12 Months Ended
Dec. 31, 2014
Related Party Transactions [Abstract]  
Related Party Transactions
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 December 31, 2013 and December 31, 2014 the total owed is $1,937,500 and $1,957,200, 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 December 31, 2014 and 2013, is $62,844 and $691,935 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 $55,355 and $135,060 for the years ended December 31, 2014 and 2013, respectively.


v3.3.1.900
Notes Payable
 12 Months Ended
Dec. 31, 2014
Notes Payable [Abstract]  
Notes Payable
Note 6.Notes Payable

 

Notes payable at December 31, 2014 and December 31, 2013 consist of the following:

 

   2014  2013 
 Secured fixed term note of $213,226 due October 2014; fixed interest rate of 5.98%     $27,241 
 Secured fixed term note of $340,990 due December 2014; fixed interest rate of 5.93%      63,525 
 Secured fixed term note of $260,000 due May 2015; fixed interest rate of 5.4%      66,554 
 Secured fixed term note of $60,303 due November 2015; fixed interest rate of 2.9%  4,248   18,312 
 Secured fixed term note of $23,968 due February 2016; fixed interest rate of 6.0%  3,801   9,397 
 Secured fixed term note of $449,000 due October 2014; fixed interest rate of 0.0%      187,083 
 Secured fixed term note of $48,601.50 due November 2020; fixed interest rate of 3.39%  47,274     
 Unsecured variable term note of $3,935,217 due on demand; fixed consulting fee of 4.0%  3,935,217     
 Secured fixed term note of $96,213 August 2013; fixed interest rate of 7.95%        
   $3,990,540  $372,112 
 Less: Current Portion  3,951,389   364,047 
 Long-Term Portion $39,151  $8,065 

Following are maturities of long-term debt at December 31, 2014:

 

 Fiscal Year Ending December 31, Amount 
 2016 $20,521 
 2017  18,630 
 Total $39,151 


v3.3.1.900
Income Taxes
 12 Months Ended
Dec. 31, 2014
Income Taxes [Abstract]  
Income Taxes
Note 7. Income Taxes

 

For the year ended December 31, 2014, the Company reported an income tax benefit of $161,080 compared to income tax expense of $161,081 for the year ended December 31, 2013. This was the result of our net operating loss carry-back.

 

The provision for income taxes for 2014 and 2013 consist of the following:

 

   2014  2013 
 Current - Federal   $(161,080) $161,081 
 Current - State      -   - 
 Deferred - Federal    -   - 
 Deferred - State      -   - 
 Provision for Income Taxes $(161,080) $161,081 

 

A reconciliation of income tax expense at the federal statutory rate to the Company’s actual income tax expense at December 31, 2013 and 2012 follows:

 

   2014  2013 
 Tax (Benefit) Expense Provsion at Expected Federal Statutory Rate of 34% $(161,080) $161,081 
          
 Deferred State Taxes and Adjustment of State Income Tax Allocation  -   - 
          
 Income Tax (Benefit) Expense $(161,080) $161,081 


v3.3.1.900
Equity
 12 Months Ended
Dec. 31, 2014
Equity [Abstract]  
Equity
Note 8.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 165,548,766 and 169,165,841 as of December 31, 2014 and December 31, 2013 respectively.

 

The Company is authorized to issue 10,000,000 shares of preferred stock. As of December 31, 2014 and December 31, 2013, there were no shares issued and outstanding.

 

In 2013, the company issued a total of 41,167 shares of common stock valued at an average of $0.749 a share to employees as compensation. The company also purchased 20,270 shares of common stock now held in Treasury for $120,845. In 2014, the company issued an unsecured variable term note of $3,935,217 to purchase 3,580,000 shares of common stock which now is in Treasury. The company also purchased 37,075 shares of common stock for $20,379. These shares are also held in Treasury.


v3.3.1.900
Earnings per Share
 12 Months Ended
Dec. 31, 2014
Earnings per Share [Abstract]  
Earnings per Share
Note 9.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 December 31, 2014, therefore basic earnings per share equals diluted earnings per share for the year ended December 31, 2014. As the Company incurred a net loss during the year ended December 31, 2014, 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, 2013, 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 168,332,363, and 169,149,947 for the years ended December 31, 2014 and 2013, respectively.


v3.3.1.900
Commitments
 12 Months Ended
Dec. 31, 2014
Commitments, Litigation and Contingent Liabilities [Abstract]  
Commitments
Note 10.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. Rent expense for the year ended December 31, 2014 and 2013 was $209,860, and $219,798, respectively.

 

Minimum future rental payments under operating leases having remaining terms in excess of one year as of December 31, 2014 are as follows:

 

 2015  6,000 
 2016  6,000 
 2017  6,000 
 2018  6,000 
 Thereafter  70,500 
 Total $94,500 


v3.3.1.900
Litigation and Contingent Liabilities
 12 Months Ended
Dec. 31, 2014
Commitments, Litigation and Contingent Liabilities [Abstract]  
Litigation and Contingent Liabilities
Note 11.Litigation and Contingent Liabilities

 

The Company is currently involved in litigation with a supplier regarding a contract agreement for the Company to serve as a distributor for the suppliers products. Because it is probable that the Company will be unsuccessful in defending its position, the Company has recorded a liability of $2,252,936 for net proceeds due the supplier from sales of its product.


v3.3.1.900
Major Customers
 12 Months Ended
Dec. 31, 2014
Major Customers [Abstract]  
Major Customers
Note 12.Major Customers

 

For the year ended December 31, 2014, the Company had two customers which generated revenues in excess of 10% of the Company’s total revenues. Revenues for these two customers were approximately 54% of total revenues, and total balance due from these two customers at December 31, 2014 was $151,582. For the year ended December 31, 2013, the Company had two customers for which revenue generated from the customer amounted to approximately 59% of the Company’s total revenue. At December 31, 2013, these customers had a trade receivable balance of $802,583


v3.3.1.900
Estimated Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2014
Estimated Fair Value Of Financial Instruments [Abstract]  
Estimated Fair Value of Financial Instruments
Note 13.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.

 

   December 31, 
   2014  2013 
   Carrying  Fair  Carrying  Fair 
   Amount  Value  Amount  Value 
 Financial Assets            
 Investments $58,490  $58,490  $4,393  $4,393 
                  
   $58,490  $58,490  $4,393  $4,393 

 

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

 

Investments: The carrying amount reported in the balance sheet approximates fair value.


v3.3.1.900
Subsequent Events
 12 Months Ended
Dec. 31, 2014
Subsequent Events [Abstract]  
Subsequent Events
Note 14.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 December 31, 2014. In preparing these financial statements, the Company evaluated the events and transactions through the date these financial statements were issued. The following events should be noted:

 

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 the first quarter of 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 Settlement of $2,252,936.

 

The Company was involved in arbitration with an Insurance company regarding coverage of an insurance claim but has since been settled in the second quarter of 2015. The Company has recorded Income from Settlement of $150,000.

 

The Company was involved in a legal dispute concerning the use of land being used under a lease. A Related Party has purchased the property and all legal disputes have been dropped.


v3.3.1.900
Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 31, 2014
Summary Of Significant Accounting Policies [Abstract]  
Basis of Presentation and Consolidation

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

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

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 Recognition

Revenue for Exploration Technologies is recognized when persuasive evidence of an arrangement exist, services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

 

Revenue for manufacturing services is recognized when persuasive evidence of an arrangement exist, services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

 

Revenue for Warehouse & Storage Fees is recognized at the beginning of the month when billed.


Revenue for the sales of pipe is recognized when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is reasonable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. The Company's pipe division sells pipe on trade accounts under terms common in the industry and

the associated costs are included in cost of sales.
Trade Receivables

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

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 $9,035 for the years ended December 31, 2014 and 2013 respectively.
Inventory

Inventory

Inventories are stated at the lower of cost or market. The company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are charged to Loss on Inventory Valuation under Operating Expenses. In the year ended December 31, 2013, the company experienced total write-downs of $1,052,478 attributable to the decline in the oil industry. At December 31, 2014 and 2013, inventory consisted of pipe available for sale.
Property and Equipment

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

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

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 December 31, 2014, the balance due from two customers represented 49% of receivables, and sales to those two customers represented 54% of revenues for the year ended December 31, 2014

 

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

Advertising

The Company charges the costs of advertising to expense as incurred. Advertising expense was $32,264 and $34,455, for the year ended December 31, 2014 and 2013, respectively.
Cash Flows

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

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

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.
Going Concern

Going Concern

The company is considered to be in the oil industry. Because of the recent downturn of the market, the financial statements were prepared on a going concern basis. The going concern basis assumes that the company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. During the year ended December 31, 2014, the company had a net loss of $2,574,974, positive cash flow from operations of $664,210, and negative working capital of $6,196,025. Given the company maintained positive cash flow from operations, it believes that it will have sufficient capital to operate over the next 12 months.

 

Historically, the company has had operating losses, negative cash flow from operations, and working capital deficiencies. Whether, and when, the company can attain profitability and positive working capital is uncertain. The company is also uncertain whether it can obtain funding to continue operations. These uncertainties cast significant doubt upon the company’s ability to continue as a going concern.

 

The company will need to raise capital in order to fund its operation. This need may be adversely impacted by uncertain market conditions and approval by regulatory bodies. To address its financing requirements, the company will seek financing from related parties, equity financing and asset sales. The outcome of these matters cannot be predicted at this time.
Patents

Patents

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. GAAP requires that internally created Patents be expensed as incurred instead of amortized. Our current year auditors’ correction reflects a prior year inappropriate Patent capitalization.
Recent Accounting Pronouncements

Recent Accounting Pronouncements

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

Comprehensive Income

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


v3.3.1.900
Restatement (Tables)
 12 Months Ended
Dec. 31, 2014
Restatement [Abstract]  
Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

 

   As Previously Reported (1)  Restatement Adjustment  As Restated 
 For the year ended December 31, 2012         
 Deferred Tax Asset  875,441   (875,441)  - 
 Patents, Net  433,136   (433,136)  - 
 Deferred Taxes Payable  (811,025)  811,025   - 
 Amortization  28,786   (28,786)  - 
 Selling, General and Administrative  1,737,849   461,918   2,199,767 
 Benefit for Income Tax  (144,115)  64,416   (79,699)
              
 For the year ended December 31, 2013            
 Accounts Receivable, Trade Net  1,029,761   (118,924)  910,837 
 Inventory, Net  2,309,048   (1,052,478)  1,256,570 
 Deferred Tax Asset  962,436   (962,436)  - 
 Held for Operations, Net  3,650,236   65,272   3,715,508 
 Patents, Net  409,539   (409,539)  - 
 Accounts Payable  2,109,713   (106,676)  2,003,037 
 Accrued Liabilities  54,357   106,674   161,031 
 Deferred Taxes Payable  604,271   (604,271)  - 
 Paid-In Capital  4,181,922   22,643   4,204,565 
 Revenue  5,440,621   (223,994)  5,216,627 
 Cost of Revenue  3,399,892   255,088   3,654,980 
 Selling, General and Administrative  1,953,834   (187,489)  1,766,345 
 Depreciation  382,031   (237,125)  144,906 
 Loss on Inventory Valuation  -   1,052,478   1,052,478 
 Benefit for Income Tax  (132,668)  293,749   161,081 


v3.3.1.900
Property and Equipment (Tables)
 12 Months Ended
Dec. 31, 2014
Property and Equipment [Abstract]  
Summary of property and equipment

   2014  2013 
        
 Buildings and Improvements $3,042,385  $3,042,385 
 Equipment  5,827,229   5,626,649 
 Autos and Trucks  304,495   255,894 
 Office Furniture  32,657   32,657 
 Construction in Progress  184,211     
    9,390,977   8,957,585 
 Less: Accumulated Depreciation  -6,109,284   -5,242,077 
 Total $3,281,693  $3,715,508 


v3.3.1.900
Notes Payable (Tables)
 12 Months Ended
Dec. 31, 2014
Notes Payable [Abstract]  
Summary of notes payable
   2014  2013 
 Secured fixed term note of $213,226 due October 2014; fixed interest rate of 5.98%     $27,241 
 Secured fixed term note of $340,990 due December 2014; fixed interest rate of 5.93%      63,525 
 Secured fixed term note of $260,000 due May 2015; fixed interest rate of 5.4%      66,554 
 Secured fixed term note of $60,303 due November 2015; fixed interest rate of 2.9%  4,248   18,312 
 Secured fixed term note of $23,968 due February 2016; fixed interest rate of 6.0%  3,801   9,397 
 Secured fixed term note of $449,000 due October 2014; fixed interest rate of 0.0%      187,083 
 Secured fixed term note of $48,601.50 due November 2020; fixed interest rate of 3.39%  47,274     
 Unsecured variable term note of $3,935,217 due on demand; fixed consulting fee of 4.0%  3,935,217     
 Secured fixed term note of $96,213 August 2013; fixed interest rate of 7.95%        
   $3,990,540  $372,112 
 Less: Current Portion  3,951,389   364,047 
 Long-Term Portion $39,151  $8,065
Summary of maturities of long-term debt
 Fiscal Year Ending December 31, Amount 
 2016 $20,521 
 2017  18,630 
 Total $39,151


v3.3.1.900
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2014
Income Taxes [Abstract]  
Schedule of provision for income taxes

   2014  2013 
 Current - Federal   $(161,080) $161,081 
 Current - State      -   - 
 Deferred - Federal    -   - 
 Deferred - State      -   - 
 Provision for Income Taxes $(161,080) $161,081 
Schedule of reconciliation of income tax expense at the federal statutory rate

   2014  2013 
 Tax (Benefit) Expense Provsion at Expected Federal Statutory Rate of 34% $(161,080) $161,081 
          
 Deferred State Taxes and Adjustment of State Income Tax Allocation  -   - 
          
 Income Tax (Benefit) Expense $(161,080) $161,081 


v3.3.1.900
Commitments (Tables)
 12 Months Ended
Dec. 31, 2014
Commitments, Litigation and Contingent Liabilities [Abstract]  
Schedule of future minimum rental payments for operating leases

 2015  6,000 
 2016  6,000 
 2017  6,000 
 2018  6,000 
 Thereafter  70,500 
 Total $94,500 


v3.3.1.900
Estimated Fair Value of Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2014
Estimated Fair Value Of Financial Instruments [Abstract]  
Summary of financial instruments at carrying and fair value

   December 31, 
   2014  2013 
   Carrying  Fair  Carrying  Fair 
   Amount  Value  Amount  Value 
 Financial Assets            
 Investments $58,490  $58,490  $4,393  $4,393 
                  
   $58,490  $58,490  $4,393  $4,393 


v3.3.1.900
Organization (Details)
 12 Months Ended
Dec. 31, 2014
shares
Organization (Textual)  
Common Stock, shares issued to American Interest, LLC, in exchange for founder services 125,000,000
Stock issued in exchange of all outstanding shares of Technical Industries, Inc. 50,000,000


v3.3.1.900
Summary of Significant Accounting Policies (Details)
 12 Months Ended
Dec. 31, 2014
USD ($)
Customer
Dec. 31, 2013
USD ($)
Summary of Significant Accounting Policies (Textual)    
Concentration risk, percentage 54.00% 59.00%
Allowance for doubtful accounts $ 3,078 $ 9,035
Advertising expense $ 32,264 34,455
Tax benefit
more than 50% 
  
Inventory write-downs   1,052,478
Net Loss $ (1,560,793) (1,647,833)
Net Cash Provided By (Used In) Operating Activities 663,994 $ 318,162
Working capital $ 6,196,025  
Receivable [Member] | Customer Concentration Risk [Member]    
Summary of Significant Accounting Policies (Textual)    
Number of major customers | Customer 2  
Concentration risk, percentage 49.00%  
Revenue [Member] | Customer Concentration Risk [Member]    
Summary of Significant Accounting Policies (Textual)    
Number of major customers | Customer 2  
Concentration risk, percentage 54.00%  


v3.3.1.900
Restatement (Details) - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Deferred Tax Asset
Patents, Net
Deferred Taxes Payable
Amortization  
Selling, General and Administrative $ 1,766,345 $ 2,199,767
Benefit for Income Tax (161,080) 161,081
Accounts Receivable, Trade Net (608,545) 797,502
Inventory, Net (248,447) (569,037)
Held For Operations, Net 3,715,508  
Accounts Payable 699,590 (169,694)
Accrued Liabilities 20,000 150,000
Paid-In Capital 4,204,565  
Revenue 3,956,612 5,216,627
Cost of Revenue 3,751,196 3,654,980
Depreciation $ 868,802 891,503
Loss on Inventory Valuation 1,052,478
As Previously Reported [Member]    
Deferred Tax Asset [1] $ 962,436 875,441
Patents, Net [1] 409,539 433,136
Deferred Taxes Payable [1] 604,271 (811,025)
Amortization [1]   28,786
Selling, General and Administrative [1] 1,953,834 1,737,849
Benefit for Income Tax [1] (132,668) (144,115)
Accounts Receivable, Trade Net [1] 1,029,761  
Inventory, Net [1] 2,309,048  
Held For Operations, Net [1] 3,650,236  
Accounts Payable [1] 2,109,713  
Accrued Liabilities [1] 54,357  
Paid-In Capital [1] 4,181,922  
Revenue [1] 5,440,621  
Cost of Revenue [1] 3,399,892  
Depreciation [1] $ 382,031  
Loss on Inventory Valuation [1]  
Restatement Adjustment [Member]    
Deferred Tax Asset $ (962,436) (875,441)
Patents, Net (409,539) (433,136)
Deferred Taxes Payable (604,271) 811,025
Amortization   (28,786)
Selling, General and Administrative (187,489) 461,918
Benefit for Income Tax 293,749 $ 64,416
Accounts Receivable, Trade Net (118,924)  
Inventory, Net (1,052,478)  
Held For Operations, Net 65,272  
Accounts Payable (106,676)  
Accrued Liabilities 106,674  
Paid-In Capital 22,643  
Revenue (223,994)  
Cost of Revenue 255,088  
Depreciation (237,125)  
Loss on Inventory Valuation $ 1,052,478  
[1] (1) Includes certain reclassification to conform to the current presentation


v3.3.1.900
Property and Equipment (Details) - USD ($)
Dec. 31, 2014
Dec. 31, 2013
Summary of property and equipment    
Property and equipment, gross $ 9,390,977 $ 8,957,585
Less: Accumulated Depreciation (6,109,284) (5,242,077)
Total Property and Equipment 3,281,693 3,715,508
Buildings and Improvements [Member]    
Summary of property and equipment    
Property and equipment, gross 3,042,385 3,042,385
Equipment [Member]    
Summary of property and equipment    
Property and equipment, gross 5,827,229 5,626,649
Autos and Trucks [Member]    
Summary of property and equipment    
Property and equipment, gross 304,495 $ 255,894
Construction in Progress [Member]    
Summary of property and equipment    
Property and equipment, gross 184,211
Office Furniture [Member]    
Summary of property and equipment    
Property and equipment, gross $ 32,657 $ 32,657


v3.3.1.900
Property and Equipment (Details Textual) - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Property and Equipment (Textual)    
Depreciation expense $ 868,802 $ 891,503
Due to affiliates   1,095,583
Purchase of Property and Equipment 434,987 $ 25,607
Decrease in accumulated depreciation 1,595  
Disposal of equipment loss $ 214  


v3.3.1.900
Related Party Transactions (Details) - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Related Party Transactions (Textual)    
Lease $ 209,860 $ 219,798
Due to affiliates $ 62,844 691,935
Interest rate on amounts due to the affiliates 8.00%  
Interest expense on amounts due to the affiliates $ 55,355 135,060
St Charles Real Estate Corp Llc [Member]    
Related Party Transactions (Textual)    
Lease 12,500  
Toatl due to related party $ 1,957,200 $ 1,937,500


v3.3.1.900
Notes Payable (Details) - USD ($)
Dec. 31, 2014
Dec. 31, 2013
Summary of notes payable    
Notes payable $ 3,990,540 $ 372,112
Less: Current Portion 3,951,389 364,047
Long-Term Portion $ 39,151 8,065
Due October 2014 [Member]    
Summary of notes payable    
Notes payable 27,241
Due December 2014 [Member]    
Summary of notes payable    
Notes payable 63,525
Due May 2015 [Member]    
Summary of notes payable    
Notes payable 66,554
Due November 2015 [Member]    
Summary of notes payable    
Notes payable $ 4,248 18,312
Due February 2016 [Member]    
Summary of notes payable    
Notes payable $ 3,801 9,397
Due October 2014 [Member]    
Summary of notes payable    
Notes payable $ 187,083
Due November 2020 [Member]    
Summary of notes payable    
Notes payable $ 47,274
Unsecured variable term note [Member]    
Summary of notes payable    
Notes payable $ 3,935,217
Due August 2013 [Member]    
Summary of notes payable    
Notes payable


v3.3.1.900
Notes Payable (Details 1)
Dec. 31, 2014
USD ($)
Maturities of long-term debt  
2016 $ 20,521
2017 18,630
Total $ 39,151


v3.3.1.900
Notes Payable (Details Textual)
 12 Months Ended
Dec. 31, 2014
USD ($)
Due October 2014 [Member]  
Notes Payable (Textual)  
Secured notes payable amount $ 213,226
Due date of notes payable Oct. 31, 2014
Interest rate 5.98%
Due December 2014 [Member]  
Notes Payable (Textual)  
Secured notes payable amount $ 340,990
Due date of notes payable Dec. 31, 2014
Interest rate 5.93%
Due May 2015 [Member]  
Notes Payable (Textual)  
Secured notes payable amount $ 260,000
Due date of notes payable May 31, 2015
Interest rate 5.40%
Due November 2015 [Member]  
Notes Payable (Textual)  
Secured notes payable amount $ 60,303
Due date of notes payable Nov. 30, 2015
Interest rate 2.90%
Due February 2016 [Member]  
Notes Payable (Textual)  
Secured notes payable amount $ 23,968
Due date of notes payable Feb. 29, 2016
Interest rate 6.00%
Due October 2014 [Member]  
Notes Payable (Textual)  
Secured notes payable amount $ 449,000
Due date of notes payable Oct. 31, 2014
Interest rate 0.00%
Due November 2020 [Member]  
Notes Payable (Textual)  
Secured notes payable amount $ 48,601.50
Due date of notes payable Nov. 30, 2020
Interest rate 3.39%
Unsecured variable term note [Member]  
Notes Payable (Textual)  
Unsecured notes payable amount $ 3,935,217
Interest rate 4.00%
Due August 2013 [Member]  
Notes Payable (Textual)  
Secured notes payable amount $ 96,213
Due date of notes payable Aug. 31, 2013
Interest rate 7.95%


v3.3.1.900
Income Taxes (Details) - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Income Taxes [Abstract]    
Current - Federal $ (161,080) $ 161,081
Current - State
Deferred - Federal
Deferred - State
Provision for Income Taxes $ (161,080) $ 161,081


v3.3.1.900
Income Taxes (Details 1) - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Income Taxes [Abstract]    
Tax (Benefit) Expense provision at Expected Federal Statutory Rate of 34% $ (161,080) $ 161,081
Deferred State Taxes and Adjustment of State Income Tax Allocation
Provision for Income Taxes $ (161,080) $ 161,081


v3.3.1.900
Income Taxes (Details Textual) - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Income Taxes (Textual)    
Income tax benefit $ (161,080) $ 161,081
Expected federal statutory income tax rate 34.00%  


v3.3.1.900
Equity (Details) - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Equity (Textual)    
Common stock, shares authorized 250,000,000 250,000,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares issued 169,186,117 169,186,117
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock shares issued to employees as compensation   41,167
Average price per share issued to employees as compensation   $ 0.749
Purchase of common stock held in Treasury (Shares) 37,075 20,270
Purchase of common stock held in Treasury (Value) $ 20,379 $ 120,845
Unsecured note [Member]    
Equity (Textual)    
Purchase of common stock held in Treasury (Shares) 3,580,000  
Unsecured variable term note issued $ 3,935,217  


v3.3.1.900
Earnings per Share (Details) - shares
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Earnings per Share (Textual)    
Weighted average common shares outstanding 168,332,363 169,149,947


v3.3.1.900
Commitments (Details)
Dec. 31, 2014
USD ($)
Summary of minimum future rental payments under operating leases  
2015 $ 6,000
2016 6,000
2017 6,000
2018 6,000
Thereafter 70,500
Total $ 94,500


v3.3.1.900
Commitments (Details Textual) - USD ($)
 12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Commitments (Textual)    
Operating lease expiration period Operating leases expiring in various years through 2030.  
Rent expense $ 209,860 $ 219,798


v3.3.1.900
Litigation and Contingent Liabilities (Details)
 12 Months Ended
Dec. 31, 2014
USD ($)
Litigation and Contingent Liabilities (Textual)  
Proceeds from sales of product $ 2,252,936


v3.3.1.900
Major Customers (Details)
 12 Months Ended
Dec. 31, 2014
USD ($)
Customer
Dec. 31, 2013
USD ($)
Customer
Major Customers (Textual)    
Number of major customers for revenues generation | Customer 2 2
Concentration risk, percentage 54.00% 59.00%
Customer [Member]    
Major Customers (Textual)    
Concentration risk, percentage 10.00%  
Total balance due from customers $ 151,582  
Trade receivable from customers   $ 802,583


v3.3.1.900
Estimated Fair Value of Financial Instruments (Details) - USD ($)
Dec. 31, 2014
Dec. 31, 2013
Financial assets:    
Investments at carrying amount $ 58,490 $ 4,393
Investments at fair value 58,490 4,393
Assets at carrying amount 58,490 4,393
Assets at fair value $ 58,490 $ 4,393


v3.3.1.900
Subsequent Events (Details) - USD ($)
 1 Months Ended 12 Months Ended
Jun. 30, 2015
Mar. 31, 2015
Dec. 31, 2014
Subsequent Event (Textual)      
Proceeds from sales of product     $ 2,252,936
Subsequent Event [Member]      
Subsequent Event (Textual)      
Proceeds from sales of product   $ 2,252,936  
Income from Settlement $ 150,000 $ 2,252,936  
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