UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
|
For
the
quarterly period ended September 30, 2008
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
|
For
the
transition period from _____ to _____
Commission
File Number: 000-51249
ENERGTEK
INC.
(Exact
name of registrant as specified in its charter)
Nevada
|
|
42-1708652
|
(State
or other jurisdiction of incorporation or organization)
|
|
(IRS
Employer Identification No.)
|
Energtek
Inc
11
East
44th Street, 19th floor
,
NY
10017
(Address
of principal executive offices, Zip Code)
(516)
887-8200
(Registrant’s
telephone number, including area code)
N/A
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for 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
x
No
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer
¨
|
Accelerated
filer
¨
|
Non-accelerated
filer
x
|
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
x
The
number of shares outstanding of the issuer’s common stock as of November 15,
2008 was 75,014,410 shares of common stock.
TABLE
OF CONTENTS
PART
I - FINANCIAL INFORMATION
|
3
|
Item
1.
|
Financial
Statements.
|
3
|
|
Note
1 - Business Organization and Summary of Significant Accounting
Policies
|
7
|
|
Note
1 - Business Organization and Summary of Significant Accounting Policies
(Cont.)
|
8
|
|
Note
1 - Business Organization and Summary of Significant Accounting Policies
(Cont.)
|
9
|
|
Note
2 - Stockholders Equity
|
9
|
|
Note
3- Stock Based Compensation
|
10
|
|
Note
4 - Going Concern
|
11
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
12
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
16
|
Item
4T.
|
Controls
and Procedures.
|
16
|
PART
II - OTHER INFORMATION
|
17
|
Item
1.
|
Legal
Proceedings.
|
17
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds.
|
18
|
Item
3.
|
Defaults
Upon Senior Securities.
|
19
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
19
|
Item
5.
|
Other
Information.
|
19
|
Item
6.
|
Exhibits
|
19
|
PART
I - FINANCIAL INFORMATION
Item
1.
Financial
Statements.
The
accompanying financial statements have been prepared by Energtek Inc.
("Energtek" or "the Company") and are unaudited. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at September 30, 2008 and 2007 and for the periods then ended have
been made. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted. It is suggested that these condensed financial statements be read
in conjunction with the financial statements and notes thereto included in
the
Company’s December 31, 2007 audited financial statements, which were filed with
the Securities and Exchange Commission on March 27, 2008 with the Company’s
annual report on Form 10-K. The results of operations for the periods
ended September 30, 2008 and 2007 are not necessarily indicative of the
operating results for the full year.
ENERGTEK
INC.
(A
DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED
CONDENSED BALANCE SHEET
|
|
Note
|
|
As
of
30/09/2008
(Unaudited)
$
|
|
As
of
31/12/2007
(Audited)
$
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
|
|
|
|
1,654,851
|
|
|
2,527,681
|
|
Deposits
in bank
|
|
|
|
|
|
514,831
|
|
|
-
|
|
Accounts
receivable and prepaid expenses
|
|
|
|
|
|
483,859
|
|
|
410,843
|
|
Inventory
|
|
|
|
|
|
17,399
|
|
|
-
|
|
Total
current assets
|
|
|
|
|
|
2,670,940
|
|
|
2,938,524
|
|
|
|
|
|
|
|
|
|
|
|
|
ADVANCES&DEPOSITS
|
|
|
|
|
|
57,915
|
|
|
33,337
|
|
FIXED
ASSETS, NET
|
|
|
|
|
|
513,351
|
|
|
185,577
|
|
INVESTMENTS:
|
|
|
|
|
|
|
|
|
|
|
Investments
in Shares
|
|
|
|
|
|
24,500
|
|
|
24,500
|
|
Patent
rights
|
|
|
|
|
|
38,096
|
|
|
41,920
|
|
|
|
|
|
|
|
62,596
|
|
|
66,420
|
|
TOTAL
ASSETS
|
|
|
|
|
|
3,304,802
|
|
|
3,223,858
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDER EQUITY
|
|
|
|
|
|
|
|
|
|
|
Short
Term Loans
|
|
|
|
|
|
402,467
|
|
|
468,965
|
|
Accounts
payable and Accrued Liabilities
|
|
|
|
|
|
305,289
|
|
|
239,448
|
|
TOTAL
CURRENT LIABILITIES
|
|
|
|
|
|
707,756
|
|
|
708,413
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDER
EQUITY
|
|
|
2
|
|
|
|
|
|
|
|
Preferred
Stock: $0.001 par value; 5,000,000 authorized, none issued and
outstanding
|
|
|
|
|
|
|
|
|
|
|
Common
Stock: $0.001 par value; 750,000,000 authorized, 75,014,410 issued
and
outstanding
|
|
|
|
|
|
75,014
|
|
|
70,754
|
|
Additional
Paid-in Capital
|
|
|
|
|
|
18,464,530
|
|
|
7,251,051
|
|
Accumulated
Deficit
|
|
|
|
|
|
(15,942,498
|
)
|
|
(4,806,360
|
)
|
TOTAL
SHAREHOLDER EQUITY
|
|
|
|
|
|
2,597,046
|
|
|
2,515,445
|
|
Total
Liabilities and Stockholders' Equity
|
|
3,304,802
|
|
|
3,223,858
|
|
ENERGTEK
INC.
(A
DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
|
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
Since
the
beginning
of
the
development stage entity until
|
|
|
|
|
|
September-30
|
|
September-30
|
|
September-30
|
|
September-30
|
|
September
30,
|
|
|
|
Note
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
Revenues
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
|
|
|
58,659
|
|
|
111,218
|
|
|
213,878
|
|
|
421,615
|
|
|
1,451,239
|
|
Consulting-Related
parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,900
|
|
Research
and
Development
expenses
|
|
|
|
|
|
257,104
|
|
|
385,289
|
|
|
653,660
|
|
|
1,185,442
|
|
|
1,984,495
|
|
Research
and Development expenses - Share Based Compensation
|
|
|
3
|
|
|
428,172
|
|
|
|
|
|
428,172
|
|
|
|
|
|
428,172
|
|
Market
Research-
Related
parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,020
|
|
General
and administrative
expenses-
Share Based Compensation
|
|
|
3
|
|
|
7,584,620
|
|
|
|
|
|
7,738,120
|
|
|
|
|
|
7,908,120
|
|
General
and administrative
expenses
|
|
|
|
|
|
730,324
|
|
|
444,229
|
|
|
2,099,821
|
|
|
1,140,285
|
|
|
3,460,646
|
|
Total
Operating Expenses
|
|
|
|
|
|
9,058,879
|
|
|
940,736
|
|
|
11,133,651
|
|
|
2,747,342
|
|
|
15,475,591
|
|
Net
loss from operations
|
|
|
|
|
|
(9,058,879
|
)
|
|
(940,736
|
)
|
|
(11,133,651
|
)
|
|
(2,747,342
|
)
|
|
(15,475,591
|
)
|
Other
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Income (losses),net
|
|
|
|
|
|
23,798
|
|
|
7,451
|
|
|
(2,486
|
)
|
|
(9,159
|
)
|
|
(31,583
|
)
|
Investments
impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
Patent
impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100,000
|
)
|
Total
other income(expenses)
|
|
|
|
|
|
23,798
|
|
|
7,451
|
|
|
(2,486
|
)
|
|
(9,159
|
)
|
|
(181,583
|
)
|
Net
Loss
|
|
|
|
|
|
(9,035,081
|
)
|
|
(933,285
|
)
|
|
(11,136,137
|
)
|
|
(2,756,501
|
)
|
|
(15,657,174
|
)
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Shares
Common
Stock
Outstanding
|
|
|
|
|
|
74,950,708
|
|
|
62,916,603
|
|
|
72,831,212
|
|
|
55,768,248
|
|
|
|
|
Net
Loss Per Common Share
(Basic
and Fully Diluted)
|
|
|
|
|
|
(0.12
|
)
|
|
(0.01
|
)
|
|
(0.15
|
)
|
|
(0.05
|
)
|
|
|
|
ENERGTEK
INC.
(A
DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
Since
the
beginning
of
the
development stage entity until
|
|
|
|
September-30
|
|
September-30
|
|
September-30
|
|
September-30
|
|
September
30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
Cash
Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
(9,035,081
|
)
|
|
(933,285
|
)
|
|
(11,136,137
|
)
|
|
(2,756,501
|
)
|
|
(15,657,174
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and Amortization
|
|
|
11,265
|
|
|
281,503
|
|
|
32,794
|
|
|
1,116,465
|
|
|
1,152,502
|
|
Foreign
exchange difference on loans
|
|
|
(38,803
|
)
|
|
38,151
|
|
|
5,269
|
|
|
38,151
|
|
|
47,145
|
|
Impairment
and Adjustments of Patent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,147
|
|
Impairment
of Option Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
Non-employees'
share compensation
|
|
|
8,106,127
|
|
|
63,025
|
|
|
8,405,489
|
|
|
334,393
|
|
|
9,102,032
|
|
Severance
pay liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,295
|
)
|
Decrease
(Increase) in accounts receivable and prepaid expenses
|
|
|
(25,203
|
)
|
|
(13,283
|
)
|
|
(73,017
|
)
|
|
(38,867
|
)
|
|
(199,822
|
)
|
Increase
in Inventory
|
|
|
(2,925
|
)
|
|
|
|
|
(17,399
|
)
|
|
|
|
|
(17,399
|
)
|
Accounts
payable and accrued liabilities
|
|
|
(80,696
|
)
|
|
(527,278
|
)
|
|
65,841
|
|
|
(224,438
|
)
|
|
73,803
|
|
Net
cash used in Operating Activities
|
|
|
(1,065,316
|
)
|
|
(1,091,167
|
)
|
|
(2,717,160
|
)
|
|
(1,530,797
|
)
|
|
(5,358,061
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows to Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in new-consolidated subsidiaries and purchase of new-activity
|
|
|
|
|
|
|
|
|
|
|
|
(160,688
|
)
|
|
(160,688
|
)
|
Investment
in shares
|
|
|
|
|
|
|
|
|
|
|
|
(24,500
|
)
|
|
(24,500
|
)
|
Investment
in Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
Deposit
|
|
|
(517,308
|
)
|
|
(4,958
|
)
|
|
(539,409
|
)
|
|
(16,953
|
)
|
|
(569,055
|
)
|
Advances
paid to suppliers of fixed assets
|
|
|
|
|
|
|
|
|
(75,000
|
)
|
|
|
|
|
(334,340
|
)
|
Purchase
of fixed assets
|
|
|
(66,243
|
)
|
|
(58,615
|
)
|
|
(281,744
|
)
|
|
(196,166
|
)
|
|
(401,012
|
)
|
Net
cash used in Investing Activities
|
|
|
(583,551
|
)
|
|
(63,573
|
)
|
|
(896,153
|
)
|
|
(398,307
|
)
|
|
(1,539,595
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock
|
|
|
|
|
|
1,240,500
|
|
|
2,917,250
|
|
|
4,143,262
|
|
|
7,280,512
|
|
Warrants
exercise
|
|
|
|
|
|
1,295,000
|
|
|
|
|
|
1,295,000
|
|
|
1,295,000
|
|
Redemption
of warrants
|
|
|
(105,000
|
)
|
|
|
|
|
(105,000
|
)
|
|
(250,000
|
)
|
|
(355,000
|
)
|
Repayment
of loan
|
|
|
|
|
|
|
|
|
(71,767
|
)
|
|
|
|
|
(291,767
|
)
|
Net
cash from Financing Activities
|
|
|
-105,000
|
|
|
2,535,500
|
|
|
2,740,483
|
|
|
5,188,262
|
|
|
7,928,745
|
|
Net
Increase (Decrease) in Cash
|
|
|
(1,753,867
|
)
|
|
1,380,760
|
|
|
(872,830
|
)
|
|
3,259,158
|
|
|
1,031,089
|
|
Cash
at Beginning of Period
|
|
|
3,408,718
|
|
|
2,165,699
|
|
|
2,527,681
|
|
|
287,301
|
|
|
623,762
|
|
Cash
at End of Period
|
|
|
1,654,851
|
|
|
3,546,459
|
|
|
1,654,851
|
|
|
3,546,459
|
|
|
1,654,851
|
|
ENERGTEK
INC.
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Note
1 -
Business
Organization and Summary of Significant Accounting
Policies
About
Energtek
Energtek
provides proprietary solutions to meet the technical, economical and logistical
challenges of Natural Gas (NG) delivery for vehicles worldwide, with a major
focus on the 2- and 3-wheel vehicles market, and on Bulk Transportation
markets.
The
Company is considered to be a development stage company and as such the
financial statements presented herein are presented in accordance with Statement
of Financial Accounting Standards (“SFAS”) No. 7 “Accounting and Reporting by
Development Stage Enterprises”.
Inception
of Development Stage
The
cumulative data from inception of the development stage entity is presented
since September, 2006, when the Company changed its area of activities to clean
energy related technologies.
Condensed
Financial Statements
The
accompanying financial statements have been prepared by the Company and are
unaudited. In the opinion of management, all adjustments necessary to
present fairly the financial position, at September 30, 2008 and the results
of
operations and cash flows at September 30, 2008 and 2007 and for the periods
then ended have been made. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company’s December 31, 2007 audited financial
statements. The results of operations for the periods ended September 30,
2008 and 2007 are not necessarily indicative of the operating results for the
full year.
Recently
Issued Standards
In
March
2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about
Derivative Instruments and Hedging Activities - An Amendment of SFAS
No. 133” (“SFAS 161”). SFAS 161 seeks to improve financial reporting for
derivative instruments and hedging activities by requiring enhanced disclosures
regarding the impact on financial position, financial performance, and cash
flows. To achieve this increased transparency, SFAS 161 requires (1) the
disclosure of the fair value of derivative instruments and gains and losses
in a
tabular format; (2) the disclosure of derivative features that are credit
risk-related; and (3) cross-referencing within the footnotes. SFAS 161 is
effective for us on January 1, 2009. We are in the process of evaluating
the new disclosure requirements under SFAS 161.
ENERGTEK
INC.
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Note
1 -
Business
Organization and Summary of Significant Accounting Policies
(Cont.)
In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
Combinations” (“SFAS 141R”). SFAS 141R continues to require the purchase method
of accounting to be applied to all business combinations, but it significantly
changes the accounting for certain aspects of business combinations. Under
SFAS
141R, an acquiring entity will be required to recognize all the assets acquired
and liabilities assumed in a transaction at the acquisition-date fair value
with
limited exceptions. SFAS 141R will change the accounting treatment for certain
specific
acquisition related items including: (1) expensing acquisition related
costs as incurred; (2) valuing noncontrolling interests at fair value at
the acquisition date; and (3) expensing restructuring costs associated with
an acquired business. SFAS 141R also includes a substantial number of new
disclosure requirements. SFAS 141R is to be applied prospectively to business
combinations for which the acquisition date is on or after January 1, 2009.
We expect SFAS 141R will have an impact on our accounting for future business
combinations once adopted but the effect is dependent upon the acquisitions
that
are made in the future.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS 160”). SFAS 160 establishes new
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
noncontrolling interest in a subsidiary (minority interest) is an ownership
interest in the consolidated entity that should be reported as equity in the
Consolidated Financial Statements and separate from the parent company’s equity.
Among other requirements, this statement requires consolidated net income to
be
reported at amounts that include the amounts attributable to both the parent
and
the noncontrolling interest. It also requires disclosure, on the face of the
Consolidated Statement of Operations, of the amounts of consolidated net income
attributable to the parent and to the noncontrolling interest. This statement
is
effective for us on January 1, 2009.
Recently
Adopted Standards
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 allows
entities to voluntarily choose to measure certain financial assets and
liabilities at fair value (“fair value option”). The fair value option may be
elected on an instrument-by-instrument basis and is irrevocable, unless a new
election date occurs. If the fair value option is elected for an instrument,
SFAS 159 specifies that unrealized gains and losses for that instrument be
reported in earnings at each subsequent reporting date. SFAS 159 was effective
for us on January 1, 2008. We did not apply the fair value option to any of
our outstanding instruments and, therefore, SFAS 159 did not have an impact
on
our Condensed Consolidated Financial Statements.
ENERGTEK
INC.
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Note
1 -
Business
Organization and Summary of Significant Accounting Policies
(Cont.)
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS 157”), which defines fair value, establishes a framework for measuring
fair value in accordance with generally accepted accounting principles, and
expands disclosures about fair value measurements. SFAS 157 was effective for
us
on January 1, 2008 for all financial assets and liabilities and for
nonfinancial assets and liabilities recognized or disclosed at fair value in
our
Condensed Consolidated Financial Statements on a recurring basis (at least
annually). For all other nonfinancial assets and liabilities, SFAS 157 is
effective for us on January 1, 2009. We are still in the process of
evaluating the impact that SFAS 157 will have on our pension related financial
assets and our nonfinancial assets and liabilities not valued on a recurring
basis (at least annually).SFAS 157 did not have an impact on our Condensed
Consolidated Financial Statements.
Note
2 - Stockholders Equity
Between January
1, 2008 and September 30, 2008, the Company raised an aggregate of $2,917,250
by
selling to purchasers an aggregate of 3,889,667 units of the Company’s
securities, each unit consisting of one share of common stock and one warrant,
designated Class 2007-J Warrant. Each Class 2007-J Warrant entitles the holder
thereof to purchase one share of common stock at a purchase price of $1.50
until
February 28, 2011. The purchase price paid to the Company for each unit was
$0.75.
Commissions
in cash, in the amount of $145,863 are to be paid with respect to such issuances
and, in addition, 194,483 shares of our common stock are to be issued as
commissions.
On
July
7, 2008, the Company’s board of directors authorized the redemption of 2,100,000
outstanding Class B Warrants at a redemption price of $0.05 per warrant, for the
aggregate amount of $105,000, pursuant to the terms of the Company’s warrant
agreements with the holders of the Class B Warrants.
On
June
1, 2008 the Company signed an additional agreement with Chelsea Holdings, Inc.
(hereinafter "CHELSEA") for the provision of public and investor relations
services. The agreement has a term of 1 year and may be terminated by either
party with 30 days notice. In exchange for the services, the Company agreed
to
issue to CHELSEA 350,000 shares of restricted common stock, of which 87,500
shares were issued upon execution of the agreement, 87,500 shares were issued
on
September 1, 2008 and 87,500 additional shares will be issued on each of
December 1, 2008 and March 1, 2009
.
The
Company recorded a total of $199,792 as G&A expenses and $93,334 Pre-Paid
expenses in the period from June 1 ,2008 to September 30 ,2008 in connection
with the issuances to CHELSEA pursuant to this agreement.
ENERGTEK
INC.
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Note
3- Stock Based Compensation
Stock
Options
1.
|
Employee
Stock Option Plans:
|
a.
|
On
May 4, 2008 the Board of Directors of the Company has adopted its
2008
Israeli Employees Stock Option Plan, applicable to Israeli Officers,
Directors and Employees of the Company and its subsidiaries.
|
b.
|
3,000,000
shares of the Company's Common Stock were reserved in consideration
of
IL-2008 Stock Option Plan.
|
c.
|
Stock
Options to be granted under IL-2008 Stock Option Plan shall be subject
to
such exercise prices, and vesting schedule as shall be defined by
the
Company's Compensation Committee, or any other body, authorized by
the
Board of Directors.
|
d.
|
As
of September 30, 2008 options to purchase 995,000 shares of the Company's
of common stock were granted to an Officer and a Director of the
Company,
subject to IL-2008 Stock Option Plan.
|
e.
|
As
of September 30, 2008, total fair value of options granted under
IL-2008
Stock Option Plan is $1,108,172, of which $108,412 has been expended.
The
remaining $996,760 is expected to be recognized over a period of
2.5
years.
|
f.
|
Options
for the remaining 2,000,000 shares of common stock are reserved for
issuance in future periods.
|
2.
|
Stock
Options granted to the Company's
CEO.
|
a.
|
On
August 24, 2008 the Board of Directors of the Company has approved
the
grant of 5,000,000 Warrants to the Company's CEO, Mr. Lev
Zaidenberg.
|
b.
|
Each
of the aforementioned Warrants entitled Mr. Zaidenberg to purchase
a
single share of the Company's common stock, subject to the following
exercise prices and periods:
|
Warrants
|
|
Exercise
Price
|
|
Exercisable
Until
|
|
2,000,000
|
|
$
|
0.36
|
|
|
December
31, 2010
|
|
1,000,000
|
|
$
|
0.50
|
|
|
June
30, 2011
|
|
400,000
|
|
$
|
0.75
|
|
|
December
31,2011
|
|
400,000
|
|
$
|
1.05
|
|
|
June
30, 2012
|
|
400,000
|
|
$
|
1.50
|
|
|
December
31, 2012
|
|
400,000
|
|
$
|
2.00
|
|
|
June
30, 2013
|
|
400,000
|
|
$
|
2.50
|
|
|
December
31,2013
|
|
c.
|
The
entire aforementioned warrants are fully vested upon
grant.
|
d.
|
Total
fair value of aforementioned warrants is $7,542,550, all recognized
as
stock based compensation expenses in the third quarter of
2008.
|
3.
|
Other
Stock Options grants:
|
a.
|
Until
September 30, 2008 the Company has granted several of its subsidiaries'
officers, directors and service providers with 1,795,080 Warrants.
|
b.
|
Each
such Warrant represents the right to purchase a single share of the
Company's common stock, and is subject to various exercise prices,
periods
and vesting.
|
c.
|
As
of September 30, 2008, total fair value of all such outstanding warrants
was $615,438, out of which $170,00 have been recognized in 2007,
$336,140
in 2008, and the remaining $109,298 is expected to be recognized
over a
period of 2.6 years.
|
ENERGTEK
INC.
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Note
3 - Stock Based Compensation (Cont.)
4.
|
The
following table summarizes the changes in the above stock options
for
2008:
|
|
|
Stock
Options
|
|
Weighted
Average Exercise Price
|
|
Weighted
Average Remaining Contractual Term (as of September 30,
2008)
|
|
Fair
Value
|
|
Outstanding
December 31, 2007
|
|
|
1,488,000
|
|
$
|
0.3
|
|
|
4.6
|
|
$
|
347,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
during 2008
|
|
|
6,307,080
|
|
$
|
0.8
|
|
|
3.5
|
|
$
|
8,935,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
during 2008
|
|
|
101,000
|
|
$
|
0.4
|
|
|
5.5
|
|
$
|
17,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
September 30, 2008
|
|
|
7,694,080
|
|
$
|
0.7
|
|
|
3.7
|
|
$
|
9,266,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
as of September 30, 2008
|
|
|
6,978,805
|
|
$
|
0.7
|
|
|
3.6
|
|
$
|
8,176,423
|
|
5.
|
The
fair value of each of the aforementioned stock option is estimated
on the
date of grant using the Black-Sholes option pricing model that uses
the
following assumptions: Expected term is based on the Company’s management
estimate for future behavior; Expected volatility is based on the
historical volatility of the share price for the Company and similar
companies over a period equal to the expected term; The risk free
rate is
based on the U.S. Treasury bonds with constant maturity for a term
consistent with the expected term of the award, as in effect on the
day of
grant.
|
6.
|
The
fair value of options granted during the 9 month period ended September
30, 2008 was estimated using the following assumptions: (a) average
expected term of the option of 2.1 years (b) average risk free interest
rate of 1.88% (c) dividend yield of 0% and (d) volatility of
79.8%.
|
Note
4 - Going Concern
The
Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course
of
business. The Company will need additional working capital for its future
planned expansion of activities and to service its debt, which raises doubt
about its ability to continue as a going concern. Continuation of the Company
as
a going concern is dependent upon obtaining sufficient capital to be successful
in that effort. The accompanying consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty.
Item
2.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
As
used
in this Form 10-Q, references to the “Company”, “Corporation”, “Energtek,” “we,”
“our” or “us” refer to Energtek Inc. or to Energtek Inc. together with its
subsidiaries, unless the context otherwise indicates.
This
Management’s Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the financial statements and
the
notes thereto included elsewhere in this Form 10-Q.
Forward-Looking
Statements
This
Form
10-Q contains forward-looking statements. Any statements contained in this
Form
10-Q that are not statements of historical fact may be deemed to be
forward-looking statements. You can identify forward-looking statements as
those
that are not historical in nature, particularly those that use terminology
such
as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,”
“estimates,” “believes,” “plans,” “projects,” “predicts,” “potential,” or
“continue” or the negative of these similar terms. In evaluating these
forward-looking statements, you should consider various factors, including
the
following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently
and
operate profitably, (c) whether we are able to generate sufficient revenues
or
obtain financing to sustain and grow our operations, (d) whether we are able
to
successfully fulfill our primary requirements for cash. The Company’s actual
results may differ significantly from the results projected in the
forward-looking statements. The Company assumes no obligation to update
forward-looking statements, except as otherwise required under the applicable
federal securities laws.
Overview
We
were
incorporated under the laws of the state of Florida on November 18, 1998 under
the name “Elderwatch, Inc.” On September 20, 2006, we changed our Company’s
state of incorporation from Florida to Nevada in the merger of Elderwatch,
Inc.
with and into its wholly-owned subsidiary, Energtek Inc., a Nevada corporation,
which was formed for such purpose. Simultaneously with such merger, we changed
our Company name from "Elderwatch, Inc." to "Energtek Inc." in order to better
reflect our proposed business operations. We also increased the number of our
authorized shares of common stock from 50,000,000 to 250,000,000 shares, and
decreased the authorized number of our preferred shares from 10,000,000 to
5,000,000 shares. On October 30, 2006, we implemented a one for three forward
stock split of our common stock and further increased the authorized shares
of
our common stock to 750,000,000 shares, par value $0.001.
On
or
about May 24, 2006, we decided to engage in the field of clean energy
technologies with an emphasis on Natural Gas Vehicles (“NGV”) and Natural Gas
transportation. We are currently preparing our infrastructure for operations
through our subsidiaries. We intend to focus on:
|
·
|
Identifying
and assessing alternative energy technologies and opportunities;
and
|
|
·
|
Acquiring,
establishing and supporting the activities of alternative energy
operating
companies in the U.S., Israel, India, the Ukraine and Southeast
Asia.
|
The
Company enables the conversion of vehicles, especially two and three wheelers,
into natural
gas
powered vehicles, allowing this much cleaner and cheaper fuel to replace other
more expensive and environmentally damaging fuel sources.
We
currently have no business operations or revenues. We are devoting substantially
all of our efforts to establishing our new business. We currently have seven
subsidiaries and one affiliate. All of our subsidiaries and our affiliate are
in
the development stage. Following the changes in the market conditions, that
abruptly reflected on the financial markets starting September 2008, the Board
and the management of the Company implemented a program (the "Streamlining
Plan") aimed to focus on continuous marketing activities for the products of
the
Company in the Asian markets, while delaying or stopping activities in other
operational fronts, reducing the current expenses of the Company.
We
have
the following seven subsidiaries:
|
1.
|
Moregastech
LLC, a Nevada limited liability company registered on February
22,
2007;
|
|
2.
|
Primecyl
LLC, a New York limited liability company registered on October 27,
2006;
|
|
3.
|
Energtek
Products Ltd., a company organized under the laws of the State of
Israel
on September 3, 2008;
|
|
4.
|
GATAL
(Natural Gas for Israel) Ltd., a company organized under the laws
of the
State of Israel on November 16,
2006;
|
|
5.
|
Angstore
Technologies Ltd., a company organized under the laws of the State
of
Israel on May 25, 2003;
|
|
6.
|
Ukcyl
Ltd., a company registered in Ukraine on January15, 2007 (99.5% ownership
through Primecyl LLC); and
|
|
7.
|
Energtek
Philippines Inc., a company registered in Philippines on June 13,
2008.
|
|
8.
|
Energtek
Far East - a company registered in Singapore on June 25
,2008
|
We
also
own, through Moregastech LLC, 50% of the issued and outstanding shares of
Moregastech India Private Limited, a company registered in India.
The
business conducted or under development through our subsidiaries and our
affiliate is:
|
·
|
Moregastech
LLC:
Supply of NGV infrastructure and high-pressure
equipment;
|
|
·
|
Energtek
Products Ltd.:
Development
of natural gas (“NG”) bulk transportation
technologies;
|
|
·
|
GATAL
Ltd.:
Distribution of NG utilizing bulk NG transportation technology, and
facilitator of NGV projects;
|
|
·
|
Angstore
Technologies Ltd.:
Development of Adsorbed Natural Gas (“ANG”) storage
technology;
|
|
·
|
Ukcyl
Ltd.:
Manufacturer
of high-pressure gas storage tanks
;
Following the Streamlining Plan, the activities in this subsidiary
have
been substantially reduced. Recently, the Board has decided on a
full
cease of these activities.
|
|
·
|
Energtek
Philippines Inc.:
Provision
of solution for conversion of two of and three wheeled vehicles into
NG
powered vehicles; and
|
|
·
|
MoreGasTech
India Private Limited:
Marketing of the Company's products and solutions. Possible manufacturing
and distribution of NGV equipment and pipeless gas supply
technology.
|
We
intend
to further acquire or establish additional subsidiaries in selected countries,
in order to sustain our business activities in such countries. Specific business
development efforts are
ongoing
in the Philippines, India, Israel, Thailand, and Indonesia.
Plan
of Operation
Over
the
next twelve months, we intend to continue investing and engaging mainly in
the
field of NG. We intend to develop the activities in which we have invested
and
increase our research and development efforts. We also intend to continue
analyzing markets, projects and investments proposed to us in relevant areas.
The
expansion of activities that already took place and the expansion that is
planned will require the expansion of the personnel of the Company and its
subsidiaries. Our engineering and public relations personnel have been
increased. Following the Streamlining Plan we have delayed further increases
in
our staff, which will be required as the operations develop.
As
of
November 12, we are working in India for receiving the authorities' approvals
for our transportation solutions, and we are investing in parallel in marketing
efforts towards the time that the permits will be in place. In Indonesia we
are
involved in marketing efforts; we have signed two non-binding Memorandums of
Understanding for joint natural gas distribution activities, and we are working
both on operational and legal aspects to transform these Understandings into
agreements. We are working in the Philippines on the instrumentation of
conversion of tricycles to the "CNG-lite", concentrating as of now in receiving
all the required permits for these activities. In all the markets we are
checking the possibility of local financing for the activities.
Material
Changes in Financial Condition
On
September 30, 2008 we had cash and cash equivalents (including total deposits
of
$514,831) of $2,169,682, a decrease of approximately 14.2% as compared to cash
and cash equivalents of $2,527,681 on December 31, 2007. Although accounts
receivable and prepaid expenses increased by approximately 17.5%, from $410,843
on December 31, 2007 to $483,859 on September 30, 2008, and we had inventory
valued at $17,399 on September 30, 2008 as compared to no inventory on December
31, 2007, total current assets dropped by approximately 9.1%, from $2,938,524
on
December 31, 2007 to 2,670,940 on September 30, 2008. The drop in current assets
resulted primarily from a decrease in net cash received from financing
activities, including issuances of common stock and warrant exercises, which
amounted to $2,535,500 and $5,188,262, respectively, in the three and nine
month
periods ended September 30, 2007, as compared to $0 and $2,845,483,
respectively, in the three and nine month periods ended September 30,
2008.
Material
changes were also recorded in advances and deposits, which increased by
approximately 73.7% from $33,337 on December 31, 2007 to $57,915 on September
30, 2008. Advances and deposits consist primarily from deposits in bank and
prepaid expenses to car rental companies. The increase in advances and deposits
reflects primary increase in investing in bank deposits for period more than
3
months, and as a result additional deposits that the Company has made to car
rental companies.
In
addition, the value of our fixed assets increased by approximately 176.6%,
from
$185,577 on December 31, 2007 to $513,351 on September 30, 2008, as a result
of
investments in fixed assets of our Ukrainian company related to
manufacturing
of high-pressure gas storage tanks plant.
.
Our
liabilities pursuant to short term loans decreased by approximately 14.2%,
from
$468,965 on
December
31, 2007 to $402,467 on September 30, 2008, partial repayment of a loan to
former related party.
Accounts
payable and accrued liabilities increased by approximately 27.5%, from $239,448
on December 31, 2007 to $305,289 on September 30, 2008, as a result of increase
in the Company's volume of activity.
Material
Changes in Results of Operations
The
Company has not generated any revenues to date. Our net loss in the nine months
ended September 30, 2008 was $11,136,137, an increase of approximately 304%
as
compared to our net loss of $2,756,501 in the nine months ended September 30,
2007. In the three months ended September 30, 2008 our net loss was $9,035,081,
an increase of 868.1% as compared to our net loss of $933,285 in the three
months ended September 30, 2007. The increase in losses resulted primarily
from
stock based compensation expenses of $8,166,292, including the effects of stock
based compensation pursuant to our 2008 Israeli Employees Stock Plan, and
issuance of warrants to the Company's CEO, as described in more detail in
footnote 3 in the accompanying financial statements.
The
Company’s expenses include consulting expenses, stock based compensation,
research and development expenses and general and administrative expenses.
Total
operating expenses increased by approximately 305.3% to $11,133,651 in the
nine
months ended September 30, 2008, from $2,747,342 in the nine months ended
September 30, 2007. In the three months ended September 30, 2008 total operating
expenses were $9,058,879, an increase of 863.02% from operating expenses on
$940,736 in the three months ended September 30, 2007. The increases in
operating expenses resulted primarily from stock based compensation expenses
recorded in the third quarter of this year. With the implementation of the
Streamlining plan the Company expects quarterly expenses. In he context of
the
implementation of the Streamlining Plan, Eurospark S.A. has agreed to reduce
the
charges for the services provided by the CEO of the Company. The new monthly
charges, effective as of November 2008, that shall cover the salary, the
additional costs related to the Salary and the coverage of car expenses shall
amount to $14,670.
Consulting
Expenses
The
Company incurs consulting expenses in connection with the analysis of business
opportunities. In the nine months ended September 30, 2008 we incurred $213,878
in consulting expenses, a decrease of almost 50% as compared to consulting
expenses of $421,615 in the nine month period ended September 30, 2007. In
the
three month period ended September 30, 2008 we incurred $58,659 in consulting
expenses, a decrease of approximately 47.3% as compared to consulting expenses
of $111,218 in the three month period ended September 30, 2007. These decreases
resulted primarily from an increase in the number of employees of the Company
and less reliance on independent consultants.
Research
and Development Expenses
.
In
the
nine months ended September 30, 2008 we incurred $653,660 in research and
development expenses (not including $428,172 of stock based compensation that
is
related directly to our research and development activities), a decrease of
approximately 44.9% as compared to research and development expenses of
$1,185,442 in the nine month period ended September 30, 2007. In the three
month
period ended September 30, 2008 we incurred $257,104 in research and development
expenses (not including $428,172 of stock based compensation that is related
directly to our research and development activities), a decrease of
approximately 33.3% as compared to research and development expenses of $385,289
in the three month period ended September 30, 2007. In the nine months period
ended September 30, 2007 we recorded an expense of $799,417 in connection with
our acquisition of Angstore Technologies Ltd. The acquisition was accounted
for
as a purchase business combination. The consideration paid in the acquisition
has been accounted for under FAS141 "Business Combinations". The Company
allocated the total amount above to IPRD and expended it immediately in
accordance with fin
4
(
Applicability
of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase
Method (An Interpretation of FASB Statement No. 2))
If
the
said expense is neutralized the comparative figures will show the significant
increase in in-house research and development expenses.
General
and Administrative Expenses.
General
and administrative expenses include marketing and business development efforts,
management compensation, public and investor relations expenses, rent,
professional fees, telephone, travel and other general corporate expenses.
In
the
nine months ended September 30, 2008 we incurred $2,099,821 in general and
administrative expenses (not including $7,738,120 of stock based compensation),
an increase of approximately 84.1% as compared to general and administrative
expenses of $1,140,285 in the nine month period ended September 30, 2007. In
the
three month period ended September 30, 2008 we incurred $730,324 in general
and
administrative expenses (not including $7,584,620 of stock based compensation),
an increase of almost 64.4.0% as compared to general and administrative expenses
of $444,229 in the three month period ended September 30, 2007. These increases
resulted primarily from the increased marketing and business development
activities, and increased salary, commissions and travel expenses.
Interest
Income (Losses) Net.
In
the
nine months ended September 30, 2008 we incurred $2,486 in net interest
expenses, a decrease of approximately 72.9% as compared to interest expenses
of
$9,159 in the nine months ended September 30, 2007. In the three month ended
September 30, 2008 we earned net interest in the amount of $23,798, an increase
of almost 220% as compared to net interest in the amount of $7,451 earned in
the
three month period ended September 30, 2007. The increase in earned net interest
reflects an increase in an exchange rate of the US dollar against the New
Israeli Shekel.
Going
Concern Consideration
As
of
September 30, 2008, the Company has recorded an accumulated deficit of
$15,657,174. The Company's consolidated financial statements were prepared
using
generally accepted accounting principles applicable to a going concern, which
contemplate the realization of assets and the liquidation of liabilities in
the
normal course of business. Additional funds are required in order to finance
planned expansion activities and to service debt, which raises doubt about
our
ability to continue as a going concern. Continuation of the Company as a going
concern is dependent upon our ability to obtain sufficient capital. There can
be
no assurance that we will be able to raise additional capital on acceptable
terms, if at all. The accompanying consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty.
Item
3.
Quantitative
and Qualitative Disclosures About Market Risk.
Smaller
reporting companies are not required to provide the information required by
this
Item.
Item
4T.
Controls
and Procedures.
Evaluation
of Disclosure Controls and Procedures
Our
disclosure controls and procedures are designed to ensure that information
required to be disclosed in reports that we file or submit under the Securities
Exchange Act of 1934 is recorded,
processed,
summarized and reported within the time periods specified in the rules and
forms
of the United States Securities and Exchange Commission. Our principal executive
and principal financial officers have evaluated the effectiveness of our
"disclosure controls and procedures" (as defined in the Securities Exchange
Act
of 1934 Rules 13a-15(e) and 15d-15(e))
as
of the
end of the period covered by this Quarterly Report on Form 10-Q
and
have
concluded that our disclosure controls and procedures are effective to ensure
that information relating to the Company is recorded, processed, summarized,
and
reported in a timely manner.
Changes
in Internal Controls over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over our financial reporting. Internal control over financial reporting
is a process designed by, or under the supervision of, our principal executive
and principal financial officers and effected by our board of directors,
management and other personnel, to provide reasonable assurance to our
management and the board of directors regarding the reliability of financial
reporting and the preparation and fair presentation of financial statements
for
external purposes in accordance with generally accepted accounting principles.
This process includes policies and procedures 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 directors
of
the Company, 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.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurances with respect
to financial statement preparation and presentation. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may decline.
Management
has assessed of the effectiveness of the Company's internal control over
financial reporting as of September 30, 2008 and has concluded that our internal
control over financial reporting is effective. We have not identified any
current material weaknesses, considering the nature and extent of our current
operations, or any risks or errors in our financial reporting under current
operations. There was no change in our internal control over financial reporting
that occurred during the fiscal quarter ended September 30, 2008, that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
PART
II - OTHER INFORMATION
Item
1.
Legal
Proceedings.
During
the quarter ended September 30, 2008, there were no pending legal proceedings
to
which the Company was a party or in which any director, officer or affiliate
of
the Company, any owner of record or beneficially of more than 5% of any class
of
voting securities of the Company, or security holder was a party adverse to
the
Company or had a material interest adverse to the Company.
Item
1A. Risk Factors.
Smaller
reporting companies are not required to provide the information required by
this
Item.
Item
2.
Unregistered
Sales of Equity Securities and Use of Proceeds.
On
September 1, 2008 we issued 87,500 shares of common stock to a certain service
provider in consideration of public and investor relations services provided
.
The shares were issued pursuant to our investor relations agreement with the
service provider, dated June 1, 2008, which provides for monthly payments of
$5,000 and the issuance of an aggregate of 350,000 shares of common stock to
Chelsea Holdings as consideration for public and investor relations services.
The shares were issued without registration, pursuant to an exemption from
the
registration requirement of the Securities Act of 1933 under Section 4(2) of
the
Act, in a transaction not involving a public offering.
On
September 1, 2008 we issued 6,000 shares of common stock to a certain service
provider in consideration of public and investor relations services provided.
The shares were issued pursuant to a verbal agreement, which provides for
monthly payments of $1,500 and the issuance of an aggregate of 10,000 shares
of
common stock to the service provider in consideration of his services. The
aforementioned securities were issued in reliance upon the exemption afforded
by
the provisions of Regulation S, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, based on the fact
that
at the time of the offer and sale of such securities to such service providers,
the service providers were not inside the U.S., and in reliance on each of
the
service providers'' representation that such person was not a "U.S. person"
(as
defined in Regulation S) and is not acquiring the securities for the account
or
benefit of any U.S. person. In addition, the securities bear a Regulation S
restrictive legend.
On
April
9, 2008 we granted 100,080 warrants to a director of our subsidiary. Each
warrant entitles the director with right to purchase a single share of our
common stock, at exercise price of $0.70. Warrants vest over a period of three
years, and remain exercisable over a period of 3 years thereafter. The
aforementioned securities were issued in reliance upon the exemption afforded
by
the provisions of Regulation S, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, based on the fact
that
at the time of the offer and sale of such securities to such service providers,
the service providers were not inside the U.S., and in reliance on each of
the
service providers'' representation that such person was not a "U.S. person"
(as
defined in Regulation S) and is not acquiring the securities for the account
or
benefit of any U.S. person. In addition, the securities bear a Regulation S
restrictive legend.
On
April
9, 2008 we granted 102,000 warrants to a consultant of the Company. Each warrant
entitles the consultant with right to purchase a single share of our common
stock, at exercise price of $1.26. Warrants vest over a period of one year,
and
remain exercisable until December 31, 2011. The aforementioned securities were
issued were issued without registration, pursuant to an exemption from the
registration requirement of the Securities Act of 1933 under Section 4(2) of
the
Act, in a transaction not involving a public offering.
On
August
22, 2008 we granted 30,000 warrants to an advisor of the Company.
Each
such warrant entitles the director with right to purchase a single share of
our
common stock, at exercise price of $0.50 until December 31, 2010. The
aforementioned securities were issued in reliance upon the exemption afforded
by
the provisions of Regulation S, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, based on the fact
that
at the time of the offer and sale of such securities to such service providers,
the service providers were not inside the U.S., and in reliance on each of
the
service providers'' representation that such
person
was not a "U.S. person" (as defined in Regulation S) and is not acquiring the
securities for the account or benefit of any U.S. person. In addition, the
securities bear a Regulation S restrictive legend.
On
September 22 we Granted options to purchase 995,000 shares of our common stock,
to an officer and a director of the Company. Options are subject to certain
vesting and expiry schedules, and exercise prices between $0.36 and $1.50.
The
aforementioned securities were issued in reliance upon the exemption afforded
by
the provisions of Regulation S, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, based on the fact
that
at the time of the offer and sale of such securities to such service providers,
the service providers were not inside the U.S., and in reliance on each of
the
service providers'' representation that such person was not a "U.S. person"
(as
defined in Regulation S) and is not acquiring the securities for the account
or
benefit of any U.S. person. In addition, the securities bear a Regulation S
restrictive legend.
On
September 22 we granted 5,000,000 warrants, all fully vested, to our CEO, Mr.
Lev Zaidenberg. Each such warrant entitles Mr. Zaidenberg with the right to
purchase a single share of our common stock, at exercise price ranging from
$0.36 to $2.5. Warrants are exercisable over an average period of 3.2 years.
The
aforementioned securities were issued in reliance upon the exemption afforded
by
the provisions of Regulation S, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, based on the fact
that
at the time of the offer and sale of such securities to such service providers,
the service providers were not inside the U.S., and in reliance on each of
the
service providers'' representation that such person was not a "U.S. person"
(as
defined in Regulation S) and is not acquiring the securities for the account
or
benefit of any U.S. person. In addition, the securities bear a Regulation S
restrictive legend.
Item
3.
Defaults
Upon Senior Securities.
None.
Item
4.
Submission
of Matters to a Vote of Security Holders.
None.
Item
5.
Other
Information.
None.
Item
6.
Exhibits
Exhibit
No.
|
|
Description
|
31.1
|
|
Principal
Executive Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Principal
Financial Officer Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Principal
Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
32.2
|
|
Principal
Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Dated:
November
13, 2008
ENERGTEK
INC.
|
|
|
|
|
By:
|
/s/
Lev Zaidenberg
|
|
By:
|
/s/
Doron Uziel
|
Name:
|
Lev
Zaidenberg
|
|
Name:
|
Doron
Uziel
|
Title:
|
Chief
Executive Officer
(Principal
Executive Officer)
|
|
Title:
|
Treasurer
(Principal
Financial Officer)
|
Grafico Azioni Energtek (CE) (USOTC:EGTK)
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Grafico Azioni Energtek (CE) (USOTC:EGTK)
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