|
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.
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. 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 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.
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, 2017 and
2016, inventory consisted of pipe available for sale.
Property and Equipment.
Property
and equipment are stated at cost. Expenditures for property and equipment and items that substantially increase the
useful lives of existing assets are capitalized at cost and depreciated. Routine expenditures for repairs and maintenance are expensed
as incurred. The cost and related accumulated depreciation of property and equipment disposed of are eliminated from
the accounts, and any resulting gain or loss is recognized. Depreciation is provided utilizing the straight-line method
over the estimated useful lives of the assets capitalized.
Valuation of Long-Lived Assets.
In
the event facts and circumstances indicate that carrying amounts of long-lived assets may be impaired, the Company evaluates the
recoverability of its long-lived assets using the estimated future undiscounted cash flows associated with the asset compared to
the asset’s carrying amount to determine if a write-down is required. 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, 2016 to December 31, 2017
At December 31, 2017, total assets amounted
to $3,842,274 compared to $4,238,898 at December 31, 2016, a decrease of $396,624, or 8.72%. The decrease is primarily
due to a decrease in the Company’s cash of $121,900, a decrease in property and equipment held for operations of $326,203,
and a decrease in inventory of $104,748. These decreases were partially offset by an increase in accounts receivable of $28,810
and an increase in other assets of $92,455.
Our liabilities at December 31, 2017, totaled
$8,788,538 compared to $7,877,136 at December 31, 2016, an increase of $911,402, or 11.57%. The increase is primarily
due to an increase in accounts payable of $364,154, and an increase in due to affiliates of $341,302. These increases were partially
offset by a decrease in accrued liabilities of $90,107.
Total stockholder’s equity decreased
from ($3,638,237) at December 31, 2016, to ($4,946,263) at December 31, 2017. This increase was due to net loss generated
for the year ended December 31, 2017 of $1,308,025.
Cash and Cash Equivalents
The Company’s cash decreased from
$158,068 at December 31, 2016, to $36,168 at December 31, 2017. The decrease in cash and cash equivalents was primarily due to
the Company’s use of cash for operations.
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, 2017 and December 31, 2016, was $903,373 and $1,008,123, respectively. It is anticipated that the Company will
continue its efforts to expand its sales of oilfield pipe.
Property and Equipment
The decrease in property and equipment
of $332,452 is primarily due to depreciation of $367,953 at December 31, 2015 partially offset by the net purchase of equipment
of $41,750.
Accounts Payable
Accounts payable at December 31, 2017 totaled
$978,740 compared to $614,585 at December 31, 2016, an increase of $364,154. This increase is primarily attributable to the purchase
of items used in the ordinary course of business and cost of goods 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. In 2016, the Company issued 12,000
shares to market promotor.
Discussion of Results of Operations
for the Year Ended December 31, 2017 compared to the Year Ended December 31, 2016
Revenues
Our revenue for the year ended December
31, 2017, was $2,559,826 compared to $1,905,711 for the year ended December 31, 2016, an increase of $654,115, or 34.32%. The
increase is attributable primarily to the decrease in exploration technologies of $414,386. This increase was a result of the industry’s
market demand and decreased market competition.
The following table presents the composition
of revenue for the year December 31, 2017 and 2016:
|
|
2017
|
|
|
2016
|
|
|
Variance
|
|
Revenue:
|
|
Dollars
|
|
|
Percentage
|
|
|
Dollars
|
|
|
Percentage
|
|
|
Dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration Technologies
|
|
$
|
1,385,010
|
|
|
|
54.1
|
%
|
|
$
|
970,624
|
|
|
|
50.9
|
%
|
|
$
|
414,386
|
|
Drilling, OCTG, & Equipment Sales
|
|
$
|
95,712
|
|
|
|
3.7
|
%
|
|
$
|
-
|
|
|
|
0.0
|
%
|
|
$
|
95,712
|
|
Warehouse & Storage Fees
|
|
$
|
293,220
|
|
|
|
11.5
|
%
|
|
$
|
293,382
|
|
|
|
15.4
|
%
|
|
$
|
(162
|
)
|
Rebillable Income
|
|
$
|
278,760
|
|
|
|
10.9
|
%
|
|
$
|
333,047
|
|
|
|
17.5
|
%
|
|
$
|
(54,287
|
)
|
Manufacturing
|
|
$
|
507,124
|
|
|
|
19.8
|
%
|
|
$
|
308,658
|
|
|
|
16.2
|
%
|
|
$
|
198,466
|
|
Total Revenue
|
|
$
|
2,559,826
|
|
|
|
100.0
|
%
|
|
$
|
1,905,711
|
|
|
|
100.0
|
%
|
|
$
|
654,114
|
|
Cost of Revenue and Gross Profit
Our cost of revenue for the year ended
December 31, 2017, was $2,367,411, or 92.48% of revenues, compared to $1,748,203, or 91.73% of revenues, for the year ended December
31, 2016. The overall increase in our cost of revenue is primarily due to the increase in Subcontract Laor. The primary
reason for the increase in cost of sales as a percentage of revenues was due to the increase in drilling, OCTG, & Equipment
Sales and Exploration Technologies 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.
The following table presents the composition of cost of revenue
for the year ended December 31, 2017 and 2016:
|
|
2017
|
|
|
2016
|
|
|
Variance
|
|
Cost of Revenue:
|
|
Dollars
|
|
|
Percentage
|
|
|
Dollars
|
|
|
Percentage
|
|
|
Dollars
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee and Related Costs
|
|
$
|
436,564
|
|
|
|
18.4
|
%
|
|
$
|
341,587
|
|
|
|
19.5
|
%
|
|
$
|
94,977
|
|
Materials and Supplies
|
|
|
300,639
|
|
|
|
20.3
|
%
|
|
|
88,152
|
|
|
|
29.9
|
%
|
|
$
|
212,487
|
|
Subcontract Labor
|
|
|
679,631
|
|
|
|
28.7
|
%
|
|
|
344,501
|
|
|
|
19.7
|
%
|
|
$
|
335,130
|
|
Depreciation
|
|
|
257,852
|
|
|
|
10.9
|
%
|
|
|
269,570
|
|
|
|
15.4
|
%
|
|
$
|
(11,717
|
)
|
Repairs and Maintenance
|
|
|
178,826
|
|
|
|
7.6
|
%
|
|
|
45,929
|
|
|
|
2.6
|
%
|
|
$
|
132,898
|
|
Insurance
|
|
|
44,835
|
|
|
|
1.9
|
%
|
|
|
78,569
|
|
|
|
4.5
|
%
|
|
$
|
(33,734
|
)
|
Other Costs
|
|
|
469,063
|
|
|
|
19.8
|
%
|
|
|
579,896
|
|
|
|
33.2
|
%
|
|
$
|
(110,833
|
)
|
Total Cost of Revenues
|
|
$
|
2,367,411
|
|
|
|
100.0
|
%
|
|
$
|
1,748,203
|
|
|
|
100.0
|
%
|
|
$
|
619,207
|
|
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.
Operating Expenses
For the year ended December 31, 2017, our
operating expenses totaled $1,479,596, as compared to $1,172,379 in 2016, representing an increase of $307,217, or 26.2%. The
largest component of our operating expenses for 2017 consists of salaries and wages, professional services, and other costs. Salaries
and wages for general and administrative personnel was $641,077 for the year ended December 31, 2017, compared to $420,154 for
the year ended December 31, 2016, an increase of $220,923, or 52.58%. The increase is attributable to the increase in administrative
pay pertaining to the hiring of an operations manager and an additional salesman.
Professional services expense increased
from $169,593 for the year ended December 31, 2016, to $181,715 for the year ended December 31, 2017, an increase of $12,122, or
7.15%. The decrease is primarily a result of an increase in legal fees.
Other costs totaled $190,916 for the year
ended December 31, 2017, as compared to $166,100 for the year ended December 31, 2016, an increase of $24,816, or 14.94%. Other
costs for both the year ended December 31, 2017, and for the year ended December 31, 2016, 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 income
from lawsuit settlement, investment income, gain or loss on sale of assets, and interest expense. For the year ended
December 31, 2017, other expense totaled $20,845, as compared to other expense, net of other income, totaled $275,685 for the year
ended December 31, 2016. The increase in Other Income/ (Expense) is attributable primarily to the increase of interest expense.
Investment income, which consists of interest,
dividends, realized gains and losses, and unrealized gains and losses, amounted to $2,107 investment expense for the year ended
December 31, 2017, compared to investment expense of $2,399 for the year ended December 31, 2016. For the year ended December
31, 2017, investment expense consisted primarily of interest income of $125 and unrealized loss of $2,232.
Interest expense totaled $185,952 for the
year ended December 31, 2017, as compared to $343,761 for the year ended December 31, 2016, a decrease of $157,809, or 45.91%. 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, 2017, the
income tax return was not completed so no tax information is available at the time of the filing of this report.
Capital Resources and Liquidity
At December 31, 2017, we had $36,168 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.
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.
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 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
ENERGY & TECHNOLOGY, CORP.
Financial Statements
December 31, 2017 and 2016
Contents
ENERGY & TECHNOLOGY, CORP.
Consolidated Balance Sheets
December 31, 2017 and 2016
|
|
2017
|
|
|
2016
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Assets
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
36,168
|
|
|
$
|
158,068
|
|
Investments
|
|
|
2,289
|
|
|
|
4,521
|
|
Accounts Receivable
|
|
|
|
|
|
|
|
|
Trade, Net
|
|
|
273,183
|
|
|
|
244,373
|
|
Inventory, Net
|
|
|
903,373
|
|
|
|
1,008,121
|
|
Prepaid Expenses
|
|
|
50,835
|
|
|
|
7,393
|
|
Other Current Assets
|
|
|
126,168
|
|
|
|
33,713
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
1,392,016
|
|
|
|
1,456,188
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment, Net
|
|
|
|
|
|
|
|
|
Held for Operations, Net
|
|
|
2,099,840
|
|
|
|
2,426,044
|
|
Construction in Progress
|
|
|
350,418
|
|
|
|
356,667
|
|
|
|
|
2,450,258
|
|
|
|
2,782,710
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
3,842,274
|
|
|
$
|
4,238,898
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
$
|
978,740
|
|
|
$
|
614,585
|
|
Accrued Liabilities
|
|
|
82,035
|
|
|
|
172,142
|
|
Accrued Rent
|
|
|
2,407,500
|
|
|
|
2,257,500
|
|
Current Maturities of Notes Payable
|
|
|
4,425,147
|
|
|
|
4,270,179
|
|
Due to Affiliates
|
|
|
856,687
|
|
|
|
515,385
|
|
Income Taxes Payable
|
|
|
25,287
|
|
|
|
25,287
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
8,775,396
|
|
|
|
7,855,079
|
|
|
|
|
|
|
|
|
|
|
Long-Term Liabilities
|
|
|
|
|
|
|
|
|
Notes Payable
|
|
|
13,142
|
|
|
|
22,057
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
8,788,538
|
|
|
$
|
7,877,136
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Preferred Stock - $.001 Par Value; 10,000,000 Shares Authorized, None Issued
|
|
|
-
|
|
|
|
-
|
|
Common Stock - $.001 Par Value; 250,000,000 Shares Authorized, 169,198,117 Shares and 169,186,117 shares Issued at December 31, 2017, and 2016, respectively
|
|
|
169,198
|
|
|
|
169,198
|
|
Paid-In Capital
|
|
|
4,209,592
|
|
|
|
4,209,592
|
|
Treasury Stock, at cost (3,637,351 Shares)
|
|
|
(4,076,441
|
)
|
|
|
(4,076,441
|
)
|
Retained Earnings
|
|
|
(5,248,612
|
)
|
|
|
(3,940,587
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
(4,946,263
|
)
|
|
|
(3,638,237
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
3,842,274
|
|
|
$
|
4,238,898
|
|
ENERGY & TECHNOLOGY, CORP.
Consolidated Statements of Operations
For the Years Ended December 31, 2017 and 2016
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,559,826
|
|
|
$
|
1,905,711
|
|
Cost of Revenues
|
|
|
|
|
|
|
|
|
Materials and Supplies
|
|
|
300,639
|
|
|
|
88,152
|
|
Subcontract Labor
|
|
|
679,631
|
|
|
|
344,501
|
|
Depreciation
|
|
|
257,852
|
|
|
|
269,570
|
|
Employee and Related Costs
|
|
|
436,564
|
|
|
|
341,587
|
|
Repairs and Maintenance
|
|
|
178,826
|
|
|
|
45,929
|
|
Insurance
|
|
|
44,835
|
|
|
|
78,569
|
|
Other Costs
|
|
|
469,063
|
|
|
|
579,896
|
|
|
|
|
|
|
|
|
|
|
Total Cost of Revenues
|
|
|
2,367,411
|
|
|
|
1,748,203
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
192,415
|
|
|
|
157,508
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
Selling, General, and Administration
|
|
|
1,369,495
|
|
|
|
1,061,878
|
|
Depreciation
|
|
|
110,101
|
|
|
|
110,501
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
1,479,596
|
|
|
|
1,172,379
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(1,287,181
|
)
|
|
|
(1,014,871
|
)
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
Income from Lawsuit Settlement
|
|
|
167,213
|
|
|
|
70,475
|
|
Interest Income
|
|
|
125
|
|
|
|
865
|
|
Interest Expense
|
|
|
(185,952
|
)
|
|
|
(343,761
|
)
|
Other Income
|
|
|
(2,232
|
)
|
|
|
(3,264
|
)
|
|
|
|
|
|
|
|
|
|
Total Other Expense
|
|
|
(20,845
|
)
|
|
|
(275,685
|
)
|
|
|
|
|
|
|
|
|
|
Loss Before Provision for Income Taxes
|
|
|
(1,308,026
|
)
|
|
|
(1,290,556
|
)
|
|
|
|
|
|
|
|
|
|
Benefit for Income Taxes
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(1,308,026
|
)
|
|
$
|
(1,290,556
|
)
|
|
|
|
|
|
|
|
|
|
Loss per Share - Basic
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss per Share - Diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
ENERGY & TECHNOLOGY, CORP.
Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2016 and December 31, 2017
|
|
Common Stock
|
|
|
Treasury Stock
|
|
|
Additional
Paid-In
|
|
|
Retained
|
|
|
Total
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2016
|
|
|
169,186,117
|
|
|
$
|
169,186
|
|
|
|
(3,637,351
|
)
|
|
$
|
(4,076,441
|
)
|
|
$
|
4,204,564
|
|
|
$
|
(2,650,031
|
)
|
|
$
|
(2,352,722
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Issued
|
|
|
12,000
|
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
|
|
5,027
|
|
|
|
|
|
|
$
|
5,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,290,555
|
)
|
|
$
|
(1,290,555
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
|
169,198,117
|
|
|
$
|
169,198
|
|
|
|
(3,637,351
|
)
|
|
$
|
(4,076,441
|
)
|
|
$
|
4,209,591
|
|
|
$
|
(3,940,586
|
)
|
|
$
|
(3,638,238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017
|
|
|
169,198,117
|
|
|
|
169,198
|
|
|
|
(3,637,351
|
)
|
|
|
(4,076,441
|
)
|
|
|
4,209,591
|
|
|
|
(3,940,586
|
)
|
|
|
(3,638,238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(1,308,025
|
)
|
|
$
|
(1,308,025
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
|
169,198,117
|
|
|
$
|
169,198
|
|
|
$
|
(3,637,351
|
)
|
|
$
|
(4,076,441
|
)
|
|
$
|
4,209,591
|
|
|
$
|
(5,248,611
|
)
|
|
$
|
(4,946,263
|
)
|
ENERGY & TECHNOLOGY, CORP.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2017 and 2016
|
|
2017
|
|
|
2016
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(1,308,025
|
)
|
|
$
|
(1,290,556
|
)
|
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
374,202
|
|
|
|
302,480
|
|
Investments
|
|
|
2,232
|
|
|
|
|
|
Accrued Rent
|
|
|
150,000
|
|
|
|
150,000
|
|
Paid in Capital
|
|
|
|
|
|
|
5,027
|
|
Common Stock Issued
|
|
|
|
|
|
|
12
|
|
Changes in Assets and Liabilities
|
|
|
|
|
|
|
|
|
Trade Receivables
|
|
|
(28,810
|
)
|
|
|
2,295
|
|
Other Receivables
|
|
|
|
|
|
|
187,366
|
|
Inventory
|
|
|
104,748
|
|
|
|
|
|
Prepaid Expenses
|
|
|
(43,442
|
)
|
|
|
5,713
|
|
Accounts Payable
|
|
|
274,048
|
|
|
|
17,119
|
|
Accrued Payroll and Payroll Liabilities
|
|
|
|
|
|
|
101,880
|
|
Income Taxes Payable
|
|
|
|
|
|
|
|
|
Accrued Rent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
|
(475,047
|
)
|
|
|
(518,664
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
(92,455
|
)
|
|
|
14,737
|
|
Other Receivable
|
|
|
|
|
|
|
|
|
Sale of Property and Equipment
|
|
|
|
|
|
|
|
|
Purchase of Property and Equipment
|
|
|
(41,750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
(134,205
|
)
|
|
|
14,737
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Purchase of Treasury Stock
|
|
|
|
|
|
|
|
|
Borrowings (Principal Repayments) to Affiliates
|
|
|
341,299
|
|
|
|
326,321
|
|
Borrowings (Principal Repayments) on Notes Payable
|
|
|
146,053
|
|
|
|
296,693
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Financing Activities
|
|
|
487,352
|
|
|
|
623,014
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
|
(121,900
|
)
|
|
|
119,087
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, Beginning of Year
|
|
|
158,068
|
|
|
|
38,981
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents, End of Year
|
|
$
|
36,168
|
|
|
$
|
158,068
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
Cash Paid During the Period for Interest
|
|
$
|
28,543
|
|
|
$
|
20,153
|
|
|
|
|
|
|
|
|
|
|
Cash Paid During the Period for Income Taxes
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Investing and Financing Activity
|
|
|
|
|
|
|
|
|
Transfer of Property for Reduction of Notes Payable
|
|
|
|
|
|
|
|
|
ENERGY & TECHNOLOGY,
CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
This Financial statement is unaudited
and awaiting for the audited version to be amended. 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.
ENERGY & TECHNOLOGY, CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
|
N
ote 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 for the years ended December
31, 2017 and 2016.
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. At December 31, 2017 and 2016, inventory consisted of pipe available for sale.
Property and Equipment
Property and equipment are stated
at cost. Expenditures for property and equipment and items that substantially increase the useful lives of existing
assets are capitalized at cost and depreciated. Routine expenditures for repairs and maintenance are expensed as incurred. The
cost and related accumulated depreciation of property and equipment disposed of are eliminated from the accounts, and any resulting
gain or loss is recognized. Depreciation is provided utilizing the straight-line method over the estimated useful lives of the
assets capitalized.
Valuation of Long-Lived
Assets
In the event facts and
circumstances indicate that carrying amounts of long-lived assets may be impaired, the Company evaluates the recoverability
of its long-lived assets using the estimated future undiscounted cash flows associated with the asset compared to the
asset’s carrying amount to determine if a write-down is required, pursuant to the provisions of 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. At
December 31, 2017, the balance due from three customers represented 55% of receivables, and sales to those three customers represented
47% of revenues for the year ended December 31, 2017.
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 $10,353 and $7,813, for the year ended December 31, 2017 and 2016,
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.
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.
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.
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.
|
Property and Equipment
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Buildings and Improvements
|
|
$
|
3,157,937
|
|
|
$
|
3,157,937
|
|
|
Equipment
|
|
|
5,975,208
|
|
|
|
5,949,208
|
|
|
Autos and Trucks
|
|
|
276,682
|
|
|
|
260,932
|
|
|
Office Furniture
|
|
|
34,025
|
|
|
|
34,025
|
|
|
Construction in Progress
|
|
|
350,418
|
|
|
|
356,667
|
|
|
|
|
|
9,794,271
|
|
|
|
9,758,769
|
|
|
Less: Accumulated Depreciation
|
|
|
-7,344,013
|
|
|
|
-6,976,059
|
|
|
Total
|
|
$
|
2,450,258
|
|
|
$
|
2,782,710
|
|
Depreciation expense amounted
to $374,202 and $380,070 for the period ended December 31, 2017 and 2016, respectively.
|
Note 4.
|
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, 2017 and December 31, 2016 the total owed is $2,407,500 and $2,257,500, respectively. St. Charles Real Estate Corp LLC is
owned by various members of the Sfeir family.
ENERGY & TECHNOLOGY, CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
Notes payable at December 31,
2017 and December 31, 2016 consist of the following:
|
|
|
2017
|
|
|
2016
|
|
|
Secured fixed term note of $48,601.50 due November 2020; fixed interest rate of 3.39%
|
|
|
22,057
|
|
|
|
30,749
|
|
|
Unsecured variable term note of $3,935,217 ; fixed interest rate of 4.0%
|
|
|
4,416,232
|
|
|
|
4,258,823
|
|
|
Secured fixed term note of $31,905.36 due March 2018; fixed interest rate of 5.4%
|
|
|
-
|
|
|
|
2,664
|
|
|
|
|
$
|
4,438,289
|
|
|
$
|
4,292,236
|
|
|
Less: Current Portion
|
|
|
4,425,147
|
|
|
|
4,270,179
|
|
|
Long-Term Portion
|
|
$
|
13,142
|
|
|
$
|
22,057
|
|
Following are maturities of long-term
debt at December 31, 2017:
|
Fiscal Year Ending
December 31,
|
|
Amount
|
|
|
2018
|
|
$
|
8,280
|
|
|
2019
|
|
|
4,862
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
13,142
|
|
For the year ended December 31,
2017, the Company has filed an extension for income tax purposes. As of the date of this report, the Company does not have any
information as to the nature of the provision for income taxes.
The Company is authorized to
issue 250,000,000 shares of common stock at a par value of $.001 per share. The number of shares issued and outstanding are 165,560,766
and 165,548,766 as of December 31, 2017 and December 31, 2016.
The Company is authorized to
issue 10,000,000 shares of preferred stock. As of December 31, 2017 and December 31, 2016, there were no shares issued and outstanding.
|
Note 8.
|
Earnings per Share
|
Earnings (loss) per share
are calculated in accordance with ASC 260 “Earnings per Share”. The weighted average number of common shares
outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings per share are computed
using the weighted average number of shares and potentially dilutive common shares outstanding. Dilutive potential common
shares are additional common shares assumed to be exercised. Potentially dilutive common shares consist of stock options and
are excluded from the diluted earnings per share computation in periods where the Company has incurred a net loss, as their
effect would be considered anti-dilutive.
There were no potentially dilutive
common stock equivalents as of December 31, 2017, therefore basic earnings per share equals diluted earnings per share for the
year ended December 31, 2017. As the Company incurred a net loss during the year ended December 31, 2017, 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 165,560,766 for the years ended December 31, 2017 and 2016.
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, 2017 and 2016 was $217,516, and
$244,611, respectively.
Minimum future rental payments
under operating leases having remaining terms in excess of one year as of December 31, 2017 are as follows:
|
2018
|
|
|
6,000
|
|
|
2019
|
|
|
6,000
|
|
|
2020
|
|
|
6,000
|
|
|
2019
|
|
|
6,000
|
|
|
Thereafter
|
|
|
64,500
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
88,500
|
|
ENERGY & TECHNOLOGY, CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
|
Note 10.
|
Litigation and Contingent Liabilities
|
Presently, the company does have
pending litigation filed against it involving a former employee suing for the purchase of his stock. In the ordinary course of
our business, we are, from time to time, subject to various legal proceedings, including matters involving employees, customers,
and suppliers. We may enter into discussions regarding settlement of claims or lawsuits, and may enter into settlement agreements,
if we believe settlement is in the best interest of our stockholders. We do not believe that any existing legal proceedings or
settlements, individually or in the aggregate, will have a material effect on our financial condition, results of operations, or
liquidity.
For the year ended December 31,
2017, the Company had three customers which generated revenues in excess of 10% of the Company’s total revenues. Revenues
for these three customers were approximately 68% of total revenues, and total balance due from these two customers at December
31, 2017 was $121,171.
|
Note 12.
|
Estimated Fair Value of Financial Instruments
|
The following disclosure is made
in accordance with the requirements of FASB ASC 825,
Financial Instruments
. Financial instruments are defined as cash and
contractual rights and obligations that require settlement, directly or indirectly, in cash. In cases where quoted market prices
are not available, fair values have been estimated using the present value of future cash flows or other valuation techniques.
The result of these techniques
are highly sensitive to the assumptions used, such as those concerning appropriate discount rates and estimates of future cash
flows, which require considerable judgment. Accordingly, estimates presented herein are not necessarily indicative of the amounts
the Company could realize in a current settlement of the underlying financial instruments. ASC 825 excludes certain financial instruments
and all non-financial instruments from its disclosure requirements. These disclosures should not be interpreted as representing
an aggregate measure of the underlying value of the Company.
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
Amount
|
|
|
Value
|
|
|
Amount
|
|
|
Value
|
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
$
|
2,289
|
|
|
$
|
2,289
|
|
|
$
|
4,521
|
|
|
$
|
4,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,289
|
|
|
$
|
2,289
|
|
|
$
|
4,521
|
|
|
$
|
4,521
|
|
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.
|
Note 13.
|
Subsequent Events
|
In accordance with the subsequent
events topic of the FASB ASC, Topic No. 855,
Subsequent Events
, the Company evaluates events and transactions that occur
after the balance sheet date for potential recognition in the financial statements. The effects of all subsequent events that provide
additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of December
31, 2017. 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 has filed a lawsuit
against a competitor alleging patent infringement. To the date of this financial statement being issued, there is no response from
our competitor in regards to this allegation.