ENERTECK CORP - Quarter Report: 2009 March (Form 10-Q)

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 0-31981

ENERTECK CORPORATION

(Exact name of Registrant as Specified in its Charter)

Delaware		47-0929885
(State or other jurisdiction		(I.R.S. Employer
of incorporation or		Identification No.)
organization)

10701 Corporate Drive, Suite 150
Stafford, Texas		77477
(Address of principal		(Zip Code)
executive offices)

(281) 240-1787

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ¨ No ¨

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 definition 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	¨		Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Yes ¨ No x

State the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date: Common, $.001 par value per share; 19,087,788 outstanding as of May 1, 2009.

PART I - FINANCIAL INFORMATION

ENERTECK CORPORATION

Index to Financial Information

Period Ended March 31, 2009

Item		Page

Item 1 – Consolidated Financial Statements (Unaudited):

Consolidated Balance Sheets		3

Consolidated Statements of Operations		4

Consolidated Statements of Cash Flows		5

Notes to Consolidated Financial Statements		6

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		8

Item 3 – Quantitative and Qualitative Disclosures About Market Risk		15

Item 4T – Controls and Procedures		15

ENERTECK CORPORATION and SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	Unaudited			Audited
	March 31, 2009			Dec. 31, 2008
ASSETS

Current assets
Cash	$	86,365		$	106,240
Inventory		198,190			161,019
Receivables – Trade		19,648			10,036
Receivables - Employee		100			100
Prepaid Expenses		0			11,584
Total current assets	$	304,303			288,979

Intellectual Property	$	2,175,302			2,175,302

Property and equipment, net of accumulated depreciation of $249,028 and $230,968, respectively		89,678			98,091
Total assets	$	2,569,283		$	2,562,372

LIAB. AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities
Notes Payable - Current Portion	$	500,000		$	500,000
Accounts payable		555			8,204
Shareholder Advances		250,000			0
Accrued Interest		30,094			20,001
Other Accrued liabilities		55,000			28,795
Total current liabilities	$	835,649		$	577,000

Long Term Liabilities
Notes Payable	$	500,000		$	500,000
Total Long Term Liabilities	$	500,000		$	500,000


Stockholders’ Equity (Deficit)
Common stock, $.001 par value, 100,000,000 shares authorized, 19,087,788 and 19,087,788 shares issued and outstanding, respectively		19,088			19,088
Additional paid-in capital		20,912,465			20,886,996
Accumulated deficit		(19,697,920	)		(19,400,712	)
Total stockholders’ equity		1,233,634			1,505,373

Total liabilities and stockholders’ equity (deficit)	$	2,569,283		$	2,562,372

ENERTECK CORPORATION and SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months Ended March 31, 2009 and 2008

(Unaudited)

	Three Months Ended
	March 31,
	2009			2008

Revenues	$	21,152		$	120,345
Cost of goods sold		6,054			16,009
Gross profit	$	15,098		$	104,336

General and Administrative Expenses:
Wages	$	184,320		$	106,652
Stock based compensation		25,469			47,074
Depreciation		8,414			9,566
Other Selling, Gen. & Admin. Exp.		84,033			94,970
Total Expenses	$	302,236		$	258,262

Operating Income (loss)	$	(287,138	)	$	(153,926	)

Interest Income		34			4,090
Other Income					624
Interest expense		(10,103	)		(15,230	)

Net Income (loss)	$	(297,207	)	$	(164,442	)

Weighted average shares outstanding:		(0.02	)	$	(0.01	)
Basic and diluted		19,087,788			17,761,359

ENERTECK CORPORATION and SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31, 2009 (Unaudited)

	March 31,			March 31,
	2009			2008
Net (loss)	$	(297,208	)	$	(164,442	)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation		8,414			9,566
Warrants /Options Expense		25,469			47,074
Changes in operating assets and liabilities:
Accounts receivable		(9,612	)		(70,845	)
Inventory		(37,171	)		14,025
Prepaid expenses and other		11,584			14,396
Accounts payable		(7,649	)		29,065
Accrued Interest payable		10,094			15,230
Accrued Liabilities		26,204			(7,056	)
NET CASH USED IN OPERATING ACTIVITIES	$	(269,875	)	$	(112,208	)

CASH FLOWS FROM INVESTING ACTIVITIES
Employee advances		0			250
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	$	(0	)	$	250

CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder Advances	$	250,000		$	0
CASH PROVIDED BY FINANCING ACTIVITIES	$	250,000		$	0

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	$	(19,875	)	$	(111,958	)
Cash and cash equivalents, beginning of Quarter		106,240			319,126
Cash and cash equivalents, end of Quarter	$	86,365		$	207,168
Cash paid for:
Income tax	$	0		$	0
Interest	$	0		$	0

ENERTECK CORPORATION and SUBSIDIARY,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

The accompanying Unaudited interim consolidated financial statements of EnerTeck Corporation have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in EnerTeck’s Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for fiscal 2008 as reported in the Form 10-K have been omitted.

NOTE 2 - INCOME (LOSS) PER COMMON SHARE

The basic net income (loss) per common share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding.

Diluted net income (loss) per common share is computed by dividing the net income applicable to common stockholders, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For 2009 and 2008, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

NOTE 3 – INTELLECTUAL PROPERTY

In July 2006, EnerTeck acquired the EnerBurn technology. The purchase price for the EnerBurn technology is to be paid as follows: (i) $1.0 million cash paid on July 13, 2006, and (ii) promissory note for $2.0 million bearing interest each month at a rate of 4.0% per annum, compounded monthly, and which shall be paid in four annual payments of $500,000 plus accumulated interest to that date on each anniversary of the closing until the entire purchase price is paid in full. The second installment payment on this note of $500,000 plus compounded interest was made in advance of the due date on July 3, 2008. EnerTeck has determined that the life of the intellectual property is indefinite. The asset was tested for impairment as part of the 2008 annual audit and an impairment of approximately $825,000, based solely upon the reported sales since purchase, was taken to meet reporting requirements. We feel, based on current activity that no further impairment will be required.

NOTE 4 - STOCK-BASED COMPENSATION

Effective January 1, 2006, EnerTeck began recording compensation expense associated with stock options and other forms of equity compensation in accordance with Statement of Financial Accounting Standards No. 123R, Share-Based Payment, as interpreted by SEC Staff Accounting Bulletin No. 107. Prior to January 1, 2006, EnerTeck had accounted for stock options according to the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and therefore no related compensation expense was recorded for awards granted with no intrinsic value. EnerTeck adopted the modified prospective transition method provided for under SFAS No. 123R, and, consequently, have not retroactively adjusted results from prior periods. Under this transition method, compensation cost associated with stock options recognized in the first quarter of fiscal 2006 includes the quarterly amortization related to the remaining unvested portion of all stock option awards granted prior to January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123.

EnerTeck granted 64,200 non-statutory stock options to company employees during the three months ended March 31, 2008 under the Enerteck Corporation 2003 Stock Option Plan. These options were divided based upon current compensation levels to all current salaried employees. As part of his employment contract, Mr. Gary Aman was granted 200,000 non-statutory stock options, 50,000 of which were fully vested at the end of the first quarter of 2009; the remainder shall become 100% vested on January 1, 2010 and shall expire March 27, 2014. Additional options are being considered by the Board of Directors for company employees. However, no decision has been made on that issue as of this time.

NOTE 5 - EXERCISE OF WARRANTS

During the second quarter of 2008, the Company issued 526,334 shares of common stock upon the exercise of warrants at an aggregate exercise price of $333,800. Such warrants were exercised following the temporary reduction in the warrant exercise prices of all of the Company’s then outstanding warrants by 40.0% effective immediately through and including June 2, 2008, which was extended until June 30, 2008.

NOTE 6 – PRIVATE OFFERING

During June 2008, the Board of Directors of the Company authorized a private offering of stock and warrants. Pursuant thereto and during the first quarter of 2008, the Company issued 800,095 shares of its common stock at $0.70 per share to 15 investors for total gross proceeds of $560,066.50. The investors were also issued a total of 400,047.5 warrants exercisable into shares of common stock at $1.20 per share. A second private offering authorized during the second quarter of 2009. To date, $250,000 has been advanced toward this subscription.

Item 2. Management’s Discussion and Analysis of Plan of Operation

The following should be read in conjunction with the consolidated financial statements of the Company included elsewhere herein.

FORWARD-LOOKING STATEMENTS

When used in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “intend,” “plans”, and similar expressions are intended to identify forward-looking statements regarding events, conditions and financial trends which may affect our future plans of operations, business strategy, operating results and financial position. Forward looking statements in this report include without limitation statements relating to trends affecting our financial condition or results of operations, our business and growth strategies and our financing plans.

Such statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors include, among other things, general economic conditions; cyclical factors affecting our industry; lack of growth in our industry; our ability to comply with government regulations; a failure to manage our business effectively; our ability to sell products at profitable yet competitive prices; and other risks and factors set forth from time to time in our filings with the Securities and Exchange Commission.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

EXECUTIVE OVERVIEW

EnerTeck Corporation (the “Company” or “EnerTeck Parent”) was incorporated in the State of Washington on July 30, 1935 under the name of Gold Bond Mining Company for the purpose of acquiring, exploring, and developing and, if warranted, the mining of precious metals. We subsequently changed our name to Gold Bond Resources, Inc. in July 2000. We acquired EnerTeck Chemical Corp. (“EnerTeck Sub”) as a wholly owned subsidiary on January 9, 2003. For a number of years prior to our acquisition of EnerTeck Sub, we were an inactive, public “shell” corporation seeking to merge with or acquire an active, private company. As a result of this acquisition, we are now acting as a holding company, with EnerTeck Sub as our only operating business. Subsequent to this transaction, on November 24, 2003 we changed our domicile from the State of Washington to the State of Delaware, changed our name from Gold Bond Resources, Inc. to EnerTeck Corporation and affected a one for 10 reverse common stock split. Unless the context otherwise requires, the terms “we,” “us” or “our” refer to EnerTeck Corporation and its consolidated subsidiary.

EnerTeck Sub, our wholly owned operating subsidiary, was incorporated in the State of Texas on November 29, 2000. It was formed for the purpose of commercializing a diesel fuel specific combustion catalyst known as EnerBurn®, as well as other combustion enhancement and emission reduction technologies. Nalco/Exxon Energy Chemicals, L.P. (“Nalco/Exxon L.P.”), a joint venture between Nalco Chemical Corporation and Exxon Corporation commercially introduced EnerBurn in 1998. When Nalco/Exxon L.P. went through an ownership change in 2000, our founder, Dwaine Reese, formed EnerTeck Sub. It acquired the EnerBurn trademark and related assets and took over the Nalco/Exxon L.P. relationship with the EnerBurn formulator and blender, and its supplier, Ruby Cat Technology, LLC (“Ruby Cat”).

We utilize a sales process that includes detailed proprietary customer fleet monitoring protocols in on-road applications that quantify data and assists in managing certain internal combustion diesel engine operating results while utilizing EnerBurn. Test data prepared by Southwest Research Institute and actual customer usage has indicated that the use of EnerBurn in diesel engines improves fuel economy, lowers smoke, and decreases engine wear and the dangerous emissions of both Nitrogen Oxide (NOx) and microscopic airborne solid matter (particulates). Our principal target markets presently include the trucking, heavy construction and maritime shipping industries. We also expect that revenues will be derived in the future from the railroad, mining and offshore drilling industries. Each of these industries share certain common financial characteristics, i.e. (i) diesel fuel represents a disproportionate share of operating costs; and (ii) relatively small operating margins are prevalent. Considering these factors, management believes that the use of EnerBurn and the corresponding derived savings in diesel fuel costs can positively affect the operating margins of its customers while contributing to a cleaner environment.

RESULTS OF OPERATIONS

Revenues

We recorded $21,000 sales revenues for the three months ended March 31, 2009, compared to sales revenues of $120,000, in the same period of 2008. The decrease in revenues for the first three months of 2009 compared to the prior year period was primarily due to the slow down in the economy. The equipment problems with the chemical delivery infrastructure on the Mississippi River discovered during 2008 have been investigated and corrected during the later portions of 2008 and are in the process of being tested. This should result in an increase in sales in the future as the economy recovers. These equipment upgrades allow for a much higher use rate of EnerBurn on the Mississippi River and, therefore, it is anticipated that a significant restocking order from Custom should be shipped during the second quarter or third of 2009. In addition, as the economy hopefully improves, this business should increase back to or greater than prior levels during the later part of 2009 and into 2010.

We also determined that for the future growth of the EnerBurn market it is necessary to restructure our marketing force and make a concerted effort to expand into larger U.S. and international markets. We believe our initial efforts in this area have been successful. Effective January 1, 2009, the marketing effort for the Company changed with the addition of a new executive officer (who has been and remains a director), a change in marketing personnel and a new focus on marketing strategy. A significant piece of new business, larger than any we have previously sold was closed subsequent to the close of the first quarter of 2009. The Company has completed nearly a year of testing for one of the largest trucking companies in the U.S. which is expected to lead to initial shipments as soon as infrastructure equipment can be installed and put into operation. We are also working on the opening of other new markets both within the U.S. and in Europe and anticipate the generation of considerable new sales during 2009 and 2010.

On July 28, 2005, EnerTeck Sub had entered into an Exclusive Reseller and Market Development Agreement (the “Custom Agreement”) with Custom, a subsidiary of Ingram Barge. Under the Custom Agreement, EnerTeck Sub has appointed Custom, which provides dockside and midstream fueling from nine service locations in Louisiana, Kentucky, Illinois, West Virginia, Missouri and Iowa, as its exclusive reseller of EnerBurn and the related technology on the Western Rivers of the United States, meaning the Mississippi River, its tributaries, South Pass, and Southwest Pass, excluding the Intra Coastal Waterway. The Agreement has an initial term of three years but can be terminated upon 60 days prior written notice by either party. Custom is not required to purchase a minimum volume of EnerBurn during the term of the Custom Agreement. Subsequent to the signing of the Custom Agreement, Custom obtained the regulatory approvals and installed the blending equipment necessary to facilitate its distribution of EnerBurn. In February 2006, we delivered our first shipment of EnerBurn to Custom by delivering 4,840 gallons. During most of 2006, Custom concentrated on completing the required infrastructural work to allow Custom to begin servicing the Ingram and other fleets. This work was completed late in the second quarter of 2006 and treatment of the Ingram fleet was commenced. Late in the second quarter, Custom placed a second order of 4,840 gallons. However, Custom was unable to take delivery until late in the fourth quarter of 2006. Sales to Custom, currently the Company’s largest customer have been slower than initially anticipated principally due to an equipment problems and delay in the completion of a principal Marine fueling facility for EnerBurn on the Mississippi River. We believe that each of these problems has been addressed and is either corrected or close to being corrected. We anticipate sales in this market will increase significantly during 2009.

We expect future revenue trends to initially come from the trucking, rail, heavy construction and maritime industries, and subsequently expect revenues to also be derived from the mining and offshore drilling industries. We expect this to occur as sales increase and the sales and marketing strategies are implemented into the targeted markets and we create an understanding and awareness of our technology through proof of performance demonstrations with potential customers.

Our future growth is significantly dependent upon our ability to generate sales from heavy construction companies such as those currently coming on line, trucking companies with fleets of 500 trucks or more, and barge and tugboat companies with large maritime fleets, and railroad, mining and offshore drilling and genset applications. Our main priorities relating to revenue are: (1) increase market awareness of EnerBurn product through its strategic marketing plan, (2) growth in the number of customers and vehicles or vessels per customer, (3) accelerating the current sales cycle, and (4) providing extensive customer service and support.

In early September 2006, we made our initial sale to a member of the heavy construction industry working in the South Central Texas area. After successful testing this initial customer has led to introductions and initial testing with a large concrete company in West Texas, one of the largest highway contracts in the state of Texas and most recently one to largest highway and heavy construction contractor in the United States. We feel as this market matures it can become a major source of business for the Company.

Also, negotiations continue for the demonstration and testing with a major American railroad company. This follows several years of successful usage of EnerBurn, our principal product for several years with a small railroad company, working principally in the Houston area. Successful completion of this test, which is projected to take several months, should lead to the Company’s entry into a significantly larger market.

Gross Profit

Gross profit, defined as revenues less cost of goods sold, was $15,000 or 71.4% of sales for the three month period ended March 31, 2009, compared to $105,000 or 87.5% of sales for the three period ended March 31, 2008. In terms of absolute dollars, the decrease for the three month periods is a direct reflection of the difference in sales volume for the two periods. It is expected that sales should increase significantly during the later parts of the second quarter and thereafter due to the recent completion of testing and the closing of sales with one of the major U.S. trucking companies.

Cost of goods sold was $6,000 for the three period ended March 31, 2009, which represented 28.6% of revenues, as compared to $15,000 for the three months ended March 31, 2008 which represented 12.5% of revenues. Since its purchase in July 2006, we have owned the EnerBurn technology and associated assets. Although our manufacturing is performed for us by an unrelated third party, we should continue to realize better gross margins due to the manufacturing our own product lines, compared to those we had achieved in the past when we purchased all of our products from an outside vendor.

Costs and Expenses

Operating expenses were $302,000 for the three months ended March 31, 2009 as compared to $258,000 for the three months ended March 31, 2008. A significant portion of such increase for the three month period of 2009 was due to the hiring of Mr. Gary Aman as our new president and the additional cost on testing for two large potential customers, and $25,000 for Options Expense for the three months ended March 31, 2009 as compared to $47,000 for the same period in 2008. Other operating expenses were primarily unchanged for the three months ended March 31, 2009 compared to March 31, 2008. Other selling, general and administrative expenses decreased to $84,000 for the three months ended March 31, 2009 from $95,000 for the prior year period. In addition, wages increased to $184,000 for the three months ended March 31, 2009 from $107,000 for the prior year period, and depreciation decreased to $8,000 for the three months ended March 31, 2009 from $10,000 for the three months ended March 31, 2008. Costs and expenses in all periods primarily consisted of wages, professional fees, rent expense, amortization expense and other selling, general and administrative expenses.

Other Income and Expenses for the three months ended March 31, 2009 were a negative $10,000 as compared to a negative $11,000 for the three months ended March 31, 2008. Of this amount for 2009, $10,000 was accrued interest expense for the note payable to Econalytic as compared to $15,000 for the same period in 2008.

Net Loss

We reported a net loss of $297,000 during the three months ended March 31, 2009, as compared to net losses of $164,000 for the three months ended March 31, 2008. The additional loss was due to a combination of lower than anticipated sales volume for the period, combined with the increase in wages with the addition of our new president and for the funding of the additional sales effort and testing.

We realized early in 2008 that a change in our marketing effort had to be made to allow us to grow. Our ability to produce net income in the future will be dependent upon our ability to increase revenues faster than we increase our selling, general and administrative expenses, research and development expense and other expenses. The success of our large new client demonstrations performed during the first quarter and continuing into the second quarter of 2009 is critical to the future success of our business although there are no guarantees that these demonstrations will generate sales with these potential new clients.

Operations Outlook

Beginning in 2005, management began a period of reassessing the Company’s direction. Due to a lack of working capital, and a nearly complete turnover in upper management and sales staff dating back into 2004, senior management changed its method of marketing the operation during 2005. The majority of the marketing effort for 2005 was directed at targeting and gaining a foothold in one of our major target areas, the inland marine diesel market. Management focused virtually all resources at pinpointing and convincing one major customer within this market, Custom, to go full fleet with our diesel fuel additive product lines. A substantial portion of 2005 was spent testing our primary product, EnerBurn, on one large inland marine vessel belonging to this major potential customer. This resulted in the signing of the Custom Agreement and delivery of the first shipment of EnerBurn to Custom as discussed above. This initial purchase order plus the second order received in the second quarter of 2006, amount in size to more revenue and a higher margin than all the orders combined for 2005, 2004 and 2003. In addition to our efforts in the marine sales, the sales effort resulted in initial sales to customers in the heavy construction industry market beginning in the first quarter of 2006 in which we have used the same strategies that had successfully started with the marine market. To date, we have signed on three new customers with testing to begin with another major heavy equipment contractor in the very near future.

At present, one customer, Custom, represents a majority of our sale revenues. With Custom’s assistance, however, negotiations are currently underway with several other large customers in the same industry to expand this market. The loss of Custom as a customer would adversely affect our business and we cannot provide any assurances that we could adequately replace the loss of this customer. Sales revenues to Custom and its clients have been less to date than had originally been projected. This has been due primarily to the equipment malfunction and delay in the completion of a principal Marine fueling facility as described above. With our assistance, each of these problems has been addressed and is either corrected or close to being corrected. It is expected that sales should show significant increases in 2009. It is also anticipated that other new customers coming on board during 2009 will lessen the impact of a loss of Custom, should that happen.

A major change in the way EnerTeck does business commenced early in the first quarter of 2006, with the completion of the purchase of the EnerBurn technology and the commencement of manufacturing operation. This gives us permanent, exclusive rights to the EnerBurn formulas and protocols and allows for a much better gross margin than in the past. The purchase of the EnerBurn technology and associated assets was completed on July 13, 2006 and both the formulation equipment and raw materials are presently in place to manufacture for both on and off road product lines. The opening of the on-road market to our products offers great potential to the Company in coming years. Our marketing efforts from that point broadened from principally marine applications to a wide range of new industries.

Our management has also determined that it is important to expand the market for the Company’s products to other industries and other countries. During the first quarter of 2009, we have focused our marketing effort on the trucking, heavy construction, offshore marine and rail industries. We believed that it was vital to the long term viability of the Company to expand the market for EnerBurn to newer, larger markets. Negotiations are currently underway for the demonstration of EnerBurn in each of these markets. Currently, we are scheduled to commence demonstrations for major potential clients in each of these industries in the first and second quarters of 2009. Subsequent to the close of the first quarter of 2009, we were notified by one of the nation’s largest trucking companies that the tests had been successful and that it would be going full fleet with the utilization of EnerBurn in its fleet.

LIQUIDITY AND CAPITAL RESOURCES

On March 31, 2009, we had working capital deficit of ($530,000) and stockholders’ equity of $1,233,000 compared to a working capital deficit of ($139,000) and stockholders’ equity of $1,971,000 on March 31, 2008.

On March 31, 2009, we had $86,000 in cash, total assets of $2,570,000 and total liabilities of $1,336,000, compared to $207,000 in cash, total assets of $3,580,000 and total liabilities of $1,610,000 on March 31, 2008.

The decrease in cash on hand on March 31, 2009, as compared to that of March 31, 2008, was primarily due to lower than anticipated sales for the period.

Cash available decreased by $20,000 during the first three months of 2009 to a balance of $86,000 on March 31, 2009 as compared to $112,000 during the first three months of 2008 to a balance of $207,000. Net cash used in operating activities was $270,000 for the three months ended March 31, 2009 compared to net cash used in operating activities of $112,000 for the three months ended March 31, 2008. Such changes from period to period were primarily the result of a net loss of $297,000 for the three months ended March 31, 2009 compared to a net loss of $164,000 for the three months ended March 31, 2008, as well as changes from period to period in accounts receivable, inventory, prepaid expenses, accounts payable, accrued interest payable and accrued other expenses.

For the three months ended March 31, 2009, we had investing activities of $0 compared to investing activities of $250 for the three months ended March 31, 2008. Cash provided by financing activities was $250,000 for the three months ended March 31, 2009 from a Shareholder advance.

On July 13, 2006, we completed the acquisition of the EnerBurn formulas, technology and associated assets pursuant to an Asset Purchase Agreement executed as of the same date (the “EnerBurn Acquisition Agreement”) between the Company and the owner of Ruby Cat (the “Seller”). Pursuant thereto, the Company acquired from the Seller all of its rights with respect to the liquid diesel motor vehicle fuel additives known as EC5805A and EC5931A products (the “Products”) as well as its rights to certain intellectual property and technology associated with the Products (collectively, the “Purchased Assets”). The purchase price for the Purchased Assets was $3.0 million, payable as follows: (i) $1.0 million paid on July 13, 2006 in cash, and (ii) the remaining $2.0 million evidenced by a promissory note (the “Note”) bearing interest each month at a rate of 4.0% per annum, compounded monthly, and which shall be paid in four annual payments of $500,000 plus accumulated interest to that date on each anniversary of the closing until the entire purchase price is paid in full. In order to secure the debt represented by the Note, the Company executed and delivered to the Seller a Security Agreement in which the Company granted the Seller a first priority lien on the Purchased Assets. The foregoing payments will draw significantly on future cash reserves. This acquisition, however, allows us to manufacture our own on and off road versions of the EnerBurn product line and will allow for significant savings in the cost requirements of product sales from manufacturing. The first payment of $500,000 was made in advance in May 2007. An additional $500,000 due July 13, 2008 was also made in advance of the due date, on July 3, 2008. The remaining payments to complete the purchase are due on July 13, 2009 and 2010, respectively.

In the past, we have been able to finance our operations primarily from capital which has been raised. To date, sales have not been adequate to finance our operations without investment capital. Cash provided by financing activities was $894,000 for the year ended December 31, 2008 primarily from the sale of a private placement of common stock in the amount of $560,000 and $334,000 from the exercise of warrants. These funds were used primarily to fund the scheduled 2008 payment of $500,000 due on the purchase of the intellectual property. This is compared to $750,000 obtained from financing activities during the year ended December 31, 2007 from the sale of stock, which was used for the 2007 payment of $500,000 on the purchase of the intellectual property.

We anticipate, based on currently proposed plans and assumptions relating to our operations, that in addition to our current cash and cash equivalents together with projected cash flows from operations and projected revenues we will require additional investment to satisfy our contemplated cash requirements for the next 12 months. No assurance can be made that we will be able to obtain such investment on terms acceptable to us or at all. We anticipate that our costs and expenses over the next 12 months will be approximately $2.6 million, which includes the amount we will have to pay in 2009 on the Note and for the anticipated cost of inventory for late 2009 business. Other than the Note Payable for the purchase of the intellectual property, we currently have no material commitments for capital requirements. Our continuation as a going concern is contingent upon our ability to obtain additional financing and to generate revenues and cash flow to meet our obligations on a timely basis. As mentioned above, management acknowledges that sales revenues for 2007 and 2008 were considerably less than earlier anticipated. This was primarily due to a combination of circumstances which have been corrected or are in the process of being corrected and therefore should not reoccur in the future and the general state of the economy. Management expects that sales should show significant increases in the later parts of 2009. No assurances can be made that we will be able to obtain required financial on terms acceptable to us or at all. Our contemplated cash requirements beyond 2009 will depend primarily upon level of sales of our products, inventory levels, product development, sales and marketing expenditures and capital expenditures. Management anticipates that sales should show significant increases during 2009.

Inflation has not significantly impacted our operations.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

Significant Accounting Policies

Business and Basis of Presentation

EnerTeck Corporation, formerly Gold Bond Resources, Inc. was incorporated under the laws of the State of Washington on July 30, 1935. On January 9, 2003, the Company acquired EnerTeck Chemical Corp. ("EnerTeck Sub") as its wholly owned operating subsidiary. As a result of the acquisition, the Company is now acting as a holding company, with EnerTeck Sub as its only operating business. Subsequent to this transaction, on November 24, 2003, the Company changed its domicile from the State of Washington to the State of Delaware, changed its name from Gold Bond Resources, Inc. to EnerTeck Corporation.

EnerTeck Sub, the Company’s wholly owned operating subsidiary is a Houston-based corporation. It was incorporated in the State of Texas on November 29, 2000 and was formed for the purpose of commercializing a diesel fuel specific combustion catalyst known as EnerBurn (TM), as well as other combustion enhancement and emission reduction technologies for diesel fuel. EnerTeck’s primary product is EnerBurn, and is registered for highway use in all USA diesel applications. The products are used primarily in on-road vehicles, locomotives and diesel marine engines throughout the United States and select foreign markets.

Principles of Consolidation

The consolidated financial statements include the accounts of EnerTeck Corporation and its wholly-owned subsidiary, EnerTeck Chemical Corp. All significant inter-company accounts and transactions are eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three (3) months or less to be cash and cash equivalents.

Inventory

Inventory consists of market ready EnerBurn plus raw materials required to manufacture the products. Inventory is valued at the lower of cost or market, using the average cost method. Also included in inventory are three large Hammonds EnerBurn doser systems amounting to $57,000, which will be transferred to marine or railroad customers during 2009. The Company’s remaining inventory was split on approximately a 60/40 basis between raw materials and finished goods at March 31, 2009.

Accounts Receivable

Accounts receivable represent uncollateralized obligations due from customers of the Company and are recorded at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and charged to the provision for doubtful accounts. The Company calculates this allowance based on historical write-offs, level of past due accounts and relationships with and economic status of the customers. As of March 31, 2009, there were no uncollectible accounts and no allowance has been provided.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided for on the straight-line or accelerated method over the estimated useful lives of the assets. The average lives range from five (5) to ten (10) years. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred.

Intangible Assets

Intellectual property and other intangibles are recorded at cost. The Company has determined that its intellectual property has an indefinite life because there is no legal, regulatory, contractual, competitive, economic or other factor to limits its useful life, and therefore will not be amortized. For other intangibles, amortization would be computed on the straight-line method over the identifiable lives of the assets. The Company has adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, effective for periods beginning January 1, 2002, and thereafter. SFAS 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. Specifically, the statement addresses how intangible assets that are acquired should be accounted for in financial statements upon their acquisition, as well as how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The statement requires the Company to evaluate its intellectual property each reporting period to determine whether events and circumstances continue to support an indefinite life. In addition, the Company will test its intellectual property for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The statement requires intangible assets with finite lives to be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable and that a loss shall be recognized if the carrying amount of an intangible exceeds its fair value. The Company tested its intangible assets for impairment as of December 31, 2008. As a result of an independent examination based on sales for the years ended December 31, 2008 and 2007, an impairment of the asset in the amount of $825,000 was required to be recorded which management believes is a reflection of problems with the marketing plan. As such, significant changes were made to the plan and personnel effective January 1, 2009 that will hopefully remedy the situation in the future.

Revenue Recognition

The Company follows the provisions of SEC Staff Accounting Bulletin (SAB) No. 104, “Revenue Recognition” which was issued in December 2003, and recognizes revenues when evidence of a completed transaction and customer acceptance exists, and when title passes, if applicable. SAB No. 104 codified, revised and rescinded certain sections of Staff Accounting Bulletin (SAB) No. 101, “Revenue Recognition in Financial Statements”, in order to make this interpretive guidance consistent with current authoritative accounting guidance and SEC rules and regulations.

Revenues from sales are recognized at the point when a customer order has been shipped and invoiced.

Income Taxes

The Company will compute income taxes using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on evidence from prior years, may not be realized over the next calendar year or for some years thereafter.

Income (Loss) Per Common Share

The basic net income (loss) per common share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding.

Management Estimates and Assumptions

The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Financial Instruments

The Company’s financial instruments recorded on the balance sheet include cash and cash equivalents, accounts receivable, accounts payable and note payable. The carrying amounts approximate fair value because of the short-term nature of these items.

Stock Options and Warrants

Effective January 1, 2006, the Company began recording compensation expense associated with stock options and other forms of equity compensation in accordance with Statement of Financial Accounting Standards No. 123R, Share-Based Payment, as interpreted by SEC Staff Accounting Bulletin No. 107. Prior to January 1, 2006, EnerTeck had accounted for stock options according to the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and therefore no related compensation expense was recorded for awards granted with no intrinsic value. The Company adopted the modified prospective transition method provided for under SFAS No. 123R, and, consequently, has not retroactively adjusted results from prior periods. Under this transition method, compensation cost associated with stock options recognized in the first quarter of fiscal 2006 includes the quarterly amortization related to the remaining unvested portion of all stock option awards granted prior to January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123. There was no unvested portion of stock options or warrants as of January 1, 2006.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4T. Controls and Procedures.

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2009, these disclosure controls and procedures were effective to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not a party to any pending material legal proceeding nor is it aware of any proceeding contemplated by any individual, company, entity or governmental authority involving the Company except as described below.

Based upon information which has recently come to management’s attention, the Company is investigating and if necessary intends to take appropriate legal action to enforce its rights under the EnerBurn Acquisition Agreement as it relates to protected confidential and proprietary information under such agreement. Based upon its initial investigation, management believes certain confidential and proprietary information has been disclosed to third parties in violation of the EnerBurn Acquisition Agreement and the Company has demanded that such parties cease and desist from disclosing and/or using such information in violation of the EnerBurn Acquisition Agreement. While no lawsuit has to date been filed, it is the intention of management to further investigate these allegations and protect its contractual rights to its technology to the fullest extent and to take all legal action which may be necessary. In April 2009, the Company filed a petition in Harris County, Texas, requesting that the court order Econalytic Systems, Inc. and others to appear for pre-suit depositions so that the Company could explore any potential claims against Econalytic and others for breach of contract and/or conspiracy.

The Company was recently served with a summons and complaint in connection with an action commenced by Econalytic Systems, Inc. against the Company in the District Court, Boulder County, Colorado in which Econalytic is seeking a declaratory judgment which would permit it to sell certain technology with Econalytic claims it retained and is permitted to sell under the EnerBurn Acqusition Agreement. The Company intends to defend this matter vigorously.

Item 1A. Risk Factors.

Not required.

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

Pursuant to the employment agreement entered into with Gary B. Aman during the first quarter of 2009, the Company granted Mr. Aman an option to purchase 200,000 shares of Common Stock of the Company at an exercise price of $1.00 per share which option shall be 25% vested as of the date of grant (March 27, 2009), shall become 100% vested on January 1, 2010 and shall expire March 27, 2014.

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.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)
32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		ENERTECK CORPORATION
		(Registrant)

Dated: May 14, 2009	By:	/s/ Dwaine Reese
		Dwaine Reese,
		Chief Executive Officer
		(Principal Executive Officer)

Dated: May 14, 2009	By:	/s/ Richard B. Dicks
		Richard B. Dicks,
		Chief Financial Officer
		(Principal Financial Officer)