ENERTECK CORP - Quarter Report: 2012 September (Form 10-Q)

etck_10q.htm

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 September 30, 2012

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 of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(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 o

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 x No o

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	o	Accelerated filer	o
Non-accelerated filer	o	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 o 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; 23,224,517 outstanding as of November 1, 2012.

ENERTECK CORPORATION

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements.		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		23
Item 4.	Controls and Procedures.		23

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.		24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		24
Item 3.	Default upon Senior Securities.		25
Item 4.	Mine Safety Disclosures.		25
Item 5.	Other Information.		25
Item 6.	Exhibits.		25

SIGNATURES			26

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ENERTECK CORPORATION

Index to Financial Information

Period Ended September 30, 2012

	Page
Consolidated Financial Statements (Unaudited):

Consolidated Balance Sheets		4

Consolidated Statements of Operations		5

Consolidated Statements of Cash Flows		6

Notes to Consolidated Financial Statements		7

ENERTECK CORPORATION and SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	Unaudited			Audited
	September 30, 2012			Dec. 31, 2011
ASSETS

Current assets
Cash	$	51,589		$	373,729
Inventory		298,731			281,596
Receivables – Trade		142,573			200,074
Prepaid Expenses		22,766			11,250
Total current assets	$	515,659		$	866,649

Intellectual Property	$	150,000			150,000

Property and equipment, net of accumulated depreciation of $372,628 and $321,748, respectively		43,535			57,910
Total assets	$	709,194		$	1,074,559

LIAB. AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities
Accounts payable	$	156,676		$	436,748
Shareholder advances and notes		1,415,606			450,000
Accrued Interest		292,407			182,742
Accrued liabilities		1,798,816			1,409,303
Total current liabilities	$	3,663,505		$	2,478,793

Long Term Liabilities
Stockholder advances and notes		191,854		$	765,996
Deferred Lease Liability	$	7,983		$	10,574
Total Long Term Liabilities	$	199,837		$	776,570

Stockholders’ Equity (Deficit)
Preferred stock, $.001 par value, 10,000,000 shares authorized, none issued
Common stock, $.001 par value, 100,000,000 shares authorized, 23,224,517 and 22,419,683 shares issued and outstanding, respectively		23,226			22,420
Common stock subscribed		37,500			175,000
Additional paid-in capital		24,433,717			24,118,226
Accumulated deficit		(27,648,591	)		(26,496,450	)
Total stockholders’ equity (deficit)		(3,154,148	)		(2,180,804	)

Total liabilities and stockholders’ equity	$	709,194		$	1,074,559

ENERTECK CORPORATION and SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2012 and 2011

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011

Revenues	$	30,474		$	31,164		$	103,822		$	77,943
Cost of goods sold		5,966			5,078			37,203			12,846
Gross profit	$	24,508		$	26,086		$	66,619		$	65,097

General and Administrative Expenses:
Wages	$	177,934		$	174,956		$	543,910		$	539,978
Non-cash compensation		0			657,114			0			1,096,918
Depreciation		5,978			8,402			17,576			24,904
Other Selling, Gen. & Admin. Exp.		189,186			59,395			415,575			310,693
Total Expenses	$	373,098		$	899,867		$	977,061		$	1,972,493

Operating loss	$	(348,590	)	$	(873,781	)	$	(910,442	)	$	(1,907,396	)

Interest Income	$	2		$	2		$	14		$	16
Other Income	$	(4,741	)		0			(10,541	)		0
Interest expense		(79,934	)		(72,267	)		(231,172	)		(170,992	)
Net Income (loss)	$	(433,263	)	$	(946,046	)	$	(1,152,141	)	$	(2,078,372	)

Net Loss per Share: Basic and diluted	$	(0.02	)	$	(0.04	)	$	(0.05	)	$	(.09	)

Weighted average shares outstanding:
Basic and diluted		23,126,512			22,418,164			23,006,283			22,256,756

ENERTECK CORPORATION and SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended September 30, 2012 (Unaudited)

	September 30,			September 30,
	2012			2011

Net (loss)	$	(1,152,141	)	$	(2,078,372	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		139,042			110,544
Other Non Cash Transactions		78,600			1,096,918
Changes in operating assets and liabilities:
Accounts receivable		57,501			(109,882	)
Inventory		(17,135	)		(1,846	)
Prepaid expenses and other		(11,516	)		(10,930	)
Accounts payable		(280,072	)		71,364
Accrued interest payable		109,665			81,833
Accrued Liabilities		386,921			462,187
NET CASH USED IN OPERATING ACTIVITIES	$	(689,135	)	$	(378,184	)

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	$	(3,201	)	$	(1,500	)
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	$	(3,201	)	$	(1,500	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of Sale of Common Stock	$	100,196		$	50,000
Proceeds of Stockholder Notes Payable and Advances	$	270,000		$	275,000
CASH PROVIDED BY FINANCING ACTIVITIES	$	370,196		$	325,000

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	$	(322,140	)	$	(54,684	)
Cash and cash equivalents, beginning of Year		373,729			123,526
Cash and cash equivalents, end of Quarter	$	51,589		$	68,842
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 2011 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.

During the year ended December 31, 2011, EnerTeck entered into stock sales agreements with investors who contributed $175,000 in cash to the Company for 350,000 shares of common stock. The shares had not been issued as of December 31, 2011 but retain the rights associated with the respective class of stock. Accordingly, these shares are considered common stock equivalents for purposes of computing basic earnings per share. 275,000 of these shares have been issued as of September 30, 2012.

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 2012 and 2011, 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 as follows: (i) $1.0 million cash paid on July 13, 2006, and (ii) a promissory note for $2.0 million. In May of 2007, we made the initial payment of $500,000 plus interest against the loan. Prior to 2009 EnerTeck had determined that the life of the intellectual property was indefinite; therefore, the asset was not amortized. 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 year ended December 31, 2008, the Company determined that an impairment of the asset in the amount of $825,000 was required to be recorded.

Management made the decision during 2009 to change the characterization of its intellectual property to a finite-lived asset and to amortize the remaining balance of its intangible assets to the nominal value of $150,000 by the end of 2012, due to its determination that this now represents the scheduled end of its exclusive registration during that period. As a result, amortization expense of approximately $579,000 was recorded for the years ended December 31, 2010 and zero for 2011 and 2012.

Management made the decision effective December 31, 2010 to record an additional impairment of the asset in the amount of $868,000 as a result of the Company’s inability to generate sufficient sales to support its previously recorded amount. This impairment adjustment results in a value of $150,000 being placed on the Company's intellectual property, which management believes is adequately supported by existing levels of sales and market data.

NOTE 4 – STOCKHOLDERS' EQUITY

During the second quarter of 2011, the Company issued 60,000 shares of common stock, at $.50 per share, to an investor in connection with proceeds of $30,000 which had been advanced by such investor during the second quarter of 2009. In March 2011, such investor signed the subscription agreement and was issued the 60,000 shares of common stock in April 2011. These securities were sold directly by the Company, without engaging in any advertising or general solicitation of any kind, and without payment of underwriting discounts or commissions to any person.

During the first three quarters of 2011, the Company issued 377,077 shares of its common stock to an investor related to the conversion of convertible notes and accrued interest with a total value of $67,000. The company also issued warrants resulting in recording an amortizable debt discount of $380,000, and issued common stock options and warrants for services rendered with a total Black-Scholes valuation of $1,096,000, which has been reported as non-cash compensation in the statement of operations for the year ended December 31, 2011.

During the first quarter of 2011, the Company received an advance of $125,000 in gross proceeds for 250,000 shares of common stock at $.50 per share from three investors in a private placement offering to accredited investors only. Such shares were not issued during 2011. This amount has been reported as common stock subscribed in the accompanying balance sheet at December 31, 2011 pending completion of the subscription agreements and/or issuance of the shares.

During the first quarter of 2012, the Company issued 175,000 shares to two of such investors in connection with gross proceeds of $87,500. Pending completion of the subscription agreement from the third investor, the balance of 75,000 shares will be issued in connection with the remaining gross proceeds of $37,500.

During the third quarter of 2011, the Company sold to one accredited investor in a private placement offering 100,000 units at $0.50 per unit with each unit consisting of one share of our common stock and one common stock purchase warrant. Each warrant is exercisable into one share of common stock at $0.75 per share. The proceeds received of $50,000 has been reported as common stock subscribed in the accompanying balance sheet at December 31, 2011 pending issuance of the shares. During the first quarter of 2012, the Company issued the 100,000 shares in connection therewith.

During the first quarter of 2012, the Company sold to one accredited investor in a private placement offering 166,667 units at $0.60 per unit with each unit consisting of two shares of common stock and one common stock purchase warrant. Each warrant is exercisable into one share of common stock at $0.50 per share.

During the third quarter of 2012, the Company sold 196,500 shares of common stock to an unrelated third party for $196.50 in cash which shares were issued pursuant to the terms of a consulting agreement entered into as of June 1, 2012. The value of the consulting services was determined to be $78,600, which amount was expensed upon issuance in September 2012.

NOTE 5 – STOCK WARRANTS AND OPTIONS

Stock Warrants

During the second quarter of 2011, the Board of Directors granted 1,000,000 and 100,000 warrants with values of $399,822 and $39,982, respectfully, as non-cash compensation to Mr. Thomas Donino and to Mr. Richard Dicks. These warrants were issued to replace the same number of warrants which expired in the fourth quarter of 2010. These warrants have an exercise price of $0.60 per share and will expire in May 2016. An additional 950,000 warrants with the same exercise price and a value of $379,830 were also issued in the second quarter of 2011 to certain lenders as and for additional consideration for their loans to the Company which were made in 2010.

During the third quarter of 2011, the Company granted 540,000 warrants to a director and his designee, 30,000 of which were issued in replacement of 30,000 warrants which expired in the second quarter of 2011 and 510,000 of which were issued in replacement of 510,000 warrants exercisable at $2.00 per share which were to expire in October 2012 and have been cancelled. All of the new warrants have an exercise price of $0.60 per share. An additional 250,000 warrants with the same exercise price were issued during the third quarter of 2011 to such director and another officer/director of the Company as and for additional consideration for previous loans to the Company. Also, during the third quarter of 2011, three of the four directors of the Company were each granted 250,000 warrants for services rendered which warrants are exercisable at $0.60 per share. All of the warrants have a term of five years. Non-cash compensation recognized for these issuances totaled $549,291 for the year ended December 31, 2011.

During the third quarter of 2011, and in connection with a private placement offering with one accredited investor, we issued a total of 100,000 warrants exercisable at $0.75 per share. Such warrants have a term of five years.

During the first quarter of 2012, the Company issued to one accredited investor 166,667 warrants in connection with a private placement offering of 166,667 units at $0.60 per unit with each unit consisting of two shares of common stock and one common stock purchase warrant. Each warrant is exercisable into one share of common stock at $0.50 per share.

Other than the foregoing, there were no other warrants granted or exercised for the years 2012 and 2011.

Stock Options

In September 2003, shareholders of the Company approved an employee stock option plan (the “2003 Option Plan”) authorizing the issuance of options to purchase up to 1,000,000 shares of common stock. The 2003 Option Plan is intended to give the Company greater ability to attract, retain, and motivate officers, key employees, directors and consultants; and is intended to provide the Company with the ability to provide incentives more directly linked to the success of the Company’s business and increases in shareholder value.

During the third quarter of 2011, options to acquire 225,001 shares were issued under our 2003 Stock Option Plan to four employees, which options are immediately exercisable. These options have an exercise price of $0.60 per share and expire in five years from their issue date.

The fair value of options at the date of grant was $107,823 and was recognized as non-cash compensation for the year ended December 31, 2011, as estimated using the Black-Scholes Model.

NOTE 6 – RELATED PARTY NOTES AND ADVANCES

On July 7, 2009, the Company entered into a $100,000 unsecured promissory note with an officer, due on demand. Interest is payable at 12% per annum. Also, on December 11, 2009, the Company entered into a $50,000 note with a shareholder/director. Interest is 5% per annum. The principal balance of the note is due on the earlier of December 11, 2012, or upon completion by the Company of equity financing in excess of $1.0 million in gross proceeds. Interest on the loan is payable on the maturity date at the rate of 5% per annum.

On June 1, 2010, the Company entered into a $50,000 convertible promissory note with a shareholder/director which shall be due and payable on June 1, 2013 and accrue interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. The assignment of the conversion feature of the note resulted in a loan discount being recorded. The discount amount of $36,207 is being amortized over the original thirty-nine month term of the debt as additional interest expense.

On June 1, 2010, the Company entered into $300,000 of convertible promissory notes with a shareholder/director which shall be due and payable on June 1, 2013 and accrue interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock.

On July 20, 2010, the Company entered into a $200,000 convertible promissory note with a shareholder/director which shall be due and payable on July 20, 2013 and accrue interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock.

On July 20, 2010, the Company entered into $300,000 of convertible promissory notes with shareholder/directors which shall be due and payable on July 20, 2013 and accrue interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock.

On December 10, 2010, the Company entered into $150,000 of convertible promissory notes with shareholder/directors which shall be due and payable on December 10, 2013 and accrue interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock.

On October 20, 2011, the Company entered into a $70,000 convertible promissory note with a shareholder/director which shall be due and payable on October 20, 2014 and accrue interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock.

During 2010, 2011 and 2012 such shareholder/director advanced the Company $150,000, $150,000 and $270,000, respectively. Such advances are due on demand and bear interest at 5% and 8% per annum respectively. The following represents the stated maturities of these notes:

Year ending December 31

2012	$	720,000
2013		1,000,000
2014		70,000

Total	$	1,790,000
Less current portion		1,570,000

Noncurrent portion	$	220,000

Less unamortized discount		(28,146	)

Net noncurrent portion	$	191,854

Discounts representing additional interest expense have been recorded on the issuance of warrants related to certain notes. Such discounts are being amortized over the terms of the respective notes on a straight-line basis and are netted with those notes for purposes of balance sheet presentation. Interest expense resulting from the amortization of discounts amounted to approximately $121,000 and $86,000, for the nine months ended September 30, 2012 and 2011, respectively. Amortization of discounts is expected to be $162,076 for 2012, and $141,928 for 2013.

NOTE 7 – CONVERTIBLE NOTES PAYABLE

On February 10, 2010, the Company entered into a $50,000 convertible promissory note with Wayside Ventures, LLC due on October 10, 2010. Interest is payable at 8% per annum. At anytime Wayside Ventures, LLC had the right to convert any unpaid portion of the note into shares of common stock prior to the maturity date. During the second quarter of 2010, Wayside Ventures, LLC converted the note into 344,828 shares of common stock.

On June 7, 2010, the Company entered into a $55,000 convertible promissory note with Asher Enterprises, Inc. due on December 8, 2011. Interest is payable at 8% per annum. At any time during the period beginning 120 days following the date of the promissory note until maturity, Asher Enterprises, Inc. had the right to convert any unpaid portion of the note into shares of common stock. The assignment of the conversion feature of the note resulted in a loan discount being recorded. The discount amount of $35,164 was being amortized over the original eighteen month term of the debt as additional interest expense. Amortization was $13,675 for the year ended December 31, 2010. In the first quarter of 2011 Asher Enterprises converted the entire principal and accrued interest due on such note into 215,235 shares of common stock. Amortization expense of $1,439 was recorded for the first quarter of 2011 prior to conversion.

On December 3, 2010, the Company entered into a $33,000 convertible promissory note with Asher Enterprises, Inc. due on September 3, 2011. Interest is payable at 8% per annum. At any time during the period beginning 120 days following the date of the promissory note until maturity, Asher Enterprises, Inc. had the right to convert any unpaid portion of the note into shares of common stock. The assignment of the conversion feature of the note resulted in a loan discount being recorded. The discount amount of $27,000 was amortized over the original nine month term of the debt as additional interest expense. Amortization was $3,000 for the year ended December 31, 2010. In the second quarter of 2011 Asher Enterprises converted $15,000 of the principal due on such note into 68,182 shares of common stock. In the third quarter of 2011, Asher Enterprises converted the remaining $18,000 balance of such note and accrued interest of $1,320 into 93,650 shares of common stock. Amortization expense of $19,636 was recorded in 2011 prior to conversion.

NOTE 8 – ABILITY TO CONTINUE AS A GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the three months and nine months ended September 30, 2012, the Company incurred net losses of $433,000 and $1,152,000, respectively. In addition, at the quarter ended September 30, 2012 and year ended December 31, 2011, the Company has an accumulated deficit of $27,649,000 and $26,496,000, respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenues and cash flow to meet its obligations on a timely basis. Management understands that sales revenues for the first nine months of 2012 and for the year of 2011 were considerably less than earlier anticipated. As testing is either underway or completed with several potential new customers and in new areas with existing customers, management expects that sales should show significant increases in the latter part of 2012 and into 2013. One of the Company’s principal stockholders (who is also a director) has given on ongoing commitment to provide, as required, any and all necessary funding required to meet any future manufacturing cost requirement for any bona fide, contracted quantities of EnerBurn and to allow and facilitate the Company to meet any reasonable required timing deadlines to satisfy the successful servicing of all negotiated and binding customer purchase orders for the sale of its products with the Company’s credit worthy domestic and international customers.

We have been notified of the successful completion of testing for a large new international marine customer, who is currently ordering the required injection equipment. We expected we would be starting full implementation of EnerBurn in late 2012. The addition of the financial guarantee for purchase order servicing should provide the comfort for this and other large customers interested in testing and implementation of EnerBurn into their fueling systems. In addition, we are completing additional testing of EnerBurn on the Frac fleet of one the world’s largest oil field service companies and, subject to final analysis of test data, negotiations are schedule over the next several weeks for the implementation of services there. Also one of our marketing agents, has signed a supply contract with a large catalogue marketing group which is now scheduled to begin during 2013. Subsequent to the end of the third quarter, they have also completed very successful testing of EnerBurn for the municipal bus and maintenance vehicle fleet of a medium sized Midwestern city in Iowa. Our distributor anticipates large sales levels in these markets over the coming years.

The Company has been able to generate working capital in the past through private placements, stockholder advances and the issuance of promissory notes and believes that these avenues will remain available to the Company, if additional financing is necessary. No assurance can be made that any of these efforts will be successful, however. Obviously, the real answer will be for the Company’s sales to be at much higher levels that has been the case in the past and we anticipate that will be the case in 2013 and thereafter.

NOTE 9 – RECENTLY ISSUED AUTHORITATIVE ACCOUNTING GUIDANCE

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-28, Intangibles – Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts, which amends Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other. The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that an impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company does not anticipate the adoption of ASU 2010-28, will have a material impact on our financial statements. Early adoption is not permitted.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). ASU 2011-04 is intended to result in convergence between GAAP and International Financial Reporting Standards (“IFRS”) requirements for measurement of and disclosures about fair value. The amendments are not expected to have a significant impact on companies applying GAAP. Key provisions of the amendment include: a prohibition on grouping financial instruments for purposes of determining fair value, except when an entity manages market and credit risks on the basis of the entity’s net exposure to the group; an extension of the prohibition against the use of a blockage factor to all fair value measurements (that prohibition currently applies only to financial instruments with quoted prices in active markets); and a requirement that for recurring Level 3 fair value measurements, entities disclose quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements. In addition, for items not carried at fair value but for which fair value is disclosed, entities will be required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed. ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011. Early application is not permitted. The Company is currently evaluating the potential impact of ASU 2011-04 and does not expect the adoption to have a material impact on its financial statements.

In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income" ("ASU No. 2011-05"), which improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income ("OCI") by eliminating the option to present components of OCI as part of the statement of changes in stockholders' equity. The amendments in this standard require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Subsequently in December 2011, the FASB issued ASU No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income" ("ASU No. 2011-12"), which indefinitely defers the requirement in ASU No. 2011-05 to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement(s) where the components of net income and the components of OCI are presented. The amendments in these standards do not change the items that must be reported in OCI, when an item of OCI must be reclassified to net income, or change the option for an entity to present components of OCI gross or net of the effect of income taxes. The amendments in ASU No. 2011-05 and ASU No. 2011-12 are effective for interim and annual periods beginning after December 15, 2011 and are to be applied retrospectively. The adoption of the provisions of ASU No. 2011-05 and ASU No. 2011-12 will not have a material impact on the company's financial position or results of operations.

In September 2011, the FASB issued ASU 2011-08, Intangibles-Goodwill and Other: Testing Goodwill for Impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test as described in ASC 350, Intangibles-Goodwill and Other. The ASU defines the more-likely-than-not threshold as having a likelihood of more than 50%. Under the amendments in this update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not anticipate the adoption of this ASU will have an impact on our financial statements.

In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.” The amendments in this ASU require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company does not expect that the adoption of ASU 2011-11 will have a significant, if any, impact on the Company’s Financial Statements.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

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 (TM), 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 have included the trucking, heavy construction, maritime shipping, railroad and mining industries, as well as federal, state and international government applications. We believe each of these industries shares 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 $31,000 and $104,000 in sales revenues for the three and nine months ended September 30, 2012 compared to sales revenues of $31,000 and $78,000 for the three and nine months ended September 30, 2011. The slight increase in revenues for the nine month period of 2012 compared to the prior year period, while somewhat better than the prior year, is still far below anticipated levels. This was primarily due to much longer than originally anticipated testing periods with several potential new customers and other logistical problems caused by current levels of staffing.

In 2005, we appointed Custom, a subsidiary of Ingram Barge and which provides dockside and midstream fueling from nine service locations in Louisiana, Kentucky, Illinois, West Virginia, Missouri and Iowa, as our 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. Since 2006, sales have been sporadic with Custom but cumulatively since then Custom has been our largest customer to date. We cannot guarantee that we will ever generate meaningful revenues from our relationship with Custom.

As testing is either underway or completed with several potential new customers and in new areas with existing customers, more sales should occur. We have been informed by our distributor for Australia that testing has successfully been completed with a new large customer there and that implementation will start shortly. In addition, G2 Technologies, our new Certified Minority supplier and distributor, has advised us that several of its customers have started or will start using EnerBurn during 2012. In addition, the Company’s projected PEX unit product line is due for final California Air Resources Board (CARB) testing during the third quarter of 2012 and an additional more advanced design is currently under consideration for a large Federal MARAD (U.S. Maritime Administration) grant. This newly developed, patent pending technology for the remediation of diesel engine emissions for diesel engines in the marine industry is expected to open new and potentially lucrative markets for both EnerBurn and our proprietary environmental equipment product lines.

Gross Profit

Gross profit, defined as revenues less cost of goods sold, was $25,000 or 80.0% and $67,000 or 64.4%of sales for the three and nine month periods ended September 30, 2012, compared to $26,000 and $65,000 or 83.7% and 83.5% of sales, respectively, for the three and nine month periods ended September 30, 2011. A significant portion of the sales is made up of the initial sales of new dosing equipment, for equipment designed by Enerteck and manufactured by outside vendors. These initial sales were at a discounted introductory price. Future retail sales will be at a higher price, with a more normal markup. The initial installation of this equipment will take place this quarter, which should follow with significant sales volume increases over the next several quarters for both our principal product EnerBurn and this new equipment. In addition, CARB approval testing for the Company’s new PEX systems is scheduled to take place late in the third quarter of 2012. Pending approval, initial orders for these systems should commence during the fourth quarter of this year with the first units delivered during 2013. As testing is either underway or completed with several other potential new customers and in new areas with existing customers, more sales should occur. As our overall volumes increase, we feel confident that there will be an improvement in the gross profit percentage as our manufacturing proficiency continues to improve for our core products.

Cost of goods sold was $6,000 for the three month and $37,000 for the nine month periods ended September 30, 2012, represented 20.0% and 35.6 % of sales, as compared to $5,000 and $13,000 for the three and nine month periods ended September 30, 2011, which represented 16.3% and 16.5% of revenues. Cost of sales for the initial new dosing unit somewhat alters the normal margins for the quarter when compared with prior quarters. An introductory price offered as an incentive for the testing period will change for the production models to be sold in the future. Our actual manufacturing function is performed for us by unrelated third parties under contract to us. We should continue to realize better gross margins through the manufacturing of our product lines, compared to those we achieved in the past when we purchased all of our products from an outside vendor.

Costs and Expenses

Operating expenses were $373,000 for the three months and $977,000 for the nine months ended September 30, 2012 as compared to $900,000 for the three months and $1,972,000 for the nine months ended September 30, 2011, a decrease of $527,000 and $995,000, respectively. Such change from period to period of 2012 compared to 2011 was primarily due to there being no non-cash compensation expense for the three and nine months ended September 30, 2012 compared to $657,000 and $1,097,000 in stock based non-cash compensation expense for the three and nine months ended September 30, 2011, respectively, although such decrease for such three month period was offset by an increase in other selling, general and administrative expenses for the three months ended September 30, 2012 compared to the three months ended September 30, 2011 due to the increase in sales for the three months ended September 30, 2012 compared to the prior year period. Overall, however, other selling, general and administrative expenses increased by $105,000 for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 primarily due to an additional noncash consulting expense of $78,600 in the third quarter of 2012. Costs and expenses in all periods primarily consisted of payroll, professional fees, rent expense, depreciation expense, amortization expense and other general and administrative expenses. Wages remained relatively constant from period to period and were $178,000 and $544,000 for the three and nine months ended September 30, 2012 compared to $175,000 and $540,000 for the three and nine months ended September 30, 2011. While there has been an increase in costs and expenses in recent years, it is felt that these increases will lead to a considerable increase in earnings potential in 2012 and future years.

Net Loss

We reported a net loss of $433,000 during the three months and $1,152,000 for the nine months ended September 30, 2012, as compared to net losses of $946,000 for the three months and $2,078,000 for the nine months ended September 30, 2011. Such decrease in net loss is primarily due to there being no non-cash compensation expense for the three and nine months ended September 30, 2012 compared to the stock based non-cash compensation expense for the three and nine months ended September 30, 2011 as described above, offset by an increase in interest expense for the three and nine months of 2012 compared to the prior year periods.

Net income in the future will be dependent upon our ability to successfully complete testing in our projected new markets and new product lines and to increase revenues faster than we increase our selling, general and administrative expenses, research and development expense and other expenses. Our gross margin resulting from our manufacturing of our products should help us in our ability to hopefully become profitable in the future.

Operations Outlook

The majority of our marketing effort since 2005 has been directed at targeting and gaining a foothold in one of several major target areas, including the inland marine diesel market, trucking, heavy construction and mining. Management has focused virtually all resources at pinpointing and convincing certain large potential customers within these markets, with our diesel fuel additive product lines. While we still believe that this is a valid theory, the results, to date, have been less than we had expected. A substantial portion of 2010 was spent redirecting our marketing emphasis for our primary product, EnerBurn, to solidify our major customers and expanding to newer, more innovative areas. As such, we have created marketing alliances domestically and internationally with two new marketing groups, EnerGreen Technologies, based in Australia and G2 Fuel Technologies, a minority owned marketing firm working in both the domestic and foreign markets. This resulted in the signing of these marketing agreements have opened our marketing efforts to both private and publically held customers both within the United States and abroad, which appear to have significant sales potential.

As testing is either underway or has been completed with several potential new customers and in new areas with existing customers, more sales should occur. We have been informed by our distributor for Australia that testing has successfully been completed with a new large customer there and that implementation will start shortly. This implementation will require the installation of injection systems on each of the customer vessels which may take through the end of 2012 to fully occur.

In addition, G2 Technologies, our new Certified Minority supplier and distributor, has advised us that several of its customers have started or will start using EnerBurn during 2012. It is expected that sales should show significant increases during the third and fourth quarters of 2012.

During the first quarter of 2011, we have formed EnerTeck Environmental, LLC, a joint venture with Indian Nation Technologies, LLC located in Comanche, Oklahoma for the testing and manufacture of an innovative new type of environmental equipment for the remediation of diesel engine emissions for diesel engines in the marine industry. Indian Nation has filed a patent for this equipment and we will hold the exclusive marketing rights for this technology for the various applications within the marine diesel industry. Testing commenced late in the first quarters of 2011 on a towboat located on the Mississippi River. To date the tested engine has logged in more than 10,000 successful hours of operation with no apparent degrading of the effectiveness of the equipment. To comply with regulations of the California Air Quality Control Board (CARB) additional monitoring and warning equipment has been developed and mounted on the PEX beta unit equipment to supply ongoing emissions information for the crew. This equipment has now been installed and it will be allowed to run an additional 3,000 hours before final testing of our Marine Diesel PEX version one has been delayed repeatedly due to adverse conditions on the Mississippi River caused by the drought of 2012, but are currently scheduled take place in November or December. It is anticipated that subsequent to the final testing and acceptance of the test results, this new technology will open vast new marketing opportunities for us in the coming years. Each of these units will be custom engineered to fit the particular application involved. Our financing arrangement for purchase orders will facilitate these engineering and fabrication requirements.

LIQUIDITY AND CAPITAL RESOURCES

On September 30, 2012, we had working capital deficit of ($3,148,000) and a stockholders’ deficit of ($3,154,000) compared to a working capital deficit of ($1,612,000) and a stockholders’ deficit of ($2,181,000) on December 31, 2011. On September 30, 2012, we had $52,000 in cash, total assets of $709,000 and total liabilities of $3,863,000, compared to $374,000 in cash, total assets of $1,075,000 and total liabilities of $3,255,000 on December 31, 2011.

Net cash used in operating activities was $689,000 for the nine months ended September 30, 2012, which was primarily due to a net loss of ($1,152,000), a decrease in accounts payable of ($280,000), prepaid expenses of ($12,000) and increase in inventory of ($17,000) offset by and decrease in accounts receivable of $58,000, increase Accrued Interest of $110,000 and Other Accrued Expenses and non-cash transactions netting approximately $387,000. Net cash used in operating activities was $378,000 for the nine months ended September 30, 2011, which was primarily due to a net loss of ($2,078,000) which was made up largely of $1,097,000 for stock and options expenses, Depreciation and Amortization of $111,000, an increase in Accounts Receivable of $110,000, Accrued Interest Expenses of 82,000 and other non-cash transactions of $462,000.

For the nine months ended September 30, 2012 we had cash flow used by investing activities of $3,200 from capital expenditures of $3,200 as compared to $1,500 cash used in investing activities for the same period in 2011.

Cash provided by financing activities was $370,000 for the nine months ended September 30, 2012 due to proceeds from the sales of common stock and issuance of notes as compared to $325,000 for the nine months ended September 30, 2011 due to proceeds of stockholder notes and advances.

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. All payments have been made and, as of July 2010, we have now completed our monetary obligations under the EnerBurn Acquisition Agreement and the Note. Through 2010 this obligation drew significantly on our cash reserves. Starting in 2011 this is no longer the case.

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. During 2012, investment capital has provided $370,000 for working capital. For the first nine months of ended September 30, 2011, cash provided by financing activities was $325,000 from the proceeds of loans and advances made to the Company.

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 $3.0 million. 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 have been 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 increases in the latter part of 2012 and into 2013. 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 2012 will depend primarily upon level of sales of our products, inventory levels, product development, sales and marketing expenditures and capital expenditures.

One of the Company’s principal stockholders (who is also a director) has given on ongoing commitment to provide, as required, any and all necessary funding required to meet any future manufacturing cost requirement for any bona fide, contracted quantities of EnerBurn and to allow and facilitate the Company to meet any reasonable required timing deadlines to satisfy the successful servicing of all negotiated and binding customer purchase orders for the sale of its products with the Company’s credit worthy domestic and international customers.

Inflation has not significantly impacted the Company’s 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. On October 3, 2011, a fire broke out at the Magna Blend Chemical plant in Waxahachie, Texas. Magna Blend has been the principal blending plant for our EnerBurn product and was the storage location of our entire stock of raw materials and finished goods inventory. EnerTeck was subsequently paid by Magna Blend the full replacement value of our inventory and replacement has been made of both raw materials and finished goods sufficient for us to continue operations. In the interim, to insure that at least some of our new and smaller customers could be serviced, one of our established customers agreed to supply us with several drums of EnerBurn, which were being held in their supply inventory. We will in turn replaced these drums of EnerBurn with new EnerBurn stock, as soon as the required raw material inventories could be acquired, blended and shipped back to their warehouses. This was all accomplished prior to the end of the fourth quarter. We do not expect this incident will have a material adverse effect on our operations.

Also included in inventory were five large Hammonds EnerBurn doser systems amounting to $28,000, which have been returned to Hammonds during the first quarter of 2011 in exchange for more useful equipment. Also included in inventory is a Pex unit amounting to $39,000. The Company’s remaining inventory was split on approximately a 78/22 basis between raw materials and finished goods at December 31, 2011.

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. Accounts are written off as bad debts when all collection efforts have failed and the account is deemed uncollectible. There was no allowance for doubtful accounts considered necessary at September 30, 2012.

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

The Company follows the provisions of FASB ASC 350, Goodwill and Other Intangible Assets. FASB ASC 350 addresses financial accounting and reporting for acquired goodwill and other intangible assets. Specifically, FASB ASC 350 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 tests 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.

Intellectual property and other intangibles are recorded at cost. Prior to 2009, the Company determined that its intellectual property had an indefinite life because it believed there was no legal, regulatory, contractual, competitive, economic or other factor to limit its useful life, and therefore would not be amortized. For other intangibles, amortization would be computed on the straight-line method over the identifiable lives of the assets.

As a result of a review by management of its intangible asset and policies related thereto as of December 31, 2010, it was determined that a further impairment was required to be recorded. This impairment serves to reduce its intellectual property to an amount which management believes represents its fair value. This value would be considered a level 3 measurement under FASB ASC 820, Fair Value Measurements and Disclosures, since it is based on significant unobservable inputs. The Company will re-assess the value of this asset in future periods and make adjustments as considered necessary, rather than record additional amortization.

Revenue Recognition

The Company follows the provisions of FASB ASC 605, Revenue Recognition, and recognizes revenues when evidence of a completed transaction and customer acceptance exists, and when title passes, if applicable.

Revenues from sales of product and equipment 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.

The current and deferred tax provisions in the financial statements include consideration of uncertain tax positions in accordance with FASB ASC 740, Income Taxes. Management believes there are no significant uncertain tax positions, so no adjustments have been reported from adoption of FASB ASC 740. The Company files income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. The Company is no longer subject to income tax examinations by the Internal Revenue Service for years prior to 2008. For state tax jurisdictions, the Company is no longer subject to income tax examinations for years prior to 2007.

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.

Periodically, EnerTeck enters into stock sales agreements with investors who contributed cash to the Company for shares of common stock. Whether of not the shares have not been issued, they retain the rights associated with the respective class of stock. Accordingly, unissued shares are considered common stock equivalents for purposes of computing basic earnings per share.

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 2012 and 2011, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

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 FASB ASC 718, Stock Compensation.

Taxes Collected

The Company collects sales taxes assessed by governmental authorities imposed on certain sales to customers. Sales taxes collected are included in revenues; net amounts paid are reported as expenses in the consolidated statement of operations.

Recently Issued Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income" ("ASU No. 2011-05"), which improves the comparability, consistency, and transparency of financial reporting and increases the prominence of items reported in other comprehensive income ("OCI") by eliminating the option to present components of OCI as part of the statement of changes in stockholders' equity. The amendments in this standard require that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Subsequently in December 2011, the FASB issued ASU No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income" ("ASU No. 2011-12"), which indefinitely defers the requirement in ASU No. 2011-05 to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement(s) where the components of net income and the components of OCI are presented. The amendments in these standards do not change the items that must be reported in OCI, when an item of OCI must be reclassified to net income, or change the option for an entity to present components of OCI gross or net of the effect of income taxes. The amendments in ASU No. 2011-05 and ASU No. 2011-12 are effective for interim and annual periods beginning after December 15, 2011 and are to be applied retrospectively. The adoption of the provisions of ASU No. 2011-05 and ASU No. 2011-12 will not have a material impact on the company's financial position or results of operations.

In September 2011, the FASB issued ASU 2011-08, Intangibles-Goodwill and Other: Testing Goodwill for Impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test as described in ASC 350, Intangibles-Goodwill and Other . The ASU defines the more-likely-than-not threshold as having a likelihood of more than 50%. Under the amendments in this update, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company does not anticipate the adoption of this ASU will have an impact on our financial statements.

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 4. 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 September 30, 2012, 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 material 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 currently 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.

Item 1A. Risk Factors.

Not required.

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

During the first quarter of 2012, we sold to one accredited investor in a private placement offering 166,667 units at $0.60 per unit with each unit consisting of two shares of our common stock and one common stock purchase warrant. Each warrant is exercisable into one share of common stock at $0.50 per share. These securities were sold directly by the Company, without engaging in any advertising or general solicitation of any kind and without payment of underwriting discounts or commissions to any person. The securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 thereunder.

During the third quarter of 2012, we sold 196,500 shares of common stock to an unrelated third party for $196.50 in cash which shares were issued pursuant to the terms of a consulting agreement entered into as of June 1, 2012. The securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

During the first quarter of 2011, the Company received an advance of $125,000 in gross proceeds for 250,000 shares of common stock at $.50 per share from three investors in a private placement offering to accredited investors only. During the first quarter of 2012, we issued 175,000 shares to two of such investors in connection with gross proceeds of $87,500. Pending completion of the subscription agreement from the third investor, the balance of 75,000 shares will be issued in connection with the remaining gross proceeds of $37,500. These securities were sold directly by the Company, without engaging in any advertising or general solicitation of any kind and without payment of underwriting discounts or commissions to any person. The securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 thereunder.

During the third quarter of 2011, we sold to one accredited investor in a private placement offering 100,000 units at $0.50 per unit with each unit consisting of one share of our common stock and one common stock purchase warrant. Each warrant is exercisable into one share of common stock at $0.75 per share. During the first quarter of 2012, we issued the 100,000 shares in connection therewith. These securities were sold directly by the Company, without engaging in any advertising or general solicitation of any kind and without payment of underwriting discounts or commissions to any person. The securities were issued in reliance upon the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 thereunder.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

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)

101*		The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements

_______________

In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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: November 14, 2012	By:	/s/ Dwaine Reese
		Dwaine Reese,
		Chief Executive Officer
		(Principal Executive Officer)

Dated: November 14, 2012	By:	/s/ Richard B. Dicks
		Richard B. Dicks,
		Chief Financial Officer
		(Principal Financial Officer)