10-Q

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 June 30, 2019

¨ 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 ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No x

Securities registered pursuant to Section 12(b) of the Act: None.

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; 36,380,690 outstanding as of August 14, 2019.

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.	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	17
Item 4.	Controls and Procedures.	17
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	18
Item 1A.	Risk Factors.	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	18
Item 3.	Default upon Senior Securities.	18
Item 4.	Mine Safety Disclosures.	18
Item 5.	Other Information.	18
Item 6.	Exhibits.	19
SIGNATURES		20

2

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

ENERTECK CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2019			2018
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	15,239		$	11,851
Inventory		59,055			62,120
Receivable - trade		9,574			10,680
Representative advances		-			24,031
Prepaid expenses		46,124			11,537
Total current assets		129,992			120,219
Inventory, net of current portion		37,524			37,524
Intellectual property, net of accumulated amortization of $6,250 and $0, respectively		143,750			150,000
Website, net of accumulated amortization of $26,920 and $23,646, respectively		5,818			9,092
Property and equipment, net of accumulated depreciation of $268,538 and $268,314, respectively		1,385			1,609
TOTAL ASSETS	$	318,469		$	318,444
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	212,589		$	124,270
Customer advances		50,900			50,900
Related party notes and advances		2,162,500			1,862,500
Accrued compensation		4,194,301			4,058,065
Accrued interest		1,457,673			1,345,664
Accrued liabilities - other		144,557			138,947
Deferred revenue		21,528			-
Total current liabilities		8,244,048			7,580,346
Long term liabilities
Deferred lease liability		754			3,014
Total Liabilities	$	8,244,802		$	7,583,360
Commitments and contingencies (Note 8)
Stockholders' deficit
Preferred stock, $.001 par value, authorized 100,000,000
shares, none issued and outstanding at June 30, 2019
and December 31,2018		-			-
Common stock, $.001 par value, authorized 100,000,000
shares, 36,380,690 issued and outstanding at June 30, 2019
and December 31, 2018, respectively		36,381			36,381
Additional paid-in capital		29,293,021			29,293,021
Accumulated deficit		(37,255,735	)		(36,594,318	)
Total stockholders' deficit		(7,926,333	)		(7,264,916	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	318,469		$	318,444

The accompanying notes are integral part of these condensed consolidated financial statements.

3

ENERTECK CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
Revenues	$	9,037		$	10,427		$	25,710		$	22,346
Cost of goods sold		1,737			1,966			4,947			4,759
Gross profit		7,300			8,461			20,763			17,587
General and administrative expenses
Wages		133,708			133,706			266,430			260,520
Depreciation and amortization		4,874			1,969			9,748			3,959
Other selling, general and administrative		152,087			79,186			293,507			154,437
Total Expenses		290,669			214,861			569,685			418,916
Operating loss		(283,369	)		(206,400	)		(548,922	)		(401,329	)
Interest income		17			-			26			31
Other income (expense)		-			(23,188	)		-			(5,978	)
Interest expense		(57,405	)		(45,190	)		(112,521	)		(105,006	)
Net loss	$	(340,757	)	$	(274,778	)	$	(661,417	)	$	(512,282	)
Loss per common share
Basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)
Weighted average shares outstanding
Basic and diluted		36,380,690			36,380,690			36,380,690			34,070,349

The accompanying notes are integral part of these condensed consolidated financial statements.

4

ENERTECK CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
Six Months Ended June 30, 2018	Shares		Amount		Capital		Deficit			Deficit
Balances at December 31, 2017		31,153,543	$	31,154	$	28,100,037	$	(35,661,916	)	$	(7,530,725	)
Stockholder advance conversion		5,227,147		5,227		1,146,870		-			1,152,097
Net loss		-		-		-		(512,282	)		(512,282	)
Balances at June 30, 2018		36,380,690	$	36,381	$	29,246,907	$	(36,174,198	)	$	(6,890,910	)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
Six Months Ended June 30, 2019	Shares		Amount		Capital		Deficit			Deficit
Balances at December 31, 2018		36,380,690	$	36,381	$	29,293,021	$	(36,594,318	)	$	(7,264,916	)
Net loss		-		-		-		(661,417	)		(661,417	)
Balances at June 30, 2019		36,380,690	$	36,381	$	29,293,021	$	(37,255,735	)	$	(7,926,333	)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
Three Months Ended June 30, 2018	Shares		Amount		Capital		Deficit			Deficit
Balances at March 31, 2018		36,380,690	$	36,381	$	29,246,906	$	(35,899,419	)	$	(6,616,132	)
Net loss		-		-		-		(274,778	)		(274,778	)
Balances at June 30, 2018		36,380,690	$	36,381	$	29,246,906	$	(36,174,197	)	$	(6,890,910	)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
Three Months Ended June 30, 2019	Shares		Amount		Capital		Deficit			Deficit
Balances at March 31, 2019		36,380,690	$	36,381	$	29,293,021	$	(36,914,978	)	$	(7,585,576	)
Net loss		-		-		-		(340,757	)		(340,757	)
Balances at June 30, 2019		36,380,690	$	36,381	$	29,293,021	$	(37,255,735	)	$	(7,926,333	)

The accompanying notes are an integral part of these consolidated financial statements.

5

ENERTECK CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,
	2019			2018
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(661,417	)	$	(512,282	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization		9,748			3,959
Effects of changes in operating assets and liabilities:
Accounts receivable		1,106			12,184
Representative advances		24,031			(9,060	)
Deferred liability		(2,260	)		(2,260	)
Inventory		3,065			3,032
Prepaid expenses		(34,587	)		(30,554	)
Accounts payable		69,999			24,780
Accrued interest payable		112,009			98,438
Accrued liabilities		141,846			47,083
Deferred revenue		21,528			-
NET CASH USED IN OPERATING ACTIVITIES		(314,932	)		(364,680	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from financing prepaid insurance		43,425			51,100
Payments on prepaid insurance financing		(25,105	)		(29,422	)
Proceeds from sale of common stock		-			-
Proceeds from related party notes and advances		300,000			355,000
NET CASH PROVIDED BY FINANCING ACTIVITIES		318,320			376,678
NET INCREASE IN CASH AND CASH EQUIVALENTS		3,388			11,998
CASH AND CASH EQUIVALENTS, beginning of period		11,851			19,373
CASH AND CASH EQUIVALENTS, end of period	$	15,239		$	31,371

The accompanying notes are integral part of these condensed consolidated financial statements.

6

ENERTECK CORPORATION and SUBSIDIARY,

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

Nature of Operations:

EnerTeck Corporation, a Delaware corporation, and its wholly owned subsidiary, EnerTeck Sub (collectively referred to as the “Company”) are headquartered in Houston, Texas. The Company specialize in the sales, marketing and manufacture of a fuel borne catalytic engine treatment for diesel engines known as EnerBurn®. 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). Principal target markets have included the trucking, heavy construction, maritime shipping, railroad and mining industries, as well as federal, state and international government applications. Key uncertainties and risks to the Company include, but are not limited to, if and how quickly the EnerBurn technology is accepted by the market and the effects future technological changes and environmental regulatory requirements may have on the need for diesel fuel additives.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’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 2018 as reported in the Form 10-K have been omitted.

Use of Estimates

In preparing the accompanying condensed unaudited interim consolidated financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed unaudited interim consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates.

Inventory

Inventory primarily consists of market ready EnerBurn plus raw materials required to manufacture the products. With the adoption of ASU 2015-11, inventory is valued at the lower of cost or net realizable value, using the average cost method.

Finished product costs amounted to approximately $23,000 and $26,000 at June 30, 2019 and December 31, 2018, respectively, and includes required blending costs to bring our products to their finished state.

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. Management has provided allowances for doubtful accounts of $0 as of June 30, 2019 and December 31, 2018.

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 consolidated 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 consolidated 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.

7

During the six months ended June 30, 2019, the Company reviewed the estimated life of its intellectual property and determined it to have a finite life of 12 years. This change in accounting estimate requires the Company to amortize the intellectual property over the 12 year life and resulted in amortization expense of $3,125 and $6,250 for the three and six months ended June 30, 2019, respectively.

Revenue Recognition

Effective January 1, 2018, the Company adopted ASC 606, Revenue from Contracts With Customers, using the modified retrospective adoption approach. As a result of adoption, the Company noted there were no changes or modifications required to previously recorded revenues.

While the Company has had some direct customers over the years, the principal method of selling the Company’s product EnerBurn is through the use of independent distributors, for both domestic and international markets. The transaction price for each sale is explicitly stated within the contract with a customer. The Company does not accept returns nor does it provide warranty on its product’s performance, as control of performance is based on the proper utilization by the final user. Normal payment terms for domestic sales to both customers and distributors shipping within the United States are net 30 days. All foreign shipments are cash in advance of shipment from the Company’s location. The Company’s sole performance obligation to customers and distributors is the manufacturing and shipment of EnerBurn. Revenues from sales of the Company’s product are recognized at the point when a customer order has been completed and shipped. Sales of all product are f.o.b. shipping point, with the distributors responsible for the freight and delivery. Revenue from shipments to related party distributors is recognized when the product is sold to unrelated third-party customers. All negotiation on sales contracts between the individual distributor and end customer and are the responsibility of the individual distributor and the amount of mark up above the distributors’ wholesale price per unit is the purview of the distributor.

The Company may from time to time enter into contracts to sell exclusive distributorship rights to certain markets for a fee. The contracts typically contain a term of market exclusivity as well as other performance obligations. The Company has determined the performance obligations on these types of contracts are satisfied evenly over the term of the contract and recognizes revenue evenly over the term of the contract. The remaining performance obligations on these contracts as of June 30, 2019 is $21,528 and is included in deferred revenue on the Company’s Condensed Consolidated Balance Sheet. These amounts are expected to be ratably recognized as revenue over the remaining term of the contracts.

In the following table, revenues have been disaggregated for the six months ended June 30:

	2019		2018
Revenues - domestic	$	25,710	$	22,346
Revenues - foreign		-		-
Total revenues	$	25,710	$	22,346

As stated above, the Company does not accept returns nor does it provide warranty on its product’s performance, as control of performance is based on the proper utilization by the final user. The Company periodically tests the product manufactured prior to shipment for its proprietary quality standards and guarantees to the distributors that the product will always maintain the level of strict quality standard that is integral to the performance of its product for the end customer. The Company will provide a Certificate of Analysis, (“C of A”) on each shipment of its product, if requested for the customer. The C of A provides proof that the product is manufactured to meet chemical specifications that insure performance standards.

8

Going Concern

In accordance with ASC Subtopic 205-40, Going Concern, management evaluates whether relevant conditions and events that, when considered in the aggregate, indicate that it is probable the Company will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. When relevant conditions or events, considered in the aggregate, initially indicate that it is probable that the Company will be unable to meet its obligations as they become due within one year after the date that the consolidated financial statements are issued (and therefore they raise substantial doubt about the Company’s ability to continue as a going concern), management evaluates whether its plans that are intended to mitigate those conditions and events, when implemented, will alleviate substantial doubt about the Company’s ability to continue as a going concern. Management’s plans are considered only to the extent that 1) it is probable that the plans will be effectively implemented and 2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying condensed consolidated 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 six months ended June 30, 2019 and 2018, the Company incurred recurring net losses of $661,417 and $512,282, respectively. Further, most of the Company’s notes payable are overdue and payment may be demanded at any time. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated 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. The Company has been able to obtain cash in the past through private placements and issuing promissory notes and believes that these avenues will remain available to the Company. Management believes that these financings are probable of occurring and mitigating the substantial doubt raised by historical operating results and satisfying the Company’s estimated liquidity needs 12 months from the issuance of the consolidated financial statements. No assurance can be made that these efforts will be successful.

NOTE 2 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	June 30,		December 31,
	2019		2018
Furniture and fixtures	$	30,909	$	30,909
Equipment		239,014		239,014
		269,923		269,923
Less: accumulated depreciation		268,538		268,314
Total property and equipment, net	$	1,385	$	1,609

Depreciation expense for the three months ended June 30, 2019 and 2018 was $112 and $332, respectively, and $224 and $686 for the six months ended June 30, 2019 and 2018, respectively.

NOTE 3 – LOSS PER COMMON SHARE

The Company follows ASC 260, ”Earnings Per Share” for share-based payments that are considered to be participating securities within the definition provided by the standard. All share-based payment awards that contained non-forfeitable rights to dividends, whether paid or unpaid, were designated as participating securities and included in the computation of earnings per share (“EPS”).

9

The following table sets forth the computation of basic and diluted loss per share:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
Net loss	$	(340,757	)	$	(274,778	)	$	(661,417	)	$	(512,282	)
Weighted average common shares outstanding:
Basic and diluted		36,380,690			36,380,690			36,380,690			34,070,349
Basic and diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

For the three and six months ended June 30, 2019 and 2018, 4,986,334 stock warrants were excluded from diluted earnings per share because they are considered anti-dilutive.

For the three and six months ended June 30, 2019 and 2018, 1,257,555 and 1,200,879 stock options, respectively, were excluded from diluted earnings per share because they are considered anti-dilutive.

Further, the calculation of diluted weighted-average shares outstanding for the three and six months ended June 30, 2019 and 2018 exclude potential shares, related to the outstanding convertible notes payable, which if converted, would be anti-dilutive and would have a significant impact on the total number of shares outstanding, once exercised.

NOTE 4 – STOCKHOLDERS’ EQUITY

During the six months ended June 30, 2019 no equity activity occurred.

During the first quarter of 2018, the Company issued 5,227,147 shares of common stock to a shareholder/director in full satisfaction and discharge of certain obligations of the Company with respect to various advances and contributions made by such shareholder/director. The Company accounted for this related party transaction as a capital contribution and, accordingly, did not recognize gain or loss in the condensed consolidated statements of operations. Such transaction was effected pursuant to a 2017 Consolidated Conversion and Subscription Agreement entered into as of January 31, 2018 (the “2017 Conversion Agreement”) pursuant to which (i) such shareholder/director converted $100,000 advanced on July 10, 2010 bearing interest at 8.0% per annum (the “2010 Advance”) into 250,000 shares of common stock at a conversion price of $0.40 per share; (ii) such shareholder/director converted $50,000 advanced on December 31, 2012 bearing interest at 8.0% per annum (the “2012 Advance”) into 166,667 shares of common stock at a conversion price of $0.30 per share; (iii) the Company agreed to issue and such shareholder/director agreed to accept 539,230 shares of common stock at $0.20 per share in full payment of accrued and unpaid interest on the 2010 Advance and 2012 Advance which totaled $107,846; (iv) the Company agreed to issue and such shareholder/director agreed to accept 800,000 shares of common stock at $0.25 per share in full consideration for an aggregate of $200,000, bearing no interest, contributed to the Company between July 29 and December 2, 2015, and expected to be applied to stock subscriptions to be issued at a future date; (v) the Company agreed to issue and such shareholder/director agreed to accept 2,150,000 shares of common stock at $0.20 per share in full consideration for aggregate of $430,000, bearing no interest, contributed to the Company between February 9 and November 30, 2016, and expected to be applied to stock subscriptions to be issued at a future date; and (vi) the Company agreed to issue and such shareholder/director agreed to accept 1,321,250 shares of common stock at $0.20 per share in full consideration for an aggregate of $264,250, bearing no interest, contributed to the Company between January 5 and October 24, 2017 and expected to be applied to stock subscriptions to be issued at a future date.

10

NOTE 5 – STOCK WARRANTS AND OPTIONS

Stock Warrants

No warrants were issued or exercised, nor were there any warrants that expired, during the six months ended June 30, 2019 and 2018.

Warrants outstanding and exercisable as of June 30, 2019 were:

				Weighted
				Average		Exercisable
Exercise		Number of		Remaining		Number of
Price		Warrants		Life in Years		Warrants
$	0.60		3,590,000		2.0		3,590,000
$	0.75		100,000		2.2		100,000
$	0.50		546,334		1.0		546,334
$	0.30		750,000		2.4		750,000
			4,986,334				4,986,334

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 2013, the board of directors increased the number of shares reserved for issuance under the 2003 Option Plan from 1,000,000 to 1,250,000 which was increased by the board to 1,750,000 during the third quarter of 2018.

A summary of the activity of the Company’s stock options for the six months ended June 30, 2019 is presented below:

					Weighted		Weighted
	Weighted				Average		Average
	Average		Number of		Remaining		Optioned		Aggregate
	Exercise		Optioned		Contractual		Grant Date		Intrinsic
	Price		Shares		Term in Years		Fair Value		Value
Balance as of December 31, 2018	$	0.36		1,257,555			$	0.20	$	-
Expired		-		-				-
Granted		-		-				-
Exercised		-		-				-
Forfeited		-		-				-
Balance as of June 30, 2019	$	0.36		1,257,555		2.79	$	0.20	$	-
Vested and exercisable as of June 30, 2019	$	0.36		1,257,555		2.79	$	0.20	$	-

NOTE 6 – INCOME TAXES

On December 22, 2017, the President signed the Tax Cuts and Jobs Act (“U.S. Tax Reform”), which enacts a wide range of changes to the U.S. Corporate income tax system. The impact of U.S. Tax Reform primarily represents our estimates of revaluing our U.S. deferred tax assets and liabilities based on the rates at which they are expected to be recognized in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for the 2018 tax year. Based on our historical financial performance, we have a net deferred tax asset position that we have re-measured at the lower corporate rate of 21%.

NOTE 7 – 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 was due on the earlier of December 11, 2013, 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. These notes are now overdue for payment.

11

On June 1, 2010, the Company entered into a $50,000 convertible promissory note with a shareholder/director which was due on June 1, 2013 and accrues 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 was fully amortized over the original thirty-six-month term of the debt as additional interest expense. This note is now overdue for payment.

On June 1, 2010, the Company entered into $300,000 of convertible promissory notes with a shareholder/director which was due on June 1, 2013 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock the number of which is to be determined at that time. This note is now overdue for payment.

On July 20, 2010, the Company entered into $400,000 convertible promissory notes with a shareholder/director which was due on July 20, 2013 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. This note is now overdue for payment.

On July 20, 2010, the Company entered into a $100,000 convertible promissory note with a shareholder which was due on July 20, 2013 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. This note is now overdue for payment.

On December 10, 2010, the Company entered into $150,000 of convertible promissory notes with a shareholder/director which was due on December 10, 2013 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. This note is now overdue for payment.

On June 20, 2011, the Company entered into a $150,000 convertible promissory note with a shareholder/director which shall be due and payable on June 20, 2014 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. This note is now overdue for payment.

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

During the year ended December 31, 2018, a shareholder/director advanced $445,000 to the Company for working capital requirements. In addition, the Company reclassified a previous customer deposit of $37,500 originally received from a shareholder/director, made on behalf of a now deceased distributor, from customer deposits to shareholder deposits, as the original projected sale in question is no longer viable. The Company expects amounts advanced will be either (i) applied against a stock subscription to be issued at a future date or (ii) repaid at a future date as the parties shall determine. Until otherwise agreed, such amounts advanced have been recorded as an additional payable bearing no interest.

During the six months ended June 30, 2019, a shareholder/director advanced $300,000 to the Company for working capital requirements. The Company expects amounts advanced will be either (i) applied against a stock subscription to be issued at a future date or (ii) repaid at a future date as the parties shall determine. Until otherwise agreed, such amounts advanced have been recorded as an additional payable bearing no interest.

The Company determined it is not practicable to estimate the fair value of outstanding debt as of June 30, 2019 and December 31, 2018, as the outstanding debt is private, there is no clarity as to when interest payments or principal payments will ultimately be made (or be called by the debt holders), and the Company lacks the internal expertise to calculate fair value of these debt instruments and would incur excessive costs to obtain a third-party valuation.

Other related party transactions

As of June 30, 2019 and December 31, 2018, the Company owed approximately $4.2 and $4.1 million, respectively, to its chief executive officer and other employees of the Company. The CEO and employees agreed to salary deferrals pending available resources to make such payments.

12

NOTE 8 -- COMMITMENTS AND CONTINGENCIES

Effective January 1, 2019, the Company adopted ASU 2016-02, ”Leases (Topic 842)” to account for leases. The Company elected to apply the transition option practical expedient as well as the short-term lease practical expedient upon adoption. As a result of adoption and application of the practical expedients, the Company noted there was no material impact to the Company’s financial statements upon adoption. The Company leases office space under a non-cancelable operating lease that expires in August 2019. Due to the short-term nature of the lease, the Company has elected an accounting policy to not record short-term leases on the balance sheet. ASC 842-20-25-2 allows a lessee to elect an accounting policy to not record short-term leases, defined as those with terms of 12 months or less, on the balance sheet.

The lease provides for a rent-free period as well as increasing rental payments. In accordance with generally accepted accounting principles, rent expense for financial statement purposes is being recognized on a straight-line basis over the lease term. A deferred lease liability arises from the timing difference in the recognition of rent expense and the actual payment of rent.

Rent expense for the three months ended June 30, 2019 and 2018 totaled $12,577 and $12,578, respectively and $25,298 and $25,207 for the six months ended June 30, 2019, respectively.

In August 2019, the Company executed a six-month amendment to the lease for office space for the period September 1, 2019 through February 29, 2020. As permitted by ASC 842-20-25-2 the Company has elected to not record the short-term lease on the balance sheet.

NOTE 9 -- RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company has adopted this update. See Note 1 for further discussion.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has adopted this update effective January 1, 2019 with no material impact on its consolidated 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.

NOTE 10 – SUBSEQUENT EVENTS

There have been no material subsequent events after the close of the quarter ended June 30, 2019.

13

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

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 a guarantee 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”), formerly named Gold Bond Mining Company and then Gold Bond Resources, Inc., was incorporated in the State of Washington on July 30, 1935. We acquired EnerTeck Chemical Corp. (“EnerTeck Sub”) as a wholly owned subsidiary on January 9, 2003. As a result of this acquisition, we are now acting as a holding company, with EnerTeck Sub as our primary operating business. Subsequent to this transaction, on November 24, 2003 we changed our domicile from the State of Washington to the State of Delaware and changed our name from Gold Bond Resources, Inc. to EnerTeck Corporation. 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 blender at that time.

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. 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.

During 2011, we acquired a 40% membership interest in a entity called EnerTeck Environmental, LLC, which was formed for the purpose of marketing and selling a diesel fuel emission reduction technology with the creators of such specific technology.

14

Results of Operations

Three Months Ended June 30, 2019, Compared to Three Months Ended June 30, 2018

Revenues

We recognized revenues of $9,037 for the three months ended June 30, 2019, compared to revenues of $10,427 for the three months ended June 30, 2018, a decrease of $1,390. As testing is either underway or completed with several potential new customers and in new areas with existing customers, it is expected that the remainder of 2019 should show improvement.

Gross Profit

Gross profit, defined as revenues less cost of goods sold, was $7,300, or 80.8% of revenue, for the three months ended June 30, 2019, compared to $8,461, or 81.1% of revenue, for the three months ended June 30, 2018. We feel confident that there will be continued improvement in gross profits as the year proceeds, as several recently completed successful tests have reached the negotiation stage and our manufacturing proficiency continues to improve for our core products.

Cost of goods sold was $1,737 for the three months ended June 30, 2019 which represented 19.2% of revenue compared to $1,966 for the three months ended June 30, 2018, which represented 18.9% or revenue.

Costs and Expenses

Operating expenses were $290,669 for the three months ended June 30, 2019 as compared to $214,861 for the three months ended June 30, 2018, an increase of $75,808. Costs and expenses in all periods primarily consisted of payroll, professional fees, rent expense, depreciation expense, amortization expense and other general and administrative expenses. The increase is primarily due to increased professional fees and costs associated with business development.

Net Loss

We reported a net loss of $340,757 for the three months ended June 30, 2019 as compared to a net loss of $274,778 for the three months ended June 30, 2018, an increase of $65,979. The expectation is that sales will increase for the remainder of 2019 due to the success of certain completed testing and negotiations for and with new customers.

Six Months Ended June 30, 2019, Compared to Six Months Ended June 30, 2018

Revenues

We recognized revenues of $25,710 for the six months ended June 30, 2019, compared to revenues of $22,346 for the six months ended June 30, 2018, an increase of $3,364. As testing is either underway or completed with several potential new customers and in new areas with existing customers, it is expected that the remainder of 2019 should show improvement.

Gross Profit

Gross profit, defined as revenues less cost of goods sold, was $20,763, or 80.8% of revenue, for the six months ended June 30, 2019, compared to $17,587, or 78.7% of revenue, for the six months ended June 30, 2018. We feel confident that there will be continued improvement in gross profits as the year proceeds, as several recently completed successful tests have reached the negotiation stage and our manufacturing proficiency continues to improve for our core products.

Cost of goods sold was $4,947 for the six months ended June 30, 2019 which represented 19.2% of revenue compared to $4,759 for the six months ended June 30, 2018, which represented 21.3% or revenue.

15

 

Costs and Expenses

Operating expenses were $569,685 for the six months ended June 30, 2019 as compared to $418,916 for the six months ended June 30, 2018, an increase of $150,769. Costs and expenses in all periods primarily consisted of payroll, professional fees, rent expense, depreciation expense, amortization expense and other general and administrative expenses. The increase is primarily due to increased professional fees and costs associated with business development.

Net Loss

We reported a net loss of $661,417 for the six months ended June 30, 2019 as compared to a net loss of $512,282 for the six months ended June 30, 2018, an increase of $149,135. The expectation is that sales will increase for the remainder of 2019 due to the success of certain completed testing and negotiations for and with new customers.

Operations Outlook

The fuel additive industry has historically been mired by a myriad of technically dubious products. Prospective customers in all targeted market sectors and geographic locations are primarily concerned about the potential business risks associated with the adoption of any new fuel or engine treatment. Our sales process begins with a proof of performance demonstration that is a thorough analysis of the potential customer, including fleet type, size, and opportunity. This is followed with sales presentations at both the executive level and maintenance level.

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 concedes that sales revenues for the first six months of 2019, the calendar year 2018 and prior years have been considerably less than anticipated. One of the issues we have faced in recent years has been the very long timeline from initial contact to contract signing subsequent to completion of an evaluation. Although we believe that many times in the past, we have proven the benefits of EnerBurn, various evaluating companies have opted not to move forward for a variety of reasons which we believe were beyond our control.

Nevertheless, at both the Company and distributor level, we have recently completed or are proceeding with evaluations of EnerBurn in many field trials. As we continue to string together a series of positive evaluations in more industries, we should begin to see more business generated from such results. New trials are either in progress or should be commencing shortly.

Liquidity and Capital Resources

On June 30, 2019 we had a working capital deficit of $8,114,056 and a stockholders’ deficit of $7,926,333 compared to a working capital deficit of $7,460,127 and a stockholders’ deficit of $7,264,916 on December 31, 2018. Our continuing deficit levels are primarily due to poor sales. On June 30, 2019, we had $15,239 in cash, total assets of $318,469 and total liabilities of $8,244,802, compared to $11,851 in cash, total assets of $318,444 and total liabilities of $7,583,360 on December 31, 2018.

Net cash used in operating activities was $314,932 for the six months ended June 30, 2019 compared to net cash used in operating activities of $394,102 for the six months ended June 30, 2018, a decrease of $79,170. The decrease was primarily due to the timing of payments of accounts payable during the six months ended June 30, 2019.

Cash used in investing activities was $0 for the six months ended June 30, 2019 and 2018.

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 $318,320 for the six months ended June 30, 2019 with $43,425 provided by the financing of prepaid insurance, repayments on the financing of prepaid insurance of $25,105 and $300,000 from related party notes and advances as compared to cash provided by financing activities of $406,100 for the six months ended June 30, 2018 which was comprised $355,000 of related party notes and advances and $51,100 in financing of prepaid insurance.

16

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 fourth quarter of 2019 and into 2020. No assurances can be made that we will be able to obtain required financial backing on terms acceptable to us or at all. Our contemplated cash requirements beyond 2019 will depend primarily upon level of sales of our products, inventory levels, product development, sales and marketing expenditures and capital expenditures.

Due to our lack of meaningful revenues, we have been forced to finance our operations primarily from capital which has been raised from third parties and promissory notes and advances from related parties. As of June 30, 2019, such loans and advances from related parties total $2,162,500 as compared to $1,862,500 on December 31, 2018. Many of these remaining loans are past due and certain others are due on demand. The Company does not expect any of such related parties to demand payment until the Company has adequate resources to pay back such loans and advances, there can be no assurance that such will be the case. This debt presents a significant risk to the Company in that in the event any of such related parties demand payment, the Company may not have the necessary cash to meet such payment obligations, or if it does, such payments may draw significantly on the Company’s cash position. Any of such events will likely have a materially detrimental effect on the Company.

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, and results of operations, liquidity or capital expenditures.

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 June 30, 2019, these disclosure controls and procedures were ineffective 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, as a result of material weaknesses in our disclosure controls and internal control over financial reporting. The ineffectiveness was due to the following material weaknesses which are indicative of many small companies: (i) all accounting functions are performed by limited accounting personnel; (ii) lack of formalized controls in the financial close process; (iii) general lack of knowledge of generally accepted accounting principles; and (iv) review of monthly, quarterly and yearly consolidated financial statements was not performed at a sufficient level of precision and specificity in order to detect material errors in the financial statements.

Despite the existence of the material weaknesses, we believe that our consolidated financial statements contained in this Form 10-Q fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.

Changes in Internal Control over Financial Reporting

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. However, we intend to actively plan for and implement control procedures to improve our overall control environment including but not limited to documenting necessary internal control policies and developing and delivering appropriate internal control training to our personnel. Due to the nature of the remediation process and the need to allow adequate time after implementation to evaluate and test the effectiveness of the controls, as well as our limited cash resources, no assurance can be given as to the timing of achievement of remediation.

17

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.

None.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

18

Item 6. Exhibits.

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 002 (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 June 30, 2019 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements Changes in Stockholders’ Deficit, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.

19

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: August 14, 2019	By:	/s/ Gary B. Aman
		Gary B. Aman,
		President and Acting Chief Executive Officer
		(Principal Executive Officer)
Dated: August 14, 2019	By:	/s/ Richard B. Dicks
		Richard B. Dicks,
		Chief Financial Officer
		(Principal Financial Officer)

 20

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Gary B. Aman, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of EnerTeck Corporation;
2.	Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2019	By:	/s/ Gary B. Aman
		Gary B. Aman,
		President and Acting Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Richard Dicks, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of EnerTeck Corporation;
2.	Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2019	By:	/s/ Richard Dicks
		Richard Dicks, Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of EnerTeck Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2019, as filed with the Securities and Exchange Commission (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of the undersigned’s knowledge, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 14, 2019	By:	/s/ Gary B. Aman
		Gary B. Aman,
		President and Acting Chief Executive Officer (Principal Executive Officer)

 

Dated: August 14, 2019	By:	/s/ Richard Dicks
		Richard Dicks, Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 14, 2019
Document And Entity Information
Entity Registrant Name	ENERTECK CORP
Entity Central Index Key	0001128353
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2019
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019
Entity Common Stock Shares Outstanding		36,380,690

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 15,239	$ 11,851
Inventory	59,055	62,120
Receivable - trade	9,574	10,680
Representative advances		24,031
Prepaid expenses	46,124	11,537
Total current assets	129,992	120,219
Inventory, net of current portion	37,524	37,524
Intellectual property, net of accumulated amortization of $6,250 and $0, respectively	143,750	150,000
Website, net of accumulated amortization of $26,920 and $23,646, respectively	5,818	9,092
Property and equipment, net of accumulated depreciation of $268,538 and $268,314, respectively	1,385	1,609
TOTAL ASSETS	318,469	318,444
Current liabilities
Accounts payable	212,589	124,270
Customer advances	50,900	50,900
Related party notes and advances	2,162,500	1,862,500
Accrued compensation	4,194,301	4,058,065
Accrued interest	1,457,673	1,345,664
Accrued liabilities - other	144,557	138,947
Deferred revenue	21,528
Total current liabilities	8,244,048	7,580,346
Long term liabilities
Deferred lease liability	754	3,014
Total Liabilities	8,244,802	7,583,360
Commitments and contingencies (Note 8)
Stockholders' deficit
Preferred stock, $.001 par value, authorized 100,000,000 shares, none issued and outstanding at June 30, 2019 and December 31,2018
Common stock, $.001 par value, authorized 100,000,000 shares, 36,380,690 issued and outstanding at June 30, 2019 and December 31, 2018, respectively	36,381	36,381
Additional paid-in capital	29,293,021	29,293,021
Accumulated deficit	(37,255,735)	(36,594,318)
Total stockholders' deficit	(7,926,333)	(7,264,916)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 318,469	$ 318,444

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current assets
Accumulated amortization Intellectuals property	$ 6,250	$ 0
Accumulated amortization on website costs, net	26,920	23,646
Accumulated depreciation on property and equipment, net	$ 268,538	$ 268,314
Stockholders' deficit
Preferred stock, par value	$ .001	$ .001
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	30
Common stock, par value	$ .001	$ .001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	36,380,690	36,380,690
Common stock, shares outstanding	36,380,690	36,380,690

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Revenues	$ 9,037	$ 10,427	$ 25,710	$ 22,346
Cost of goods sold	1,737	1,966	4,947	4,759
Gross profit	7,300	8,461	20,763	17,587
General and administrative expenses
Wages	133,708	133,706	266,430	260,520
Depreciation and amortization	4,874	1,969	9,748	3,960
Other selling, general and administrative	152,087	79,186	293,507	154,436
Total Expenses	290,669	214,861	569,685	418,916
Operating loss	(283,369)	(206,400)	(548,922)	(401,329)
Interest income	17		26	31
Other income (expense)		(23,188)		(5,978)
Interest expense	(57,405)	(45,190)	(112,521)	(105,006)
Net loss	$ (340,757)	$ (274,778)	$ (661,417)	$ (512,282)
Loss per common share
Basic and diluted	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.02)
Weighted average shares outstanding
Basic and diluted	36,380,690	36,380,689	36,380,690	34,070,349

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($)	Total	Common Stock Shares	Additional Paid-in Capital	Accumulated Deficit
Beginning Balance, shares at Dec. 31, 2017		31,153,543
Beginning Balance, amount at Dec. 31, 2017	$ (7,530,725)	$ 31,154	$ 28,100,037	$ (35,661,916)
Stockholder advance conversion, shares		5,227,147
Stockholder advance conversion, amount	1,152,097	$ 5,227	1,146,870
Net loss	(512,282)			(512,282)
Ending Balance, shares at Jun. 30, 2018		36,380,690
Ending Balance, amount at Jun. 30, 2018	(6,890,910)	$ 36,381	29,246,906	(36,174,197)
Beginning Balance, shares at Mar. 31, 2018		36,380,690
Beginning Balance, amount at Mar. 31, 2018	(6,616,132)	$ 36,381	29,246,906	(35,899,419)
Net loss	(274,778)			(274,778)
Ending Balance, shares at Jun. 30, 2018		36,380,690
Ending Balance, amount at Jun. 30, 2018	(6,890,910)	$ 36,381	29,246,906	(36,174,197)
Beginning Balance, shares at Dec. 31, 2018		36,380,690
Beginning Balance, amount at Dec. 31, 2018	(7,264,916)	$ 36,381	29,293,021	(36,594,318)
Net loss	(661,417)			(661,417)
Ending Balance, shares at Jun. 30, 2019		36,380,690
Ending Balance, amount at Jun. 30, 2019	(7,926,333)	$ 36,381	29,293,021	(37,255,735)
Beginning Balance, shares at Mar. 31, 2019		36,380,690
Beginning Balance, amount at Mar. 31, 2019	(7,585,576)	$ 36,381	29,293,021	(36,914,978)
Net loss	(340,757)			(340,757)
Ending Balance, shares at Jun. 30, 2019		36,380,690
Ending Balance, amount at Jun. 30, 2019	$ (7,926,333)	$ 36,381	$ 29,293,021	$ (37,255,735)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (661,417)	$ (512,282)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization	$ 9,748	$ 3,960
Effects of changes in operating assets and liabilities:
Accounts receivable	1,106	12,184
Representative advances	24,031	(9,060)
Deferred liability	(2,260)	(2,260)
Inventory	3,065	3,032
Prepaid expenses	(34,587)	(30,554)
Accounts payable	69,999	24,780
Accrued interest payable	112,009	98,438
Accrued liabilities	141,846	47,083
Deferred revenue	21,528
NET CASH USED IN OPERATING ACTIVITIES	(314,932)	(364,680)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from financing prepaid insurance	43,425	51,100
Payments on prepaid insurance financing	(25,105)	(29,422)
Proceeds from sale of common stock
Proceeds from related party notes and advances	300,000	355,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	318,320	376,678
NET INCREASE IN CASH AND CASH EQUIVALENTS	3,388	11,998
CASH AND CASH EQUIVALENTS, beginning of period	11,851	19,373
CASH AND CASH EQUIVALENTS, end of period	$ 15,239	$ 31,371

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

BASIS OF PRESENTATION

NOTE 1 - BASIS OF PRESENTATION

Nature of Operations:

EnerTeck Corporation, a Delaware corporation, and its wholly owned subsidiary, EnerTeck Sub (collectively referred to as the Company) are headquartered in Houston, Texas. The Company specialize in the sales, marketing and manufacture of a fuel borne catalytic engine treatment for diesel engines known as EnerBurn®. 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). Principal target markets have included the trucking, heavy construction, maritime shipping, railroad and mining industries, as well as federal, state and international government applications. Key uncertainties and risks to the Company include, but are not limited to, if and how quickly the EnerBurn technology is accepted by the market and the effects future technological changes and environmental regulatory requirements may have on the need for diesel fuel additives.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Companys 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 2018 as reported in the Form 10-K have been omitted.

Use of Estimates

In preparing the accompanying condensed unaudited interim consolidated financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed unaudited interim consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates.

Inventory

Inventory primarily consists of market ready EnerBurn plus raw materials required to manufacture the products. With the adoption of ASU 2015-11, inventory is valued at the lower of cost or net realizable value, using the average cost method.

Finished product costs amounted to approximately $23,000 and $26,000 at June 30, 2019 and December 31, 2018, respectively, and includes required blending costs to bring our products to their finished state.

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. Management has provided allowances for doubtful accounts of $0 as of June 30, 2019 and December 31, 2018.

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 consolidated 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 consolidated 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. 

During the six months ended June 30, 2019, the Company reviewed the estimated life of its intellectual property and determined it to have a finite life of 12 years. This change in accounting estimate requires the Company to amortize the intellectual property over the 12 year life and resulted in amortization expense of $3,125 and $6,250 for the three and six months ended June 30, 2019, respectively.

Revenue Recognition

Effective January 1, 2018, the Company adopted ASC 606, Revenue from Contracts With Customers, using the modified retrospective adoption approach. As a result of adoption, the Company noted there were no changes or modifications required to previously recorded revenues.

While the Company has had some direct customers over the years, the principal method of selling the Companys product EnerBurn is through the use of independent distributors, for both domestic and international markets. The transaction price for each sale is explicitly stated within the contract with a customer. The Company does not accept returns nor does it provide warranty on its products performance, as control of performance is based on the proper utilization by the final user. Normal payment terms for domestic sales to both customers and distributors shipping within the United States are net 30 days. All foreign shipments are cash in advance of shipment from the Companys location. The Companys sole performance obligation to customers and distributors is the manufacturing and shipment of EnerBurn. Revenues from sales of the Companys product are recognized at the point when a customer order has been completed and shipped. Sales of all product are f.o.b. shipping point, with the distributors responsible for the freight and delivery. Revenue from shipments to related party distributors is recognized when the product is sold to unrelated third-party customers. All negotiation on sales contracts between the individual distributor and end customer and are the responsibility of the individual distributor and the amount of mark up above the distributors wholesale price per unit is the purview of the distributor.

The Company may from time to time enter into contracts to sell exclusive distributorship rights to certain markets for a fee. The contracts typically contain a term of market exclusivity as well as other performance obligations. The Company has determined the performance obligations on these types of contracts are satisfied evenly over the term of the contract and recognizes revenue evenly over the term of the contract. The remaining performance obligations on these contracts as of June 30, 2019 is $21,528 and is included in deferred revenue on the Companys Condensed Consolidated Balance Sheet. These amounts are expected to be ratably recognized as revenue over the remaining term of the contracts.

In the following table, revenues have been disaggregated for the six months ended June 30:

	2019		2018
Revenues - domestic	$	25,710	$	22,346
Revenues - foreign		-		-
Total revenues	$	25,710	$	22,346

As stated above, the Company does not accept returns nor does it provide warranty on its products performance, as control of performance is based on the proper utilization by the final user. The Company periodically tests the product manufactured prior to shipment for its proprietary quality standards and guarantees to the distributors that the product will always maintain the level of strict quality standard that is integral to the performance of its product for the end customer. The Company will provide a Certificate of Analysis, (C of A) on each shipment of its product, if requested for the customer. The C of A provides proof that the product is manufactured to meet chemical specifications that insure performance standards.

Going Concern

In accordance with ASC Subtopic 205-40, Going Concern, management evaluates whether relevant conditions and events that, when considered in the aggregate, indicate that it is probable the Company will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. When relevant conditions or events, considered in the aggregate, initially indicate that it is probable that the Company will be unable to meet its obligations as they become due within one year after the date that the consolidated financial statements are issued (and therefore they raise substantial doubt about the Companys ability to continue as a going concern), management evaluates whether its plans that are intended to mitigate those conditions and events, when implemented, will alleviate substantial doubt about the Companys ability to continue as a going concern. Managements plans are considered only to the extent that 1) it is probable that the plans will be effectively implemented and 2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the Companys ability to continue as a going concern.

The accompanying consolidated 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 six months ended June 30, 2019 and 2018, the Company incurred recurring net losses of $661,417 and $512,282, respectively. Further, most of the Companys notes payable are overdue and payment may be demanded at any time. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Companys 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. The Company has been able to obtain cash in the past through private placements and issuing promissory notes and believes that these avenues will remain available to the Company. Management believes that these financings are probable of occurring and mitigating the substantial doubt raised by historical operating results and satisfying the Companys estimated liquidity needs 12 months from the issuance of the consolidated financial statements. No assurance can be made that these efforts will be successful.

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PROPERTY AND EQUIPMENT

6 Months Ended

Jun. 30, 2019

PROPERTY AND EQUIPMENT

NOTE 2 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	June 30,		December 31,
	2019		2018
Furniture and fixtures	$	30,909	$	30,909
Equipment		239,014		239,014
		269,923		269,923
Less: accumulated depreciation		268,538		268,314
Total property and equipment, net	$	1,385	$	1,609

Depreciation expense for the three months ended June 30, 2019 and 2018 was $112 and $332, respectively, and $224 and $686 for the six months ended June 30, 2019 and 2018, respectively.

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LOSS PER COMMON SHARE

6 Months Ended

Jun. 30, 2019

LOSS PER COMMON SHARE

NOTE 3 - LOSS PER COMMON SHARE

The Company follows ASC 260, Earnings Per Share for share-based payments that are considered to be participating securities within the definition provided by the standard. All share-based payment awards that contained non-forfeitable rights to dividends, whether paid or unpaid, were designated as participating securities and included in the computation of earnings per share (EPS).

The following table sets forth the computation of basic and diluted loss per share:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
Net loss	$	(340,757	)	$	(274,778	)	$	(661,417	)	$	(512,282	)
Weighted average common shares outstanding:
Basic and diluted		36,380,690			36,380,689			36,380,690			34,070,349
Basic and diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

For the three and six months ended June 30, 2019 and 2018, 4,986,334 stock warrants were excluded from diluted earnings per share because they are considered anti-dilutive.

For the three and six months ended June 30, 2019 and 2018, 1,257,555 and 1,200,879 stock options, respectively, were excluded from diluted earnings per share because they are considered anti-dilutive.

Further, the calculation of diluted weighted-average shares outstanding for the three and six months ended June 30, 2019 and 2018 exclude potential shares, related to the outstanding convertible notes payable, which if converted, would be anti-dilutive and would have a significant impact on the total number of shares outstanding, once exercised.

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2019

STOCKHOLDERS' EQUITY

NOTE 4 - STOCKHOLDERS' EQUITY

During the six months ended June 30, 2019 no equity activity occurred.

During the first quarter of 2018, the Company issued 5,227,147 shares of common stock to a shareholder/director in full satisfaction and discharge of certain obligations of the Company with respect to various advances and contributions made by such shareholder/director. The Company accounted for this related party transaction as a capital contribution and, accordingly, did not recognize gain or loss in the condensed consolidated statements of operations. Such transaction was effected pursuant to a 2017 Consolidated Conversion and Subscription Agreement entered into as of January 31, 2018 (the 2017 Conversion Agreement) pursuant to which (i) such shareholder/director converted $100,000 advanced on July 10, 2010 bearing interest at 8.0% per annum (the 2010 Advance) into 250,000 shares of common stock at a conversion price of $0.40 per share; (ii) such shareholder/director converted $50,000 advanced on December 31, 2012 bearing interest at 8.0% per annum (the 2012 Advance) into 166,667 shares of common stock at a conversion price of $0.30 per share; (iii) the Company agreed to issue and such shareholder/director agreed to accept 539,230 shares of common stock at $0.20 per share in full payment of accrued and unpaid interest on the 2010 Advance and 2012 Advance which totaled $107,846; (iv) the Company agreed to issue and such shareholder/director agreed to accept 800,000 shares of common stock at $0.25 per share in full consideration for an aggregate of $200,000, bearing no interest, contributed to the Company between July 29 and December 2, 2015, and expected to be applied to stock subscriptions to be issued at a future date; (v) the Company agreed to issue and such shareholder/director agreed to accept 2,150,000 shares of common stock at $0.20 per share in full consideration for aggregate of $430,000, bearing no interest, contributed to the Company between February 9 and November 30, 2016, and expected to be applied to stock subscriptions to be issued at a future date; and (vi) the Company agreed to issue and such shareholder/director agreed to accept 1,321,250 shares of common stock at $0.20 per share in full consideration for an aggregate of $264,250, bearing no interest, contributed to the Company between January 5 and October 24, 2017 and expected to be applied to stock subscriptions to be issued at a future date.

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STOCK WARRANTS AND OPTIONS

6 Months Ended

Jun. 30, 2019

STOCK WARRANTS AND OPTIONS

NOTE 5 - STOCK WARRANTS AND OPTIONS

Stock Warrants

No warrants were issued or exercised, nor were there any warrants that expired, during the six months ended June 30, 2019 and 2018.

Warrants outstanding and exercisable as of June 30, 2019 were:

				Weighted
				Average		Exercisable
Exercise		Number of		Remaining		Number of
Price		Warrants		Life in Years		Warrants
$	0.60		3,590,000		2.0		3,590,000
$	0.75		100,000		2.2		100,000
$	0.50		546,334		1.0		546,334
$	0.30		750,000		2.4		750,000
			4,986,334				4,986,334

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 Companys business and increases in shareholder value. During the third quarter of 2013, the board of directors increased the number of shares reserved for issuance under the 2003 Option Plan from 1,000,000 to 1,250,000 which was increased by the board to 1,750,000 during the third quarter of 2018.

A summary of the activity of the Companys stock options for the six months ended June 30, 2019 is presented below:

					Weighted
					Average		Weighted
	Weighted				Remaining		Average
	Average		Number of		Contractual		Optioned		Aggregate
	Exercise Price		Optioned Shares		Term in Years		Grant Date Fair Value		Intrinsic Value
Balance as of December 31, 2018	$	0.36		1,257,555			$	0.20	$	-
Expired		-		-				-
Granted		-		-				-
Exercised		-		-				-
Forfeited		-		-				-
Balance as of June 30, 2019	$	0.36		1,257,555		2.79	$	0.20	$	-
Vested and exercisable as of June 30, 2019	$	0.36		1,257,555		2.79	$	0.20	$	-

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INCOME TAXES

6 Months Ended

Jun. 30, 2019

INCOME TAXES

NOTE 6 - INCOME TAXES

On December 22, 2017, the President signed the Tax Cuts and Jobs Act (U.S. Tax Reform), which enacts a wide range of changes to the U.S. Corporate income tax system. The impact of U.S. Tax Reform primarily represents our estimates of revaluing our U.S. deferred tax assets and liabilities based on the rates at which they are expected to be recognized in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for the 2018 tax year. Based on our historical financial performance, we have a net deferred tax asset position that we have re-measured at the lower corporate rate of 21%.

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RELATED PARTY NOTES AND ADVANCES

6 Months Ended

Jun. 30, 2019

RELATED PARTY NOTES AND ADVANCES

NOTE 7 - 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 was due on the earlier of December 11, 2013, 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. These notes are now overdue for payment.

On June 1, 2010, the Company entered into a $50,000 convertible promissory note with a shareholder/director which was due on June 1, 2013 and accrues 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 was fully amortized over the original thirty-six-month term of the debt as additional interest expense. This note is now overdue for payment.

On June 1, 2010, the Company entered into $300,000 of convertible promissory notes with a shareholder/director which was due on June 1, 2013 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock the number of which is to be determined at that time. This note is now overdue for payment.

On July 20, 2010, the Company entered into $400,000 convertible promissory notes with a shareholder/director which was due on July 20, 2013 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. This note is now overdue for payment.

On July 20, 2010, the Company entered into a $100,000 convertible promissory note with a shareholder which was due on July 20, 2013 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. This note is now overdue for payment.

On December 10, 2010, the Company entered into $150,000 of convertible promissory notes with a shareholder/director which was due on December 10, 2013 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. This note is now overdue for payment.

On June 20, 2011, the Company entered into a $150,000 convertible promissory note with a shareholder/director which shall be due and payable on June 20, 2014 and accrues interest at 8.0% per annum payable at maturity and which may be converted at any time into shares of common stock. This note is now overdue for payment.

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

During the year ended December 31, 2018, a shareholder/director advanced $445,000 to the Company for working capital requirements. In addition, the Company reclassified a previous customer deposit of $37,500 originally received from a shareholder/director, made on behalf of a now deceased distributor, from customer deposits to shareholder deposits, as the original projected sale in question is no longer viable. The Company expects amounts advanced will be either (i) applied against a stock subscription to be issued at a future date or (ii) repaid at a future date as the parties shall determine. Until otherwise agreed, such amounts advanced have been recorded as an additional payable bearing no interest.

During the six months ended June 30, 2019, a shareholder/director advanced $300,000 to the Company for working capital requirements. The Company expects amounts advanced will be either (i) applied against a stock subscription to be issued at a future date or (ii) repaid at a future date as the parties shall determine. Until otherwise agreed, such amounts advanced have been recorded as an additional payable bearing no interest.

The Company determined it is not practicable to estimate the fair value of outstanding debt as of June 30, 2019 and December 31, 2018, as the outstanding debt is private, there is no clarity as to when interest payments or principal payments will ultimately be made (or be called by the debt holders), and the Company lacks the internal expertise to calculate fair value of these debt instruments and would incur excessive costs to obtain a third-party valuation.

Other related party transactions

As of June 30, 2019 and December 31, 2018, the Company owed approximately $4.2 and $4.1 million, respectively, to its chief executive officer and other employees of the Company. The CEO and employees agreed to salary deferrals pending available resources to make such payments.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2019

COMMITMENTS AND CONTINGENCIES

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) to account for leases. The Company elected to apply the transition option practical expedient as well as the short-term lease practical expedient upon adoption. As a result of adoption and application of the practical expedients, the Company noted there was no material impact to the Companys financial statements upon adoption. The Company leases office space under a non-cancelable operating lease that expires in August 2019. Due to the short-term nature of the lease, the Company has elected an accounting policy to not record short-term leases on the balance sheet. ASC 842-20-25-2 allows a lessee to elect an accounting policy to not record short-term leases, defined as those with terms of 12 months or less, on the balance sheet.

The lease provides for a rent-free period as well as increasing rental payments. In accordance with generally accepted accounting principles, rent expense for financial statement purposes is being recognized on a straight-line basis over the lease term. A deferred lease liability arises from the timing difference in the recognition of rent expense and the actual payment of rent.

Rent expense for the three months ended June 30, 2019 and 2018 totaled $12,577 and $12,578, respectively and $25,298 and $25,207 for the six months ended June 30, 2019, respectively.

In August 2019, the Company executed a six-month amendment to the lease for office space for the period September 1, 2019 through February 29, 2020. As permitted by ASC 842-20-25-2 the Company has elected to not record the short-term lease on the balance sheet.

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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2019

STOCK WARRANTS AND OPTIONS

NOTE 9 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company has adopted this update. See Note 1 for further discussion.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has adopted this update effective January 1, 2019 with no material impact on its consolidated 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.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2019

SUBSEQUENT EVENTS

NOTE 10 - SUBSEQUENT EVENTS

There have been no material subsequent events after the close of the quarter ended June 30, 2019.

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2019

BASIS OF PRESENTATION (Policies)

Nature of Operations

EnerTeck Corporation, a Delaware corporation, and its wholly owned subsidiary, EnerTeck Sub (collectively referred to as the Company) are headquartered in Houston, Texas. The Company specialize in the sales, marketing and manufacture of a fuel borne catalytic engine treatment for diesel engines known as EnerBurn®. 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). Principal target markets have included the trucking, heavy construction, maritime shipping, railroad and mining industries, as well as federal, state and international government applications. Key uncertainties and risks to the Company include, but are not limited to, if and how quickly the EnerBurn technology is accepted by the market and the effects future technological changes and environmental regulatory requirements may have on the need for diesel fuel additives.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Companys 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 2018 as reported in the Form 10-K have been omitted.

Use of Estimates

In preparing the accompanying condensed unaudited interim consolidated financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed unaudited interim consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates.

Inventory

Inventory primarily consists of market ready EnerBurn plus raw materials required to manufacture the products. With the adoption of ASU 2015-11, inventory is valued at the lower of cost or net realizable value, using the average cost method.

Finished product costs amounted to approximately $23,000 and $26,000 at June 30, 2019 and December 31, 2018, respectively, and includes required blending costs to bring our products to their finished state.

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. Management has provided allowances for doubtful accounts of $0 as of June 30, 2019 and December 31, 2018.

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 consolidated 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 consolidated 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. 

During the six months ended June 30, 2019, the Company reviewed the estimated life of its intellectual property and determined it to have a finite life of 12 years. This change in accounting estimate requires the Company to amortize the intellectual property over the 12 year life and resulted in amortization expense of $3,125 and $6,250 for the three and six months ended June 30, 2019, respectively.

Revenue Recognition

Effective January 1, 2018, the Company adopted ASC 606, Revenue from Contracts With Customers, using the modified retrospective adoption approach. As a result of adoption, the Company noted there were no changes or modifications required to previously recorded revenues.

While the Company has had some direct customers over the years, the principal method of selling the Companys product EnerBurn is through the use of independent distributors, for both domestic and international markets. The transaction price for each sale is explicitly stated within the contract with a customer. The Company does not accept returns nor does it provide warranty on its products performance, as control of performance is based on the proper utilization by the final user. Normal payment terms for domestic sales to both customers and distributors shipping within the United States are net 30 days. All foreign shipments are cash in advance of shipment from the Companys location. The Companys sole performance obligation to customers and distributors is the manufacturing and shipment of EnerBurn. Revenues from sales of the Companys product are recognized at the point when a customer order has been completed and shipped. Sales of all product are f.o.b. shipping point, with the distributors responsible for the freight and delivery. Revenue from shipments to related party distributors is recognized when the product is sold to unrelated third-party customers. All negotiation on sales contracts between the individual distributor and end customer and are the responsibility of the individual distributor and the amount of mark up above the distributors wholesale price per unit is the purview of the distributor.

The Company may from time to time enter into contracts to sell exclusive distributorship rights to certain markets for a fee. The contracts typically contain a term of market exclusivity as well as other performance obligations. The Company has determined the performance obligations on these types of contracts are satisfied evenly over the term of the contract and recognizes revenue evenly over the term of the contract. The remaining performance obligations on these contracts as of June 30, 2019 is $21,528 and is included in deferred revenue on the Companys Condensed Consolidated Balance Sheet. These amounts are expected to be ratably recognized as revenue over the remaining term of the contracts.

In the following table, revenues have been disaggregated for the six months ended June 30:

	2019		2018
Revenues - domestic	$	25,710	$	22,346
Revenues - foreign		-		-
Total revenues	$	25,710	$	22,346

As stated above, the Company does not accept returns nor does it provide warranty on its products performance, as control of performance is based on the proper utilization by the final user. The Company periodically tests the product manufactured prior to shipment for its proprietary quality standards and guarantees to the distributors that the product will always maintain the level of strict quality standard that is integral to the performance of its product for the end customer. The Company will provide a Certificate of Analysis, (C of A) on each shipment of its product, if requested for the customer. The C of A provides proof that the product is manufactured to meet chemical specifications that insure performance standards.

Going Concern

In accordance with ASC Subtopic 205-40, Going Concern, management evaluates whether relevant conditions and events that, when considered in the aggregate, indicate that it is probable the Company will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. When relevant conditions or events, considered in the aggregate, initially indicate that it is probable that the Company will be unable to meet its obligations as they become due within one year after the date that the consolidated financial statements are issued (and therefore they raise substantial doubt about the Companys ability to continue as a going concern), management evaluates whether its plans that are intended to mitigate those conditions and events, when implemented, will alleviate substantial doubt about the Companys ability to continue as a going concern. Managements plans are considered only to the extent that 1) it is probable that the plans will be effectively implemented and 2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the Companys ability to continue as a going concern.

The accompanying consolidated 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 six months ended June 30, 2019 and 2018, the Company incurred recurring net losses of $661,417 and $512,282, respectively. Further, most of the Companys notes payable are overdue and payment may be demanded at any time. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Companys 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. The Company has been able to obtain cash in the past through private placements and issuing promissory notes and believes that these avenues will remain available to the Company. Management believes that these financings are probable of occurring and mitigating the substantial doubt raised by historical operating results and satisfying the Companys estimated liquidity needs 12 months from the issuance of the consolidated financial statements. No assurance can be made that these efforts will be successful.

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BASIS OF PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2019

BASIS OF PRESENTATION (Tables)

Schedule of revenue

	2019		2018
Revenues - domestic	$	25,710	$	22,346
Revenues - foreign		-		-
Total revenues	$	25,710	$	22,346

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PROPERTY AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2019

PROPERTY AND EQUIPMENT (Tables)

Schedule of property and equipment

	June 30,		December 31,
	2019		2018
Furniture and fixtures	$	30,909	$	30,909
Equipment		239,014		239,014
		269,923		269,923
Less: accumulated depreciation		268,538		268,314
Total property and equipment, net	$	1,385	$	1,609

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LOSS PER COMMON SHARE (Tables)

6 Months Ended

Jun. 30, 2019

LOSS PER COMMON SHARE (Tables)

Schedule of basic and diluted loss per share

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(unaudited)						(unaudited)
Net loss	$	(340,757	)	$	(274,778	)	$	(661,417	)	$	(512,282	)
Weighted average common shares outstanding:
Basic and diluted		36,380,690			36,380,689			36,380,690			34,070,349
Basic and diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

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STOCK WARRANTS AND OPTIONS (Tables)

6 Months Ended

Jun. 30, 2019

STOCK WARRANTS AND OPTIONS (Tables)

Warrants outstanding and exercisable

				Weighted
				Average		Exercisable
Exercise		Number of		Remaining		Number of
Price		Warrants		Life in Years		Warrants
$	0.60		3,590,000		2.0		3,590,000
$	0.75		100,000		2.2		100,000
$	0.50		546,334		1.0		546,334
$	0.30		750,000		2.4		750,000
			4,986,334				4,986,334

Activity for stock options

	Weighted Average Exercise Price		Number of Optioned Shares		Weighted Average Remaining Contractual Term in Years		Weighted Average Optioned Grant Date Fair  Value		Aggregate Intrinsic Value
Balance as of December 31, 2018	$	0.36		1,257,555			$	0.20	$	-
Expired		-		-				-
Granted		-		-				-
Exercised		-		-				-
Forfeited		-		-				-
Balance as of June 30, 2019	$	0.36		1,257,555		2.79	$	0.20	$	-
Vested and exercisable as of June 30, 2019	$	0.36		1,257,555		2.79	$	0.20	$	-

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BASIS OF PRESENTATION (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
BASIS OF PRESENTATION (Details)
Revenue - domestic			$ 25,710	$ 22,346
Revenue - foreign
Total revenues	$ 9,037	$ 10,427	$ 25,710	$ 22,346

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BASIS OF PRESENTATION (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
State of incorporation			Delaware
Inventory, Finished Goods	$ 23,000		$ 23,000		$ 26,000
Allowances for doubtful accounts	0		0		0
Accumulated amortization, intellectual property	3,125		6,250
Net loss	(340,757)	$ (274,778)	(661,417)	$ (512,282)
Deferred revenue	$ 21,528		$ 21,528
Intellectual Property [Member]
Intangible assets, finite life			12 years
Amortization period			12 years

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PROPERTY AND EQUIPMENT (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
PROPERTY AND EQUIPMENT (Details)
Furniture and fixtures	$ 30,909	$ 30,909
Equipment	239,014	239,014
Property plant and equipment gross	269,923	269,923
Less: accumulated depriciation	268,538	268,314
Total property and equipment, net	$ 1,385	$ 1,609

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PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
PROPERTY AND EQUIPMENT (Details)
Depreciation expense	$ 112	$ 332	$ 224	$ 686

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LOSS PER COMMON SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
LOSS PER COMMON SHARE (Details)
Net loss	$ (340,757)	$ (274,778)	$ (661,417)	$ (512,282)
Weighted average common shares outstanding: Basic and Diluted	36,380,690	36,380,689	36,380,690	34,070,349
Basic and diluted loss per share	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.02)

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LOSS PER COMMON SHARE (Details Narrative) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Stock Warrants [Member]
Potentially dilutive securities excluded from the computation of EPS	4,986,334	4,986,334	4,986,334	4,986,334
Stock Option [Member]
Potentially dilutive securities excluded from the computation of EPS	1,257,555	1,257,555	1,200,879	1,200,879

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STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)				1 Months Ended			6 Months Ended
	Dec. 10, 2010	Jun. 01, 2010	Dec. 11, 2009	Oct. 20, 2011	Jun. 20, 2011	Jul. 20, 2010	Jun. 30, 2019	Dec. 31, 2018
Common stock, shares issued							36,380,690	36,380,690
Director [Member]
Common stock, shares issued							5,227,147
Interest rate	8.00%	8.00%	5.00%	8.00%	8.00%	8.00%
Director [Member] | 2017 Conversion Agreement [Member] | January 5 and October 24, 2017 [Member]
Common stock price per share							$ 0.20
Common stock shares issuable upon conversion of debt							1,321,250
Convertible debt							$ 264,250
Director [Member] | 2017 Conversion Agreement [Member] | February 9 and November 30, 2016 [Member]
Common stock price per share							$ 0.20
Common stock shares issuable upon conversion of debt							2,150,000
Convertible debt							$ 430,000
Director [Member] | 2017 Conversion Agreement [Member] | July 29 and December 2, 2015 [Member]
Common stock price per share							$ 0.25
Common stock shares issuable upon conversion of debt							800,000
Convertible debt							$ 200,000
Director [Member] | 2017 Conversion Agreement [Member] | 2010 Advance and 2012 Advance [Member]
Common stock price per share							$ 0.20
Common stock shares issuable upon conversion of debt							539,230
Accrued and unpaid interest							$ 107,846
Director [Member] | 2017 Conversion Agreement [Member] | December 31, 2012 [Member]
Debt conversion converted amount							$ 50,000
Debt conversion converted instrument, shares issued							166,667
Interest rate							8.00%
Conversion price per share							$ 0.30
Director [Member] | 2017 Conversion Agreement [Member] | July 10, 2010 [Member]
Debt conversion converted amount							$ 100,000
Debt conversion converted instrument, shares issued							250,000
Interest rate							8.00%
Conversion price per share							$ 0.40

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STOCK WARRANTS AND OPTIONS (Details)	6 Months Ended
	Jun. 30, 2019 shares
Number of Warrants	4,986,334
Exercisable Number of Warrants	4,986,334
Exercise Price $0.60 [Member]
Number of Warrants	3,590,000
Exercisable Number of Warrants	3,590,000
Weighted Average Remaining Life in Years	2 years
Exercise Price $0.75 [Member]
Number of Warrants	100,000
Exercisable Number of Warrants	100,000
Weighted Average Remaining Life in Years	2 years 2 months 12 days
Exercise Price $0.50 [Member]
Number of Warrants	546,334
Exercisable Number of Warrants	546,334
Weighted Average Remaining Life in Years	1 year
Exercise Price $0.30 [Member]
Number of Warrants	750,000
Exercisable Number of Warrants	750,000
Weighted Average Remaining Life in Years	2 years 4 months 24 days

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STOCK WARRANTS AND OPTIONS (Details 1)	6 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares
Number of shares
Outstanding at beginning | shares	1,257,555
Expired | shares
Granted | shares
Exercised | shares
Forfeited | shares
Outstanding at ending | shares	1,257,555
Vested and exercisable | shares	1,257,555
Weighted average exercise price
Outstanding at beginning	$ 0.36
Expired
Granted
Exercised
Forfeited
Outstanding at ending	0.36
Vested and exercisable	$ 0.36
Weighted Average Remaining Contractual Term in Years	2 years 9 months 14 days
Weighted Average Remaining Contractual Term in Years vested and exercisable	2 years 9 months 14 days
Weighted average fair value grant date, beginning of period	$ 0.20
Weighted average fair value grant date, end of period	0.20
Weighted average Fair value of options vested during the period	$ 0.20
Aggregate intrinsic value | $

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STOCK WARRANTS AND OPTIONS (Details Narrative) - 2003 Option Plan [Member] - shares	6 Months Ended
	Jun. 30, 2019	Sep. 30, 2018	Sep. 30, 2013	Sep. 30, 2003
Description of option plan	During the third quarter of 2013, the board of directors increased the number of shares reserved for issuance under the 2003 Option Plan from 1,000,000 to 1,250,000 which was increased by the board to 1,750,000 during the third quarter of 2018.
Common stock, shares reserved for future issuance		1,750,000	1,250,000	1,000,000

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RELATED PARTY NOTES AND ADVANCES (Details Narrative) - USD ($)					1 Months Ended			6 Months Ended	12 Months Ended
	Dec. 10, 2010	Jun. 01, 2010	Dec. 11, 2009	Jul. 07, 2009	Oct. 20, 2011	Jun. 20, 2011	Jul. 20, 2010	Jun. 30, 2019	Dec. 31, 2018
Accrued compensation								$ 4,194,301	$ 4,058,065
Director [Member]
Reclassified to shareholder deposits									37,500
Convertible promissory note	$ 150,000	$ 50,000	$ 50,000		$ 70,000	$ 150,000	$ 400,000
Interest rate	8.00%	8.00%	5.00%		8.00%	8.00%	8.00%
Principal balance term			The principal balance of the note was due on the earlier of December 11, 2013, or upon completion by the Company of equity financing in excess of $1.0 million in gross proceeds.
Note due date	Dec. 10, 2010	Jun. 01, 2013			Oct. 20, 2014	Jun. 20, 2014
Discount amount		$ 36,207
Debt discount amortized period		36 months
Proceeds from related party notes and advances								300,000	445,000
Officer [Member]
Convertible promissory note				$ 100,000
Interest rate				12.00%
Director One [Member]
Convertible promissory note		$ 300,000					$ 100,000
Note due date		Jun. 01, 2013					Jul. 20, 2013
Interest rate		8.00%					8.00%
Chief Executive Officer And Other Employees [Member]
Accrued compensation								$ 4,194,301	$ 4,058,065

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COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
COMMITMENTS AND CONTINGENCIES (Details Narrative)
Rent expense	$ 12,577	$ 12,578	$ 25,298	$ 25,207