10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2012

or

¨ 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: 333-167380

ENERGY TELECOM, INC.

(Exact name of registrant as specified in its charter)

Florida	65-0434332
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3501-B N. Ponce de Leon Blvd., #393

St. Augustine, Florida 32084

(Address of principal executive offices) (zip code)

(904) 819-8995

(Registrant’s telephone number, including area code)

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 o  No x

Note: The Company is a voluntary filer but has filed all reports it would have been required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months if it was a mandatory filer.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x   No o

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

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

As of November 13, 2012, there were 8,648,581 and 600,000 shares of registrant’s class A and B common stock outstanding, respectively.

ENERGY TELECOM, INC.

INDEX
			Page
PART I.	FINANCIAL INFORMATION
	ITEM 1	Financial Statements
		Condensed balance sheets as of September 30, 2012 (unaudited) and December 31, 2011	3
		Condensed statements of operations for the three and nine months ended September 30, 2012 and 2011 (unaudited)	4
		Condensed statement of changes in stockholders’ equity for the nine months ended September 30, 2012 (unaudited)	5
		Condensed statements of cash flows for the nine months ended September 30, 2012 and 2011 (unaudited)	6
		Notes to condensed financial statements (unaudited)	7-11
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12-19
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	19
	ITEM 4.	Controls and Procedures	20
PART II.	OTHER INFORMATION
	ITEM 1.	Legal Proceedings	21
	ITEM 1A.	Risk Factors	21
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
	ITEM 3.	Defaults Upon Senior Securities	21
	ITEM 4.	Mine Safety Disclosures	21
	ITEM 5.	Other Information	21
	ITEM 6.	Exhibits	21
	SIGNATURES		22

2

PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

ENERGY TELECOM, INC.
CONDENSED BALANCE SHEETS
	September 30,			December 31,
	2012			2011
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	142,891		$	138,712
Accounts receivable, net		20,882			-
Total current assets		163,773			138,712
Property and equipment, net		3,908			3,378
Total assets	$	167,681		$	142,090
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	81,657		$	40,481
Stockholder notes payable		13,486			18,486
Total current liabilities		95,143			58,967
STOCKHOLDERS' EQUITY
Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 8,648,581 and 7,432,748 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively		865			743
Class B common stock, no par value, 10,000,000 shares authorized, 600,000 and 200,000 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively		300,000			-
Additional paid in capital		5,562,403			4,989,537
Accumulated deficit		(5,790,730	)		(4,907,157	)
Total stockholders' equity		72,538			83,123
Total liabilities and stockholders' equity	$	167,681		$	142,090

The accompanying notes are an integral part of these unaudited condensed financial statements

3

ENERGY TELECOM, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
REVENUE:
Sales	$	17,784		$	-		$	31,503		$	950
Royalties		-			1,649			3,032			1,649
Total revenue		17,784			1,649			34,535			2,599
COST OF GOODS SOLD		19,031			-			30,248			-
Gross (loss) profit		(1,246	)		1,649			4,288			2,599
OPERATING EXPENSES:
Selling, general and administrative expenses		220,024			122,082			883,169			354,982
Depreciation		401			429			1,112			429
Total operating expenses:		220,425			122,511			884,281			355,411
Loss from operations		(221,671	)		(120,862	)		(879,993	)		(352,812	)
OTHER INCOME (EXPENSE):
Interest income		74			168			265			500
Interest expense		(1,248	)		(1,245	)		(3,845	)		(3,802	)
Total other income (expense):		(1,174	)		(1,077	)		(3,580	)		(3,302	)
Net loss before provision for income taxes		(222,845	)		(121,939	)		(883,573	)		(356,114	)
PROVISION FOR INCOME TAXES
Income tax (benefit)		-			-			-			-
NET LOSS	$	(222,845	)	$	(121,939	)	$	(883,573	)	$	(356,114	)
Net loss per common share, basic and diluted	$	(0.03	)	$	(0.02	)	$	(0.11	)	$	(0.05	)
Weighted average number of common shares outstanding, basic and diluted		8,621,027			7,303,853			8,259,813			7,023,968

The accompanying notes are an integral part of these unaudited condensed financial statements

4

ENERGY TELECOM, INC.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
(unaudited)
																Total
										Additional						Stockholders'
	Class A Common Stock					Class B Common Stock				Paid in			Accumulated			Equity
	Shares			Amount		Shares		Amount		Capital			Deficit			(Deficiency)
Balance, January 1, 2011		6,282,239		$	628		200,000	$	-	$	4,444,637		$	(4,447,784	)	$	(2,519	)
Sale of common stock		910,732			91		-		-		329,867			-			329,958
Repurchase and cancelation of common stock		(667	)		-		-		-		(5,000	)		-			(5,000	)
Common stock issued for services rendered		90,444			9		-		-		68,548			-			68,557
Common stock issued for officer compensation		150,000			15						151,485			-			151,500
Net loss		-			-		-		-		-			(459,373	)		(459,373	)
Balance, December 31, 2011		7,432,748			743		200,000		-		4,989,537			(4,907,157	)		83,123
Sale of common stock		960,000			96		-		-		349,694			-			349,790
Common stock issued for services rendered		122,500			13		-		-		77,836			-			77,849
Common stock issued as officer compensation		133,333			13		-		-		99,486			-			99,499
Class B common stock issued as officer compensation		-			-		400,000		300,000		-			-			300,000
Stock based compensation		-			-		-		-		45,850			-			45,850
Net loss		-			-		-		-		-			(883,573	)		(883,573	)
Balance, September 30, 2012		8,648,581		$	865		600,000	$	300,000	$	5,562,403		$	(5,790,730	)	$	72,538

The accompanying notes are an integral part of these unaudited condensed financial statements

5

ENERGY TELECOM, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
	Nine months ended September 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(883,573	)	$	(356,114	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		1,112			429
Common stock issued for services rendered		77,849			53,857
Common stock issued or issuable for officer compensation		445,349			101,000
Changes in operating assets and liabilities:
Increase in accounts receivable		(20,882	)		(1,649	)
Increase in accounts payable and accrued liabilities		41,176			702
Net cash used in operating activities		(338,969	)		(201,775	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,642	)		(4,072	)
Net cash used in investing activities		(1,642	)		(4,072	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		349,790			329,958
Repurchase and cancellation of common stock		-			(5,000	)
Repayments of shareholder loans		(5,000	)		(20,000	)
Net cash provided by financing activities		344,790			304,958
Net increase in cash		4,179			99,111
Cash beginning of period		138,712			87,643
Cash end of period	$	142,891		$	186,754
Supplemental disclosures of cash flow information:
Interest paid	$	-		$	-
Taxes paid	$	-		$	-

The accompanying notes are an integral part of these unaudited condensed financial statements

6

ENERGY TELECOM, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2012 AND 2011

(unaudited)

NOTE 1 — NATURE OF OPERATIONS/BASIS OF PRESENTATION

Energy Telecom, Inc. (the “Company”), formerly The Energy Corp., is an intellectual property exploitation company providing patent protection to its manufacturing business partners so they may manufacture, market, distribute and sell worldwide a family of eyewear products delivering a full range of audio and optical information to mobile workers and recreational eyewear users. The Company also manages and coordinates the process of its manufacturing business partners in manufacturing the product. The Company’s Class A common stock trades from time to time on the over-the-counter-bulletin-board under the symbol “ENRG.OB”.

During year ended December 31, 2011, the Company transitioned from a development stage enterprise to an operating company, as the Company’s manufacturing partner, Samsin USA, began producing the telecom eyewear product for delivery to a consumer-retail distributor for resale. The Company recognizes revenue when the product is sold and shipped by the distributor.  The consumer-retail model of the eyewear is being sold through print and online advertising.

The accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim condensed financial information and Rule 8-03 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.

All adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included in these unaudited interim condensed financial statements. Operating results for the nine month period presented are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2011 has been derived from audited financial statements. The unaudited interim condensed financial statements should be read in conjunction with the financial statements and footnotes thereto for the year ended December 31, 2011.

NOTE 2 — GOING CONCERN

The accompanying unaudited interim condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As shown in the accompanying financial statements, the Company has earned minimal revenues, has had recurring net losses, and has an accumulated deficit through September 30, 2012 totaling $5,790,730. In addition, the Company’s stockholder notes payable are due on demand. If the notes were to be called, the Company may be unable to meet these obligations. Also, the Company is in a position where its current cash on hand may not be adequate to cover all of its operating expenses for the next 12 months.

The Company’s independent registered public accounting firm, in their report dated March 15, 2012 on the Company’s financial statements as of and for the year ended December 31, 2011, have included an emphasis of matter paragraph with respect to the Company’s ability to continue as a going concern. The existence of such a report may adversely affect the Company’s stock price and its ability to raise capital. Further, no assurance can be given that the Company will maintain its cost structure as presently contemplated or raise additional capital on satisfactory terms. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited interim condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company seeks to sell authorized but unissued shares to the extent available and to obtain debt financing to generate cash to cover short-falls in working capital as it continues to develop its products and operations. The Company expects that as sales volume increases, operations will generate working capital sufficient to allow it to continue as a going concern.

7

ENERGY TELECOM, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2012 AND 2011

(unaudited)

NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of these unaudited interim condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures in the financial statements. Accordingly, actual results could differ from these estimates.

REVENUE RECOGNITION

The Company recognizes revenue on four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (4) is based on management’s judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectability of those fees. Revenue is earned for product shipped and sold by our distributor on a per unit basis or as royalties upon shipment by the manufacturer as third party sales.

Revenue recognized in the nine months ended September 30, 2012 relates to sales of product of $31,503 and royalties earned of $3,032.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of three to five years.

SHARE-BASED COMPENSATION

Share-based compensation issued to employees is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The Company measures the fair value of the share-based compensation issued to non-employees using the average stock price observed (for stock transactions) or the fair value of the award (for non-stock transactions), which were considered to be more reliably determinable measures of fair value than the value of the services being rendered. The measurement date is the earlier of (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

NET LOSS PER COMMON SHARE

Basic loss per share (“EPS”) is computed by dividing the net loss attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock, such as stock options and warrants (using the “treasury stock” method), unless their effect on net loss per share is antidilutive. The effect of computing diluted loss per share is antidilutive and, as such, basic and diluted loss per share is the same for the three and nine months ended September 30, 2012 and 2011.

RECENT ACCOUNTING PRONOUNCEMENTS

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.

8

ENERGY TELECOM, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2012 AND 2011

(unaudited)

NOTE 4 — FINANCIAL INSTRUMENTS

CONCENTRATIONS OF CREDIT RISK

The Company’s financial instrument that is exposed to a concentration of credit risk is cash. Effective December 31, 2010 and extending through December 31, 2012, all non-interest-bearing transaction accounts are fully insured by the Federal Deposit Insurance Corporation (FDIC), regardless of the balance of the account. On occasion, the Company’s cash and cash equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management.

NOTE 5 — STOCKHOLDER NOTES PAYABLE

The Company has received financing from the Company’s founder, Chief Executive Officer, President and majority stockholder. The stockholder notes bear interest of 10% per annum, compounding annually and are due on demand.

 The following table summarizes stockholder notes payable as of September 30, 2012 (unaudited) and December 31, 2011:

	September 30, 2012		December 31, 2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		37,286		33,441
	$	50,772	$	51,927

The Company recognized interest expense associated with the notes of $1,248 and $3,845 for the three and nine months ended September 30, 2012, respectively; and $1,245 and $3,802 for the three and nine months ended September 30, 2011, respectively.

NOTE 6 — STOCKHOLDERS’ EQUITY

PRIVATE PLACEMENTS

During the nine months ended September 30, 2012, the Company completed private placements of 960,000 shares of Class A common stock and has received proceeds totaling $349,790.

SHARES ISSUED TO CONSULTANTS

During the nine months ended September 30, 2012, the Company issued an aggregate of 122,500 shares of Class A common stock to consultants in exchange for services rendered with a fair value totaling $77,849.

SHARES ISSUABLE AS COMPENSATION

During the nine months ended September 30, 2012, the Company issued an aggregate of 133,333 shares of Class A common stock with a fair value totaling $99,499 and was obligated under employment contracts to issue an additional 83,333 shares of Class A common stock with a fair value totaling $45,850 as officer compensation and 400,000 shares of Class B common stock with a fair value totaling $300,000.  The issuance of the Class B common stock represented a signing bonus, fully earned at the date of issuance.

9

ENERGY TELECOM, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2012 AND 2011

(unaudited)

NOTE 7 — COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENT-TOM RICKARDS

On May 3, 2011, the Company entered into a one year employment agreement with Tom Rickards, Chief Executive Officer, director and founder whereby Mr. Rickards received an annual salary of $36,000.  In addition, Mr. Rickards received 200,000 shares of series A common stock that was paid in equal installments at the end of each calendar quarter and a $600 per month car allowance.  The employment agreement expired on May 31, 2012

On June 1, 2012, the Company entered into a one year employment agreement with Tom Rickards, Chief Executive Officer, director and founder whereby Mr. Rickards shall receive (i) an annual salary of $36,000 which may be increased up to $72,000 by mutual agreement by Mr. Rickards and the Board of Directors and dependent on the financial strength of the Company and (ii) 400,000 shares of class A common stock and (the “Stock Salary”), with the Cash Salary payable in equal installments at the end of such regular payroll accounting periods as are established by Employer, or in such other installments upon which the parties shall mutually agree.  In addition, Mr. Rickards received 400,000 shares of series B common stock as a signing bonus, which was fully earned upon issuance, and receives a $600 per month car allowance.

LITIGATION

The Company may, from time to time, become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The Company is currently not aware of any such legal proceedings that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.

NOTE 8 — RELATED PARTY TRANSACTIONS

The Company has an operating lease agreement for office space with the Company's Chief Executive Officer and director who has agreed to sublet space to the Company for a fixed fee of $2,750 (reduced to $2,000 beginning July 1, 2012) on a month-to-month basis. Total rent expense for the three and nine month periods ended September 30, 2012 was $6,000 and $22,500, respectively; and $7,250 and $17,750 for the three and nine month periods ended September 30, 2011, respectively.

As discussed in Note 5, the Company has received financing from the Company’s Chief Executive Officer, director, founder and majority stockholder. The stockholder loans bear interest of 10% per annum, compounding annually and are due on demand.

NOTE 9 — DEPENDENCY ON KEY MANAGEMENT

The future success or failure of the Company is dependent primarily upon the continued services and efforts of its Chief Executive Officer, director and founder. The ability of the Company to pursue its business strategy effectively will also depend upon, among other factors, the successful recruitment and retention of additional highly skilled and experienced managerial, marketing, engineering and technical personnel. There can be no assurance that the Company will be able to retain or recruit such personnel.

NOTE 10 — SUBSEQUENT EVENTS

On October 22, 2012, the Company filed a certificate of amendment to its Articles of Incorporation, which was a Certificate of Designations, Rights and Preferences of series A convertible preferred stock (the “Series A Preferred Stock”). The total number of shares of Series A Preferred Stock was 5,790.

10

ENERGY TELECOM, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2012 AND 2011

(unaudited)

On November 5, 2012, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Normandia Capital (“Normandia”) providing for the sale by the Company to Normandia of 1,150 shares of the Series A Preferred Stock at a price of $100 per share of Series A Preferred Stock for aggregate cash proceeds of $115,000 (the “Financing”).

Each share of Series A Preferred Stock has a stated value of $100 (the “Stated Value”).  Normandia may convert, at any time, shares of Series A Preferred Stock into the number of shares of common stock of the Company (the “Common Stock”) obtained by dividing the Stated Value by the Conversion Price then in effect.  The conversion price is $0.3468, subject to adjustment (the “Conversion Price”).

Upon the occurrence of certain triggering events, Normandia has the right to require the Company to redeem all or a portion of the shares of Series A Preferred Stock.  The redemption price is the greater of (A) the number of shares of Common Stock that the Series A Preferred Stock being redeemed are convertible into multiplied by the average market price on the date of redemption or (B) the Stated Value of the Series A Preferred Stock being redeemed multiplied by a Redemption Premium.  The “Redemption Premium” is (A) 125% in the event that the Company fails to have the Common Stock be quoted on the OTC-QB or OTC-PK for a period of 10 days during any period of 12 months; (B) 250% in the event that the Company (1) fails to timely file an Annual Report on Form 10-K, an Quarterly Report on Form 10-Q or a Current Report on Form 8-K in the time periods that are required of a company with securities registered under Section 12 of the Securities Exchange Act of 1934 (a “Reporting Delinquency”) within the first year from the closing date or (2) the Company makes any statement that it intends to not comply with proper requests for conversion of the Series A Preferred Stock; or (C) 200% in the event that the Company has a Reporting Delinquency after the first year from the closing date.

The Company has the right, at any time after two years from the closing date, to redeem all or a portion of the Series A Preferred Stock, upon 120 days prior written notice.  The redemption price per share of Series A Preferred Stock shall equal 200% of the Stated Value.  In addition, upon the occurrence of a change in control or a liquidation, dissolution or winding up of the Company, Normandia has the right to receive, at its election, either 200% of the Stated Value per share of Series A Preferred Stock, or share in the assets of the Company being distributed on a pro rata basis as if the Series A Preferred Stock had been converted into shares of Common Stock.

Pursuant to the certificate of designation for the Series A Preferred Stock, Normandia may not convert Series A Preferred Stock if such conversion would result in Normandia beneficially owning in excess of 4.99% of the Company’s then issued and outstanding common stock. Normandia may, however, increase this limitation (but in no event exceed 9.99% of the number of shares of Common Stock issued and outstanding) by providing the Company with 61 days’ notice that such holder wishes to increase this limitation.

In connection with the Financing, the Company granted Normandia a right of first refusal on any proposed sale by the Company of any shares of common or preferred stock, except for certain exempted issuances.  The right of first refusal is for the earlier of one year from the closing date or until Normandia no longer holds any securities of the Company.  In addition, the Company granted Normandia piggyback registration rights for a period of two years from the closing date.

11

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management's current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to, expected market demand for our products, fluctuations in pricing for materials, and competition.

Overview

We were incorporated on September 7, 1993 under the laws of the State of Florida as The Energy Corp. On April 24, 2004, we changed our name to Energy Telecom, Inc.

We hold U.S. and foreign patents allowing for the manufacture, marketing and distribution of a hands-free, wireless communication eyewear providing quality sound and noise attenuation.

During 2011, we transitioned from a development stage enterprise to an operating company, as our manufacturing partner, Samsin USA, begin producing our telecom eyewear product for delivery to Qmadix, a consumer-retail distributor, for resale.  The consumer-retail model of the eyewear is being sold through print and online advertising, by Brookstone, and other online retailers, such as Abe’s of Maine, through their own online retail channel and online stores at Amazon.com. As such, we began recognizing revenues from sales of our product in the third quarter of 2011.

In February 2012, we entered into a Distributor Agreement with Honeywell. Honeywell intends to start selling sell our eyewear under its branded ‘ICOM’ name in multiple European countries and UVEX branded ‘AcccoustiMaxx’ in the United States.

We have developed the world's first hands-free two-way, sound attenuating wireless telecommunication eyewear.  The eyewear is designed for use on a recreational and professional basis.  Our recreational eyewear is equipped with wireless two-way Bluetooth voice communication that is compatible with any cellular telephone that is Bluetooth enabled and is capable of streaming stereo music from any Bluetooth enabled music device. In addition, our eyewear works with handheld Bluetooth- enabled VHF and UHF walkie-talkies and Bluetooth adaptors. It contains built-in dual microphones to cancel out background noise and noise-isolating ear plugs that reduce noise levels by up to 42 decibels. In addition, the safety lenses come in clear, gray and amber colors, allowing them to be used indoor and outside.

We have another model, which is similar to the recreational model, but contains additional safety features and is intended to be marketed to the Personal Protective Equipment markets (commonly expressed as PPE) for use by police, fire, rescue, military and security personnel as well as companies in bio-hazardous, mining, construction and heavy manufacturing that utilize VHF and UHF radio communication.  We have obtained numerous certifications for our telecommunications eyewear.  We have obtained the necessary certifications to sell our product as personal protective equipment.  We contracted with Colts Laboratories, an independent testing facility that is accredited by the Safety Equipment Institute to complete and verify standards tests.

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In July 2012, after several months of development, we completed the research and development of our new model 2.1 eyewear, for both the PPE and recreational markets, and approved the model for sale by our distribution partners.  It has a new internal engineering design, and used Eastman copolyester plastics, new thermoplastic elastomer softening sections, and nylon parts in strategic areas for maximum resistance to impact.  It has passed the impact requirements described by ANSI Z-87.1, and is being tested to higher impact requirements described in CAN/CSA Z94.3.

 Within the PPE market, our telecommunication eyewear competes primarily in the markets represented by hearing and eye protection and communication headset products and will be targeted towards the following end-markets:

● Police and fire rescue, security services and military:To protect the eyes and ears during the use of firearms, explosives and other weaponry, to provide hands-free communication among personnel and allow for real-time viewing of intelligence;

● Manufacturing:To protect workers from plant hazards such as industrial noise and flying particles that may cause eye injuries; and

● Construction, Mining and Logging Operations:To protect workers from airborne dust and debris and construction equipment noise and to provide two-way, instant communication.

Current Operating Trends and Financial Highlights

Management currently considers the following events, trends and uncertainties to be important in understanding our results of operations and financial condition during the current fiscal year:

● Several hundred pairs of the model 2.1 eyewear have been manufactured and are ready for fulfillment of orders from our distribution partners.  The Uvex AcoustiMaxxtm branded eyewear from Honeywell are now available for sale in the United States and we anticipate our eyewear will be available for sale in Europe before the end of 2012.  We anticipate that revenues will increase significantly now that the eyewear is available for sale and is actively being promoted by our distribution partners;

● In August 2012, US Patent 8,243,973 was issued by the Patent and Trademark Officer.  In November 2012, our Patent Cooperation Treaty patent applications relating to US Patent 8,243,973 were accepted in Canada, Australia, Germany, Great Britain, France, Italy, Spain, Japan, The Republic of China, and South Korea.  In addition, we anticipate making a new patent application in the United States relating to eyewear with additional safety measures for the PPE market, which we anticipate will be filed by the end of the month;

● In an effort to proactively protect our intellectual property rights and to explore the possibility of strategic relationships, we have been contacting several global entertainment and communication companies showing interest in music, voice communication and gaming eyewear.  Our utility patents provide exclusive rights for the use of integrated telecommunication eyewear, and we believe that these companies will be unable to develop products without entering into some sort of cooperation or licensing agreement with us; and

● Escalating tensions between North Korea and South Korea could disrupt our operations. The telecommunication eyewear frames are manufactured by Samsin Innotec, which has plants in South Korea. In addition, all the components are shipped to South Korea, where they are assembled and tested, and then shipped out as a product ready for sale.

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Results of Operations

The following discussion of the financial condition and results of operations should be read in conjunction with the financial statements included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future.

Three months ended September 30, 2012 compared to the three months ended September 30, 2011

Revenue

We generated $17,784 in revenues for the three months ended September 30, 2012 as compared to $1,649 for the three months ended September 30, 2011. Revenue for three months ended September 30, 2012 was comprised of sales of $17,784 as compared to $1,649 in royalties for the same period last year.  We have granted our manufacturing partner, Samsin USA, a non-exclusive right to sell our eyewear.  Any sales made by Samsin are recorded as royalty payments, whereas any sales made to any of our other distribution partners are recorded as sales.

The primary increase in revenue was the result of our sales to a distribution partner in the PPE market.  With the new version of the eyewear ready for production, we expect to see further increases in revenue in the last quarter of 2012 and even greater revenue in 2013, as our primary research and development is completed, the product is ready for sale, and we have entered into two distribution agreements and have requests about our product from other national marketers that have expressed interest in making purchase orders.

Cost of goods sold

Cost of goods sold for the three months ended September 30, 2012 were $19,031 as compared to $-0- for the same period last year.  Revenue for the three months ended September 30, 2011 was comprised of royalties.  Gross (loss) profit for the three months ended September 30, 2012 was $(1,246) compared to $1,649 for the same period last year.  We incurred losses in the current period resulting from production costs relating to the new version of the eyewear.

Expenses

For the three months ended September 30, 2012 and 2011, selling, general and administrative expenses totaled $220,024 and $122,082, respectively.

A summary comparison for the three months ended September 30, 2012 and 2011 is as follows:

	2012		2011
Professional fees	$	44,780	$	38,365
Office and utilities		19,085		13,554
Travel and promotion		2,808		3,506
Salaries and related taxes		9,688		9,808
Equity based compensation		76,849		50,500
Patents, trademarks and product development		66,775		5,878
Other		39		471
Total	$	220,024	$	122,082

The primary increase in selling, general and administrative is due to patient and trademark expenses for the three months ended September 30, 2012 of $66,775 as compared to $5,878 for the same period last year, an increase of $60,897, primarily due to product development cost payments of $49,595 and patent related legal costs and other of $17,180.  In addition, the valuation of the Class A common stock issued in connection with the employment agreements of our CEO were $76,849 for the three months ended September 30, 2012 as compared to $50,500, an increase of $26,349.

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Depreciation

Deprecation for the three months ended September 30, 2012 was $401 as compared to $429 for the same period last year.  

Other Income and Expenses

For the three months ended September 30, 2012, we incurred $1,248 in interest expense, which was offset by $74 in interest income, compared to $1,245 in interest expense, which was offset by $168 in interest income, for the three months ended September 30, 2011.

Interest expense increased by $3, primarily due to compounding interest on notes payable to a related party.  

Net Loss

For the three months ended September 30, 2012, we incurred a net loss of $222,845 ($0.03 per share of common stock) as a result of the foregoing, compared to a net loss of $121,939 ($0.02 per share of common stock) for the three months ended September 30, 2011.

Nine months ended September 30, 2012 compared to the nine months ended September 30, 2011

Revenue

We generated $34,535 in revenues for the nine months ended September 30, 2012 as compared to $2,599 for the nine months ended September 30, 2011. Revenue for nine months ended September 30, 2012 was comprised of sales of $31,503 and earned royalties of $3,032 as compared to $950 in sales made to customers on a limited basis for the same period last year and earned royalties of $1,649. We have granted our manufacturing partner, Samsin USA, a non-exclusive right to sell our eyewear.  Any sales made by Samsin are recorded as royalty payments, whereas any sales made to any of our other distribution partners are recorded as sales.

The primary increase in revenue was the result of our sales to a distribution partner in the PPE market.  With the new version of the eyewear ready for production, we expect to see further increases in revenue in the last quarter of 2012 and even greater revenue in 2013, as our primary research and development is completed, the product is ready for sale, and we have entered into two distribution agreements and have requests about our product from other national marketers that have expressed interest in making purchase orders.

Cost of goods sold

Cost of goods sold for the nine months ended September 30, 2012 were $24,937 as compared to $-0- for the same period last year.  Sales for the nine months ended September 30, 2011 were from sample inventories previously expensed in prior periods.  Gross profit for the nine months ended September 30, 2012 was $4,288 compared to $2,599 for the same period last year.

Expenses

For the nine months ended September 30, 2012 and 2011, selling, general and administrative expenses totaled $883,169 and $354,982, respectively.

           A summary comparison for the nine months ended September 30, 2012 and 2011 is as follows:

	2012		2011
Professional fees	$	172,421	$	144,793
Office and utilities		50,803		34,969
Travel and promotion		9,264		17,604
Salaries and related taxes		29,272		29,313
Equity based compensation		445,349		101,000
Patents, trademarks and product development		175,218		23,109
Other		842		4,194
Total	$	883,169	$	354,982

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The primary increase in selling, general and administrative is due to share-based compensation for the nine months ended September 30, 2012 of $445,349 as compared to $101,000 for the same period last year, an increase of $344,349. During the nine months ended September 30, 2012, we issued 400,000 shares of Class B common stock as a signing bonus to our Chief Executive Officer in connection with a new employment agreement, which was valued at $300,000 and issued (or is contractually obligated to issue) an aggregate of 216,666 shares of Class A common stock in connection with the employment agreements which was valued at $145,349 compared to 50,000 Class A common stock, which was valued at $101,000 for the same period last year.  In addition, our patent and trademark expenses increased by $152,109 to $175,218 for the nine months ended September 30, 2012 as compared to $23,109 for the same period last year, primarily due to product development cost payments of $99,190 and patent related legal and other costs of $76,028.

Depreciation

Deprecation for the nine months ended September 30, 2012 as $1,112 as compared to $429 for the same period last year. The increase related to equipment purchased in the second half of fiscal year ended December 31, 2011.

Other Income and Expenses

For the nine months ended September 30, 2012, we incurred $3,845 in interest expense, which was offset by $265 in interest income, compared to $3,802 in interest expense, which was offset by $500 in interest income, for the nine months ended September 30, 2011.

Interest expense increased by $43, primarily due to compounding interest on notes payable.  

Net Loss

For the nine months ended September 30, 2012, we incurred a net loss of $883,573 ($0.11 per share of common stock) as a result of the foregoing, compared to a net loss of $356,114 ($0.05 per share of common stock) for the nine months ended September 30, 2011.

Liquidity and Capital Resources

As of September 30, 2012, we had working capital of $68,630.  For the nine months ended September 30, 2012, we generated a net cash flow deficit from operating activities of $338,969 consisting primarily of a year to date loss of $883,573.  Non cash adjustments included $1,112 for depreciation, $445,349 for share-based compensation and $77,849 for common stock issued for services.  In addition, there was an increase in accounts payable and accrued liabilities of $41,176 offset by an increase in accounts receivable of $20,882.  Cash used in investing activities totaled $1,642 from the purchase of property and equipment. Cash provided by financing activities totaled $344,790, primarily from the sale of common stock of $349,790, net with repayment of a shareholder loan of $5,000. From time to time since our formation in 1993, we have sold shares to investors in private placement transactions. For the nine months ended September 30, 2012, we sold an aggregate of 960,000 shares of our class A common stock for $349,790 in two different transactions. Except for anti-dilution protection provided to one shareholder in connection with investments made in 2007 and 2008, our financing transactions have not contained additional equity components (such as warrants) nor provide the investors with rights (such as piggyback or demand registration rights).

We expect capital expenditures during the next 12 months, contingent upon raising capital.  These anticipated expenditures are for marketing, advertising, inventory, equipment and overhead. We believe that we have sufficient funds to conduct our proposed operations for approximately nine months, depending on revenues, but not for 12 months or more. If we are unable to raise any additional funds, we have sufficient capital for about nine months of operation. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. However, based on years of experience of financing operations through the sale of securities, we believe we will generate sufficient capital to meet our needs for the next 12 months.

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We do not currently have a sufficient amount of cash to cover our proposed operating costs. Our fixed operating expenses have been and are expected to continue to outpace revenue resulting in additional losses in the near term. By adjusting our operations to our current level of capitalization, we believe we have sufficient capital resources to meet projected cash flow deficits for at least nine months. However, if during that period, or thereafter, we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations, liquidity and financial condition.

As of September 30, 2012, we had working capital of $68,630. During the nine months ended September 30, 2012, we incurred significant one-time costs, such as patent registration fees of approximately $110,000 and product development costs of approximately $50,000, which costs decreased our working capital and resulted in a temporary increase in our monthly burn rate.  Other than product development costs of approximately $50,000 that we anticipate will be payable within the next six months, we currently do not anticipate a significant additional increase in spending. Without these added costs, our cash usage was $21,500 per month for continuing operations. We anticipate that we will use about $22,000 per month for continuing operations for the next quarter, which includes general operating expenses (office lease, utilities, salary and insurance), promotion and marketing (travel, entertainment, meals and website development),  research and development (parts, engineering and testing), and professional services (accounting, legal, professional and state fees and intellectual property fees). We anticipate that our burn rate will increase in 2013 as we anticipate increased promotion and marketing expenses as we promote and market our products, including the attendance at industry trade shows and events.

If we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, it could have a material adverse effect on our business, results of operations, liquidity and financial condition.

We presently do not have any available credit, bank financing or other external sources of liquidity. Due to our brief history and historical operating losses, our operations have not been a source of liquidity. We may seek additional capital in order to develop operations and become profitable. In order to obtain capital, we may need to sell additional shares of common stock or borrow funds from private lenders pursuant to instruments, which are junior to our outstanding secured debt instruments. There can be no assurance that we will be successful in obtaining additional funding. 

We will need additional financing in order to continue operations. Additional financings are being sought, but we cannot guarantee that we will be able to obtain such financings. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the low trading price of our common stock and a downturn in the U.S. stock and debt markets is likely to make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail or cease our operations

November 2012 Private Placement

On November 5, 2012, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Normandia Capital (“Normandia”) providing for the sale by us to Normandia of 1,150 shares of our series A convertible preferred stock (the “Series A Preferred Stock”) at a price of $100 per share of Series A Preferred Stock for aggregate cash proceeds of $115,000 (the “Financing”).

Each share of Series A Preferred Stock has a stated value of $100 (the “Stated Value”).  Normandia may convert, at any time, shares of Series A Preferred Stock into the number of shares of our common stock (the “Common Stock”) obtained by dividing the Stated Value by the Conversion Price then in effect.  The conversion price is $0.3468, subject to adjustment (the “Conversion Price”).

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Upon the occurrence of certain triggering events, Normandia has the right to require us to redeem all or a portion of the shares of Series A Preferred Stock.  The redemption price is the greater of (A) the number of shares of Common Stock that the Series A Preferred Stock being redeemed are convertible into multiplied by the average market price on the date of redemption or (B) the Stated Value of the Series A Preferred Stock being redeemed multiplied by a Redemption Premium.  The “Redemption Premium” is (A) 125% in the event that we fail to have the Common Stock be quoted on the OTC-QB or OTC-PK for a period of 10 days during any period of 12 months; (B) 250% in the event that we (1) fail to timely file an Annual Report on Form 10-K, an Quarterly Report on Form 10-Q or a Current Report on Form 8-K in the time periods that are required of a company with securities registered under Section 12 of the Securities Exchange Act of 1934 (a “Reporting Delinquency”) within the first year from the closing date or (2) we make any statement that it intends to not comply with proper requests for conversion of the Series A Preferred Stock; or (C) 200% in the event that we have a Reporting Delinquency after the first year from the closing date.

We have the right, at any time after two years from the closing date, to redeem all or a portion of the Series A Preferred Stock, upon 120 days prior written notice.  The redemption price per share of Series A Preferred Stock shall equal 200% of the Stated Value.  In addition, upon the occurrence of a change in control or a liquidation, dissolution or winding up of our company, Normandia has the right to receive, at its election, either 200% of the Stated Value per share of Series A Preferred Stock, or share in our assets being distributed on a pro rata basis as if the Series A Preferred Stock had been converted into shares of Common Stock.

Pursuant to the certificate of designation for the Series A Preferred Stock, Normandia may not convert Series A Preferred Stock if such conversion would result in Normandia beneficially owning in excess of 4.99% of our then issued and outstanding common stock. Normandia may, however, increase this limitation (but in no event exceed 9.99% of the number of shares of Common Stock issued and outstanding) by providing us with 61 days’ notice that such holder wishes to increase this limitation.

In connection with the Financing, we granted Normandia a right of first refusal on any proposed sale by us of any shares of common or preferred stock, except for certain exempted issuances.  The right of first refusal is for the earlier of one year from the closing date or until Normandia no longer holds any of our securities.  In addition, we granted Normandia piggyback registration rights for a period of two years from the closing date.

Loans Payable to Related Party

From time to time, we have received financing from Thomas Rickards, our Chief Executive Officer and sole Director. The stockholder loans bear interest of 10% per annum, compounding annually and are due on demand.

The following table summarizes stockholder notes payable as of September 30, 2012 (unaudited) and December 31, 2011:

	September 30, 2012		December 31, 2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		37,286		33,441
	$	50,772	$	51,927

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Critical Accounting Policies

The accounting policies identified as critical are as follows:

 Revenue Recognition

We recognize revenue on four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (4) is based on management’s judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectability of those fees. Revenue is earned for product shipped and sold by our distributor on a per unit basis or as royalties upon shipment by the manufacturer as third party sales.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

Share-Based Compensation

Share-based compensation issued to employees is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. We measure the fair value of the share-based compensation issued to non-employees using the stock price observed in the arms-length private placement transaction nearest the measurement date (for stock transactions) or the fair value of the award (for non-stock transactions), which were considered to be more reliably determinable measures of fair value than the value of the services being rendered. The measurement date is the earlier of (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

Net Loss per Common Share

Basic loss per share computed by dividing the net loss attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock, such as stock options and warrants (using the “treasury stock” method), unless their effect on net loss per share is antidilutive. The effect of computing diluted loss per share is antidilutive and, as such, basic and diluted loss per share is the same for the three and nine months ended September 30, 2012 and 2011.

Recently Issued Accounting Pronouncements

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on our financial position, results of operations or cash flows.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required under Regulation S-K for “smaller reporting companies.”

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ITEM 4 - CONTROLS AND PROCEDURES

a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of the material weaknesses described below, as of September 30, 2012, our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are: 

a)

We did not have sufficient personnel in our accounting and financial reporting functions. As a result we were not able to achieve adequate separation of duties and were not able to provide for adequate reviewing of the financial statements. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis; and

b)

We did not maintain sufficient personnel with an appropriate level of technical accounting knowledge, experience, and training in the application of U.S. GAAP commensurate with out complexity and our financial accounting and reporting requirements. This control deficiency is pervasive in nature. Further, there is a reasonable possibility that material misstatements of the financial statements including disclosures will not be prevented or detected on a timely basis as a result.

            We are committed to improving our accounting and financial reporting functions. As part of this commitment, we will create a segregation of duties consistent with control objectives and will look to increase our personnel resources and technical accounting expertise within the accounting function as soon as our finances allow for additional personnel to appropriately address non-routine or complex accounting matters. In addition, we have engaged an outside consultant to provide additional knowledgeable personnel with technical accounting expertise to further support the current accounting personnel at the Company.

Management believes that hiring additional knowledgeable personnel with technical accounting expertise will remedy the following material weaknesses: (A) lack of sufficient personnel in our accounting and financial reporting functions to achieve adequate segregation of duties; and (B) insufficient personnel with an appropriate level of technical accounting knowledge, experience, and training in the application of US GAAP commensurate with our complexity and our financial accounting and reporting requirements. 

Management believes that the hiring of additional personnel who have the technical expertise and knowledge with the non-routine or technical issues we have encountered in the past will result in both proper recording of these transactions and a much more knowledgeable finance department as a whole. Due to the fact that our accounting staff consists of a Chief Financial Officer and an accounting consultant, additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support us if personnel turnover issues within the department occur. We believe this will greatly decrease any control and procedure issues we may encounter in the future.

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

(b) Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not a party to any material legal proceedings or claims.

Item 1A. Risk Factors

Not required under Regulation S-K for “smaller reporting companies.”

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

During the quarter ended September 30, 2012, we issued an aggregate of 45,000 shares of Class A common stock to consultants in exchange for services rendered with an aggregate fair value of $26,482. The securities were issued in transactions pursuant to Section 4(2) and/or Regulation D under the Securities Act of 1933, as amended.

* All of the above offerings and sales were deemed to be exempt under either rule 506 of Regulation D and Section 4(2) or Rule 902 of Regulation S of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of Energy Telecom or executive officers of Energy Telecom, and transfer was restricted by Energy Telecom in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Except as expressly set forth above, the individuals and entities to whom we issued securities as indicated in this section are unaffiliated with us.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits

31.01	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 INS	XBRL Instance Document*
101 SCH	XBRL Taxonomy Extension Schema Document*
101 CAL	XBRL Taxonomy Calculation Linkbase Document*
101 LAB	XBRL Taxonomy Labels Linkbase Document*
101 PRE	XBRL Taxonomy Presentation Linkbase Document*
101 DEF	XBRL Taxonomy Extension Definition Linkbase Document*

* Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

21

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.

	ENERGY TELECOM, INC.
Date: November 15, 2012	By:	/s/ THOMAS RICKARDS
		Thomas Rickards
		Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

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EX-31.1

EXHIBIT 31.01

CERTIFICATION

I, Thomas Rickards, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Energy Telecom, Inc.;  

2. Based on my knowledge, this report does not contain any untrue statement 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 officer 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; and

(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 reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer 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 reasonable 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 controls over financial reporting.

Date: November 15, 2012

/s/ THOMAS RICKARDS

Thomas Rickards

Chief Executive Officer

EX-31.2

EXHIBIT 31.02

CERTIFICATION

I, Thomas Rickards, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Energy Telecom, Inc.;  

2. Based on my knowledge, this report does not contain any untrue statement 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 officer 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; and

(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 reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer 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 reasonable 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 controls over financial reporting.

Date: November 15, 2012

/s/ THOMAS RICKARDS

Thomas Rickards

Principal Financial Officer

EX-32.1

Exhibit 32.01

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas Rickards, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Energy Telecom, Inc. on Form 10-Q for the fiscal quarter ended September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Energy Telecom, Inc.

	By:	/s/ THOMAS RICKARDS
Date: November 15, 2012	Name:	Thomas Rickards
	Title:	Chief Executive Officer and Principal Financial Officer

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Note 2 - Going Concern (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Accumulated deficit	$ 5,790,730	$ 4,907,157

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Note 3 - Significant Accounting Policies

3 Months Ended

Sep. 30, 2012

Notes

Note 3 - Significant Accounting Policies

NOTE 3 — SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of these unaudited interim condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures in the financial statements. Accordingly, actual results could differ from these estimates.

REVENUE RECOGNITION

The Company recognizes revenue on four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (4) is based on management’s judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectability of those fees. Revenue is earned for product shipped and sold by our distributor on a per unit basis or as royalties upon shipment by the manufacturer as third party sales.

Revenue recognized in the nine months ended September 30, 2012 relates to sales of product of $31,503 and royalties earned of $3,032.

 PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of three to five years.

SHARE-BASED COMPENSATION

Share-based compensation issued to employees is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The Company measures the fair value of the share-based compensation issued to non-employees using the average stock price observed (for stock transactions) or the fair value of the award (for non-stock transactions), which were considered to be more reliably determinable measures of fair value than the value of the services being rendered. The measurement date is the earlier of (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

NET LOSS PER COMMON SHARE

Basic loss per share (“EPS”) is computed by dividing the net loss attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock, such as stock options and warrants (using the “treasury stock” method), unless their effect on net loss per share is antidilutive. The effect of computing diluted loss per share is antidilutive and, as such, basic and diluted loss per share is the same for the three and nine months ended September 30, 2012 and 2011.

RECENT ACCOUNTING PRONOUNCEMENTS

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.

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Note 6 - Stockholders' Equity (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Shares Issued in Private Placement	960,000
ProceedsFromIssuanceOfPrivatePlacement	$ 349,790
StockIssuedDuringPeriodSharesIssuedForNoncashConsideration	122,500
Fair Value of Services Received in Exchange for Class A Shares Issued	77,849
Class A aggregate shares issued	133,333
Fair value of class A aggregate shares issued	99,499
Class A Shares issued under employment contracts	83,333
Fair value of Class A shares issued under employemnt contracts	45,850
Class B common stock issued as officer compensation Shares	400,000
Class B common stock issued as officer compensation	$ 300,000

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Note 5 - Stockholder Notes Payable: Schedule of stockholder notes payable (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Stockholder notes payable	$ 13,486	$ 18,486
InterestPayableCurrentAndNoncurrent	37,286	33,441
Stockholders Note Payable and Interest	$ 50,772	$ 51,927

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Note 7 - Commitments and Contingencies (Details) (USD $)	Jun. 01, 2012	May 03, 2011
Employment Agreement Cash Salary Current	$ 36,000	$ 36,000
Employment Agreement Class A Common Stock Shares	400,000	200,000
Employment Agreement Monthly Car allowance	600	600
Employment Agreement Cash Salary Potential	$ 72,000

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Note 8 - Related Party Transactions (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Monthly Operating Lease Related Party	$ 2,000		$ 2,000
OperatingLeasesRentExpense	$ 6,000	$ 7,250	$ 22,500	$ 17,750

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Note 2 - Going Concern

3 Months Ended

Sep. 30, 2012

Notes

Note 2 - Going Concern

NOTE 2 — GOING CONCERN

The accompanying unaudited interim condensed financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As shown in the accompanying financial statements, the Company has earned minimal revenues, has had recurring net losses, and has an accumulated deficit through September 30, 2012 totaling $5,790,730. In addition, the Company’s stockholder notes payable are due on demand. If the notes were to be called, the Company may be unable to meet these obligations. Also, the Company is in a position where its current cash on hand may not be adequate to cover all of its operating expenses for the next 12 months.

The Company’s independent registered public accounting firm, in their report dated March 15, 2012 on the Company’s financial statements as of and for the year ended December 31, 2011, have included an emphasis of matter paragraph with respect to the Company’s ability to continue as a going concern. The existence of such a report may adversely affect the Company’s stock price and its ability to raise capital. Further, no assurance can be given that the Company will maintain its cost structure as presently contemplated or raise additional capital on satisfactory terms. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited interim condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company seeks to sell authorized but unissued shares to the extent available and to obtain debt financing to generate cash to cover short-falls in working capital as it continues to develop its products and operations. The Company expects that as sales volume increases, operations will generate working capital sufficient to allow it to continue as a going concern.

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Note 10 - Subsequent Events (Details) (USD $)	Nov. 05, 2012	Oct. 22, 2012
Shares of Series A preferred stock		5,790
Sales of Series A Preferred Stock	1,150
Per share price of Series A Preferred Stock	$ 100
Aggregate cash proceeds from sale of Series A Preferred Stock	$ 115,000

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CONDENSED BALANCE SHEETS (USD $)	Sep. 30, 2012	Dec. 31, 2011
Cash	$ 142,891	$ 138,712
Accounts receivable, net	20,882
Total current assets	163,773	138,712
Property and equipment, net	3,908	3,378
Total assets	167,681	142,090
Accounts payable and accrued liabilities	81,657	40,481
Stockholder notes payable	13,486	18,486
Total current liabilities	95,143	58,967
Additional paid in capital	5,562,403	4,989,537
Accumulated deficit	(5,790,730)	(4,907,157)
Total stockholders' equity	72,538	83,123
Total liabilities and stockholders' equity	167,681	142,090
Common Stock - Class A
Common stock	865	743
Common Stock - Class B
Common stock	$ 300,000

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CONDENSED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Net loss	$ (883,573)	$ (356,114)
Depreciation expense	1,112	429
Common stock issued for services rendered	77,849	53,857
Common stock issued or issuable for officer compensation	445,349	101,000
Increase in accounts receivable	(20,882)	(1,649)
Increase in accounts payable and accrued liabilities	41,176	702
Net cash used in operating activities	(338,969)	(201,775)
Purchase of property and equipment	(1,642)	(4,072)
Net cash used in investing activities	(1,642)	(4,072)
Proceeds from sale of common stock	349,790	329,958
Repurchase and cancellation of common stock		(5,000)
Repayments of shareholder loans	(5,000)	(20,000)
Net cash provided by financing activities	344,790	304,958
Net increase in cash	4,179	99,111
Cash beginning of period	138,712	87,643
Cash end of period	142,891	186,754
Interest paid
Taxes paid

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Note 3 - Significant Accounting Policies: Net Loss Per Common Share (Policies)

3 Months Ended

Sep. 30, 2012

Policies

Net Loss Per Common Share

NET LOSS PER COMMON SHARE

Basic loss per share (“EPS”) is computed by dividing the net loss attributable to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator) during the reporting periods. Diluted loss per share is computed by increasing the denominator by the weighted average number of additional shares that could have been outstanding from securities convertible into common stock, such as stock options and warrants (using the “treasury stock” method), unless their effect on net loss per share is antidilutive. The effect of computing diluted loss per share is antidilutive and, as such, basic and diluted loss per share is the same for the three and nine months ended September 30, 2012 and 2011.

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Note 5 - Stockholder Notes Payable: Schedule of stockholder notes payable (Tables)

3 Months Ended

Sep. 30, 2012

Tables/Schedules

Schedule of stockholder notes payable

	September 30, 2012		December 31, 2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		37,286		33,441
	$	50,772	$	51,927

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Note 1 - Nature of Operations/Basis of Presentation

3 Months Ended

Sep. 30, 2012

Notes

Note 1 - Nature of Operations/Basis of Presentation

NOTE 1 — NATURE OF OPERATIONS/BASIS OF PRESENTATION

Energy Telecom, Inc. (the “Company”), formerly The Energy Corp., is an intellectual property exploitation company providing patent protection to its manufacturing business partners so they may manufacture, market, distribute and sell worldwide a family of eyewear products delivering a full range of audio and optical information to mobile workers and recreational eyewear users. The Company also manages and coordinates the process of its manufacturing business partners in manufacturing the product. The Company’s Class A common stock trades from time to time on the over-the-counter-bulletin-board under the symbol “ENRG.OB”.

During year ended December 31, 2011, the Company transitioned from a development stage enterprise to an operating company, as the Company’s manufacturing partner, Samsin USA, began producing the telecom eyewear product for delivery to a consumer-retail distributor for resale. The Company recognizes revenue when the product is sold and shipped by the distributor.  The consumer-retail model of the eyewear is being sold through print and online advertising.

The accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim condensed financial information and Rule 8-03 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.

All adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included in these unaudited interim condensed financial statements. Operating results for the nine month period presented are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2011 has been derived from audited financial statements. The unaudited interim condensed financial statements should be read in conjunction with the financial statements and footnotes thereto for the year ended December 31, 2011.

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CONDENSED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Common Stock - Class A
Common stock par value	$ 0.0001	$ 0.0001
Common stock shares authorized	200,000,000	200,000,000
Common stock shares issued	8,648,581	7,432,748
Common stock shares outstanding	8,648,581	7,432,748
Common Stock - Class B
Common stock shares authorized	10,000,000	10,000,000
Common stock shares issued	600,000	200,000
Common stock shares outstanding	600,000	200,000

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Note 1 - Nature of Operations/Basis of Presentation: BasisOfAccountingPolicyPolicyTextBlock (Policies)

3 Months Ended

Sep. 30, 2012

Policies

BasisOfAccountingPolicyPolicyTextBlock

The accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim condensed financial information and Rule 8-03 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements.

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Document and Entity Information	3 Months Ended
	Sep. 30, 2012	Nov. 13, 2012 Class A Common Stock	Nov. 13, 2012 Common Stock - Class B
Entity Registrant Name	ENERGY TELECOM, INC.
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Entity Central Index Key	0001456455
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	No
Entity Voluntary Filers	Yes
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Entity Common Stock, Shares Outstanding		8,648,581	600,000

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Note 3 - Significant Accounting Policies: Use of Estimates (Policies)

3 Months Ended

Sep. 30, 2012

Policies

Use of Estimates

USE OF ESTIMATES

The preparation of these unaudited interim condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures in the financial statements. Accordingly, actual results could differ from these estimates.

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CONDENSED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Sales	$ 17,784		$ 31,503	$ 950
Royalties		1,649	3,032	1,649
Total revenue	17,784	1,649	34,535	2,599
COST OF GOODS SOLD	19,031		30,248
Gross (loss) profit	(1,246)	1,649	4,288	2,599
Selling, general and administrative expenses	220,024	122,082	883,169	354,982
Depreciation	401	429	1,112	429
Total operating expenses:	220,425	122,511	884,281	355,411
Loss from operations	(221,671)	(120,862)	(879,993)	(352,812)
Interest income	74	168	265	500
Interest expense	(1,248)	(1,245)	(3,845)	(3,802)
Total other income (expense):	(1,174)	(1,077)	(3,580)	(3,302)
Net loss before provision for income taxes	(222,845)	(121,939)	(883,573)	(356,114)
Income tax (benefit)
NET LOSS	$ (222,845)	$ (121,939)	$ (883,573)	$ (356,114)
Net loss per common share, basic and diluted	$ (0.03)	$ (0.02)	$ (0.11)	$ (0.05)
Weighted average number of common shares outstanding, basic and diluted	8,621,027	7,303,853	8,259,813	7,023,968

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Note 6 - Stockholders' Equity

3 Months Ended

Sep. 30, 2012

Notes

Note 6 - Stockholders' Equity

NOTE 6 — STOCKHOLDERS’ EQUITY

PRIVATE PLACEMENTS

During the nine months ended September 30, 2012, the Company completed private placements of 960,000 shares of Class A common stock and has received proceeds totaling $349,790.

SHARES ISSUED TO CONSULTANTS

During the nine months ended September 30, 2012, the Company issued an aggregate of 122,500 shares of Class A common stock to consultants in exchange for services rendered with a fair value totaling $77,849.

SHARES ISSUABLE AS COMPENSATION

During the nine months ended September 30, 2012, the Company issued an aggregate of 133,333 shares of Class A common stock with a fair value totaling $99,499 and was obligated under employment contracts to issue an additional 83,333 shares of Class A common stock with a fair value totaling $45,850 as officer compensation and 400,000 shares of Class B common stock with a fair value totaling $300,000.  The issuance of the Class B common stock represented a signing bonus, fully earned at the date of issuance.

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Note 5 - Stockholder Notes Payable

3 Months Ended

Sep. 30, 2012

Notes

Note 5 - Stockholder Notes Payable

 NOTE 5 — STOCKHOLDER NOTES PAYABLE

The Company has received financing from the Company’s founder, Chief Executive Officer, President and majority stockholder. The stockholder notes bear interest of 10% per annum, compounding annually and are due on demand.

 The following table summarizes stockholder notes payable as of September 30, 2012 (unaudited) and December 31, 2011:

	September 30, 2012		December 31, 2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		37,286		33,441
	$	50,772	$	51,927

The Company recognized interest expense associated with the notes of $1,248 and $3,845 for the three and nine months ended September 30, 2012, respectively; and $1,245 and $3,802 for the three and nine months ended September 30, 2011, respectively.

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Note 3 - Significant Accounting Policies: Recent Accounting Pronouncements (Policies)

3 Months Ended

Sep. 30, 2012

Policies

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.

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Note 3 - Significant Accounting Policies: Revenue Recognition (Policies)

3 Months Ended

Sep. 30, 2012

Policies

Revenue Recognition

REVENUE RECOGNITION

The Company recognizes revenue on four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (4) is based on management’s judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectability of those fees. Revenue is earned for product shipped and sold by our distributor on a per unit basis or as royalties upon shipment by the manufacturer as third party sales.

Revenue recognized in the nine months ended September 30, 2012 relates to sales of product of $31,503 and royalties earned of $3,032.

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Note 9 - Dependency On Key Management

3 Months Ended

Sep. 30, 2012

Notes

Note 9 - Dependency On Key Management

NOTE 9 — DEPENDENCY ON KEY MANAGEMENT

The future success or failure of the Company is dependent primarily upon the continued services and efforts of its Chief Executive Officer, director and founder. The ability of the Company to pursue its business strategy effectively will also depend upon, among other factors, the successful recruitment and retention of additional highly skilled and experienced managerial, marketing, engineering and technical personnel. There can be no assurance that the Company will be able to retain or recruit such personnel.

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Note 7 - Commitments and Contingencies

3 Months Ended

Sep. 30, 2012

Notes

Note 7 - Commitments and Contingencies

NOTE 7 — COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENT-TOM RICKARDS

On May 3, 2011, the Company entered into a one year employment agreement with Tom Rickards, Chief Executive Officer, director and founder whereby Mr. Rickards received an annual salary of $36,000.  In addition, Mr. Rickards received 200,000 shares of series A common stock that was paid in equal installments at the end of each calendar quarter and a $600 per month car allowance.  The employment agreement expired on May 31, 2012

On June 1, 2012, the Company entered into a one year employment agreement with Tom Rickards, Chief Executive Officer, director and founder whereby Mr. Rickards shall receive (i) an annual salary of $36,000 which may be increased up to $72,000 by mutual agreement by Mr. Rickards and the Board of Directors and dependent on the financial strength of the Company and (ii) 400,000 shares of class A common stock and (the “Stock Salary”), with the Cash Salary payable in equal installments at the end of such regular payroll accounting periods as are established by Employer, or in such other installments upon which the parties shall mutually agree.  In addition, Mr. Rickards received 400,000 shares of series B common stock as a signing bonus, which was fully earned upon issuance, and receives a $600 per month car allowance.

LITIGATION

The Company may, from time to time, become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The Company is currently not aware of any such legal proceedings that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.

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Note 8 - Related Party Transactions

3 Months Ended

Sep. 30, 2012

Notes

Note 8 - Related Party Transactions

NOTE 8 — RELATED PARTY TRANSACTIONS

The Company has an operating lease agreement for office space with the Company's Chief Executive Officer and director who has agreed to sublet space to the Company for a fixed fee of $2,750 (reduced to $2,000 beginning July 1, 2012) on a month-to-month basis. Total rent expense for the three and nine month periods ended September 30, 2012 was $6,000 and $22,500, respectively; and $7,250 and $17,750 for the three and nine month periods ended September 30, 2011, respectively.

As discussed in Note 5, the Company has received financing from the Company’s Chief Executive Officer, director, founder and majority stockholder. The stockholder loans bear interest of 10% per annum, compounding annually and are due on demand.

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Note 10 - Subsequent Events

3 Months Ended

Sep. 30, 2012

Notes

Note 10 - Subsequent Events

NOTE 10 — SUBSEQUENT EVENTS

On October 22, 2012, the Company filed a certificate of amendment to its Articles of Incorporation, which was a Certificate of Designations, Rights and Preferences of series A convertible preferred stock (the “Series A Preferred Stock”).  The total number of shares of Series A Preferred Stock was 5,790.

On November 5, 2012, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Normandia Capital (“Normandia”) providing for the sale by the Company to Normandia of 1,150 shares of the Series A Preferred Stock at a price of $100 per share of Series A Preferred Stock for aggregate cash proceeds of $115,000 (the “Financing”).

Each share of Series A Preferred Stock has a stated value of $100 (the “Stated Value”).  Normandia may convert, at any time, shares of Series A Preferred Stock into the number of shares of common stock of the Company (the “Common Stock”) obtained by dividing the Stated Value by the Conversion Price then in effect.  The conversion price is $0.3468, subject to adjustment (the “Conversion Price”).

Upon the occurrence of certain triggering events, Normandia has the right to require the Company to redeem all or a portion of the shares of Series A Preferred Stock.  The redemption price is the greater of (A) the number of shares of Common Stock that the Series A Preferred Stock being redeemed are convertible into multiplied by the average market price on the date of redemption or (B) the Stated Value of the Series A Preferred Stock being redeemed multiplied by a Redemption Premium.  The “Redemption Premium” is (A) 125% in the event that the Company fails to have the Common Stock be quoted on the OTC-QB or OTC-PK for a period of 10 days during any period of 12 months; (B) 250% in the event that the Company (1) fails to timely file an Annual Report on Form 10-K, an Quarterly Report on Form 10-Q or a Current Report on Form 8-K in the time periods that are required of a company with securities registered under Section 12 of the Securities Exchange Act of 1934 (a “Reporting Delinquency”) within the first year from the closing date or (2) the Company makes any statement that it intends to not comply with proper requests for conversion of the Series A Preferred Stock; or (C) 200% in the event that the Company has a Reporting Delinquency after the first year from the closing date.

The Company has the right, at any time after two years from the closing date, to redeem all or a portion of the Series A Preferred Stock, upon 120 days prior written notice.  The redemption price per share of Series A Preferred Stock shall equal 200% of the Stated Value.  In addition, upon the occurrence of a change in control or a liquidation, dissolution or winding up of the Company, Normandia has the right to receive, at its election, either 200% of the Stated Value per share of Series A Preferred Stock, or share in the assets of the Company being distributed on a pro rata basis as if the Series A Preferred Stock had been converted into shares of Common Stock.

Pursuant to the certificate of designation for the Series A Preferred Stock, Normandia may not convert Series A Preferred Stock if such conversion would result in Normandia beneficially owning in excess of 4.99% of the Company’s then issued and outstanding common stock. Normandia may, however, increase this limitation (but in no event exceed 9.99% of the number of shares of Common Stock issued and outstanding) by providing the Company with 61 days’ notice that such holder wishes to increase this limitation.

In connection with the Financing, the Company granted Normandia a right of first refusal on any proposed sale by the Company of any shares of common or preferred stock, except for certain exempted issuances.  The right of first refusal is for the earlier of one year from the closing date or until Normandia no longer holds any securities of the Company.  In addition, the Company granted Normandia piggyback registration rights for a period of two years from the closing date.

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Note 3 - Significant Accounting Policies: Share-Based Compensation (Policies)

3 Months Ended

Sep. 30, 2012

Policies

Share-Based Compensation

SHARE-BASED COMPENSATION

Share-based compensation issued to employees is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The Company measures the fair value of the share-based compensation issued to non-employees using the average stock price observed (for stock transactions) or the fair value of the award (for non-stock transactions), which were considered to be more reliably determinable measures of fair value than the value of the services being rendered. The measurement date is the earlier of (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

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Note 3 - Significant Accounting Policies: Revenue Recognition (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Sales	$ 17,784		$ 31,503	$ 950
Royalties		$ 1,649	$ 3,032	$ 1,649

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CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) (USD $)	Class A Common Stock	Class B Common Stock	Additional Paid in Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2010	$ 628		$ 4,444,637	$ (4,447,784)	$ (2,519)
Balance - Shares at Dec. 31, 2010	6,282,239	200,000
Common stock issued	91		329,867		329,958
Common stock issued - Shares	910,732
Repurchase and cancelation of common stock			(5,000)		(5,000)
Repurchase and cancelation of common stock - Shares	(667)
Common stock issued for services rendered	9		68,548		68,557
Common stock issued for services rendered - Shares	90,444
Common stock issuable for officer compensation	15		151,485		151,500
Common stock issuable for officer compensation - Shares	150,000
Net loss				(459,373)	(459,373)
Balance at Dec. 31, 2011	743		4,989,537	(4,907,157)	83,123
Balance - Shares at Dec. 31, 2011	7,432,748	200,000
Common stock issued	96		349,694		349,790
Common stock issued - Shares	960,000
Common stock issued for services rendered	13		77,836		77,849
Common stock issued for services rendered - Shares	122,500
Common stock issuable for officer compensation	13		99,486		99,499
Common stock issuable for officer compensation - Shares	133,333
Class B common stock issued as officer compensation		300,000			300,000
Class B common stock issued as officer compensation Shares		400,000
Stock based compensation			45,850		45,850
Net loss				(883,573)	(883,573)
Balance at Sep. 30, 2012	$ 865	$ 300,000	$ 5,562,403	$ (5,790,730)	$ 72,538
Balance - Shares at Sep. 30, 2012	8,648,581	600,000

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Note 4 - Financial Instruments

3 Months Ended

Sep. 30, 2012

Notes

Note 4 - Financial Instruments

NOTE 4 — FINANCIAL INSTRUMENTS

CONCENTRATIONS OF CREDIT RISK

The Company’s financial instrument that is exposed to a concentration of credit risk is cash. Effective December 31, 2010 and extending through December 31, 2012, all non-interest-bearing transaction accounts are fully insured by the Federal Deposit Insurance Corporation (FDIC), regardless of the balance of the account. On occasion, the Company’s cash and cash equivalents in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management.

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Note 5 - Stockholder Notes Payable (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Terms of Stockholders Note	The stockholder notes bear interest of 10% per annum, compounding annually and are due on demand.
Interest expense	$ 1,248	$ 1,245	$ 3,845	$ 3,802

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Note 3 - Significant Accounting Policies: Property and Equipment (Policies)

3 Months Ended

Sep. 30, 2012

Policies

Property and Equipment

 PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of three to five years.