10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, 2012

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)		(IRS Employer Identification No.)
3501-B N. Ponce de Leon Blvd., #393 St. Augustine, Florida	32084	(904) 819-8995
(Address of principal executive office)	(Zip Code)	(Registrant’s telephone number,  Including area code)

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes o   No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes x   No o

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 o

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 (§ 229.405 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   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 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).Yeso Nox

The aggregate market value of the voting common equity held by non-affiliates as of June 29, 2012, based on the closing sales price of the Common Stock as quoted on the Over-the-Counter Bulletin Board was $2,562,699. For purposes of this computation, all officers, directors, and 5 percent beneficial owners of the registrant are deemed to be affiliates.  Such determination should not be deemed an admission that such directors, officers, or 5 percent beneficial owners are, in fact, affiliates of the registrant.

As of March 19, 2013, there were 8,834,541 and 600,000 shares of registrant’s class A and B common stock outstanding, respectively.

TABLE OF CONTENTS

		PAGE
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	20
Item 3.	Legal Proceedings	20
Item 4.	Mine Safety Disclosures	20
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	21
Item 6.	Selected Financial Data	21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 8.	Financial Statements and Supplementary Data	F1-F15
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	28
Item 9A.	Controls and Procedures	28
Item 9B.	Other Information	29
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	30
Item 11.	Executive Compensation	31
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13.	Certain Relationships and Related Transactions, and Director Independence	33
Item 14.	Principal Accounting Fees and Services	34
PART IV
Item 15.	Exhibits	35
	Signatures	37

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PART I

ITEM 1 - BUSINESS

This Annual Report on Form 10-K (including the section regarding Management's Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Annual Report on Form 10-K.  Additionally, statements concerning future matters are forward-looking statements.

Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our Management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading "Risks Factors” below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with the Securities and Exchange Commission ("SEC"). You can read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549.  You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

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.  From inception through 1998, we designed, manufactured and sold products for heavy industrial markets to multi-national firms in six countries and the United States. While working in this market, he saw an opportunity to create a new type of personal communication systems and filed his first patent in September 1996. Once that first patent was awarded, the founder re-directed our focus and centered his activities on expanding our patent portfolio of personal communication systems which support the needs of the emergency, security and industrial work environment, and the broader cellular and recreational eyewear markets.  As a result, we ceased our prior operations and entered the development stage in August 2000 relating to our current line of business.

Our patent portfolio has since grown to consist of multiple issued United States and international Patent Cooperation Treaty (PCT) patents, and multiple pending U.S. and PCT applications. We intend to continue building our existing patent portfolio by filing additional patent claims. While many manufacturers of wireless headsets, novelty eyewear, industrial headwear and optical projection technology offer products with one or more of the features, we believe we offer the only next-generation solution protected by patent claims in all these areas.

We hold U.S. and foreign patents allowing for the manufacture, marketing and distribution of hands-free, wireless communication eyewear providing quality sound and noise attenuation. The targeted markets for our eyewear is 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.  Additionally, our products are marketed to multiple commercial retail sales channels for sight and hearing protection products, along with wireless telecommunication markets including cellular phone carriers and their suppliers.

Personal Protection Equipment Market

Overview

The Personal Protection Equipment ("PPE") market includes equipment and clothing worn for protection against bodily injury. Products include earmuffs and earplugs, communication headsets for noisy environments, safety eyewear and goggles, respirators, fall protection equipment, head protection equipment, protective clothing, gloves, footwear and other products. According to the Personal Protective Equipment Market Report, prepared by Global Industry Analysts I 2010, the global PPE market is anticipated to reach $33.3 billion in annual sales by 2015. Within this market, we aim to compete primarily in the segment of the market represented by hearing, eye and face protection products.

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In many emergency rescue, industrial, mining, manufacturing or construction related applications, employees are generally required to wear and carry various types of PPE gear, such as boots, hard hats, or gloves, as well as vision and hearing safety equipment in the form of protective glasses and disposable ear plugs.

The ability to communicate easily is another important consideration in equipping workers. Generally, they carry a radio, or have some form of communication such as a computer or a telephone near their workstation. Unfortunately, however, workers can become quite isolated in many of these working environments, because their hearing protection blocks out all exterior noise including the phone or radio. In emergency situations, it is very important that all of the workers communicate with one another so as to properly alert one another of dangers, evacuations or other safety related events.

In addition to safety, businesses also need communicability to increase worker efficiency and productivity. For those reasons it is vital that a worker be in communication with other workers at all times.  Presently, businesses address the various safety and communicability considerations by issuing employees individual radios, protective glasses and earplugs. Alternatively, some facilities attempt to use a computer workstation monitor to provide workers with a visual signal. Still, communication can be a great inconvenience because workers must often remove their hearing protection to properly communicate even though some external headphone-type ear covers, which provide for some communicability, are available, due to the previously described expense, inconveniences and un-hygienic conditions associated with their use, those types of devices are not favored and businesses must look to many available alternatives.

Accordingly, safety glasses, hearing protection and communication devices are still commonly provided to workers separately, and the worker is called upon to manage all of the separate, and often incompatible, devices as well as possible. Unfortunately, users who are able to simultaneously wear two or three separate devices find their combined use very inconvenient, bulky and awkward on a day-to-day basis. To ensure that a worker does not forget or misplace the often expensive equipment, in many instances some or all of the safety equipment, and especially the more expensive equipment such as the communication equipment and exterior head phone type covers, must be turned in each day and reissued the following morning. This practice frequently results in safety glasses, cell phones, microphones, transmitters and ear covers being lost, misplaced, or damaged during storage, as the use of several separate devices does not allow for easy convenient storage in one central location. As such, it is very difficult to keep track of all of the various types of safety equipment and a user still has no assurance that they are using all of their own equipment from day to day, a circumstance that is not only un-sanitary, but also can be quite inconvenient to a user who may have to re-size or otherwise adapt their equipment to their comfort requirements.

This is the state of the current market for providing what we estimate as 75 million police, fire, rescue, military, security, bio-hazard, mining, construction and heavy manufacturing workers worldwide, with various levels of protection and communication products.

Types of Products

The following are the types of products being used in today‘s marketplace. They include:

● Protective eyewear: generally a lightweight, wraparound frame that has durable, hard-coated, often wrap-around, polycarbonate lenses;

● Industrial wireless all-in-one communication headgear radios: two-way, portable radios built into headsets with noise-reducing earmuffs; generally requiring a base station for multiple user environments;

● Industrial headsets: industrial strength headsets with portable radios that can be connected to belt worn or handheld transceivers;

● Two-way handheld radios: a full range of products that use short-range wireless communication technologies;

● RF wireless ear worn Bluetooth radios: adoption of the Bluetooth RF protocol which now makes production of the eyewear radio both practical and economical; and

● Inductance wireless earpieces (buds): a component of the product offering a pathway to superior foam technologies.

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Future of the PPE Market

The convergence of voice, data and video communication technologies has produced a growing market for personal protection and telecommunication products. With the exponential growth in computational capabilities, intelligence and miniaturization, new technologies are being applied to old communications methodologies. The next generation of broad spectrum, small, intelligent digital audio and video communication devices can now be created based on the availability of advanced digital signal processing (DSP) technology (allowing for the conversion of analog information such as sound and pictures into digital information), single-chip radio construction and the miniaturization and commercialization of optical projection technology. Convergence was inevitable, as the perceived need for “smaller, lighter, cheaper, smarter and hands-free” devices is now deep-seated in the modern consumer‘s buying habits.

We believe that our telecommunication eyewear is the type of convergence where the PPE market is heading. We consider telecommunication eyewear as a product delivering hands-free access to the full range of voice, stereo music, data and video (optical display) information, including text, multi-media and full screen and full color web-site views.  This convergence is evidenced by the introduction of at least one type of wireless optical-display eyewear, the Google Glass product.  The Google Glass eyewear delivers optical information to the wearer while he or she is connected wirelessly to the internet.  We believe that other companies are planning on introducing wireless optical display eyewear in the near future.

Key industry trends

The industry is experiencing significant advancements in various forms of technological advances, and thus evolving user requirements, including:

● Increasing interest and demand for small, hands-free, wireless and digital communication products;

● Increasing need and demand for real-time information delivery of text messages, and eventually full page, multi-media, full color displays;

● evolving capability to deliver smaller, full screen, full color, interactive displays;

● rapid advances in digital signal processing (DSP) chip technology providing for the conversion of analog signals to digital signals, allowing for smaller systems utilizing software controlled learning-capable operations;

● development of voice-recognition software for hands-free information appliances;

● development of speakers and microphones-on-a-chip allow for miniaturized sound systems within the ear;

● increasing need to organize and manage employee group and individual connectivity; and

● increasing need to increase productivity through use of individual safety glasses, hardhats, microphones, transmitters, ear covers, computer terminals, cell and smart phones.

Limitations of current industry practices

Although various solutions are being offered to attempt to fill the void in the marketplace, they all have inherent limitations, including:

● combining communications with personal safety requires two or three separate products;

● current headsets normally require a wired connection from the headset to a radio worn elsewhere on the body;

● some current information appliances are hands-free, but because they are almost exclusively ear-muff type in design, do not find favor from those working in high-heat and humid work environments;

● current work-related radio products are finger-push activated – as they do not yet employ voice-recognition - thus are difficult for gloved fire and emergency personnel to use;

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● current short-range walkie-talkie radio technology uses analog transmissions, therefore cannot provide digital data; and

● current state of bulky hardwired radios, versus printed-circuit-board mounted single chip radios.

Our Product

We have produced the world's first hands-free two-way, sound attenuating wireless telecommunication eyewear, intended for use by police, fire, rescue, military and security personnel as well as bio-hazard, construction and heavy-manufacturing workers.  In addition, we are designing our product to deliver comfortable, safe, economic, and aesthetic access to entertainment and cellular-phone networks through consumer-level recreational eyewear/accessory for use in various everyday situations including beach wear, casual shopping, sporting events, or other casual wear.

The 2.1 model of our eyewear was completed in 2012, with advanced materials used to enhance strength and durability. 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.

Additionally, the Company is working on new benefits as protected in its newly issued patent, including wireless earpieces, and benefits stated in a newly filed patent, that establishes a ‘Zone of Safety’ around the wearer, using new technologies never before found on the human head.  The innovative 'Zone of Safety' technology will benefit workers in hazardous locations, those enjoying sports outdoors, as well as a variety of other applications. The eyewear will receive and accumulate knowledge of the wearer's surroundings, including many environmental hazards, while simultaneous providing others with the eyewear wearer's condition and state, including physical condition, location, and movements.

Finally, the Company is completing the software design and testing required for the eyewear to be consider a ‘Hearing protection’ product under some standards, by limiting its audio output to 82dB.  The preliminary tests of the 82dB limited samples are complete, and testing on live models is scheduled for completion in 2013.

Safety Lenses

The lenses in our eyewear are manufactured and designed by Uvex, a division of Honeywell Safety Products, a leading manufacturer of safety eyewear products.  The Genesis wraparound lenses provide vision impact protection to industry safety standards and block 99.9% of UVA and UVB radiation light.  In order to provide for maximum usage and durability, the lenses are easily replaceable and come in different colors/shades.  Our eyewear allows prescription lenses to be securely inserted behind the safety lenses and specifications for prescription lenses are also available.  We are also working to provide eyewear that will provide a heads-up optical display, although no release date is currently available. We previously tested 3-D lenses, but have decided not to move forward with them at this time, as we don’t believe it represents a significant enough segment of our potential market.  We are also working to provide polarized lenses and eyewear that will provide a heads-up optical display, although no release dates are currently available.

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Noise Attenuation Earplugs

The eyewear contains soft ear plugs designed and manufactured by Howard Leight/Honeywell Safety Products, a leading global hearing protection device company. The earplugs are corded to the eyewear and are replaceable.   Through the use of dual microphones and noise attenuating software designed by Samsin USA, the earplugs passively provide a Noise Reduction Rating (“NRR”) of 24 using SmartFit 300 plugs, and an NRR of 30 using ET-113 foam plugs, both types supplied by Howard Leight, a division of Honeywell Safety Products. OSHA regulations require that, when engineering controls and/or administrative controls cannot reduce noise levels in industry to an eight-hour time-weighted average level of less than 85 dB, a hearing protection (or conservation) program must be established.  OSHA requirements prohibit a worker from working more than eight hours per day with exposure to a sustained sound level of 90 dB, which decreases significantly to two hours per day at 100dB.  Most industrial and construction noise is in the range of 90 – 110 dB.

Voice Communication

Our eyewear is equipped with wireless two-way Bluetooth v2.1 voice communication that is compatible with a cellular telephone that is Bluetooth enabled. In addition, our eyewear works with handheld Bluetooth- enabled VHF and UHF walkie-talkies and Bluetooth adaptors. This provides a user with hands-free use of their cell phones.  Large push buttons are built into the frame to allow easy use even by users with gloved hands.  The eyewear works at least 15 feet from the cell phone or other Bluetooth enabled device.

Music Playback

Our eyewear is capable of streaming stereo music from any Bluetooth enabled music device.

Industrial Certifications

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.

American National Standards Institute

The American National Standards Institute, or ANSI, is a not-for-profit organization that serves as administrator of the United States private sector voluntary standardization system. The primary objective of ANSI is to promote and facilitate voluntary consensus standards and conformity assessment systems. ANSI does not have authority to enforce such standards, but their standards are used by OSHA to be sure that certain safety devices, such as eyewear, provide adequate protection for workers.

The ANSI Z87.1 standard sets forth requirements for the design, construction, testing, and use of eye protection devices, including standards for impact and penetration resistance. All safety glasses, goggles, and face shields used by employees under OSHA jurisdiction must meet the ANSI Z87.1 standard. The eyewear standard includes the following minimum requirements:

● Provide adequate protection against the hazards for which they are designed;

● Be reasonably comfortable;

● Fit securely, without interfering with movement or vision;

● Be capable of being disinfected if necessary, and be easy to clean;

● Be durable; and

● Fit over, or incorporate, prescription eyewear.

The ANSI Z87.1 standard requires that eyewear pass certain tests, including a high mass impact test and a high velocity impact test. In July 2012, our latest version of our telecommunications eyewear passed the ANSI Z87.1 testing requirements.

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FCC/CE Regulatory Certification

The Federal Communications Commission, or FCC, has adopted limits for safe exposure to radiofrequency (RF) energy. These limits are given in terms of a unit referred to as the Specific Absorption Rate (SAR), which is a measure of the amount of radio frequency energy absorbed by the body when using a mobile phone. The FCC requires cell phone manufacturers to ensure that their phones comply with these objective limits for safe exposure. Any cell phone at or below these SAR levels (that is, any phone legally sold in the U.S.) is a "safe" phone, as measured by these standards. The FCC limit for public exposure from cellular telephones is an SAR level of 1.6 watts per kilogram (1.6 W/kg).   Our eyewear has been determined to be “safe” and has been certified by the FCC.

Similarly, a CE certification refers to a product’s eligibility to be sold in the European Union. The trading region defined by the EU is called the European Economic Area, or EEA.  In order to sell our telecommunication eyewear to any of the countries in the EEA, it must obtain CE certification. A product bearing the CE Mark has been tested to all of the relevant standards that the EU demands.  

In order to obtain CE certification, a product must satisfy the following obligations:

● Carry out a risk analysis and determine what solutions can be applied to reduce risks in compliance with the appropriate EEA directive;

● Write a user’s instruction manual that sets out the purpose for which the product is intended;

● Draft an EEA declaration of conformity, in which the manufacturer declares that the product complies with the specified EEA directives and norms; and

● Prepare a product dossier, which includes the documents mentioned above, as well as design data, drawings, calculations and test reports. In other words, it contains everything which makes it possible to demonstrate that the essential requirements relating to CE marking have been met.

In September 2011, our telecommunications eyewear received CE certification and may be sold in the EEA.

Bluetooth Qualification

Bluetooth is an open wireless technology standard for exchanging data over short distances (using short length radio waves) from fixed and mobile devices, creating personal area networks with high levels of security. Bluetooth Qualification is the Bluetooth SIG certification process required for any product using Bluetooth wireless technology and is a necessary pre-condition of the intellectual property license for the Bluetooth technology. Qualification is also necessary in order to apply the Bluetooth trademark to a product. Bluetooth Qualification requires certain testing standards for all products that use Bluetooth wireless technology. Our telecommunication eyewear has received Bluetooth Qualification as a v2.1 Bluetooth enabled device.

CSA International

CSA International is a provider of product testing and certification services for electrical products, whose certifications are recognized in the U.S., Canada and around the world. CSA International is accredited by national agencies including, OSHA, ANSI, National Voluntary Laboratory Accreditation Program, National Evaluation Service and Standards Council of Canada.

The CSA Z94.3 standard applies to eye and face protectors used in all occupational and educational operations or processes involving hazards to the eyes or face.  Typical hazards include flying objects and particles, splashing liquids, molten metal, and ultraviolet, visible, and infrared radiation, but do not include X-rays, gamma rays, high-energy particulate radiation, radioactive materials, lasers, or masers.  The CSA Z94.3 standard would be considered the Canadian equivalent of the ANSI Z87.1 standard although it has higher impact standards.  The prior version of our eyewear passed the CSA Z94.3 standard.  Our new eyewear is still undergoing internal testing and has not yet been submitted for CSA certification, but we anticipate that the new version will pass all required testing to achieve the CSA Z94.3 standard.

Manufacturing Operations

Our telecom eyewear product is a manufactured product using various components constructed for the project, and assembled and shipped for distribution. Our exclusive contractual agreement with Samsin USA expired in October 2011, by which it develops, provide prototypes for, and manufactures our telecom eyewear products, which it does through Samsin Innotec in any of its three plants, located in South Korea, or mainland China.  Although the agreement expired, we continue to operate with Samsin USA as our manufacturing partner under the same terms and conditions of the agreement, although if necessary, we could utilize additional or other manufacturing partners if we decided.

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The UVEX lenses are manufactured by Honeywell Safety Products, located in Smithfield, Rhode Island.  The eyewear's specially designed sound attenuating ear plugs are manufactured by Howard Leight Company, a division of Honeywell Safety Products, in a manufacturing plant in Mexico.  Other than the purchase orders we place with Honeywell Safety Products or Howard Leight, we have no contractual obligations to use their products and we could use lenses or ear plugs produced by other companies if we decided.

All components are then shipped to South Korea for assembly of the eyewear.  The completed eyewear is thoroughly tested in Samsin USA's own Quality Control facilities, then shipped directly to first or second tier distributors wishing to distribute the product.

Distribution

On February 21, 2012, we entered into a Distributor Agreement with Honeywell International Inc., acting through its Honeywell Safety Products business unit (“Honeywell”).  Pursuant to the terms of the agreement, we appointed Honeywell as our distributor with regards to our products, which appointment was on a worldwide basis and exclusive only to the personal protective equipment market.  All products are purchased from us by Honeywell for resale.  Honeywell sells our eyewear under its branded ‘ICOM’ name in Europe and UVEX branded ‘AcccoustiMaxx’ in the United States. The Distributor Agreement had an initial term of one year, and would automatically renew for successive one year terms after the initial term unless either party provides prior written cancellation.  On December 26, 2012, we notified Honeywell that we elected to not review the Distributor Agreement beyond the initial term.  We have had discussions with Honeywell regarding entering into a new Distributor Agreement, which we anticipate would be on substantially the same terms as the prior agreement, but would provide Honeywell with expanded exclusive rights and provide us with greater product, marketing and sales support.  Although no agreement is currently in place, we continue to receive purchase orders from Honeywell and anticipate a significant increase in total sales by Honeywell in the fiscal year ending December 31, 2013. 

Additionally, we believe that, similar to our agreement with Honeywell, one or more of the companies that produce the wireless headsets and industrial safety products will distribute the telecommunication eyewear product, probably under their own label, to gain new market share. For example, Samsin USA, which produces the frames for the eyewear and manufactures the completed eyewear, may desire to sell the eyewear through its distribution network.  If they decided to do so, they would purchase them from us to be sold under their own brand name for the eyewear.  Alternatively, a company such as Samsin Innotec, which has a long history of selling products to police and military forces in Asia, could sell the eyewear and pay us a royalty rate based on the number of units sold.  

We will seek to analyze the products being offered by other companies, evaluate which competitors could benefit from licensing our patents, and carefully determine which, if any, of their products may infringe on elements of our patented protection. Many of these companies hold patents on various elements of the products that they sell; however, none hold patents that protect the “means” for integrating additional functionality into their core product offerings like our patents do. For that reason, we believe that companies will be interested in licensing our technology to be able to incorporate multi-functionality into their current products.

The following are targeted licensees, potential competitors and prospective partners:

Cellular Carriers	In-Ear audio delivery systems
AT&T Inc.	Siemens AG
Verizon Communications Inc.	Plantronics Inc.
Nokia Corp.	GN US, Inc. (Jabra)
Sprint Nextel Corp.

Targeted PPE Markets

The personal protection equipment market includes equipment and clothing worn for protection against bodily injury. Products include earmuffs and earplugs, communication headsets for noisy environments, safety eyewear and goggles, respirators, fall protection equipment, head protection equipment, protective clothing, gloves, footwear and other products. Within this global market, our telecommunication eyewear will compete primarily in the markets represented by hearing and eye protection and communication headset products.

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Our telecommunication eyewear product 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;

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

● Video Game Players:To provide a better gaming experience with hands-free voice controls and streaming data; and

● Consumers:To protect consumers in home improvement and maintenance projects and to provide digital radio and cell phone communications.

Currently, through our distribution partner, we are targeting the United States and Europe, which we believe are the two largest PPE markets and the markets in which we have the greatest intellectual property protection. In addition, we are planning to sell the eyewear in Australia in 2013.  Thereafter, the markets that we decide to target will be based on receiving patent protection and which distribution partners, if any, we enter into agreements with.

Research and Development

Research and development of our telecom eyewear product is conducted at various locations simultaneously:  our own offices (general layout, benefits, and ergonomics), research facilities at Howard Leight in San Diego, California (sound attenuation), at Samsin USA in Mason, Ohio (Bluetooth and other electronic design), and at Samsin Innotec's R&D facility (operating software system design, physical engineering) located in Seoul, South Korea.

Intellectual Property

We own and have obtained licenses to various domestic and foreign patents, patent applications and trademarks related to our products, processes and business. Our patents are often referred to as means plus function patents. Means plus function is the broadest type of patent protection and refers to a way of defining an invention in a patent claim that describes the element of the invention in terms of its function (i.e, the means by which a specific function is performed), rather than in terms of its specific structure. The use of a means plus function clause makes the claim harder to design around, since a patent on the means will then support all possible structures that can be performed by the specific function. Our patents expire at various times in the future not exceeding 20 years.

Patents and Patent Applications

Proprietary protection for our products and technology are important to our business and we seek patent protection in the U.S. and internationally when we deem appropriate. We also rely on trade secrets, know-how and continuing technological advances to protect various aspects of our core technology. 

We own numerous patents and have patent applications pending in the United States and abroad. In addition, we have two trademarks.

Our commercial success will largely depend on obtaining and maintaining patent protection and trade secret protection of our current and future products and technologies, as well as successfully defending these patents against third-party challenges. Our ability to stop third parties from making, using, selling, offering to sell or importing our products or products using our technology depends on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities. We cannot assure you that our pending patent applications will result in issued patents.

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Approved Patents

Our current patents owned are as follows:

Patent Number	Name of Patent	Jurisdiction	Expiration Date
5,717,479	Industrial safety assembly including disposable ear protection and earphone	USA	September 6, 2016
CA2314348	Industrial safety assembly including disposable ear protection and ear phone	Canada	February 10, 2018
AU759466	Industrial safety assembly including disposable ear protection and ear phone	Australia	February 10, 2018
6,012,812	Industrial safety assembly	USA	September 6, 2016
ZL988140675	Industrial safety assembly including disposable ear protection and ear phone	China	February 10, 2018
6,950,531	Industrial hearing protection and communication assembly	USA	September 14, 2016
7,133,532	Hearing protection and communication assembly	USA	September 17, 2016
EP 1060433	Industrial safety assembly including disposable ear protection and ear phone	European Patent Office, United Kingdom, Spain, Italy, Germany, France	February 10, 2018
8,243,973	Communication eyewear assembly	USA	April 19, 2031

Patent Applications

Our current patent applications that are pending are as follows:

Application Number	Name of Patent Application	Jurisdiction	Application Date
108475823	Communication eyewear assembly	European Patent Office	March 10, 2010
2010347741	Communication eyewear assembly	Australia	March 10, 2012
13/585,430	Communication eyewear assembly	USA	August 14, 2012
2791531	Communication eyewear assembly	Canada	August 29, 2012
2010800652024	Communication eyewear assembly	China	September 5, 2012
1020127023357	Communication eyewear assembly	South Korea	September 6, 2012
2012557012	Communication eyewear assembly	Japan	September 10, 2012
2013/713,789	Communication eyewear assembly with Zone of Safety capability	USA	December 13, 2012

Trademarks

We have been granted two trademarks as follows:

Name of Trademark Granted	Date of Registration	Registration Number
Energytele.com	December 11, 2007	3354175
Safe-Talk	March 8, 2011	3930119

Competition

The global PPE market is highly fragmented. We estimate that there are several hundred manufacturers of PPE (other than safety clothing, gloves and shoes) in the United States, Europe and Southeast Asia. Participants in the industry range in size from small, independent, single-product companies with annual sales of a few million dollars, to a small number of multinational corporations with annual sales in excess of $100 million. We believe that participants in the PPE market compete primarily on the basis of product characteristics (such as design, style and functional performance), product quality, service, brand name recognition and, to a lesser extent, price. From a competitive standpoint, we believe we are currently well situated, primarily because we believe our telecommunication eyewear will appeal to many different potential end-users in the PPE market.

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Government Regulation

As a manufacturer of safety products, we are subject to regulation by numerous governmental bodies. Principal among the federal regulatory agencies in the United States of America are the following: (i) Occupational Safety and Health Administration, which regulates the occupational usage of all PPE; (ii) the Environmental Protection Agency, which regulates labeling of hearing protection devices; and (iii) the Mine Safety and Health Administration, which regulates safety in mines. These agencies generally mandate that our products meet standards established by private groups, such as ANSI. Our products are also subject to foreign laws and regulations. In particular, they must comply with the Canadian Standards Association, European Committee for Standardization and Standards Australia in order to be sold in these markets. Our products are also subject to the Export Administration Regulation administered by the Department of Commerce, and certain products may be subject to the International Traffic in Arms Regulations administered by the Department of State. We believe we are in compliance in all material respects with the regulations and standards of these governmental bodies.

Environmental, Health and Safety Matters

We are subject to various evolving federal, state, local and foreign environmental, health and safety laws and regulations governing, among other things, emissions to air, discharge to waters and the generation, handling, storage, transportation, treatment and disposal of hazardous substances and wastes. We believe that we are in substantial compliance with all such laws and regulations. We have an active program to ensure environmental compliance and achievement of environmental goals and objectives. We will continue to implement environmental management systems at our manufacturing facilities. The consequence for violating these laws and regulations can be material. We will likely have to make capital and other expenditures to comply with environmental and health and safety requirements. In addition, certain environmental laws and regulations impose joint and several strict liability on responsible parties, including past and present owners and operators of sites, to clean up, or contribute to the cost of cleaning up, sites at which hazardous wastes or materials were disposed or released. For example, if a release of hazardous substances occurs on or from our property or any offsite disposal location where our wastes have been disposed, or if contamination from prior activities is discovered at our property or third-party owned properties that we or our predecessors formerly owned or operated, we may be subject to liability arising out of such conditions and the amount of such liability could be material. Liability can include, among other things, for example, costs of investigation and cleanup of the contamination, natural resource damages, property damage to properties and personal injuries. Environmental laws and regulations are complex, change frequently and have tended to become more strict over time. If more stringent environmental laws or regulations are enacted, these future laws could have a material adverse effect on our results of operations.

Employees

As of March 19, 2013, we had one employee, our Chief Executive Officer.  From time to time, we rely on consultants for various activities, including accounting, design, manufacturing and marketing.  Currently we have three consultants:  The Brussell Group, LLC, which is providing marketing and logistical consulting services, Mr. Tom Perszyk, who is providing electronic consulting services and Mr. Steven Chaussy, CPA, who is providing accounting services.

We engaged the services of Benjamin Brussell, through The Brussell Group, LLC in December 2011.  The Brussell Group provides marketing and business logistical services.  We and The Brussell Group entered into a consulting agreement in December 2011, on a month-to-month basis, whereby The Brussell Group receives shares of common stock on a monthly basis for his services.

Mr. Tom Perszyk, our Bluetooth design engineer, formerly of Motorola, provides all technical guidance required on the design, implementation, and development of the Bluetooth (and other RF) protocols employed by the design engineers at Samsin USA.  Mr. Perszyk is the Chief Executive Officer and a minority shareholder of Samsin USA. We and Mr. Perszyk entered into a consulting agreement in November 2011, on a month-to-month basis, whereby Mr. Perszyk receives shares of common stock on a monthly basis for his services.

Mr. Steven Chaussy, a CPA licensed in Florida, Virginia and California, was initially engaged in January 2011 and renewed in January 2013 to provide accounting services including the assemblage of financial data required for the Company's SEC filings. Mr. Chaussy receives shares of common stock on a monthly basis for his services.

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ITEM 1A - RISK FACTORS

Risks Relating to Our Business:

We have a short operating history and have not produced significant revenues.  This makes it difficult to evaluate our future prospects and increases the risk that we will not be successful.

We have a short operating history with our current business model, which involves the manufacture, marketing and distribution of a hands-free, wireless communication eyewear.  While we have been in existence since 1993, we have only started to generate revenues in the second half of 2010.  No assurances can be given that we will generate any significant revenue, or any revenues at all, in the future. As a result, we have a very limited operating history for you to evaluate in assessing our future prospects.   Our operations have not produced significant revenues, and may not produce significant revenues in the near term, or at all, which may harm our ability to obtain additional financing and may require us to reduce or discontinue our operations.  You must consider our business and prospects in light of the risks and difficulties we will encounter as an early-stage company in a new and rapidly evolving industry.  We may not be able to successfully address these risks and difficulties, which could significantly harm our business, operating results, and financial condition.

We have a history of losses which may continue and which may negatively impact our ability to achieve our business objectives.

We incurred net losses of $1,055,625 and $459,373 for the years ended December 31, 2012 and 2011, respectively.   In addition, at December 31, 2012, we had an accumulated deficit of $5,962,782. We cannot assure you that we can achieve or sustain profitability on a quarterly or annual basis in the future.  Our operations are subject to the risks and competition inherent in the establishment of a business enterprise. There can be no assurance that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including whether we will be able to continue expansion of our revenue. We may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.

We received a modified report from our independent registered public accounting firm with an emphasis of matter paragraph for the year ended December 31, 2011 with respect to our ability to continue as a going concern.  Although we did not receive a modified report for the year ended December 31, 2012, there is no assurance that we will receive a similar unmodified report for our year ended December 31, 2013.

In their report dated March 15, 2012, our independent registered public accounting firm expressed substantial doubt about our ability to continue as a going concern as we had incurred substantial losses and have minimal revenues to date. Although we incurred operating losses during the year ended December 31, 2012, we increased our revenues for the year ended 2012, were cash flow positive for the year ended December 31, 2012, had increased the amount of cash on hand at year end and further increased the amount of cash on hand prior to the date of this report.  As a result, in their report dated March 22, 2013, our independent registered public accounting firm did not express substantial doubt about our ability to continue as a going concern.  If we are unable to generate a profit and/or obtain necessary funding from outside sources, our independent registered public accounting firm may express doubt about our ability to continue as a going concern in the future.

We face strong competition from other personal protection equipment companies.

The personal protection equipment market is highly competitive. Our competitors range in size from small companies focusing on single products to large multinational corporations that manufacture and supply many types of products. Our main competitors vary by region and product. We believe that participants in this industry compete primarily on the basis of product characteristics (such as design, style and functional performance), product quality, service, brand-name recognition and, to a lesser extent, price. Almost all of our competitors have greater financial and other resources than we do and may be able to grow more quickly through strategic acquisitions and may be able to better respond to changing business and economic conditions. Our net income could be adversely affected by competitors’ product innovations and increased pricing pressure. Individual competitors have advantages and strengths in different sectors of our markets, in different products and in different areas, including manufacturing and distribution systems, geographic market presence, customer service and support, breadth of product, delivery time and price. Some of our competitors also have greater access to capital and technological resources and we may not be able to compete successfully with them.

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Our lack of diversification will increase the risk of an investment in us, and our financial condition and results of operations may deteriorate if we fail to diversify.

Our current business focuses on one product in the personal protection equipment market, our Telecommunication Eyewear. Larger companies have the ability to manage their risk by diversification. However, we currently lack diversification, in terms of both the nature and geographic scope of our business. As a result, we will likely be impacted more acutely by factors affecting our industry in which we operate, than we would if our business were more diversified, enhancing our risk profile.

If we fail to successfully introduce new products, we may lose market position.

New products, product improvements, line extensions or new packaging will be an important factor in our sales growth. If we fail to identify emerging consumer and technological trends, to maintain and improve the competitiveness of our existing products or to successfully introduce new products on a timely basis, we may lose market position. Continued product development and marketing efforts have all the risks inherent in the development of new products and line extensions, including development delays, the failure of new products and line extensions to achieve anticipated levels of market acceptance and the cost of failed product introductions.

Our continued success depends on our ability to protect our intellectual property. The failure to do so could impact our profitability and stock price.

Our success depends, in part, on our ability to obtain and enforce patents, maintain trade-secret protection and operate without infringing on the proprietary rights of third parties. Litigation can be costly and time consuming. Litigation expenses could be significant. In addition, we may decide to settle legal claims, including certain pending claims, despite our beliefs on the probability of success on the merits, to avoid litigation expenses as well as the diversion of management resources. While we have been issued patents and have registered trademarks with respect to our product and technology, our competitors may infringe upon our patents or trademarks, independently develop similar or superior products or technologies, duplicate our designs, trademarks, processes or other intellectual property or design around any processes or designs on which we have or may obtain patents or trademark protection. In addition, it is possible that third parties may have or acquire other technology or designs that we may use or desire to use, so that we may need to acquire licenses to, or to contest the validity of, such third-party patents or trademarks. Such licenses may not be made available to us on acceptable terms, if at all, and we may not prevail in contesting the validity of such third-party rights.

In addition to patent and trademark protection, we also protect trade secrets, know-how and other confidential information against unauthorized use by others or disclosure by persons who have access to them, including our employees, through contractual arrangements. These agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If we are unable to maintain the proprietary nature of our technologies, we may lose market share to competing products using the same or similar technology.

Litigation brought by third parties claiming infringement of their intellectual property rights or trying to invalidate intellectual property rights owned or used by us may be costly and time consuming.

We may face lawsuits from time to time alleging that our products infringe on third-party intellectual property, and/or seeking to invalidate or limit our ability to use our intellectual property. If we become involved in litigation, we may incur substantial expense defending these claims and the proceedings may divert the attention of management, even if we prevail. An adverse determination in proceedings of this type could subject us to significant liabilities, allow our competitors to market competitive products without a license from us, prohibit us from marketing our products or require us to seek licenses from third parties that may not be available on commercially reasonable terms, if at all.

Product liability claims could have a material adverse effect on our operating results and negatively impact our stock price.

We face an inherent business risk of exposure to product liability claims arising from the alleged failure of our products to prevent the types of personal injury or death against which they are designed to protect. Any material uninsured losses due to product liability claims that we experience could subject us to material losses.

We could be required to recall or redesign our products if they prove to be defective. We maintain insurance against product liability claims (with the exception of asbestosis and silicosis cases, for which coverage is not commercially available), but it is possible that our insurance coverage will not continue to be available on terms acceptable to us or that such coverage will not be adequate for liabilities actually incurred. A successful claim brought against us in excess of available insurance coverage, or any claim or product recall that results in significant expense or adverse publicity against us, could have a material adverse effect on our business, operating results and financial condition.

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Environmental, health and safety requirements could expose us to material obligations and liabilities and affect our profitability.

We are subject to federal, state, local and foreign laws, regulations and ordinances relating to the protection of the environment, including those governing discharges to air and water, handling and disposal practices for solid and hazardous wastes, and occupational health and safety. The consequence for violating such requirements can be material. We have made and will continue to make capital and other expenditures to comply with environmental and health and safety requirements. In addition, if a release of hazardous substances occurs on or from our properties or any offsite disposal location where our wastes have been disposed, or if contamination from prior activities is discovered at any of our properties or third-party owned properties that we or our predecessors formerly owned or operated, we may be subject to liability arising out of such conditions and the amount of such liability could be material. Liability can include, for example, costs of investigation and cleanup of the contamination, natural resource damages, damage to properties and personal injuries.

A significant portion of our income will come from individual purchases not long-term contracts; as a result, our revenue will not be guaranteed from quarter-to-quarter and we cannot always operate efficiently.

A large percentage of our customer base will involve individual purchases who do not enter into long-term purchase orders or commitments.  Therefore, our customers may terminate their relationships with us at any time.   We make significant decisions regarding staffing and component procurement, personnel and resource requirements, and the level of business we seek and accept based upon long-term estimates of our number of customers.  The short-term nature of our customers’ commitments could result in large deviations from our estimates, resulting in severe excesses or shortages in staffing and resources.  This makes it difficult for us to maximize our potential efficiency.

Our results of operations and net sales are dependent on existing regulations and standards. If these regulations or standards are changed to our detriment, demand for our products could decrease.

Our products are and will continue to be subject to regulation by various federal, state, local and foreign regulatory authorities. Our net sales may be materially and adversely affected by changes in safety regulations and standards covering industrial workers in the United States, Canada and Europe, including those of the Occupational Safety and Health Administration, or OSHA, the National Institute for Occupational Safety and Health, or NIOSH, and the European Committee for Standardization, or CEN. Our net sales could also be adversely affected by a reduction in the level of enforcement of such regulations. Changes in regulations could reduce the demand for our products or require us to reengineer our products, thereby creating opportunities for our competitors. If demand for our products is reduced, our results of operations and net sales could be materially and adversely affected.

If we are unable to retain senior executives and other qualified professionals, including sales and marketing personnel, our growth may be hindered, which could negatively impact our results of operations.

Our success depends to a significant extent upon the continued services of Mr. Thomas Rickards, our Founder, Chief Executive Officer and sole director. Loss of the services of Mr. Rickards would have a material adverse effect on our growth, revenues, and prospective business. We have not obtained key-man insurance on the life of Mr. Rickards.  In order to successfully implement and manage our business plan, we will be dependent upon, among other things, our ability to attract, hire, train and retain qualified managerial, sales and marketing personnel. We rely on our sales and marketing teams to come up with innovative ways to generate demand for our products. Competition for these types of personnel is intense. We may be unsuccessful in attracting and retaining the personnel we require to conduct and expand our operations successfully. Our results of operations could be materially and adversely affected if we are unable to attract, hire, train and retain qualified personnel.  The loss of any member of the management team could have a material adverse effect on our business, results of operations and financial condition.

Our resources may not be sufficient to manage our expected growth; failure to properly manage our potential growth would be detrimental to our business.

We may fail to adequately manage our anticipated future growth. Any growth in our operations will place a significant strain on our administrative, financial and operational resources, and increase demands on our management and on our operational and administrative systems, controls and other resources. We cannot assure you that our existing personnel, systems, procedures or controls will be adequate to support our operations in the future or that we will be able to successfully implement appropriate measures consistent with our growth strategy. As part of this growth, we may have to implement new operational and financial systems, procedures and controls to expand, train and manage our employee base, and maintain close coordination among our staff. We cannot guarantee that we will be able to do so, or that if we are able to do so, we will be able to effectively integrate them into our existing staff and systems.

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If we are unable to manage growth effectively, such as if our sales and marketing efforts exceed our capacity to perform our services and maintain our products or if new employees are unable to achieve performance levels, our business, operating results and financial condition could be materially adversely affected. As with all expanding businesses, the potential exists that growth will occur rapidly. If we are unable to effectively manage this growth, our business and operating results could suffer. Anticipated growth in future operations may place a significant strain on management systems and resources. In addition, the integration of new personnel will continue to result in some disruption to ongoing operations. The ability to effectively manage growth in a rapidly evolving market requires effective planning and management processes. We will need to continue to improve operational, financial and managerial controls, reporting systems and procedures, and will need to continue to expand, train and manage our work force.

A manufacturer's inability to produce our goods on time and to our specifications could result in lost revenue and net losses.

We do not own or operate any manufacturing facilities and therefore depend upon independent third parties for the manufacture of all of our products. Our products are manufactured to our specifications by both domestic and international manufacturers. The inability of a manufacturer to ship orders of our products in a timely manner or to meet our quality standards could cause us to miss the delivery date requirements of our customers for those items, which could result in cancellation of orders, refusal to accept deliveries or a reduction in purchase prices, any of which could have a material adverse effect as our revenues would decrease and we would incur net losses as a result of sales of the product, if any sales could be made. Because of the nature of our client’s business, the dates on which customers need and require shipments of products from us are critical, as personal protection equipment is required for our clients to conduct business, so they are unlikely to wait for replacement or late products. Further, because quality is a leading factor when customers accept or reject goods, any decline in quality by our third-party manufacturers could be detrimental not only to a particular order, but also to our future relationship with that particular customer.

To date, we have only placed small orders of eyewear with our manufacturer and anticipate placing larger orders as a result of our distribution agreement with Honeywell.  While we believe that our manufacturer has the capacity to produce significant orders, if there are problems with these orders, it could result in cancelled orders and negative publicity just as we are trying to introduce our product to the new markets through Honeywell and the initial reactions will be critical to our future success.  

If we need to replace manufacturers, our expenses could increase resulting in smaller profit margins.

We compete with other companies for the production capacity of our manufacturers and import quota capacity. Some of these competitors have greater financial and other resources than we have, and thus may have an advantage in the competition for production and import quota capacity. If we experience a significant increase in demand, or if an existing manufacturer of ours must be replaced, we may have to expand our third-party manufacturing capacity. We cannot assure you that this additional capacity will be available when required on terms that are acceptable to us or similar to existing terms which we have with our manufacturers, either from a production standpoint or a financial standpoint. None of the manufacturers we use produces our products exclusively.

Should we be forced to replace one or more of our manufacturers, particularly a manufacturer that we may rely upon for a substantial portion of its production needs, then we may experience an adverse financial impact, or an adverse operational impact, such as being forced to pay increased costs for such replacement manufacturing or delays upon distribution and delivery of our products to our customers, which could cause us to lose customers or lose revenues because of late shipments.

Our financial performance would be harmed if we suffer disruptions in our ability to fulfill orders.

Our ability to provide effective customer service and efficiently fulfill orders depends, to a large degree, on the efficient and uninterrupted operation of the manufacturing and related distribution centers and management information systems run by third parties and on the timely performance of other third parties such as shipping companies. Any material disruption or slowdown in our manufacturing, order processing or fulfillment systems resulting from strikes or labor disputes, telephone down times, electrical outages, mechanical problems, human error or accidents, fire, natural disasters, adverse weather conditions or comparable events could cause delays in our ability to receive and distribute orders and may cause orders to be lost or to be shipped or delivered late. As a result, customers may cancel orders or refuse to receive goods on account of late shipments that would result in a reduction of net sales and could mean increased administrative and shipping costs. Our success depends in part on our maintaining high quality customer service and any failure to do so could adversely affect our business, financial condition or results of operations.

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Our officer, director and control persons own a controlling interest in our voting stock and investors will not have any voice in our management.

Our officer, director and control persons, in the aggregate, beneficially own or control the votes of approximately 61.8% of our outstanding common stock, including votes of the outstanding class B common stock. As a result, these stockholders, acting together, will have the ability to control substantially all matters submitted to our stockholders for approval, including:

● election of our board of directors;

● removal of any of our directors;

● amendment of our certificate of incorporation or bylaws; and

● adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

As a result of their ownership and positions, our director and executive officers collectively are able to influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, sales of significant amounts of shares held by our director or executive officers, or the prospect of these sales, could adversely affect the market price of our common stock. Our officers and director’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

Risks Relating to Our Common Stock:

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the Over-The-Counter Bulletin Board must be reporting issuers under the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. The lack of resources to prepare and file our reports, including the inability to pay our independent registered public accounting firm, could result in our failure to remain current on our reporting requirements, which could result in our being removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.   In addition, we may be unable to get re-approved for quotation on the OTC Bulletin Board, which may have an adverse material effect on our company.

There has been a limited trading market for our common stock.

It is anticipated that there will be a limited trading market for our Common Stock on the NASD’s Over-the-Counter Bulletin Board for the foreseeable future.  The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies or technologies by using common stock as consideration.

You may have difficulty trading and obtaining quotations for our common stock.

Our common stock is not actively traded, and the bid and asked prices for our common stock on the NASD Over-the-Counter Bulletin Board may fluctuate widely. As a result, investors may find it difficult to dispose of, or to obtain accurate quotations of the price of, our securities. This severely limits the liquidity of the common stock, and would likely reduce the market price of our common stock and hamper our ability to raise additional capital.

Our common stock is not currently traded at high volume, and you may be unable to sell at or near ask prices or at all if you need to sell or liquidate a substantial number of shares at one time.

Our common stock is currently traded, but with very low, if any, volume, based on quotations on the “Over-the-Counter Bulletin Board”, meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small or non-existent.  During the year ended December 31, 2012, trading occurred on only 102 out of 250 possible trading days, with an average of less than 2,600 shares per possible trading day and less than 6,300 shares trades on each day when shares actually traded.  This situation is attributable to a number of factors, including the fact that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.  As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.  We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will be sustained.

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Shareholders should be aware that, according to Commission Release No. 34-29093, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse.  Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.  Our management is aware of the abuses that have occurred historically in the penny stock market.  Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the future volatility of our share price.

The market price of our Common Stock may, and is likely to continue to be, highly volatile and subject to wide fluctuations.

The market price of our Common Stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including:

● dilution caused by our issuance of additional shares of Common Stock and other forms of equity securities, which we expect to make in connection with future capital financings to fund our operations and growth, to attract and retain valuable personnel and in connection with future strategic partnerships with other companies;

● quarterly variations in our revenues and operating expenses;

● changes in the valuation of similarly situated companies, both in our industry and in other industries;

● changes in analysts’ estimates affecting our company, our competitors and/or our industry;

● changes in the accounting methods used in or otherwise affecting our industry;

● additions and departures of key personnel;

● announcements of technological innovations or new products available to the personal protective equipment industry;

● fluctuations in interest rates and the availability of capital in the capital markets; and

● significant sales of our common stock.

These and other factors are largely beyond our control, and the impact of these risks, singly or in the aggregate, may result in material adverse changes to the market price of our Common Stock and/or our results of operations and financial condition.

We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the Board of Directors may consider relevant.

Legislative actions, higher insurance costs and potential new accounting pronouncements may impact our future financial position and results of operations.

There have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and there may potentially be new accounting pronouncements or additional regulatory rulings that will have an impact on our future financial position and results of operations. The Sarbanes-Oxley Act of 2002 and other rule changes as well as proposed legislative initiatives following the Enron bankruptcy are likely to increase general and administrative costs and expenses. In addition, insurers are likely to increase premiums as a result of high claims rates over the past several years, which we expect will increase our premiums for insurance policies. Further, there could be changes in certain accounting rules.  These and other potential changes could materially increase the expenses we report under generally accepted accounting principles, and adversely affect our operating results.

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Efforts to comply with recently enacted changes in securities laws and regulations will increase our costs and require additional management resources.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on their internal controls over financial reporting in their annual reports on Form 10-K. In addition, in the event we are no longer a smaller reporting company, the independent registered public accounting firm auditing our financial statements would be required to attest to the effectiveness of our internal controls over financial reporting. Such attestation requirement by our independent registered public accounting firm would not be applicable to us until the report for the year ended December 31, 2013 at the earliest, if at all.  If we are unable to conclude that we have effective internal controls over financial reporting or if our independent registered public accounting firm is required to, but is unable to provide us with a report as to the effectiveness of our internal controls over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our securities.

Our common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The SEC has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

● that a broker or dealer approve a person's account for transactions in penny stocks; and

● the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

● obtain financial information and investment experience objectives of the person; and

● make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:

● sets forth the basis on which the broker or dealer made the suitability determination; and

● that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

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FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

ITEM 1B – UNRESOLVED STAFF COMMENTS

None.

ITEM 2 – PROPERTIES

We maintain our mailing address at 3501-B N. Ponce de Leon Blvd., #393, St. Augustine, Florida 32084.  Our principal office is located at 3406 Lands End Drive, St. Augustine, Florida 32084, which we sub-lease from our Chief Executive Officer.  Our telephone number is (904) 819-8995 and our fax number is (904) 819-8181. Our current office space consists of approximately 2,000 square feet. The lease runs on a month-to-month basis at a cost of $2,000 per month. We believe that our existing facilities are suitable and adequate to meet our current business requirements. We maintain websites at www.energytele.com and www.energyeyewear.com and the information contained on those websites is not deemed to be a part of this annual report.

ITEM 3 - LEGAL PROCEEDINGS

From time to time, we may 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. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

20

PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock

Our common stock is currently traded on the Over-the-Counter Bulletin Board under the symbol “ENRG.” Prior to February 4, 2011, our common stock was considered a grey market stock that trades from time to time under the symbol “ENRG”.  A stock that is considered a grey market stock means there are no market makers in the stock and that it is not listed, traded or quoted on any stock exchange, the OTCBB or the Pink Sheets. Trades in grey market stocks are reported by broker-dealers to their self-regulatory organization (SRO) and the SRO distributes the trade data to market data vendors and financial websites so investors can track price and volume.

For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.

	Fiscal Year 2012
	High		Low
First Quarter	$	0.77	$	0.20
Second Quarter	$	2.40	$	0.30
Third Quarter	$	0.65	$	0.25
Fourth Quarter	$	1.00	$	0.25

	Fiscal Year 2011
	High		Low
First Quarter	$	0.79	$	0.15
Second Quarter	$	1.01	$	0.51
Third Quarter	$	1.05	$	0.51
Fourth Quarter	$	0.75	$	0.35

On March 19, 2013, the closing sale price of our common stock, as reported by the Over-the-Counter Bulletin Board, was $0.48 per share. On March 19, 2013, there were 143 holders of record of our common stock.  On June 30, 2010, a one-for-five reverse stock split was effective for our common stock. All share prices herein reflect this reverse stock split.

Dividend Policy

We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future.   We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of the Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.

Recent Sales of Unregistered Securities

On December 28, 2012, we issued an aggregate of 52,500 shares of our class A common stock to consultants pursuant to their consulting agreements. The securities were issued in an exempt transaction pursuant to Section 4(2) and/or Regulation D under the Securities Act of 1933, as amended.

On December 28, 2012, we issued 183,334 shares of our class A common stock to our President for services rendered. The securities were issued in an exempt transaction pursuant to Rule 4(2) and/or Regulation D under the Securities Act.

ITEM 6 – SELECTED FINANCIAL DATA

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

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ITEM 7 - 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 its 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 us 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 its assumptions are based upon reasonable data derived from and known about our business and operations and the business and operations of the Company.  No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions.  Factors that could cause differences include, but are not limited to, expected market demand for the Company’s services, 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. 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 a professional model, which is similar to the recreational model, but contains additional safety features and is intended to be marketed to the PPE markets 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 standard tests.

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.

22

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:

● In December 2012, Honeywell Safety Products began officially marketing and accepting orders for its UVEX AcoustiMaxx Stereo Bluetooth eyewear within Europe.  Since that time, we have received purchase orders for an aggregate of several thousand eyewear, which we are in the process of fulfilling;  

●  We have multiple patent applications pending in the United States and with the European Patent Office, and the Company’s patent counsel responds to their comments on regular basis to insure timely actions and filings.  In addition, we have made the necessary filings to allow us to file patent applications in certain European and Asian counties if our pending patent applications are granted by the USPTO; 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.

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.

Year ended December 31, 2012 compared to the year ended December 31, 2011

Revenue, Cost of Sales and Gross Profit

Revenue for the year ended December 31, 2011 was $34,535 as compared to $950 for the year ended December 31, 2011.  Revenue for year ended December 31, 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. We expect to have a significant increase in revenue in 2013 as the eyewear product is being distributed and sold in the United States and Europe.  Planning is underway to sell the eyewear in Australia in 2013. Our cost of sales was $30,248 sales in 2012 netting us a gross profit of $4,287 compared to $Nil since our sales in 2011 were from sample products previously expensed, netting us a gross profit of $950.  Cost of sales relating to product sales include various product introduction costs, such as eyewear that was given away for free to potential vendors and distributors and sales made at a loss or at cost to obtain customer feedback.

Expenses

For the years ended December 31, 2012 and 2011, general and administrative expenses totaled $1,058,720 and $455,113, respectively, representing a year to year increase of $603,607.  The primary increase in our general and administrative expenses was stock based (non-cash) compensation expense of $629,479 for the year ended December 31, 2012 compared to $220,057 for the year ended December 31, 2011, an increase of $409,422.

In addition, included in general and administrative expenses for the years ended December 31, 2012 and 2011 were professional fees totaling $127,787 and $90,301, respectively.  The increase in accounting and legal professional fees of $37,486 resulted from increased accounting and legal fees related to our public filing obligations as well as fees incurred in connection with financing transactions during 2012.  We also incurred patent maintenance, non- recurring engineering costs and prototype development costs in aggregate of $183,006 in 2012 as compared to $20,779 in 2011.   

Other Income and Expenses

During the year ended December 31, 2012, we sold Series A convertible preferred stock that contained certain anti-dilutive provisions.  As such, we are required to record the fair value of these anti-dilutive provisions at the time issuance as a liability and mark to market to each reporting period.  For 2012, we recorded a gain on change in the fair value of these derivative liabilities of $5,130 as compared to $Nil in 2011.

We incurred interest expense of $5,125 and $5,079 for the years ended December 31, 2012 and 2011, respectively.  The reduction is due to lower related party debt obligations resulting in less incurred interest.

Interest income was $316 and $562 for the years ended December 31, 2012 and 2011, respectively. Changes in interest income is a result of lower carrying balances in our interest bearing accounts coupled with interest rate changes paid on those balances from year to year.

23

Net Loss

For the year ended December 31, 2012, we incurred a net loss of $1,055,625 ($0.13 per share of common stock) as a result of the foregoing, compared to a net loss of $459,373 ($0.06 per share of common stock) for the year ended December 31, 2011.

Liquidity and Capital Resources

As of December 31, 2012, we had a working capital of $213,025. For the year ended December 31, 2012, we used $480,276 in cash in operating activities and $1,642 in investing activities. Cash provided by financing activities totaled $559,685, primarily from the issuance of Class A common stock and issuance of Series A convertible preferred stock, net with repayment of shareholder loans of $5,000.  From time to time since our formation in 1993, we have sold shares to investors in private placement transactions.  For the year ended December 31, 2012, we sold an aggregate of 960,000 shares of our Class A common stock for $349,790.  In addition, for the year ended December 31, 2012, we sold an aggregate of 2,150 shares of our Series A convertible preferred stock for $214,895. Our Series A convertible preferred stock certain anti-dilution protection up to the first anniversary of the issuance date.

We expect capital expenditures during the next 12 months for marketing, advertising, inventory, equipment and overhead. We have sufficient funds to conduct our proposed operations for at least the next 12 months.  However, depending on revenues, we may continue to seek additional equity investments.  There can be no assurance that financing, if needed, will be available in amounts or on terms acceptable to us, if at all. During the year ended December 31, 2012, we raised $564,685 from the sale of securities compared with $329,958 for the year ended December 31, 2011.  As we continue to increase operations and generate additional revenue, we believe it is more likely that investors would be willing to fund operations in the short-term, if needed.  

As of December 31, 2012, we had working capital of approximately $213,000.  In March 2013, we received an additional $152,000 from the purchase of additional shares of preferred stock, as discussed below.  We currently use about $21,000 per month for continuing operations, which includes general operating expenses (office lease, utilities, salary and insurance), promotion and marketing (travel, entertainment, meals and website development), prototype development (parts, engineering and testing), and professional services (accounting, legal, professional and state fees and intellectual property fees). We expect that our burn rate will remain relatively consistent for the next twelve months.  During the year ended December 31, 2012, we had approximately $62,000 in non-recurring expenses related to old inventory from prior eyewear models and engineering fees and certifications relating to redesigned eyewear and packaging.  In addition, we spent approximately $28,000 as a deposit on eyewear components, which we anticipate will be recovered during 2013 from the sale of the new eyewear.

We presently do not have any available credit, bank financing or other external sources of liquidity. Due to our 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 or preferred 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.

Preferred Stock Financings

On November 5, 2012, we entered into a securities 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 (“Series A Preferred Stock”) at a price of $100 per share of Series A Preferred Stock for aggregate cash proceeds of $115,000 (the “November Financing”).

On January 9, 2013, but effective December 31, 2012, we entered into a securities purchase agreement with Tidal East Global Relief Fund 80160-0503-RR0001 (“Tidal East”) providing for the sale by us to Tidal East of 999.3 shares of Series A Preferred Stock at a price of $100 per share of Series A Preferred Stock for aggregate cash proceeds of $99,930 (the “December Financing”).

On February 11, 2013, we entered into exchange agreements with Normandia and Robert Kalfayan (“Kalfayan” and together with Normandia and Tidal East, the “Investors”), pursuant to which Normandia and Kalfayan exchanged an aggregate of 79,874 shares of our common stock for an aggregate of 277 shares of Series A Preferred Stock.

On March 11, 2013, we entered into a securities purchase agreement with Normandia providing for the sale by us to Normandia of 1,520 shares of Series A Preferred Stock at a price of $100 per share of Series A Preferred Stock for aggregate cash proceeds of $152,000 (the “February Financing” and together with the November Financing and December Financing, the “Financings”).

Each share of Series A Preferred Stock has a stated value of $100 (the “Stated Value”).  The Investors may convert, at any time, shares of Series A Preferred Stock into the number of shares of our 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”).

24

Upon the occurrence of certain triggering events, the Investors have 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) 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 Investors acquiring Series A Preferred Stock or (2) we make any statement that we intend 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, the Investors have the right to receive, at their 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, the Investors may not convert Series A Preferred Stock if such conversion would result in such Investor beneficially owning in excess of 4.99% of our then issued and outstanding common stock. The Investors 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 Financings, we granted Normandian and Tidal East 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 of such Investor’s Financing or until such Investor no longer holds any of our securities.  In addition, we granted Normandia and Tidal East piggyback registration rights for a period of two years from the closing date of such Investor’s Financing.

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 loans payable as of December 31, 2012 and December 31, 2011:

	December 31, 2012		December 31, 2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		38,566		33,441
	$	52,052	$	51,927

Critical Accounting Policies

Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our results of operations, financial position or liquidity for the periods presented in this report.

The accounting policies identified as critical are as follows:

25

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.

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 (3) and (4) are 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 generally recognized upon shipment.

Cash and Cash Equivalents

We consider financial instruments with an original maturity date of three months or less to be cash equivalents.

Patents

Our patents (U.S. 5,717,479, U.S. 6,012,812, U.S. 6,950,531, U.S. 7,133,532, U.S. 8,243,973 and other international patents) which describe the general means for delivering sound through disposable sound attenuating components, are capitalized at the original cost, if purchased, or at the carrying basis of the transferor if contributed by an entity under common control.  Patent costs, if any, are amortized using the straight-line method over their estimated period of benefit remaining.  We evaluate the recoverability of patents annually taking into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.  Costs of developing patents that are not specifically identifiable, that have indeterminate lives, or that are inherent in the continuation of our business are recognized as an expense when incurred.

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.

We measure the fair value of shares issued as share-based compensation using the stock price observed in the arms-length private placement transaction nearest the measurement date, which was considered to be a more reliably determinable measure 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.

Income Taxes

We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards.  A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.

There are no unrecognized tax benefits at December 31, 2012 and 2011. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.  There are no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the year.  We have determined we have no uncertain tax positions.

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 Class A 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 Class A common stock, such as stock options and warrants (using the “treasury stock” method), unless their effect on net loss per share is antidilutive. Class B common stock is not convertible into our Class A common stock. The effect of computing diluted loss per share is antidilutive and, as such, basic and diluted loss per share is the same.

26

Derivative Financial Instruments

We account for derivative instruments in accordance with ASC 815, “Derivatives and Hedging”, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value.  Accounting for changes in the fair value of derivative instruments depends on whether the derivatives qualify as hedge relationships, and the types of relationships designated are based on the exposures hedged.  Our derivative financial instruments consist of reset provisions related to Series A convertible preferred stock.  These embedded derivatives include certain conversion features and reset provisions.

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 the Company's financial position, results of operations or cash flows.

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

Off-Balance Sheet Arrangements

We do not maintain off-balance sheet arrangements nor do we participate in non-exchange traded contracts requiring fair value accounting treatment.

Inflation

The effect of inflation on our revenue and operating results was not significant.

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ENERGY TELECOM, INC.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Balance sheets as of December 31, 2012 and 2011	F-3
Statements of operations for the years ended December 31, 2012 and 2011	F-4
Statements of changes in stockholders’ equity (deficiency) for two years ended December 31, 2012	F-5
Statements of cash flows for the years ended December 31, 2012 and 2011	F-6
Notes to financial statements	F-7 – F-15

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Energy Telecom, Inc.

We have audited the accompanying balance sheets of Energy Telecom, Inc. (the “Company”) as of December 31, 2012 and 2011 and the related statements of operations, changes in stockholders equity (deficiency) and cash flows for each of the two years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to the above present fairly, in all material respects, the financial position of Energy Telecom, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the two years ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ RBSM LLP

New York, New York

March 22, 2013

F-2

ENERGY TELECOM, INC.
BALANCE SHEETS
DECEMBER 31, 2012 AND 2011
	2012			2011
ASSETS
CURRENT ASSETS
Cash	$	216,479		$	138,712
Accounts receivable, net		20,882			-
Advances to suppliers		33,300			-
Inventory		18,420			-
Total current assets		289,081			138,712
Property and equipment, net		3,507			3,378
Total assets	$	292,588		$	142,090
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	62,570		$	40,481
Stockholder notes payable		13,486			18,486
Total current liabilities		76,056			58,967
Derivative liability		345,875			-
STOCKHOLDERS' (DEFICIT) EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares authorized
Series A Convertible preferred stock, $0.001 par value, 5,790 shares designated, 2,150 and -0- shares issued and outstanding as of December 31, 2012 and 2011, respectively		2			-
Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 8,884,415 and 7,432,748 shares issued and outstanding as of December 31, 2012 and 2011, respectively		888			743
Class B common stock, no par value, 10,000,000 shares authorized, 600,000 and 200,000 shares issued and outstanding as of December 31, 2012 and 2011, respectively		300,000			-
Additional paid in capital		5,532,549			4,989,537
Accumulated deficit		(5,962,782	)		(4,907,157	)
Total stockholders' (deficit) equity		(129,343	)		83,123
Total liabilities and stockholders' (deficit) equity	$	292,588		$	142,090

The accompanying notes are an integral part of these financial statements

F-3

ENERGY TELECOM, INC.
STATEMENTS OF OPERATIONS
	Year ended December 31,
	2012			2011
REVENUE:
Sales	$	31,503		$	950
Royalties		3,032			-
Total revenue		34,535			950
COST OF GOODS SOLD		30,248			-
Gross profit		4,287			950
OPERATING EXPENSES:
Selling, general and administrative expenses		1,058,720			455,113
Depreciation		1,513			693
Total operating expenses:		1,060,233			455,806
Loss from operations		(1,055,946	)		(454,856	)
OTHER INCOME (EXPENSE):
Interest income		316			562
Gain on change in fair value of derivative liabilities		5,130			-
Interest expense		(5,125	)		(5,079	)
Total other income (expense):		321			(4,517	)
Net loss before provision for income taxes		(1,055,625	)		(459,373	)
PROVISION FOR INCOME TAXES
Income tax (benefit)		-			-
NET LOSS	$	(1,055,625	)	$	(459,373	)
Net loss per common share, basic and diluted	$	(0.13	)	$	(0.06	)
Weighted average number of common shares outstanding, basic and diluted		8,359,469			7,109,592

The accompanying notes are an integral part of these financial statements

F-4

ENERGY TELECOM, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
TWO YEARS ENDED DECEMBER 31, 2012
																				Total
														Additional						Stockholders'
	Series A Convertible Preferred Stock				Class A Common Stock					Class B Common Stock				Paid in			Accumulated			Equity
	Shares		Amount		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		-		-		175,000			17		-		-		115,402			-			115,419
Common stock issued as officer compensation		-		-		316,667			32		-		-		214,028			-			214,060
Class B common stock issued as officer compensation		-		-		-			-		400,000		300,000		-			-			300,000
Sale of Series A Convertible Preferred stock		2,150		2		-			-		-		-		214,893			-			214,895
Reclassify initial fair value of anti-dilution provisions of the Series A Convertible Preferred stock		-		-		-			-		-		-		(351,005	)		-			(351,005	)
Net loss		-		-		-			-		-		-		-			(1,055,625	)		(1,055,625	)
Balance, December 31, 2012		2,150	$	2		8,884,415		$	888		600,000	$	300,000	$	5,532,549		$	(5,962,782	)	$	(129,343	)

The accompanying notes are an integral part of these financial statements

F-5

ENERGY TELECOM, INC.
STATEMENTS OF CASH FLOWS
	Year ended December 31,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,055,625	)	$	(459,373	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		1,513			693
Common stock issued for services rendered		115,419			68,557
Common stock issued or issuable for officer compensation		514,060			151,500
Change in fair value of derivative liability		(5,130	)		-
Changes in operating assets and liabilities:
Increase in accounts receivable		(20,882	)		-
Increase in inventory		(18,420	)		-
Increase in advances to suppliers		(33,300	)		-
Increase (decrease) in accounts payable and accrued liabilities		22,089			(11,195	)
Net cash used in operating activities		(480,276	)		(249,818	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,642	)		(4,071	)
Net cash used in investing activities		(1,642	)		(4,071	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		349,790			329,958
Proceeds from sale of Series A convertible preferred stock		214,895			-
Repurchase and cancellation of common stock		-			(5,000	)
Repayments of shareholder loans		(5,000	)		(20,000	)
Net cash provided by financing activities		559,685			304,958
Net increase in cash		77,767			51,069
Cash beginning of period		138,712			87,643
Cash end of period	$	216,479		$	138,712
Supplemental disclosures of cash flow information:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

The accompanying notes are an integral part of these financial statements

F-6

ENERGY TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Energy Telecom, Inc. (the "Company") was incorporated under the laws of the State of Florida as The Energy Corp.  On April 24, 2004, the Company changed its name to Energy Telecom, Inc. The Company is an intellectual property exploitation company planning to provide patent protection to its manufacturing business partners so the Company 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 ("OTCBB") under the symbol “ENRG.OB”.  

During 2011, the Company transitioned from a development stage enterprise to an operating company.  The Company’s eyewear is being sold in the United States and Europe, and the Company is planning for sales to be made in Australia during 2013.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for annual financial statements and with Form 10-K and article 8 of the Regulation S-X of the United States Securities and Exchange Commission (“SEC”).  

NOTE 2 - LIQUIDITY

The Company incurred various non-recurring expenses in 2012 in connection with non-recurring engineering costs and patent expenses.  As of December 31, 2012, the Company had working capital of approximately $213,000.  In March 2013, the Company received an additional $152,000 from the purchase of additional shares of preferred stock (See Note 14- Subsequent Events).  As a result, the Company has sufficient capital resources to meet its projected cash flow requirements to conduct its proposed operations for at least the next 12 months.  However, there can be no assurance that additional non-recurring expenses may be incurred during 2013 or that the Company will be successful in completing its business development plan.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the 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.

Concentration of Credit Risks

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.

Patents

The Company’s patents (U.S. 5,717,479, U.S. 6,012,812, U.S. 6,950,531, U.S. 7,133,532, 8,243,973 and other international patents) which describe the general means for delivering sound through disposable sound attenuating components, are capitalized at the original cost, if purchased, or at the carrying basis of the transferor if contributed by an entity under common control.  Patent costs are amortized using the straight-line method over their estimated period of benefit remaining.  The Company evaluates the recoverability of patents annually taking into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.  Costs of developing patents that are not specifically identifiable, that have indeterminate lives, or that are inherent in the continuation of the Company’s business are recognized as an expense when incurred.

F-7

ENERGY TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

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 (3) and (4) are 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 generally recognized upon shipment.

Revenue recognized in the year ended December 31, 2012 relates to sales of product of $31,503 and royalties earned of $3,032.

Revenue recognized in the year ended December 31, 2011 included to sales of product which had previously been expensed and used as sample units of $950; therefore, there is no cost of goods associated with these sales.

Accounts Receivable

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. At December 31, 2012 and 2011, the Company has deemed that no allowance for doubtful accounts was necessary.

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

The Company follows the fair value recognition provisions of Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) using the modified-prospective transition method. 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 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.

ASC 718-10 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the Company’s pro forma information required under ASC 718- 10 for the periods prior to fiscal 2006, the Company accounted for forfeitures as they occurred.

Research and Development

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”).  Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.  The Company did not incur research and development expenses for the years ended December 31, 2012 and 2011.

F-8

ENERGY TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

Derivative Financial Instruments

The Company accounts for derivative instruments in accordance with ASC 815, “Derivatives and Hedging”, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value.  Accounting for changes in the fair value of derivative instruments depends on whether the derivatives qualify as hedge relationships, and the types of relationships designated are based on the exposures hedged.  The Company's derivative financial instruments consist of reset provisions related to Series A Convertible preferred stock.  These embedded derivatives include certain conversion features and reset provisions. During the year ended December 31, 2012, upon issuance, therefore, the initial determined fair values of the reset provisions of $351,005 were reclassified from equity to liability.  

Income Taxes

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards.  A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.

There are no unrecognized tax benefits at December 31, 2012 and 20101 The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.  There are no accrued interests or penalties associated with any unrecognized tax benefits, nor were any interest expense recognized during the year.  The Company has determined it has no uncertain tax positions at December 31, 2012. Currently, the Company’s federal and state income tax returns for the years 2009-2011 remain open to inspection by the IRS and various state taxing authorities.  The Company believes that it has appropriate support for income tax positions taken in its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter.

Inventories

Inventories are valued at the lower of cost or market, using the first-in first-out cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analysis and assumptions including, but not limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded to cost of goods sold.

Net Loss Per Common Share

The Company computes earnings per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Basic loss per share is computed by dividing the net loss attributable to the common stockholders (the numerator) by the weighted average number of shares of Class A 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 Class A common stock, such as stock options and warrants (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive.  Class B common stock is not convertible into the Company’s Class A common stock.  The effect of computing diluted loss per share is anti-dilutive and, as such, basic and diluted loss per share is the same for the years ended December 31, 2012 and 2011.

F-9

ENERGY TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

Segment information

The Company has one operating segment.

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.

NOTE 4 — FINANCIAL INSTRUMENTS

Fair Value Measurements

The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.  ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure.

ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.

Level 2 -  Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the asset or liability.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

For the year ended December 31, 2012, the Company has determined that the only asset or liability measured at fair value is the derivative instrument related to an anti-dilution provision contained in Series A Convertible preferred stock which was issued during the year ended December 31, 2012 and valued using level 3 inputs.  The carrying amounts of the Company's other assets and liabilities approximate fair value as of December 31, 2012 and 2011.

NOTE 5 — DERIVATIVE LIABILITY

The Company identified embedded derivatives related to the Series A Convertible preferred stock issued during year ended December 31, 2012.  These embedded derivatives included certain reset features.  The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Series A Convertible preferred stock and to adjust the fair value as of each subsequent balance sheet date.  At the inception of the Series A Convertible preferred stock, the Company determined a fair value of $351,005 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial Lattice Model based on the following assumptions:  

Dividend yield:		-0-	%
Volatility	198.12%to 201.31 %
Risk free rate:	0.16% to 0.19 %

F-10

The initial fair value of the embedded debt derivative of $351,005 was reclassified from equity to liability at the date of inception.

The fair value of the described embedded derivative of $345,875 at December 31, 2012 was determined using the Binomial Lattice Model with the following assumptions:

Dividend yield:	-0-	%
Volatility	201.31	%
Risk free rate:	0.16	%

At December 31, 2012, the Company adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating gain of $5,130 for the year ended December 31, 2012.

NOTE 6 — STOCKHOLDER NOTES PAYABLE

The Company has received financing from the Company’s founder, Chief Executive Officer, President and majority stockholder (the “officer/director”). No formal repayment terms or arrangements exist. The stockholder loans bear interest of 10% per annum, compounding annually and are due on demand.

The following table summarizes stockholder loans payable as of December 31, 2012 and 2011:

	2012		2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		38,566		33,441
	$	52,052	$	51,927

The Company recognized interest expense associated with the loans of $5,125 and $5,079 for the years ended December 31, 2012 and 2011, respectively.

NOTE 7 — STOCKHOLDERS’ EQUITY

Preferred stock

During the year ended December 31, 2012, the Company designated 5,790 shares of authorized preferred stock as Series A Convertible Preferred Stock.

Each share of Series A Convertible Preferred Stock, par value of $0.001, has stated value of $100 per share, is nonvoting and is convertible into the Company's Class A common stock determined by dividing by the conversion price. The initial conversion price is $0.3468 subject to certain anti-dilutive (reset) provisions until the first anniversary of the issuance date.

Upon the occurrence of certain triggering events, the holder of the Series A Convertible Preferred Stock 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.

F-11

ENERGY TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

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, the holder 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.

During the year ended December 31, 2012, the Company sold an aggregate of 2,150 shares of Series A Convertible Preferred Stock for net proceeds of $214,895.

Recapitalizations

On June 2, 2010, the Company filed amended articles of incorporation with the Secretary of the State of Florida to effect a 1:5 reverse split of its common stock, which amendment was effective as of June 28, 2010. All share and per share amounts contained in these audited financial statements have been adjusted to reflect the effects of the aforementioned stock splits in accordance with ASC 260.

As of December 31, 2012 and 2011, 8,884,415 and 7,432,748 shares of Class A common stock, respectively, and 600,000 and 200,000 shares of Class B common stock, respectively were issued and outstanding.

Private placements

During the year ended December 31, 2012 and 2011 the Company completed private placements of 960,000 and 910,732 shares of Class A common stock and has received proceeds totaling $349,790 and $329,958, respectively.

Shares Repurchased

During the year ended December 31, 2011, the Company re-acquired and canceled 667 shares of its Class A common stock for $5,000.

Shares Issued as Compensation

During the year ended December 31, 2012 and 2011, the Company issued 316,667 and 150,000 shares of Class A common stock as officer compensation with a fair value totaling $214,060 and $151,500, respectively.  In addition, during the year ended December 31, 2012, the Company issued 400,000 shares of Class B common stock with a fair value of $300,000.

Shares issued to consultants

During the year ended December 31, 2012 and 2011, the Company issued 175,000 and 90,444 shares of Class A common stock to consultants in exchange for services rendered with a fair value totaling $115,419 and $68,557, respectively.

NOTE 8 – SHARE BASED COMPENSATION

2012 Incentive Stock Option Plan

On December 21, 2012, the Company’s shareholders approved the 2012 Incentive Stock Option Plan (the “2012 Plan”). The 2012 Plan provides for the issuance of options and stock grants up to 4,000,000 shares of the Company’s common stock to officers, directors, employees and consultants of the Company. Under the terms of the 2012 Plan, the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutory options. The Board of Directors of the Company determines the exercise price, vesting and expiration period of the grants under the 2012 Plan. However, the Company shall not grant an Incentive Stock Option under the Plan to any employee if such grant would result in such employee holding the right to exercise for the first time in any one calendar year, under all Incentive Stock Options granted under the Plan or any other plan maintained by the Company, with respect to shares of Stock having an aggregate fair market value, determined as of the date of the Option is granted, in excess of $100,000. The exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder.

F-12

ENERGY TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

The fair value of the common stock is determined based on quoted market price or in absence of such quoted market price, by the Board of Directors in good faith. Additionally, the vesting period of the grants under the 2012 Plan shall be immediate unless the Board determine and no Incentive Stock Option granted to a 10% holder shall be exercisable after five year, otherwise the and expiration period not more than ten years. The Company reserved 4,000,000 shares of its common stock for future issuance under the terms of the 2012 Plan.

As of December 31, 2012, there were no issued or outstanding options.

NOTE 9 — 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 10 — 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 year ended December 31, 2012 and 2011 was $28,500 and $26,000, respectively.

As discussed in Note 6, 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.

F-13

ENERGY TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

NOTE 11 — CONCENTRATIONS

The Company’s revenues earned from sale of products and services for the year ended December 31, 2012 and 2011 included an aggregate of 100% from one customer of the Company's total revenues.  

NOTE 12 — 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 13 — INCOME TAXES

At December 31, 2012, the Company had accumulated taxable losses of approximately $1,885,000 available to offset future taxable income, if any, which begin to expire in 2026.

The actual provision for income taxes differs from the amount computed by applying the federal statutory rate to losses before income taxes at December 31, 2012 and 2011, as follows:

	2012			2011
Federal income taxes at statutory rate		(34	)%		(34	)%
State income tax, net of federal benefit		(3.6	)		(3.6	)
Permanent differences		22.4			22.4
Valuation allowance		15.2%			15.2%

The components of the net deferred tax asset (liability) at December 31, 2012 and 2011 are as follows:

	2012			2011
Net operating losses	$	426,000		$	524,000
Valuation allowance		(426,000	)		(524,000	)
Net deferred tax assets	$	-		$	-

The Company evaluates a variety of factors in determining the amount of the deferred income taxes to be recognized, including the Company’s earnings history. As of December 31, 2012 and 2011, the Company has fully reserved the value of its deferred tax assets as it cannot determine that the ultimate realization of those assets is more likely than not.

NOTE 14 — SUBSEQUENT EVENTS

Class A common stock:

On January 30, 2013, the Company issued an aggregate of 15,000 shares of its Class A common stock to consultants for services rendered valued at $7,500.

On March 6, 2013, the Company issued an aggregate of 15,000 shares of its Class A common stock to consultants for services rendered valued at $7,500.

F-14

ENERGY TELECOM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

Series A Convertible Preferred Stock:

On February 11, 2013, the Company entered into exchange agreements with investors pursuant to which the investors exchanged an aggregate of 79,874 shares of the Company’s Class A common stock for an aggregate of 277 shares of Series A Convertible Preferred Stock.

On March 11, 2013, the Company entered into a securities purchase agreement with an investor providing for the sale 1,520 shares of Series A Convertible Preferred Stock at a price of $100 per share for aggregate cash proceeds of $152,000.

F-15

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

None.

ITEM 9A – 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 Exchange Act. 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 management’s evaluation, our chief executive officer and chief financial officer concluded that, as a result of the material weaknesses described below, as of December 31, 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 clerk, 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.

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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 December 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

(c) Management’s report on internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of December 31, 2012 for the reasons discussed above.

This annual report does not include an attestation report by RBSM LLP, our independent registered public accounting firm regarding internal control over financial reporting.  As a smaller reporting company, our management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.

ITEM 9B – OTHER INFORMATION

None.

29

PART III

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The names of our sole director and executive officer and his age, titles, and biography as of December 31, 2012 are set forth below:

NAME	AGE	OFFICES HELD
Thomas Rickards	65	Chief Executive Officer and Director

Directors are elected annually and hold office until the next annual meeting of the stockholders of the Company and until their successors are elected. Officers are elected annually and serve at the discretion of the Board of Directors. There is no family relationship between any of our executive officers or directors.

Thomas Rickards has been our Chief Executive Officer and a member of the Board of Directors since founding Energy Telecom in 1993. Mr. Rickards has more than twenty-five years of experience in the research, development, and exploitation of state-of-the-art manufacturing and technology-related intellectual property. Mr. Rickards was educated at Mercer University in Macon, GA, and after managing the physical testing section of Pittsburgh Testing Laboratory in Miami, Florida for ten years, independently applied his engineering experience in hundreds of major manufacturing plants around the world.  Mr. Rickards has traveled worldwide, designing and implementing several types of process control equipment/systems.

Among his numerous credits, Mr. Rickards is the original designer of several high speed, intelligent continuous-web control systems, and, industrial information transfer systems. Mr. Rickards is the inventor of record on numerous patents in the United States and other countries. Mr. Rickards is a member of the GAVI Alliance, a global health alliance, a member of the Chief Executive Officer group, and a member of the Chairmen and Chairwomen of the Board group. Mr. Rickards was selected to serve as a director due to his deep familiarity with our business, his history as the founder of our company and developer of our patents and his extensive entrepreneurial background.

Board Committees and Independence

We are not required to have any independent members of the Board of Directors. The board of directors has determined that (i) Mr. Rickards has a relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and is not an “independent director” as defined in the Marketplace Rules of The NASDAQ Stock Market.  As we do not have any board committees, the board as a whole carries out the functions of audit, nominating and compensation committees, and such “independent director” determination has been made pursuant to the committee independence standards.

Involvement in Certain Legal Proceedings

Our Directors and Executive Officers have not been involved in any of the following events during the past ten years:

1.	any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;

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4.	being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
5.	being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
6.	being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Section 16(a) Beneficial Owner Reporting Compliance

Since we are governed under Section 15(d) of the Exchange Act, we are not required to file reports of executive officers and directors and persons who own more than 10% of a registered class of our equity securities pursuant to Section 16(a) of the Exchange Act.

Code of Business Conduct and Ethics/Business Conduct Policy

We intend to adopt a Code of Business Conduct and Ethics in the future when we have additional officers, directors and/or employees that will apply to all of our directors, officers, employees and consultants.

ITEM 11 - EXECUTIVE COMPENSATION

Summary Compensation Table

The following table provides certain summary information concerning compensation awarded to, earned by or paid to our Chief Executive Officer and the highest paid executive officer whose total annual salary and bonus exceeded $100,000 for fiscal years 2012 and 2011.

Name &  Principal Position	Year	Salary ($)		Bonus ($)	Stock Awards ($)			Option Awards ($)	Non-Equity Incentive Plan Compensation  ($)		Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)	All Other Compensation ($)			Total ($)
Thomas Rickards, CEO	2012	$	36,000	--	$	514,060	(a)	--		--	--	$	7,200	(c)	$	557,260
	2011	$	36,000	--	$	151,500	(b)	--		--	--	$	7,200	(c)	$	194,700

(a)  Pursuant to the employment agreement, Mr. Rickards received an aggregate of 316,667 shares of the Company’s Class A common stock and 400,000 shares of the Company’s Class B common stock

(b)  Pursuant to the employment agreement, Mr. Rickards received an aggregate of 150,000 shares of the Company's Class A common stock.

(c)  Mr. Rickards received an automobile allowance of $7,200 ($600 per month) for business use of his personal automobile.

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Option/SAR Grants in Fiscal Year Ended December 31, 2012

None.

Outstanding Equity Awards at Fiscal Year-End Table

None.

Equity Compensation Plan Information

On December 21, 2012, our shareholders approved the 2012 Incentive Stock Option Plan (the “2012 Plan”). The 2012 Plan provides for the issuance of options and stock grants up to 4,000,000 shares of our common stock to officers, directors, employees and consultants. Under the terms of the 2012 Plan, we may issue Incentive Stock Options as defined by the Internal Revenue Code to our employees only and nonstatutory options. Our Board of Directors determines the exercise price, vesting and expiration period of the grants under the 2012 Plan. However, we shall not grant an Incentive Stock Option under the Plan to any employee if such grant would result in such employee holding the right to exercise for the first time in any one calendar year, under all Incentive Stock Options granted under the Plan or any other plan we maintain, with respect to shares of common stock having an aggregate fair market value, determined as of the date of the Option is granted, in excess of $100,000. The exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder.

Plan category	Number of securities to be issued upon exercise of outstanding options (a)		Weighted- average exercise price of outstanding options (b)		Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		-	$	-		3,674,166
Equity compensation plans not approved by security holders		-		-		-
Total		-	$	-		3,674,166

Employment Agreements

On June 1, 2012, we 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.

Director Compensation

None.

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ITEM 12- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of our common stock as of March 19, 2013:

● by each person who is known by us to beneficially own more than 5% of our common stock;

● by each of our officers and directors; and

● by all of our officers and directors as a group.

NAME AND ADDRESS OF OWNER (1)	TITLE OF CLASS	NUMBER OF SHARES OWNED (2)			PERCENTAGE OF  CLASS (3)
Thomas Rickards	Class A Common Stock		2,626,805	(4)		29.73	%
All Officers and Directors As a Group (1 person)	Class A Common Stock		2,626,805	(4)		29.73	%
George Bickerstaff (5)	Class A Common Stock		540,657			6.12	%
Thomas Rickards	Class B Common Stock		600,000			100	%

(1) Unless otherwise noted, the mailing address of each beneficial owner is 3501-B N. Ponce de Leon Blvd., #393, St. Augustine, Florida 32084.

(2) Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 19, 2013 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.

(3) Percentage based upon 8,834,541 shares of class A common stock and 600,000 shares of class B common stock issued and outstanding as of March 19, 2013.

(4) Does not include the shares of class B common stock, which are entitled to 10 votes per share.

(5) Mailing address is c/o CRT Investment Banking LLC, 262 Harbor Drive, 3rd Floor, Stamford, Connecticut 06902.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Other than as disclosed below, during the last two fiscal years, there have been no transactions, or proposed transactions, which have materially affected or will materially affect us in which any director, executive officer or beneficial holder of more than 5% of the outstanding common or preferred stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. We have no policy regarding entering into transactions with affiliated parties.

We have an operating lease agreement for office space with our Chief Executive Officer and sole director who has agreed to sublet space to us for a fixed fee on a month-to-month basis, which was $1,750 a month through July 2011, $2,750 a month from August 2011 through June 2012 and $2,000 per month from July 1, 2012. Total rent expense for the years ended December 31, 2012 and 2011 was $28,500 and $26,000, respectively.

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We have received financing from Thomas Rickards. The stockholder notes bear interest of 10% per annum, compounding annually and are due on demand.

The following table summarizes stockholder loans payable as of December 31, 2012 and 2011:

	2012		2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		38,566		33,441
	$	52,052	$	51,927

We recognized interest expense associated with the loans of $5,125 and $5,079 for the years ended December 31, 2012 and 2011, respectively.

ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees. The aggregate fees billed by our independent auditors, for professional services rendered for the audit of our annual financial statements for the years ended December 31, 2012 and 2011, and for the reviews of the financial statements included in our Quarterly Reports on Form 10-Q during the fiscal years were $43,046 and $63,075, respectively.

Audit Related Fees. We incurred fees to our independent auditors of $-0- for audit related fees during the fiscal years ended December 31, 2012 and 2011.  

Tax and Other Fees. We incurred fees to our independent auditors of $-0- for tax and fees during the fiscal years ended December 31, 2012 and 2011.  

The Board of Directors has considered whether the provision of non-audit services is compatible with maintaining the principal accountant's independence.

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PART IV

ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibits:

3.01	Amended and Restated Articles of Incorporation, filed as an exhibit to the Registration Statement on Form S-1/A, filed with the Securities and Exchange Commission (“Commission”) on July 23, 2010 and incorporated herein by reference.
3.02	Bylaws, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on June 8, 2010 and incorporated herein by reference.
3.03	Certificate of Designation, Rights and Preferences of the Series A Convertible Preferred Stock, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on November 9, 2012 and incorporated herein by reference.
10.01	Employment Agreement, dated as of May 1, 2011, by and between Energy Telecom, Inc. and Thomas Rickards, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on May 4, 2011 and incorporated herein by reference.
10.02	Distributor Agreement, dated January 27, 2012 and effective as of February 21, 2012, by and between Energy Telecom, Inc. and Honeywell International Inc., filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on February 27, 2012 and incorporated herein by reference.
10.03	Employment Agreement, effective as of June 1, 2012, by and between Energy Telecom, Inc. and Thomas Rickards, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on June 1, 2012 and incorporated herein by reference.
10.04	Form of Securities Purchase Agreement, dated as of November 5, 2012, by and between Energy Telecom Inc. and Normandia Capital, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on November 9, 2012 and incorporated herein by reference.
10.05	Form of Securities Purchase Agreement, dated as of January 9, 2013 but effective as of December 31, 2012, by and between Energy Telecom Inc. and Tidal East Global Relief Fund 80160-0503-RR0001.
10.06	Form of Exchange Agreement, dated as of February 11, 2013, by and between Energy Telecom Inc. and Normandia Capital.

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10.07	Form of Exchange Agreement, dated as of February 11, 2013, by and between Energy Telecom Inc. and Robert Kalfayan.
10.08	Form of Securities Purchase Agreement, dated as of March 11, 2013, by and between Energy Telecom Inc. and Normandia Capital.
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.

36

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ENERGY TELECOM, INC.

Date:  March 22, 2013	By:/s/ THOMAS RICKARDS
	Thomas Rickards
	Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Position	Date
/s/ THOMAS RICKARDS Thomas Rickards	Director	March 22, 2013

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EX-10.05

Exhibit 10.05

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of January 9, 2013 but effective as of December 31, 2012, by and between ENERGY TELECOM, INC., a Florida corporation, with headquarters located at 3501-B N. Ponce de Leon Blvd., #393, St. Augustine, Florida 32084 (the "Company"), and Tidal East Global Relief Fund 80160-0503-RR0001, a Canadian corporation with a mailing address of c/o Gracin & Marlow, LLP, 405 Lexington Avenue, 26th Floor, New York, New York 10174 (the "Buyer").

WHEREAS:

A.           The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Regulation S (“Regulation S”), as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the under the Securities Act of 1933, as amended (the “1933 Act”).

B.           The Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, 999.3 shares of series A convertible preferred stock (the “Preferred Shares”) pursuant to the Certificate of Designation, Rights and Preferences of the Series A Convertible Preferred Stock, in the form attached hereto as Exhibit A (the “Certificate of Designation”), which Preferred Shares are convertible into shares of the Company’s class A Common Stock (the “Common Stock” and, as converted, the “Conversion Shares”, and together with the Common Stock and Preferred Shares, the “Securities”).

NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

1.           PURCHASE AND SALE OF PREFERRED SHARES.

  (a)              Purchase of Preferred Shares.

(i)           Preferred Shares.Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to Buyer, and Buyer, shall purchase from the Company on the Closing Date (as defined below), the Preferred Shares (the "Closing").

(ii)           Closing. The date and time of the Closing (the "Closing Date") shall be 10:00 a.m., New York City time, on the date hereof after notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below, at the offices of Gracin & Marlow, LLP, Chrysler Building, 405 Lexington Avenue, 26th Floor, New York, New York 10174.

(iii)           Purchase Price. The aggregate purchase price for the Preferred Shares to be purchased by the Buyer at the Closing (the "Purchase Price") shall be $99,930. The purchase price per Preferred Share is $100.

  (b)             Form of Payment. On the Closing Date, (i) Buyer shall pay the Purchase Price to the Company for the Preferred Shares to be issued and sold to Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company's written wire instructions and (ii) the Company shall deliver to Buyer the Preferred Shares which such Buyer is purchasing, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

2.           BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants that:

  (a)             Organization; Authority. Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance by Buyer of the transactions contemplated by this Agreement has been duly authorized by all necessary action on the part of such Buyer. This Agreement has been duly executed by Buyer, and when delivered by Buyer in accordance with the terms hereof, will constitute the valid and legally binding obligation of Buyer, enforceable against it in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

  (b)             No Conflicts. The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Buyer to perform its obligations hereunder.

  (c)             Non-U.S. Buyer. Buyer is outside the United States when receiving and executing this Agreement and the Buyer is not a U.S. Person as defined in Rule 902 of Regulation S.

  (d)             No Public Sale or Distribution. Such Buyer (i) is acquiring the Preferred Shares and (ii) upon conversion of the Preferred Shares, will acquire the Conversion Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws.   The Buyer has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons.

  (e)             Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.

  (f)             Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Buyer.  Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

  (g)             No Governmental Review.  Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

  (h)             Transfer or Resale. Such Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel to such Buyer, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration (it being acknowledged that an opinion issued by Gracin & Marlow, LLP shall be acceptable to the Company), or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined below) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

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  (i)              Certain Trading Activities. Such Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving the Company’s securities) during the period commencing as of the time that such Buyer was first contacted regarding the specific investment in the Company contemplated by this Agreement and ending immediately prior to the execution of this Agreement by such Buyer (it being understood and agreed that for all purposes of this Agreement, and, without implication that the contrary would otherwise be true, that neither transactions nor purchases nor sales shall include the location and/or reservation of borrowable shares of Common Stock). “Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

  (j)              Experience of Such Buyer. Such Buyer, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  Such Buyer is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

  (k)             General Solicitation.  Such Buyer is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

  (l)              No Directed Selling Efforts.  The Buyer has not acquired the Securities as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of the Securities; provided, however, that the Buyer may sell or otherwise dispose of the Securities pursuant to registration thereof under the 1933 Act and any applicable state and provincial securities laws or under an exemption from such registration requirements.

  (m)             No Plan or Scheme.  The Buyer acknowledges that the statutory and regulatory basis for the exemption from U.S. registration requirements claimed for the offer of the Preferred Shares, although in technical compliance with Regulation S, would not be available if the offering is part of a plan or scheme to evade the registration provisions of the 1933 Act or any applicable state or provincial securities laws.

  (n)             Observance of Local Laws.  To the best of Buyer’s knowledge, the Buyer is in compliance with the laws of its jurisdiction in connection with any invitation to subscribe for the Preferred Shares or any use of this Agreement, including: (a) the legal requirements within its jurisdiction for the purchase of the Preferred Shares; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities.  Such Buyer’s subscription and payment for, and its continued beneficial ownership of the Securities, will not violate any applicable securities or other laws of the Buyer’s jurisdiction.

  The Company acknowledges and agrees that Buyer does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 2.

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3.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Buyer that, as of the date hereof and as of the Closing Date (which representations and warranties shall be deemed to apply, where appropriate, to each Subsidiary (as defined below) of the Company):

  (a)             Organization. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Florida, with corporate power and authority to own or lease its properties and conduct its business as described in its Annual Report on Form 10-K for the year ended December 31, 2011 (the "Annual Report"). The Company has no significant subsidiaries (as such term is defined in Rule 1-02 of Regulation S-X promulgated by the SEC) other than as set forth in the Annual Report and otherwise has no direct or indirect subsidiaries. The Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, except where the failure to be so qualified would not reasonably be expected to result in any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined below) (collectively a "Material Adverse Effect").

  (b)            Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "Transaction Documents") and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Preferred Shares, and the reservation for issuance and the issuance of the shares issuable upon conversion of the Preferred Shares have been duly authorized by the Company's Board of Directors, and no further filing, consent, or authorization is required by the Company's Board of Directors or its stockholders. This Agreement and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

  (c)             Issuance of Securities. The outstanding shares of Common Stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; the Securities to be issued and sold by the Company have been duly authorized and, when issued and paid for as contemplated by the terms of the Transaction Documents, will be free from all taxes, liens and charges with respect to the issue thereof, validly issued, fully paid and non-assessable, and no preemptive rights of stockholders exist with respect to any of the Securities or the issue and sale thereof. As of the Closing, a number of shares of Common Stock shall have been duly authorized and reserved for issuance which equals or exceeds the maximum number of shares of common stock issuable upon conversion of the Preferred Shares.  The offering or sale of the Securities as contemplated by this Agreement does not give rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock. Upon issuance or conversion in accordance with the Preferred Shares, the shares to be issued will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. There are no securities or instruments issued by the Company containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities

  (d)             Equity Capitalization.  As of the date hereof, the authorized capital stock of the Company consists of (i) 200,000,000 shares of Class A Common Stock, of which, 8,884,415 are issued and outstanding, (ii) 10,000,000 shares of Class B Common Stock, of which, 600,000 are issued and outstanding, and (ii) 10,000,000 shares of preferred stock, of which 5,790 shares have been designated as Preferred Shares and 1,150 Preferred Shares are issued and outstanding.

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  (e)              Disclosure.

 (i)          The Company confirms that neither it nor any other person acting on its behalf has provided the Buyer’s agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The Company understands and confirms that Buyer will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to Buyer regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company during the twelve (12) months preceding the date hereof did not at the time of release contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make such statements therein, in the light of the circumstances in which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or its business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

 (ii)         The Common Stock of the Company is registered pursuant to Section 15 of the 1934 Act.  During the one year period preceding the date of this Agreement, the Company has timely filed all reports, schedules, forms, statements and other documents that a company with securities registered under Section 12 of the 1934 Act would be required to file.  At the times of their respective filing, all such reports, schedules, forms, statements and other documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission promulgated thereunder.  At the times of their respective filings, such reports, schedules, forms, statements and other documents did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

  (f)              Offering Materials. The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection with the offering and sale of the Securities. The Company has satisfied or will satisfy all requirements of the federal and state securities laws and, except for a Form 8-K filing, the issuance of the Preferred Shares does not require any filing with the Securities and Exchange Commission or any state regulators.

  (g)            Financial Statements. The consolidated financial statements of the Company, together with related notes and schedules as set forth or incorporated by reference in the Annual Report, present fairly in all material respects the financial position and the results of operations and cash flows of the Company, at the indicated dates and for the indicated periods. Such consolidated financial statements and related schedules have been prepared in accordance with United States generally accepted principles of accounting ("GAAP"), consistently applied throughout the periods involved, except as disclosed therein, and all adjustments necessary for a fair presentation of results for such periods have been made and comply as to form in all material respects with applicable accounting requirements and the rules of the SEC as applicable to companies with securities registered under the 1934 Act. The summary and selected consolidated financial and statistical data included or incorporated by reference in the Annual Report present fairly in all material respects the information shown therein, at the indicated dates and for the indicated periods, and such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company. The Company does not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations or any "variable interest entities" within the meaning of Financial Accounting Standards Board Interpretation No. 46), not disclosed in the Annual Report. All filings of the Company made with the SEC complied in all material respects with the requirements of the 1934 Act and none of such filings contain an untrue statements of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein in light of the circumstances under which they were made, not misleading.

  (h)             Accountants. RBSM LLP, who have rendered an opinion on the financial statements filed with the Securities and Exchange Commission (“SEC”) as part of, or incorporated by reference in, the Annual Report is, to the Company’s knowledge, an independent registered public accounting firm with respect to the Company within the meaning of the 1933 Act and the applicable Rules and Regulations and the Public Company Accounting Oversight Board (United States) (the "PCAOB").

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  (i)              Weaknesses or Changes in Internal Accounting Controls. Except as disclosed in the Annual Report or any quarterly reports on Form 10-Q or Current Reports on Form 8-K filed since the filing of the Annual Report with the SEC (the “SEC Filings”), the Company is not aware of (i) any material weakness in its internal control over financial reporting or (ii) change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

  (j)              Sarbanes-Oxley. Solely to the extent that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the SEC thereunder (collectively, the "Sarbanes-Oxley Act") has been applicable to the Company, there is, and has been, no failure on the part of the Company to comply in all respects with any provision of the Sarbanes-Oxley Act other than the weakness in internal accounting controls. The Company has taken all necessary actions to ensure that it is in compliance in all respects with all provisions of the Sarbanes-Oxley Act other than the weakness in internal accounting controls that are in effect with respect to which the Company is required to comply and is actively taking steps to ensure that it will be in compliance with the other provisions of the Sarbanes-Oxley Act which will become applicable to the Company.

  (k)             Litigation. There is no action, suit, claim or proceeding pending or, to the knowledge of the Company, threatened against the Company before any court or administrative agency or otherwise which if determined adversely to the Company would have, individually or in the aggregate, a Material Adverse Effect, except as set forth in the Annual Report.

  (l)              Title. The Company has good and marketable title to all of the material properties and assets reflected in the consolidated financial statements hereinabove described or described in the Annual Report, subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected in such financial statements or described in the Annual Report or which are not material in amount or would not materially interfere with the use to be made of such properties or assets. The Company occupies its leased properties under valid and binding leases conforming in all material respects to the description thereof set forth in the Annual Report.

  (m)            Taxes. The Company has filed all federal, state, local and foreign tax returns which have been required to be filed and have paid all taxes indicated by such returns and all assessments received by it to the extent that such taxes have become due and are not being contested in good faith and for which an adequate reserve for accrual has been established in accordance with GAAP. All tax liabilities have been adequately provided for in the consolidated financial statements of the Company in accordance with GAAP, and the Company does not know of any actual or proposed additional material tax assessments.

  (n)            Absence of Certain Changes. Except as disclosed in the SEC Filings, there has not been any Material Adverse Effect, and there has not been any material transaction entered into by the Company. The Company has no material contingent obligations which are not disclosed in the SEC Filings.

  (o)            No Conflicts. The Company is not, or with the giving of notice or lapse of time or both, will not be after giving effect to the execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Shares, and the reservation for issuance and the issuance of the underlying commons shares), (i) in violation of its articles of organization, by-laws, any certificate of designations or other organizational documents or (ii) in violation of or in default under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound and, solely with respect to this clause (ii), which violation or default would have a Material Adverse Effect. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which the Company or any of its respective properties is bound, or of the articles of organization or by-laws of the Company or any law, order, rule or regulation judgment, order, writ or decree applicable to the Company of any court or of any government, regulatory body or administrative agency or other governmental body having jurisdiction, except to the extent that such conflict, breach or default would not have a Material Adverse Effect.

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  (p)             Contracts. There is no document, contract or other agreement required to be described in the SEC Filings that is not described or filed as required by the 1934 Act or the rules and regulations thereunder. Each description of a contract, document or other agreement in the SEC Filings accurately reflects in all material respects the terms of the underlying contract, document or other agreement. Each contract, document or other agreement described in the SEC Filings or listed in the exhibits to the SEC Filings or incorporated by reference is in full force and effect and is valid and enforceable by and against the Company in accordance with its terms (except as rights to indemnity and contribution thereunder may be limited by federal or state securities laws and matter of public policy and except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principle). Neither the Company nor, to the Company's knowledge, any other party is in default in the observance or performance of any term or obligation to be performed by it under any such agreement or any other agreement or instrument to which the Company is a party or by which the Company or its respective properties or businesses may be bound, and no event has occurred which with notice or lapse of time or both would constitute such a default, in any such case in which the default or event, individually or in the aggregate, would have a Material Adverse Effect.

  (q)             Regulatory Approvals. Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated has been obtained or made and is in full force and effect.

  (r)             Conduct of Business. The Company is not in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company and the Company will not conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

  (s)             Intellectual Property. Except as described in the SEC Filings or in any document incorporated by reference therein, the Company holds all material licenses, certificates and permits from governmental authorities which are necessary to the conduct of their businesses in the manner in which they are being conducted; the Company owns or possesses the right to use all patents, patent rights, trademarks, trade names, service marks, service names, copyrights, license rights, know-how (including trade secrets and other unpatented and unpatentable proprietary or confidential information, systems or procedures) and other intellectual property rights ("Intellectual Property") necessary to carry on their business in all material respects in the manner in which it is being conducted; the Company has not infringed, and the Company has not received notice of conflict with, any Intellectual Property of any other person or entity. The Company has taken all steps reasonably necessary to secure ownership interests in Intellectual Property created for it by any contractors. There are no outstanding options, licenses or agreements of any kind relating to the Intellectual Property of the Company that are required to be described in the SEC Filings and are not described therein in all material respects. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property of any other person or entity that are required to be set forth in the SEC Filings and are not described therein in all material respects. None of the technology employed by the Company and material to the Company's business has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company's knowledge, any of its officers, directors or employees or, to the Company's knowledge, otherwise in violation of the rights of any persons; the Company has not received any written or oral communications alleging that the Company has violated, infringed or conflicted with, or, by conducting its business as set forth in the SEC Filings, would violate, infringe or conflict with, any of the Intellectual Property of any other person or entity. Except for prior infringements by others of Intellectual Property owned by or licensed to the Company, which the Company, through counsel, has resolved through cease-and-desist letters, the Company is not aware of any current infringement by others of Intellectual Property owned by or licensed to the Company.

  (t)             Manipulation of Prices. Neither the Company, nor to the Company's knowledge, any of its affiliates, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Securities.

  (u)             Investment Company Act. The Company is not, and after giving effect to the offering and sale of the Securities contemplated hereunder and for so long any Buyer holds any Securities, will not be an "investment company" within the meaning of such term under the Investment Company Act of 1940 as amended and the rules and regulations of the SEC thereunder.

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  (v)             Internal Accounting Controls.

(i)           Except as disclosed in the SEC Filings, the Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

  (ii)             The Company has established and maintains "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act); except as disclosed in the SEC Filings, the Company's "disclosure controls and procedures" are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the 1934 Act, and that all such information is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the 1934 Act with respect to such reports.

  (w)            Industry and Market Data. The statistical, industry-related and market-related data included in the Annual Report, if any, are based on or derived from sources which the Company reasonably and in good faith believes are reliable and accurate, and such data agree in all material respects with the sources from which they are derived.

  (x)             Money Laundering Laws. The operations of the Company is and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the "Money Laundering Laws"), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any or its subsidiaries with respect to the Money Laundering Laws is pending or, to the Company's knowledge, threatened.

  (y)             Office of Foreign Assets Control. Neither the Company nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

  (z)              Reserved.

 (aa)            Employee Benefits. The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company would have any material liability; the Company has not incurred and does not expect to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.

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  (bb)           Employee Relations. (i) The Company is not a party to any collective bargaining agreement or employs any member of a union. The Company believes that its relations with its employees are good. No executive officer of the Company (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company or otherwise terminate such officer's employment with the Company. No executive officer of the Company is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters, except where such violation would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

    (ii)        The Company is in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

  (cc)           Transactions with Affiliates. Except as disclosed in the SEC Filings, there are no relationships or related-party transactions involving the Company and to the knowledge of the Company, any other person required to be described in the SEC Filings which have not been described as required.

  (dd)           Environmental Laws. The Company is (i) not in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), (ii) does not own or operate any real property contaminated with any substance that is subject to environmental laws, (iii) is not liable for any off-site disposal or contamination pursuant to any environmental laws, and (iv) is not subject to any claim relating to any environmental laws, which violation, contamination, liability or claim would, individually or in the aggregate, have a Material Adverse Effect; and the Company is not aware of any pending investigation which would reasonably be expected to lead to such a claim.

  (ee)           Listing; 1933 Act Registration. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the 1933 Act or the quotation of the Common Stock on the OTC-BB, nor, has the Company received any notification that the SEC or the OTC-BB is currently contemplating terminating such registration or quotation.

  (ff)             Contributions; Foreign Corrupt Practices. The Company has not made any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law.

  (gg)           No Integrated Offering. The Company has not sold or issued any securities that would be integrated with the offering of the Securities contemplated by this Agreement pursuant to the 1933 Act, the Rules and Regulations or the interpretations thereof by the SEC. None of the Company, any of its affiliates, and any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to require approval of stockholders of the Company for purposes of any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its affiliates and any person acting on their behalf will take any action or steps referred to in the preceding sentence that would cause the offering of the Securities to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.

  (hh)           Consents.   The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, including the issuance of the Securities, in each case in accordance with the terms hereof or thereof. The Company is unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.

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  (ii)             Acknowledgment Regarding Buyer's Purchase of Securities. The Company acknowledges and agrees that Buyer is acting solely in the capacity of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that Buyer is not (i) an officer or director of the Company, (ii) to the knowledge of the Company, an "affiliate" of the Company (as defined in Rule 144 of the 1933 Act) or (iii) to the knowledge of the Company, a "beneficial owner" of more than 10% of the shares of Common Stock (as used in this Agreement, the term "affiliate" shall have the meaning set forth in Rule 405 of the 1933 Act). The Company further acknowledges that Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer's purchase of the Securities. The Company further represents to the Buyer that the Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

  (jj)             Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to exempt the Company's issuance of the Securities and Buyer's ownership of the Securities from the provisions of any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation of the Company or the laws of the state of its incorporation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of Securities and each Buyer's ownership of the Securities). The Company does not have any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

  (ii)             Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect.

  (jj)             Transfer Taxes. On the Closing Date, all stock transfer or other similar taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

  (kk)           Shell Company Status. The Company is not, and has not been in the last twelve (12) months, an issuer identified in Rule 144(i)(1).

  (ll)             Solvency. The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(oo), "Insolvent" means, with respect to any person  (i) the present fair saleable value of such person's assets is less than the amount required to pay such person's total indebtedness, (ii) such person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

4.           COVENANTS.

  (a)             Best Efforts. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

  (b)             Use of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes, including general and administrative expenses and not for (i) the repayment of any outstanding indebtedness of the Company outside the ordinary course of business or (ii) the redemption or repurchase of any of its equity securities.

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  (c)             Pledge of Securities. The Company acknowledges and agrees that the Securities may be pledged by any holder of Securities (an “Investor“) in connection with a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the 1933 Act and who agrees to be bound by the provisions of this Agreement. If Investor effects such a pledge of Securities, it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document. At the Investor’s expense, the Company hereby agrees, subject to applicable securities laws, to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor.

  (d)             Disclosure of Transactions and Other Material Information. Without the prior written consent of Buyer, neither the Company nor any of its affiliates shall disclose the name of Buyer in any filing, announcement, release or otherwise unless such disclosure is required by law or regulation   Notwithstanding the foregoing, the Buyer acknowledges that this Agreement is required to be filed as an exhibit to a Form 8-K with the SEC within four (4) business days and consents to such filing.

  (e)             Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the maximum number of shares of Common Stock issuable upon conversion of the Preferred Shares (without taking into account any limitations on the exercise of the Preferred Shares).

  (f)              Additional Issuances of Securities.

(i)           For purposes of this Section 4(f), the following definitions shall apply.

(1)         "Approved Stock Plan" means any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer or director for services provided to the Company.

(2)         "Common Stock Equivalents" means, collectively, Options and Convertible Securities.

(3)         "Convertible Securities" means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock.

(4)         "Excluded Securities" means any Common Stock issued or issuable: (i) in connection with any Approved Stock Plan, (ii) upon conversion of the Preferred Shares; and (iii) upon exercise of any Options or Convertible Securities which are outstanding on the day immediately preceding the date hereof, provided that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the date hereof.

(5)         "Options" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

(ii)          From the date hereof until the ninetieth (90th) day after the Closing Date (the "Trigger Date"), the Company will not (A), directly or indirectly, file any registration statement, amendment to a registration statement or prospectus with the SEC, (B) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries' equity or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents or (C) be party to any solicitations, negotiations or discussions with regard to the foregoing. The restrictions contained in this subsection paragraph shall not apply in connection with the issuance of any Excluded Securities.

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  (g)             Closing Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to the Buyer executed copies of the Transaction Documents, Securities and other documents required to be delivered to any party pursuant to Section 7 hereof.

  (h)             No Dilution. The Company shall not sell or issue any additional shares of series A convertible preferred stock without the prior written consent of the Buyer, which consent may be withheld by Buyer in its sole discretion.

5            REGISTER; TRANSFER AGENT INSTRUCTIONS.

  (a)             Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Preferred Shares in which the Company shall record the name and address of Buyer (including the name and address of each transferee)), the number of Common Shares issuable upon conversion of the Preferred Shares. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

  (b)             Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Transfer Agent in the form of Exhibit D attached hereto (the "Irrevocable Transfer Agent Instructions"), and any subsequent transfer agent, to issue certificates or, provided that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, cause the Transfer Agent to issue such certificates to the Buyer by electronic delivery at the applicable balance account at the Depository Trust Company (“DTC”) through its Deposit/Withdrawal at Custodian system to the applicable balance accounts at DTC, registered in the name of Buyer or its respective nominee(s), for the Common Shares into which the Preferred Shares are convertiblein such amounts as specified from time to time by Buyer to the Company upon conversion of the Preferred Shares. The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5 will be given by the Company to the Transfer Agent, and any subsequent transfer agent with respect to the Common Shares, and that the Common Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the other Transaction Documents. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5, that the Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

6.           CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

  The obligation of the Company hereunder to issue and sell the Preferred Shares to Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing Buyer with prior written notice thereof:

  (i)               Buyer shall have executed each of the Transaction Documents and delivered the same to the Company.

  (ii)             Buyer shall have delivered to the Company the Purchase Price for the Preferred Shares being purchased by Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

  (iii)            The representations and warranties of Buyer shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Buyer at or prior to the Closing Date.

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  (iv)            No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

  (v)             The Buyer shall have delivered to Company such other documents relating to the transactions contemplated by this Agreement as the Company or its counsel may reasonably request.

7.           CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE.

  The obligation of Buyer hereunder to purchase the Preferred Sharesat the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for Buyer's sole benefit and may be waived by Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

(i)          The Company shall have duly executed and delivered to Buyer (1) each of the Transaction Documents (2) the Preferred Shares (allocated in such amounts as Buyer shall request), being purchased by Buyer at the Closing pursuant to this Agreement and (3) a copy of Irrevocable Instructions to the Transfer Agent in the form of Exhibit A attached hereto, which instructions shall have been acknowledged in writing by the Company’s transfer agent.  Notwithstanding anything else to the foregoing in this Agreement, Buyer hereby consents to delivery of the Preferred Shares within ten (10) business days after the Closing Date.

(ii)         The Company shall have delivered to Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in such entity's jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within forty-five (45) days of the Closing Date and, if applicable, qualification as a foreign corporation in good standing in each jurisdictions in which the Company conducts business.

(iii)        The Company shall have delivered to Buyer a copy of the Articles of Incorporation, as amended.

(v)         The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (1) the resolutions adopted by the Company's Board of Directors in a form reasonably acceptable to Buyer, (2) the Articles of Incorporation and (3) the Bylaws, each as in effect at the Closing, in the form attached hereto as Exhibit B.

(vi)        The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit C.

(vii)       The Company shall have delivered to Buyer a letter from the Transfer Agent certifying the number of shares of Common Stock outstanding as of a date within five days of the Closing Date.

(viii)      The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities.

 (ix)        No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

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(x)          The Company shall have delivered to Buyer such other documents relating to the transactions contemplated by this Agreement as Buyer or its counsel may reasonably request.

8.            RIGHT OF FIRST REFUSAL.

Until one year following the Closing Date or until the Holder no longer holds any securities of the Company, whichever occurs first, the Buyer shall be given not less than five (5) business days prior written notice of any proposed sale by the Company of any shares of common or preferred stock (“Other Offering”), except in connection with the Excepted Issuances (as defined below).  If Buyer elects to exercise its rights pursuant to this Section 8, the Buyer shall have the right during the five (5) business days following receipt of the notice to purchase up to all of such offered common or preferred stock in accordance with the terms and conditions set forth in the notice of sale.  In the event such terms and conditions are materially modified during the notice period, Buyers shall be given prompt notice of such material modification and shall have the right during the ten (10) business days following the notice of modification to exercise such right.  “Excepted Issuances” shall mean: (i) full or partial consideration in connection with a strategic synergistic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other entity, (ii) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital, (iii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to a stock option or incentive plan approved by the Company’s shareholders, (iv) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement on the terms in effect on the Closing Date, and (v) as a result of the conversion of any Preferred Shares issued pursuant to this Agreement.

9.            PIGGYBACK REGISTRATION RIGHTS.

For a period of twenty-four (24) months following the Closing Date, if the Company proposes to file a registration statement with respect to any class of its equity securities and included in such registration statement are securities held for the account of one or more holders of securities of the Company, but excluding any registration statements (i) on Form S-4 or S-8 (or any successor or substantially similar form), or of any employee stock option, stock purchase or compensation plan or of securities issued or issuable pursuant to any such plan, or a dividend reinvestment plan, (ii) otherwise relating to any employee, benefit plan or corporate reorganization or other transactions covered by Rule 145 promulgated under the 1933 Act, or (iii) on any registration form that does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the resale of the Conversion Shares), then the Company shall in each case give written notice of the proposed filing to Buyer at least twenty (20) business days before the anticipated filing date of the registration statement by the Company, which the Company notice must offer to Buyer the opportunity to have any or all of the Conversion Shares included in that registration statement. If Buyer wishes to have any of those Conversion Shares or any shares of Common Stock held by the Buyer registered under this Section 9(b), Buyer must so advise the Company in writing within ten (10) business days after the date of his receipt of that notice, specifying how many of the Conversion Shares it wishes to have so registered, and the Company shall include in that registration statement all Conversion Shares or shares of Common Stock that Buyer has requested be included therein subject to the provisions of the next sentence. Notwithstanding the foregoing, if the underwriter for the offering being registered shall determine and advise the Company in writing that marketing factors require a limitation in the number of securities that can be sold in the offering, then the Company will include in such registration the securities requested to be included pro rata among all holders with such piggyback rights on the basis of the number of securities requested to be included by such holders; provided that no shares of any executive officers of directors shall be included in such registration statement unless all of the Holder’s shares are included and provided, further that if any shares of any holders with piggyback rights are included then the Holder shall be entitled to register at least twenty-five percent (25%) of its Conversion Shares or shares of Common Stock.  In furtherance and not in limitation of the foregoing, the Buyer shall have no rights pursuant to this Article 9 at such time as all of the Buyer’s Conversion Shares may be sold without limitation pursuant to Rule 144 and without any requirements applicable to the Company such as current public information requirements.

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10.           MISCELLANEOUS.

  (a)             Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

  (b)             Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.  This Agreement, to the extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic Delivery”), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto, each other party hereto shall re-execute original forms hereof and deliver them in person to all other parties.  No party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense related to lack of authenticity.

  (c)              Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

  (d)             Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

  (e)             Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyer, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyer, and any amendment to this Agreement made in conformity with the provisions of this Section 8(e) shall be binding upon the Buyer and holders of Securities as applicable. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities then outstanding.

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  (f)              Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Energy Telecom, Inc.

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

St. Augustine, Florida 32084

with a copy (for informational purposes only) to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Telephone: (212) 930-9700

Facsimile: (212) 930-9725

Attention: James M. Turner, Esq.

If to the Transfer Agent:

Securities Transfer Corporation

2591 Dallas Parkway, Suite 102

Frisco, Texas 75034

Telephone: (972) 963-0012

Facsimile: (469) 633-0088

Attention: Marilyn Fox

If to Buyer:

Tidal East Global Relief Fund 80160-0503-RR0001

c/o Gracin & Marlow, LLP

405 Lexington Avenue, 26th Floor

New York, New York 10174

Telephone: (212) 907-6457

Facsimile: (212) 208-4657

Attention: Leslie Marlow, Esq.

to its address and facsimile number set forth above, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

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   (g)            Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Preferred Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be Buyer hereunder with respect to such assigned rights.

  (h)             No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

  (i)              Survival. The representations and warranties of the Company and the Buyer contained in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 8 shall survive the Closing.

  (j)              Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as are reasonably necessary in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

  (k)             Indemnification. (i) In consideration of Buyer's execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees"), as incurred, from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party that is not an affiliate of such Indemnitee (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of  Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents, provided, however, that such Indemnified Liabilities, shall in no event exceed the net proceeds received by the Company from the Buyer as a result of the sale of the Securities to the Buyer pursuant to this Agreement. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 (ii)        Promptly after receipt by an Indemnitee under this Section 8(k) of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification in respect thereof is to be made against any indemnifying party under this Section 8(k), deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be selected by the Buyer. The Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that relates to such action or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liabilities or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 8(k), except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

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(iii)         The indemnification required by this Section 8(k) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Liabilities are incurred.

(iv)        The indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.

  (l)               No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

  (m)            Remedies. Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyer. The Company therefore agrees that the Buyer shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

  (n)             Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever Buyer exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

  (o)             Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyer hereunder or pursuant to any of the other Transaction Documents or the Buyer enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

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IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

COMPANY:
ENERGY TELECOM, INC.
By:
	Name: Thomas Rickards
	Title: Chief Executive Officer

[Signature Page to Securities

Purchase Agreement]

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IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

BUYER:

TIDAL EAST GLOBAL RELIEF FUND 80160-0503-RR0001

By;  _________________________________

        Name:

        Title:

By;  _________________________________

        Name:

        Title:

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EXHIBITS

Exhibit A	Certificate of Designation, Rights and Preferences of the Series A Convertible Preferred Stock
Exhibit B	Form of Secretary's Certificate
Exhibit C	Form of Officer's Certificate
Exhibit D	Form of Irrevocable Transfer Agent Instructions

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EX-10.06

Exhibit 10.06

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (the “Agreement”) is dated as of February 11, 2013, by and between ENERGY TELECOM, INC., a Florida corporation, with headquarters located at 3501-B N. Ponce de Leon Blvd., #393, St. Augustine, Florida 32084 (the “Company”), and Normandia Capital, a Panamanian corporation, with a mailing address of c/o Gracin & Marlow, LLP, 405 Lexington Avenue, 26th Floor, New York, New York 10174 (the “Investor”).

WHEREAS:

A.           The Investor owns 500,000 shares of the Company’s class A common stock, $.0001 par value per share (the “Common Stock”).

B.           The Company and the Investor desire to enter into this Agreement, pursuant to which, among other things, the Company and the Investor shall exchange 59,977 shares of Common Stock currently held by the Investor (the “Exchange Shares”) for 208 shares of the Company’s Series A Preferred Stock (the “Preferred Stock”).

C.           The exchange of the Exchange Shares for the Preferred Stock is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “1933 Act”)..

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

1.           EXCHANGE.

1.1           Exchange. Subject to the satisfaction or waiver of the conditions with respect to the Closing set forth in Sections 5 and 6 below, at the Closing the Investor and the Company shall, pursuant to Section 3(a)(9) of the 1933 Act, exchange the Exchange Shares for the Preferred Stock as follows (the “Exchange”):

(a)           Closing. The issuance of the Preferred Stock (the “Closing”) shall occur at the offices of Sichenzia Ross Friedman Ference LLP. The date and time of the Closing shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections 5 and 6 below are satisfied or waived (or such later date as is mutually agreed to by the Company and Investor).

(b)           Consideration. At the Closing, the Preferred Stock shall be issued to the Investor in exchange for the Exchange Shares without the payment of any additional consideration.

(c)           Delivery. In exchange for the Exchange Shares, within ten (10) business days of receipt by the Company from the Investor (or its designee) of the original certificate evidencing the Exchange Shares, which shall be delivered as soon as commercially practicable following the Closing, the Company shall deliver or cause to be delivered to the Investor certificates for the 1,874 shares of Preferred Stock. As of the Closing Date, Exchange Shares shall be null and void and any and all rights arising thereunder shall be extinguished.

2.           COMPANY REPRESENTATIONS AND WARRANTIES.

2.1           Authorization and Binding Obligation. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and to issue the 208 shares of Preferred Stock in accordance with the terms hereof and thereof. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Preferred Stock and the reservation for issuance and issuance of Common Stock issuable upon conversion of the Preferred Stock, have been duly authorized by the Company's Board of Directors and no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement has been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities laws.

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2.2           No Conflict. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Stock and reservation for issuance and issuance of the Common Stock upon conversion of the Preferred Stock) will not (i) result in a violation of the articles of incorporation or other organizational documents of the Company or any of its subsidiaries, any capital stock of the Company or any of its subsidiaries or bylaws of the Company or any of its subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that could not reasonably be expected to have a material adviser effect on the Company or its subsidiaries.

2.3           Securities Law Exemptions. Assuming the accuracy of the representations and warranties of the Investor contained herein, the offer and issuance by the Company of the Securities is exempt from registration pursuant to the exemption provided by Section 3(a)(9) of the Securities Act.

2.4           Issuance of Securities. The issuance of the Preferred Stock is duly authorized and upon issuance in accordance with the terms of this Agreement and a certificate of designation for the Preferred Stock (the “Certificate of Designation”) (collectively, the “Exchange Documents”) shall be validly issued, fully paid and non-assessable and free from all taxes, liens, charges and other encumbrances with respect to the issue thereof. Upon conversion of the Preferred Stock in accordance with the Exchange Documents, the Common Stock issuable upon such conversion, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.

2.5           Transfer Taxes. On the Closing Date, all share transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance of the Preferred Stock to be exchanged with the Investor hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

2.6           Disclosure. The Company confirms that neither it nor any other person acting on its behalf has provided Investor or its agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company or any of its subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Agreements. The Company understands and confirms that Investor will rely on the foregoing representations in effecting transactions in securities of the Company.

3.           INVESTOR’S REPRESENTATIONS AND WARRANTIES.

As a material inducement to the Company to enter into this Agreement and consummate the Exchange, Investor represents, warrants and covenants with and to the Company as follows:

3.1           Authorization and Binding Obligation. The Investor has the requisite legal capacity, power and authority to enter into, and perform under, this Agreement and to perform under the other Exchange Documents, and to purchase the Purchase Stock being sold to such Investor hereunder and thereunder. The execution, delivery and performance of this Agreement and performance under the other Exchange Documents by such Investor and the consummation by such Investor of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate, partnership or similar action on the part of such Investor and no further consent or authorization is required. This Agreement has been duly authorized, executed and delivered. This Agreement has been duly executed and delivered by the Investor, and constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities laws.

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3.2           Beneficial Owner. With respect to the Exchange Shares, (i) the Investor owns, beneficially and of record, good and marketable title to the Exchange Shares, free and clear of any taxes or encumbrances; (ii) the Exchange Shares are not subject to any transfer restriction, other than the restriction that the Exchange Shares have not been registered under the 1933 Act and, therefore, cannot be resold unless registered under the 1933 Act or in a transaction exempt from or not subject to the registration requirements of the 1933 Act; (iii) the Investor has not entered into any agreement or understanding with any person or entity to dispose of the Exchange Shares; and (iv) at the Closing, the Investor will convey to the Company good and marketable title to the Exchange Shares, free and clear of any security interests, liens, adverse claims, encumbrances, taxes or encumbrances.

3.3            Liens.  There are no outstanding liens, claims, offset rights, or other encumbrances relating to the Exchange Shares.  The exchange by the Investor and the consummation of the transactions herein, does not by itself or with the passage of time violate or infringe upon the rights of any third parties or result or could reasonably result in any claims against the Investor or the Company.

3.4            Sale or Transfer.  Investor has not sold, assigned, conveyed, transferred, mortgaged, hypothecated, pledged or encumbered or otherwise permitted any lien to be incurred with respect to the Exchange Shares or any portion thereof.

3.5            Proceedings.  No proceedings relating to the Exchange Shares are pending or, to the knowledge of the Investor, threatened before any court, arbitrator or administrative or governmental body that would adversely affect the Investor’s right and ability to surrender and exchange the Exchange Shares.

3.6            Conveyance.  Investor has full legal and equitable title to the Exchange Shares, free and clear of all liens, pledges or encumbrances of any kind, nature or description, with full and unrestricted legal power, authority and right to enter into this Agreement and to transfer and deliver the Exchange Shares to the Company pursuant hereto, and upon delivery of the Exchange Shares to Company, Company will be the owner of the Exchange Shares, free and clear of all liens, claims, pledges or encumbrances of any kind, nature or description.

3.7            Action.   Investor has taken no action that would impair its ability to transfer the Exchange Shares.

3.8            Interest.   No person other than the Investor has any right or interest in the Exchange Shares.

3.9            Tax Consequences.  The Investor acknowledges that the purchase of the Preferred Stock may involve tax consequences to the Investor and that the contents of the Exchange Documents do not contain tax advice. Investor acknowledges that it has not relied and will not rely upon the Company with respect to any tax consequences related to the exchange of the Exchange Shares.  The Investor assumes full responsibility for all such consequences and for the preparation and filing of any tax returns and elections which may or must be filed in connection with such Exchange Shares.

3.10          Reliance on Exemptions. The Investor understands that the Preferred Stock being offered and exchanged in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein and in the Exchange Documents in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.

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3.11          No Governmental Review. The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Preferred Stock or the fairness or suitability of the investment in the Preferred Stock nor have such authorities passed upon or endorsed the merits of the offering of the Preferred Stock.

3.12          No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the Exchange Documents to which the Investor is a party, and the consummation by the Investor of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Investor, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Investor to perform its obligations hereunder.

4.           COVENANTS.

4.1           Reasonable Best Efforts. The Company shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 5 of this Agreement. The Investor shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 6 of this Agreement.

4.2           Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the Preferred Stock and shares of Common Stock issuable upon conversion of the Preferred Stock may be tacked onto the holding period of the Exchange Shares, and the Company agrees not to take a position contrary to this Section 4.2. Upon receipt of an opinion of counsel to the Investor, in a form reasonably acceptable to the Company, the Company agrees to take all actions necessary to issue the Common Stock upon conversion of the Preferred Stock without restriction, without any restrictive legend and without the need for any additional action by the Investor, (A) following any sale of such Common Stock pursuant to Rule 144, or (B) if such Common Stock is eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Common Stock and without volume or manner-of-sale restrictions.

4.3           Pledge of Securities. The Company acknowledges and agrees that the Preferred Stock may be pledged by any holder of Securities (a “Holder“) in connection with a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Preferred Stock to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement. If Holder effects such a pledge of Preferred Stock, it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Exchange Document. At the Holder’s expense, the Company hereby agrees, subject to applicable securities laws, to execute and deliver such documentation as a pledgee of the Preferred Stock may reasonably request in connection with a pledge of the Preferred Stock to such pledgee by an Investor.

4.4           Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the maximum number of shares of Common Stock issuable upon conversion of the Preferred Stock (without taking into account any limitations on the exercise of the Preferred Stock set forth in the Certificate of Designation).

4.5           Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to Investor), a register for the Preferred Stock in which the Company shall record the name and address of the person in whose name the Preferred Stock have been issued (including the name and address of each transferee) and the number of Common Stock shares issuable upon conversion of the Preferred Stock held by such person. The Company shall keep the register open and available, upon 24 hours prior written notice, during normal business hours for inspection of any Investor or its legal representatives.

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4.6           Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent, and any subsequent transfer agent, to issue certificates or, provided that the transfer agent is participating in the DTC Fast Automated Securities Transfer Program, cause the transfer agent to issue such certificates to the Investor by electronic delivery at the applicable balance account at the Depository Trust Company (“DTC”) through its Deposit/Withdrawal at Custodian system to the applicable balance accounts at DTC, registered in the name of the Investor or its respective nominee(s), for the Common Shares into which the Preferred Shares are convertiblein such amounts as specified from time to time by the Investor to the Company upon conversion of the Preferred Shares. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Investor. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 4.6 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 4.6, that the Investor shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

5.           CONDITIONS TO COMPANY’S OBLIGATIONS HEREUNDER.

The obligations of the Company to the Investor hereunder are subject to the satisfaction of each of the following conditions (except to the extent such condition is expressly conditional to a specific closing, in which case such condition shall only apply to such specific closing), provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Investor with prior written notice thereof:

5.1           The Investor shall have duly executed this Agreement and delivered the same to the Company.

5.2           The representations and warranties of the Investor shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and the Investor shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to the Closing Date.

5.3           No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement.

6.           CONDITIONS TO INVESTOR’S OBLIGATIONS HEREUNDER.

The obligations of the Investor hereunder are subject to the satisfaction of each of the following conditions (except to the extent such condition is expressly conditional to a specific closing, in which case such condition shall only apply to such specific closing), provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice thereof:

6.1            The Company shall have duly executed and delivered this Agreement to the Investor.

6.2            Each and every representation and warranty of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

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6.3           The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the transactions contemplated by this Agreement.

6.4           No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement.

7.           MISCELLANEOUS.

7.1           Legends. The Investor acknowledges that the certificate(s) representing the Preferred Stock shall each conspicuously set forth on the face or back thereof a legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

7.2           Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

7.3           Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.  This Agreement, to the extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic Delivery”), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto, each other party hereto shall re-execute original forms hereof and deliver them in person to all other parties.  No party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense related to lack of authenticity.

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7.4           Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

7.5           Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

7.6           Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Investor, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement, contains the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor Investor  makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Investor, and any amendment to this Agreement made in conformity with the provisions of this Section shall be binding upon the Investor.  No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

7.7           Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Energy Telecom, Inc.

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

St. Augustine, Florida 32084

with a copy (for informational purposes only) to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Telephone: (212) 930-9700

Facsimile: (212) 930-9725

Attention: James M. Turner, Esq.

If to Investor:

Normandia Capital

c/o Gracin & Marlow, LLP

405 Lexington Avenue, 26th Floor

New York, New York 10174

Telephone: (212) 907-6457

Facsimile: (212) 208-4657

Attention: Leslie Marlow, Esq.

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to its address and facsimile number set forth above, or to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

7.8           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Preferred Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor. Investor may assign some or all of its rights hereunder without the consent of the Company.

7.9           Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty.

IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date first written above.

COMPANY:
	ENERGY TELECOM, INC.
By:	____________________________
Name: Thomas Rickards
Title: Chief Executive Officer

INVESTOR:
	NORMANDIA CAPITAL
By:	____________________________
Name:
Title:

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EX-10.07

Exhibit 10.07

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (the “Agreement”) is dated as of February 11, 2013, by and between ENERGY TELECOM, INC., a Florida corporation, with headquarters located at 3501-B N. Ponce de Leon Blvd., #393, St. Augustine, Florida 32084 (the “Company”), and Robert Kalfayan, an individual, with a mailing address of c/o Gracin & Marlow, LLP, 405 Lexington Avenue, 26th Floor, New York, New York 10174 (the “Investor”).

WHEREAS:

A.          The Investor purchased from the Company 460,000 shares of the Company’s class A common stock, $.0001 par value per share (the “Common Stock”).

B.           The Company and the Investor desire to enter into this Agreement, pursuant to which, among other things, the Company and the Investor shall exchange 19,897 shares of Common Stock currently held by the Investor (the “Exchange Shares”) for 69 shares of the Company’s Series A Preferred Stock (the “Preferred Stock”).

C.           The exchange of the Exchange Shares for the Preferred Stock is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “1933 Act”)..

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

1.           EXCHANGE.

1.1           Exchange. Subject to the satisfaction or waiver of the conditions with respect to the Closing set forth in Sections 5 and 6 below, at the Closing the Investor and the Company shall, pursuant to Section 3(a)(9) of the 1933 Act, exchange the Exchange Shares for the Preferred Stock as follows (the “Exchange”):

(a)           Closing. The issuance of the Preferred Stock (the “Closing”) shall occur at the offices of Sichenzia Ross Friedman Ference LLP. The date and time of the Closing shall be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to the Closing set forth in Sections 5 and 6 below are satisfied or waived (or such later date as is mutually agreed to by the Company and Investor).

(b)           Consideration. At the Closing, the Preferred Stock shall be issued to the Investor in exchange for the Exchange Shares without the payment of any additional consideration.

(c)           Delivery. In exchange for the Exchange Shares, within ten (10) business days of receipt by the Company from the Investor (or its designee) of the original certificate evidencing the Exchange Shares, which shall be delivered as soon as commercially practicable following the Closing, the Company shall deliver or cause to be delivered to the Investor certificates for the 69 shares of Preferred Stock. As of the Closing Date, Exchange Shares shall be null and void and any and all rights arising thereunder shall be extinguished.

2.           COMPANY REPRESENTATIONS AND WARRANTIES.

2.1           Authorization and Binding Obligation. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement and to issue the 157 shares of Preferred Stock in accordance with the terms hereof and thereof. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Preferred Stock and the reservation for issuance and issuance of Common Stock issuable upon conversion of the Preferred Stock, have been duly authorized by the Company's Board of Directors and no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement has been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities laws.

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2.2           No Conflict. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Stock and reservation for issuance and issuance of the Common Stock upon conversion of the Preferred Stock) will not (i) result in a violation of the articles of incorporation or other organizational documents of the Company or any of its subsidiaries, any capital stock of the Company or any of its subsidiaries or bylaws of the Company or any of its subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that could not reasonably be expected to have a material adviser effect on the Company or its subsidiaries.

2.3           Securities Law Exemptions. Assuming the accuracy of the representations and warranties of the Investor contained herein, the offer and issuance by the Company of the Securities is exempt from registration pursuant to the exemption provided by Section 3(a)(9) of the Securities Act.

2.4           Issuance of Securities. The issuance of the Preferred Stock is duly authorized and upon issuance in accordance with the terms of this Agreement and a certificate of designation for the Preferred Stock (the “Certificate of Designation”) (collectively, the “Exchange Documents”) shall be validly issued, fully paid and non-assessable and free from all taxes, liens, charges and other encumbrances with respect to the issue thereof. Upon conversion of the Preferred Stock in accordance with the Exchange Documents, the Common Stock issuable upon such conversion, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.

2.5           Transfer Taxes. On the Closing Date, all share transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance of the Preferred Stock to be exchanged with the Investor hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

2.6           Disclosure. The Company confirms that neither it nor any other person acting on its behalf has provided Investor or its agents or counsel with any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company or any of its subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Agreements. The Company understands and confirms that Investor will rely on the foregoing representations in effecting transactions in securities of the Company.

3.           INVESTOR’S REPRESENTATIONS AND WARRANTIES.

As a material inducement to the Company to enter into this Agreement and consummate the Exchange, Investor represents, warrants and covenants with and to the Company as follows:

3.1           Authorization and Binding Obligation. The Investor has the requisite legal capacity, power and authority to enter into, and perform under, this Agreement and to perform under the other Exchange Documents, and to purchase the Purchase Stock being sold to such Investor hereunder and thereunder. The execution, delivery and performance of this Agreement and performance under the other Exchange Documents by such Investor and the consummation by such Investor of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate, partnership or similar action on the part of such Investor and no further consent or authorization is required. This Agreement has been duly authorized, executed and delivered. This Agreement has been duly executed and delivered by the Investor, and constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies and except as rights to indemnification and to contribution may be limited by federal or state securities laws.

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3.2           Beneficial Owner. With respect to the Exchange Shares, (i) the Investor owns, beneficially and of record, good and marketable title to the Exchange Shares, free and clear of any taxes or encumbrances; (ii) the Exchange Shares are not subject to any transfer restriction, other than the restriction that the Exchange Shares have not been registered under the 1933 Act and, therefore, cannot be resold unless registered under the 1933 Act or in a transaction exempt from or not subject to the registration requirements of the 1933 Act; (iii) the Investor has not entered into any agreement or understanding with any person or entity to dispose of the Exchange Shares; and (iv) at the Closing, the Investor will convey to the Company good and marketable title to the Exchange Shares, free and clear of any security interests, liens, adverse claims, encumbrances, taxes or encumbrances.

3.3              Liens.  There are no outstanding liens, claims, offset rights, or other encumbrances relating to the Exchange Shares.  The exchange by the Investor and the consummation of the transactions herein, does not by itself or with the passage of time violate or infringe upon the rights of any third parties or result or could reasonably result in any claims against the Investor or the Company.

3.4              Sale or Transfer.  Investor has not sold, assigned, conveyed, transferred, mortgaged, hypothecated, pledged or encumbered or otherwise permitted any lien to be incurred with respect to the Exchange Shares or any portion thereof.

3.5              Proceedings.  No proceedings relating to the Exchange Shares are pending or, to the knowledge of the Investor, threatened before any court, arbitrator or administrative or governmental body that would adversely affect the Investor’s right and ability to surrender and exchange the Exchange Shares.

3.6              Conveyance.  Investor has full legal and equitable title to the Exchange Shares, free and clear of all liens, pledges or encumbrances of any kind, nature or description, with full and unrestricted legal power, authority and right to enter into this Agreement and to transfer and deliver the Exchange Shares to the Company pursuant hereto, and upon delivery of the Exchange Shares to Company, Company will be the owner of the Exchange Shares, free and clear of all liens, claims, pledges or encumbrances of any kind, nature or description.

3.7              Action.   Investor has taken no action that would impair its ability to transfer the Exchange Shares.

3.8              Interest.   No person other than the Investor has any right or interest in the Exchange Shares.

3.9              Tax Consequences.  The Investor acknowledges that the purchase of the Preferred Stock may involve tax consequences to the Investor and that the contents of the Exchange Documents do not contain tax advice. Investor acknowledges that it has not relied and will not rely upon the Company with respect to any tax consequences related to the exchange of the Exchange Shares.  The Investor assumes full responsibility for all such consequences and for the preparation and filing of any tax returns and elections which may or must be filed in connection with such Exchange Shares.

3.10           Reliance on Exemptions. The Investor understands that the Preferred Stock being offered and exchanged in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein and in the Exchange Documents in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Securities.

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3.11           No Governmental Review. The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Preferred Stock or the fairness or suitability of the investment in the Preferred Stock nor have such authorities passed upon or endorsed the merits of the offering of the Preferred Stock.

3.12           No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the Exchange Documents to which the Investor is a party, and the consummation by the Investor of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational documents of the Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Investor, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Investor to perform its obligations hereunder.

4.           COVENANTS.

4.1           Reasonable Best Efforts. The Company shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 5 of this Agreement. The Investor shall use its reasonable best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Section 6 of this Agreement.

4.2           Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of the Preferred Stock and shares of Common Stock issuable upon conversion of the Preferred Stock may be tacked onto the holding period of the Exchange Shares, and the Company agrees not to take a position contrary to this Section 4.2. Upon receipt of an opinion of counsel to the Investor, in a form reasonably acceptable to the Company, the Company agrees to take all actions necessary to issue the Common Stock upon conversion of the Preferred Stock without restriction, without any restrictive legend and without the need for any additional action by the Investor, (A) following any sale of such Common Stock pursuant to Rule 144, or (B) if such Common Stock is eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Common Stock and without volume or manner-of-sale restrictions.

4.3           Pledge of Securities. The Company acknowledges and agrees that the Preferred Stock may be pledged by any holder of Securities (a “Holder“) in connection with a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Preferred Stock to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement. If Holder effects such a pledge of Preferred Stock, it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Exchange Document. At the Holder’s expense, the Company hereby agrees, subject to applicable securities laws, to execute and deliver such documentation as a pledgee of the Preferred Stock may reasonably request in connection with a pledge of the Preferred Stock to such pledgee by an Investor.

4.4           Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the maximum number of shares of Common Stock issuable upon conversion of the Preferred Stock (without taking into account any limitations on the exercise of the Preferred Stock set forth in the Certificate of Designation).

4.5           Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to Investor), a register for the Preferred Stock in which the Company shall record the name and address of the person in whose name the Preferred Stock have been issued (including the name and address of each transferee) and the number of Common Stock shares issuable upon conversion of the Preferred Stock held by such person. The Company shall keep the register open and available, upon 24 hours prior written notice, during normal business hours for inspection of any Investor or its legal representatives.

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4.6           Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Company’s transfer agent, and any subsequent transfer agent, to issue certificates or, provided that the transfer agent is participating in the DTC Fast Automated Securities Transfer Program, cause the transfer agent to issue such certificates to the Investor by electronic delivery at the applicable balance account at the Depository Trust Company (“DTC”) through its Deposit/Withdrawal at Custodian system to the applicable balance accounts at DTC, registered in the name of the Investor or its respective nominee(s), for the Common Shares into which the Preferred Shares are convertiblein such amounts as specified from time to time by the Investor to the Company upon conversion of the Preferred Shares. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Investor. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 4.6 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 4.6, that the Investor shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

5.           CONDITIONS TO COMPANY’S OBLIGATIONS HEREUNDER.

The obligations of the Company to the Investor hereunder are subject to the satisfaction of each of the following conditions (except to the extent such condition is expressly conditional to a specific closing, in which case such condition shall only apply to such specific closing), provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Investor with prior written notice thereof:

5.1           The Investor shall have duly executed this Agreement and delivered the same to the Company.

5.2           The representations and warranties of the Investor shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and the Investor shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to the Closing Date.

5.3           No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement.

6.           CONDITIONS TO INVESTOR’S OBLIGATIONS HEREUNDER.

The obligations of the Investor hereunder are subject to the satisfaction of each of the following conditions (except to the extent such condition is expressly conditional to a specific closing, in which case such condition shall only apply to such specific closing), provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice thereof:

6.1            The Company shall have duly executed and delivered this Agreement to the Investor.

6.2            Each and every representation and warranty of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Closing Date.

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6.3           The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the transactions contemplated by this Agreement.

6.4           No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement.

7.           MISCELLANEOUS.

7.1           Legends. The Investor acknowledges that the certificate(s) representing the Preferred Stock shall each conspicuously set forth on the face or back thereof a legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

7.2           Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

7.3           Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.  This Agreement, to the extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic Delivery”), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto, each other party hereto shall re-execute original forms hereof and deliver them in person to all other parties.  No party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense related to lack of authenticity.

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7.4           Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

7.5           Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

7.6           Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Investor, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement, contains the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor Investor  makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Investor, and any amendment to this Agreement made in conformity with the provisions of this Section shall be binding upon the Investor.  No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

7.7           Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Energy Telecom, Inc.

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

St. Augustine, Florida 32084

with a copy (for informational purposes only) to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Telephone: (212) 930-9700

Facsimile: (212) 930-9725

Attention: James M. Turner, Esq.

If to Investor:

Robert Kalfayan

c/o Gracin & Marlow, LLP

405 Lexington Avenue, 26th Floor

New York, New York 10174

Telephone: (212) 907-6457

Facsimile: (212) 208-4657

Attention: Leslie Marlow, Esq.

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to its address and facsimile number set forth above, or to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

7.8           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Preferred Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor. Investor may assign some or all of its rights hereunder without the consent of the Company.

7.9           Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability of a more general representation or warranty.

IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date first written above.

COMPANY:
	ENERGY TELECOM, INC.
By:	____________________________
Name: Thomas Rickards
Title: Chief Executive Officer

INVESTOR:
	ROBERT KALFAYAN
By:	____________________________
Name: Robert Kalfayan

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EX-10.08

Exhibit 10.08

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of March 11, 2013, by and between ENERGY TELECOM, INC., a Florida corporation, with headquarters located at 3501-B N. Ponce de Leon Blvd., #393, St. Augustine, Florida 32084 (the "Company"), and Normandia Capital, a Panama corporation with a mailing address of c/o Gracin & Marlow, LLP, 405 Lexington Avenue, 26th Floor, New York, New York 10174 (the "Buyer").

WHEREAS:

A.          The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Regulation S (“Regulation S”), as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the under the Securities Act of 1933, as amended (the “1933 Act”).

B.           The Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, 1,520 shares of series A convertible preferred stock (the “Preferred Shares”) pursuant to the Certificate of Designation, Rights and Preferences of the Series A Convertible Preferred Stock, in the form attached hereto as Exhibit A (the “Certificate of Designation”), which Preferred Shares are convertible into shares of the Company’s class A Common Stock (the “Common Stock” and, as converted, the “Conversion Shares”, and together with the Common Stock and Preferred Shares, the “Securities”).

NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

1.           PURCHASE AND SALE OF PREFERRED SHARES.

  (a)              Purchase of Preferred Shares.

(i)           Preferred Shares.Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to Buyer, and Buyer, shall purchase from the Company on the Closing Date (as defined below), the Preferred Shares (the "Closing").

(ii)           Closing. The date and time of the Closing (the "Closing Date") shall be 10:00 a.m., New York City time, on the date hereof after notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below, at the offices of Gracin & Marlow, LLP, Chrysler Building, 405 Lexington Avenue, 26th Floor, New York, New York 10174.

(iii)           Purchase Price. The aggregate purchase price for the Preferred Shares to be purchased by the Buyer at the Closing (the "Purchase Price") shall be $152,000. The purchase price per Preferred Share is $152,000.

  (b)             Form of Payment. On the Closing Date, (i) Buyer shall pay the Purchase Price to the Company for the Preferred Shares to be issued and sold to Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company's written wire instructions and (ii) the Company shall deliver to Buyer the Preferred Shares which such Buyer is purchasing, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.

2.           BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants that:

  (a)             Organization; Authority. Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance by Buyer of the transactions contemplated by this Agreement has been duly authorized by all necessary action on the part of such Buyer. This Agreement has been duly executed by Buyer, and when delivered by Buyer in accordance with the terms hereof, will constitute the valid and legally binding obligation of Buyer, enforceable against it in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

  (b)             No Conflicts. The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of Buyer or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Buyer to perform its obligations hereunder.

  (c)              Non-U.S. Buyer. Buyer is outside the United States when receiving and executing this Agreement and the Buyer is not a U.S. Person as defined in Rule 902 of Regulation S.

  (d)              No Public Sale or Distribution. Such Buyer (i) is acquiring the Preferred Shares and (ii) upon conversion of the Preferred Shares, will acquire the Conversion Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. Such Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws.   The Buyer has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons.

  (e)             Reliance on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire the Securities.

  (f)              Information. Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Buyer.  Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.

  (g)             No Governmental Review.  Such Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

  (h)             Transfer or Resale. Such Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the Company) an opinion of counsel to such Buyer, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration (it being acknowledged that an opinion issued by Gracin & Marlow, LLP shall be acceptable to the Company), or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person (as defined below) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

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  (i)              Certain Trading Activities. Such Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving the Company’s securities) during the period commencing as of the time that such Buyer was first contacted regarding the specific investment in the Company contemplated by this Agreement and ending immediately prior to the execution of this Agreement by such Buyer (it being understood and agreed that for all purposes of this Agreement, and, without implication that the contrary would otherwise be true, that neither transactions nor purchases nor sales shall include the location and/or reservation of borrowable shares of Common Stock). “Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended (the “1934 Act”).

  (j)              Experience of Such Buyer. Such Buyer, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  Such Buyer is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

  (k)              General Solicitation.  Such Buyer is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

  (l)              No Directed Selling Efforts.  The Buyer has not acquired the Securities as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of the Securities; provided, however, that the Buyer may sell or otherwise dispose of the Securities pursuant to registration thereof under the 1933 Act and any applicable state and provincial securities laws or under an exemption from such registration requirements.

  (m)             No Plan or Scheme.  The Buyer acknowledges that the statutory and regulatory basis for the exemption from U.S. registration requirements claimed for the offer of the Preferred Shares, although in technical compliance with Regulation S, would not be available if the offering is part of a plan or scheme to evade the registration provisions of the 1933 Act or any applicable state or provincial securities laws.

  (n)             Observance of Local Laws.  To the best of Buyer’s knowledge, the Buyer is in compliance with the laws of its jurisdiction in connection with any invitation to subscribe for the Preferred Shares or any use of this Agreement, including: (a) the legal requirements within its jurisdiction for the purchase of the Preferred Shares; (b) any foreign exchange restrictions applicable to such purchase; (c) any governmental or other consents that may need to be obtained; and (d) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Securities.  Such Buyer’s subscription and payment for, and its continued beneficial ownership of the Securities, will not violate any applicable securities or other laws of the Buyer’s jurisdiction.

The Company acknowledges and agrees that Buyer does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 2.

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3.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Buyer that, as of the date hereof and as of the Closing Date (which representations and warranties shall be deemed to apply, where appropriate, to each Subsidiary (as defined below) of the Company):

  (a)             Organization. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Florida, with corporate power and authority to own or lease its properties and conduct its business as described in its Annual Report on Form 10-K for the year ended December 31, 2011 (the "Annual Report"). The Company has no significant subsidiaries (as such term is defined in Rule 1-02 of Regulation S-X promulgated by the SEC) other than as set forth in the Annual Report and otherwise has no direct or indirect subsidiaries. The Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, except where the failure to be so qualified would not reasonably be expected to result in any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined below) (collectively a "Material Adverse Effect").

  (b)            Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "Transaction Documents") and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Preferred Shares, and the reservation for issuance and the issuance of the shares issuable upon conversion of the Preferred Shares have been duly authorized by the Company's Board of Directors, and no further filing, consent, or authorization is required by the Company's Board of Directors or its stockholders. This Agreement and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies.

  (c)                Issuance of Securities. The outstanding shares of Common Stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; the Securities to be issued and sold by the Company have been duly authorized and, when issued and paid for as contemplated by the terms of the Transaction Documents, will be free from all taxes, liens and charges with respect to the issue thereof, validly issued, fully paid and non-assessable, and no preemptive rights of stockholders exist with respect to any of the Securities or the issue and sale thereof. As of the Closing, a number of shares of Common Stock shall have been duly authorized and reserved for issuance which equals or exceeds the maximum number of shares of common stock issuable upon conversion of the Preferred Shares.  The offering or sale of the Securities as contemplated by this Agreement does not give rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock. Upon issuance or conversion in accordance with the Preferred Shares, the shares to be issued will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. There are no securities or instruments issued by the Company containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities

  (d)               Equity Capitalization.  As of the date hereof, the authorized capital stock of the Company consists of (i) 200,000,000 shares of Class A Common Stock, of which, 8,314,115 are issued and outstanding, (ii) 10,000,000 shares of Class B Common Stock, of which, 600,000 are issued and outstanding, and (ii) 10,000,000 shares of preferred stock, of which 5,790 shares have been designated as Preferred Shares and 4,180.3 Preferred Shares are issued and outstanding.

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  (e)              Disclosure.

 (i)          The Company confirms that neither it nor any other person acting on its behalf has provided the Buyer’s agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information. The Company understands and confirms that Buyer will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to Buyer regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each press release issued by the Company during the twelve (12) months preceding the date hereof did not at the time of release contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make such statements therein, in the light of the circumstances in which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or its business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

(ii) The Common Stock of the Company is registered pursuant to Section 15 of the 1934 Act.  During the one year period preceding the date of this Agreement, the Company has timely filed all reports, schedules, forms, statements and other documents that a company with securities registered under Section 12 of the 1934 Act would be required to file.  At the times of their respective filing, all such reports, schedules, forms, statements and other documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission promulgated thereunder.  At the times of their respective filings, such reports, schedules, forms, statements and other documents did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

  (f)           Offering Materials. The Company has not, directly or indirectly, distributed and will not distribute any offering material in connection with the offering and sale of the Securities. The Company has satisfied or will satisfy all requirements of the federal and state securities laws and, except for a Form 8-K filing, the issuance of the Preferred Shares does not require any filing with the Securities and Exchange Commission or any state regulators.

  (g)           Financial Statements. The consolidated financial statements of the Company, together with related notes and schedules as set forth or incorporated by reference in the Annual Report, present fairly in all material respects the financial position and the results of operations and cash flows of the Company, at the indicated dates and for the indicated periods. Such consolidated financial statements and related schedules have been prepared in accordance with United States generally accepted principles of accounting ("GAAP"), consistently applied throughout the periods involved, except as disclosed therein, and all adjustments necessary for a fair presentation of results for such periods have been made and comply as to form in all material respects with applicable accounting requirements and the rules of the SEC as applicable to companies with securities registered under the 1934 Act. The summary and selected consolidated financial and statistical data included or incorporated by reference in the Annual Report present fairly in all material respects the information shown therein, at the indicated dates and for the indicated periods, and such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company. The Company does not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations or any "variable interest entities" within the meaning of Financial Accounting Standards Board Interpretation No. 46), not disclosed in the Annual Report. All filings of the Company made with the SEC complied in all material respects with the requirements of the 1934 Act and none of such filings contain an untrue statements of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein in light of the circumstances under which they were made, not misleading.

  (h)            Accountants. RBSM LLP, who have rendered an opinion on the financial statements filed with the Securities and Exchange Commission (“SEC”) as part of, or incorporated by reference in, the Annual Report is, to the Company’s knowledge, an independent registered public accounting firm with respect to the Company within the meaning of the 1933 Act and the applicable Rules and Regulations and the Public Company Accounting Oversight Board (United States) (the "PCAOB").

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  (i)             Weaknesses or Changes in Internal Accounting Controls. Except as disclosed in the Annual Report or any quarterly reports on Form 10-Q or Current Reports on Form 8-K filed since the filing of the Annual Report with the SEC (the “SEC Filings”), the Company is not aware of (i) any material weakness in its internal control over financial reporting or (ii) change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

  (j)              Sarbanes-Oxley. Solely to the extent that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated by the SEC thereunder (collectively, the "Sarbanes-Oxley Act") has been applicable to the Company, there is, and has been, no failure on the part of the Company to comply in all respects with any provision of the Sarbanes-Oxley Act other than the weakness in internal accounting controls. The Company has taken all necessary actions to ensure that it is in compliance in all respects with all provisions of the Sarbanes-Oxley Act other than the weakness in internal accounting controls that are in effect with respect to which the Company is required to comply and is actively taking steps to ensure that it will be in compliance with the other provisions of the Sarbanes-Oxley Act which will become applicable to the Company.

  (k)             Litigation. There is no action, suit, claim or proceeding pending or, to the knowledge of the Company, threatened against the Company before any court or administrative agency or otherwise which if determined adversely to the Company would have, individually or in the aggregate, a Material Adverse Effect, except as set forth in the Annual Report.

  (l)              Title. The Company has good and marketable title to all of the material properties and assets reflected in the consolidated financial statements hereinabove described or described in the Annual Report, subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected in such financial statements or described in the Annual Report or which are not material in amount or would not materially interfere with the use to be made of such properties or assets. The Company occupies its leased properties under valid and binding leases conforming in all material respects to the description thereof set forth in the Annual Report.

  (m)            Taxes. The Company has filed all federal, state, local and foreign tax returns which have been required to be filed and have paid all taxes indicated by such returns and all assessments received by it to the extent that such taxes have become due and are not being contested in good faith and for which an adequate reserve for accrual has been established in accordance with GAAP. All tax liabilities have been adequately provided for in the consolidated financial statements of the Company in accordance with GAAP, and the Company does not know of any actual or proposed additional material tax assessments.

  (n)             Absence of Certain Changes. Except as disclosed in the SEC Filings, there has not been any Material Adverse Effect, and there has not been any material transaction entered into by the Company. The Company has no material contingent obligations which are not disclosed in the SEC Filings.

  (o)             No Conflicts. The Company is not, or with the giving of notice or lapse of time or both, will not be after giving effect to the execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Shares, and the reservation for issuance and the issuance of the underlying commons shares), (i) in violation of its articles of organization, by-laws, any certificate of designations or other organizational documents or (ii) in violation of or in default under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it, or any of its properties, is bound and, solely with respect to this clause (ii), which violation or default would have a Material Adverse Effect. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company is a party or by which the Company or any of its respective properties is bound, or of the articles of organization or by-laws of the Company or any law, order, rule or regulation judgment, order, writ or decree applicable to the Company of any court or of any government, regulatory body or administrative agency or other governmental body having jurisdiction, except to the extent that such conflict, breach or default would not have a Material Adverse Effect.

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  (p)             Contracts. There is no document, contract or other agreement required to be described in the SEC Filings that is not described or filed as required by the 1934 Act or the rules and regulations thereunder. Each description of a contract, document or other agreement in the SEC Filings accurately reflects in all material respects the terms of the underlying contract, document or other agreement. Each contract, document or other agreement described in the SEC Filings or listed in the exhibits to the SEC Filings or incorporated by reference is in full force and effect and is valid and enforceable by and against the Company in accordance with its terms (except as rights to indemnity and contribution thereunder may be limited by federal or state securities laws and matter of public policy and except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principle). Neither the Company nor, to the Company's knowledge, any other party is in default in the observance or performance of any term or obligation to be performed by it under any such agreement or any other agreement or instrument to which the Company is a party or by which the Company or its respective properties or businesses may be bound, and no event has occurred which with notice or lapse of time or both would constitute such a default, in any such case in which the default or event, individually or in the aggregate, would have a Material Adverse Effect.

  (q)              Regulatory Approvals. Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated has been obtained or made and is in full force and effect.

  (r)              Conduct of Business. The Company is not in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company and the Company will not conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

  (s)             Intellectual Property. Except as described in the SEC Filings or in any document incorporated by reference therein, the Company holds all material licenses, certificates and permits from governmental authorities which are necessary to the conduct of their businesses in the manner in which they are being conducted; the Company owns or possesses the right to use all patents, patent rights, trademarks, trade names, service marks, service names, copyrights, license rights, know-how (including trade secrets and other unpatented and unpatentable proprietary or confidential information, systems or procedures) and other intellectual property rights ("Intellectual Property") necessary to carry on their business in all material respects in the manner in which it is being conducted; the Company has not infringed, and the Company has not received notice of conflict with, any Intellectual Property of any other person or entity. The Company has taken all steps reasonably necessary to secure ownership interests in Intellectual Property created for it by any contractors. There are no outstanding options, licenses or agreements of any kind relating to the Intellectual Property of the Company that are required to be described in the SEC Filings and are not described therein in all material respects. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property of any other person or entity that are required to be set forth in the SEC Filings and are not described therein in all material respects. None of the technology employed by the Company and material to the Company's business has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company's knowledge, any of its officers, directors or employees or, to the Company's knowledge, otherwise in violation of the rights of any persons; the Company has not received any written or oral communications alleging that the Company has violated, infringed or conflicted with, or, by conducting its business as set forth in the SEC Filings, would violate, infringe or conflict with, any of the Intellectual Property of any other person or entity. Except for prior infringements by others of Intellectual Property owned by or licensed to the Company, which the Company, through counsel, has resolved through cease-and-desist letters, the Company is not aware of any current infringement by others of Intellectual Property owned by or licensed to the Company.

  (t)             Manipulation of Prices. Neither the Company, nor to the Company's knowledge, any of its affiliates, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Securities.

  (u)            Investment Company Act. The Company is not, and after giving effect to the offering and sale of the Securities contemplated hereunder and for so long any Buyer holds any Securities, will not be an "investment company" within the meaning of such term under the Investment Company Act of 1940 as amended and the rules and regulations of the SEC thereunder.

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  (v)             Internal Accounting Controls.

(i)           Except as disclosed in the SEC Filings, the Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

  (ii)             The Company has established and maintains "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act); except as disclosed in the SEC Filings, the Company's "disclosure controls and procedures" are reasonably designed to ensure that all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the rules and regulations of the 1934 Act, and that all such information is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the 1934 Act with respect to such reports.

  (w)             Industry and Market Data. The statistical, industry-related and market-related data included in the Annual Report, if any, are based on or derived from sources which the Company reasonably and in good faith believes are reliable and accurate, and such data agree in all material respects with the sources from which they are derived.

  (x)             Money Laundering Laws. The operations of the Company is and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the "Money Laundering Laws"), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any or its subsidiaries with respect to the Money Laundering Laws is pending or, to the Company's knowledge, threatened.

  (y)             Office of Foreign Assets Control. Neither the Company nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

  (z)              Reserved.

  (aa)           Employee Benefits. The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company would have any material liability; the Company has not incurred and does not expect to incur material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.

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  (bb)           Employee Relations. (i) The Company is not a party to any collective bargaining agreement or employs any member of a union. The Company believes that its relations with its employees are good. No executive officer of the Company (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company or otherwise terminate such officer's employment with the Company. No executive officer of the Company is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters, except where such violation would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(ii) The Company is in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

  (cc)           Transactions with Affiliates. Except as disclosed in the SEC Filings, there are no relationships or related-party transactions involving the Company and to the knowledge of the Company, any other person required to be described in the SEC Filings which have not been described as required.

  (dd)           Environmental Laws. The Company is (i) not in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), (ii) does not own or operate any real property contaminated with any substance that is subject to environmental laws, (iii) is not liable for any off-site disposal or contamination pursuant to any environmental laws, and (iv) is not subject to any claim relating to any environmental laws, which violation, contamination, liability or claim would, individually or in the aggregate, have a Material Adverse Effect; and the Company is not aware of any pending investigation which would reasonably be expected to lead to such a claim.

  (ee)           Listing; 1933 Act Registration. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the 1933 Act or the quotation of the Common Stock on the OTC-BB, nor, has the Company received any notification that the SEC or the OTC-BB is currently contemplating terminating such registration or quotation.

  (ff)             Contributions; Foreign Corrupt Practices. The Company has not made any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law.

  (gg)           No Integrated Offering. The Company has not sold or issued any securities that would be integrated with the offering of the Securities contemplated by this Agreement pursuant to the 1933 Act, the Rules and Regulations or the interpretations thereof by the SEC. None of the Company, any of its affiliates, and any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to require approval of stockholders of the Company for purposes of any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its affiliates and any person acting on their behalf will take any action or steps referred to in the preceding sentence that would cause the offering of the Securities to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.

  (hh)           Consents.   The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, including the issuance of the Securities, in each case in accordance with the terms hereof or thereof. The Company is unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.

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  (ii)             Acknowledgment Regarding Buyer's Purchase of Securities. The Company acknowledges and agrees that Buyer is acting solely in the capacity of an arm's length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that Buyer is not (i) an officer or director of the Company, (ii) to the knowledge of the Company, an "affiliate" of the Company (as defined in Rule 144 of the 1933 Act) or (iii) to the knowledge of the Company, a "beneficial owner" of more than 10% of the shares of Common Stock (as used in this Agreement, the term "affiliate" shall have the meaning set forth in Rule 405 of the 1933 Act). The Company further acknowledges that Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer's purchase of the Securities. The Company further represents to the Buyer that the Company's decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

  (jj)             Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to exempt the Company's issuance of the Securities and Buyer's ownership of the Securities from the provisions of any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation of the Company or the laws of the state of its incorporation which is or could become applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company's issuance of Securities and each Buyer's ownership of the Securities). The Company does not have any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

  (ii)              Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect.

  (jj)             Transfer Taxes. On the Closing Date, all stock transfer or other similar taxes (other than income or similar taxes) which are required to be paid in connection with the sale and transfer of the Securities to be sold to Buyer hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

  (kk)            Shell Company Status. The Company is not, and has not been in the last twelve (12) months, an issuer identified in Rule 144(i)(1).

  (ll)             Solvency. The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(oo), "Insolvent" means, with respect to any person  (i) the present fair saleable value of such person's assets is less than the amount required to pay such person's total indebtedness, (ii) such person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

4.           COVENANTS.

  (a)             Best Efforts. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

  (b)             Use of Proceeds. The Company will use the proceeds from the sale of the Securities for general corporate purposes, including general and administrative expenses and not for (i) the repayment of any outstanding indebtedness of the Company outside the ordinary course of business or (ii) the redemption or repurchase of any of its equity securities.

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  (c)             Pledge of Securities. The Company acknowledges and agrees that the Securities may be pledged by any holder of Securities (an “Investor“) in connection with a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the 1933 Act and who agrees to be bound by the provisions of this Agreement. If Investor effects such a pledge of Securities, it shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document. At the Investor’s expense, the Company hereby agrees, subject to applicable securities laws, to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor.

  (d)             Disclosure of Transactions and Other Material Information. Without the prior written consent of Buyer, neither the Company nor any of its affiliates shall disclose the name of Buyer in any filing, announcement, release or otherwise unless such disclosure is required by law or regulation   Notwithstanding the foregoing, the Buyer acknowledges that this Agreement is required to be filed as an exhibit to a Form 8-K with the SEC within four (4) business days and consents to such filing.

  (e)             Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the maximum number of shares of Common Stock issuable upon conversion of the Preferred Shares (without taking into account any limitations on the exercise of the Preferred Shares).

  (f)              Additional Issuances of Securities.

(i)            For purposes of this Section 4(f), the following definitions shall apply.

(1)            "Approved Stock Plan" means any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer or director for services provided to the Company.

(2)            "Common Stock Equivalents" means, collectively, Options and Convertible Securities.

(3)            "Convertible Securities" means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock.

(4)            "Excluded Securities" means any Common Stock issued or issuable: (i) in connection with any Approved Stock Plan, (ii) upon conversion of the Preferred Shares; and (iii) upon exercise of any Options or Convertible Securities which are outstanding on the day immediately preceding the date hereof, provided that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the date hereof.

(5)            "Options" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

(ii)           From the date hereof until the ninetieth (90th) day after the Closing Date (the "Trigger Date"), the Company will not (A), directly or indirectly, file any registration statement, amendment to a registration statement or prospectus with the SEC, (B) directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries' equity or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents or (C) be party to any solicitations, negotiations or discussions with regard to the foregoing. The restrictions contained in this subsection paragraph shall not apply in connection with the issuance of any Excluded Securities.

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  (g)             Closing Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be delivered, to the Buyer executed copies of the Transaction Documents, Securities and other documents required to be delivered to any party pursuant to Section 7 hereof.

  (h)             No Dilution. The Company shall not sell or issue any additional shares of series A convertible preferred stock without the prior written consent of the Buyer, which consent may be withheld by Buyer in its sole discretion.

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  REGISTER; TRANSFER AGENT INSTRUCTIONS.

  (a)              Register. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to each holder of Securities), a register for the Preferred Shares in which the Company shall record the name and address of Buyer (including the name and address of each transferee)), the number of Common Shares issuable upon conversion of the Preferred Shares. The Company shall keep the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

  (b)             Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Transfer Agent in the form of Exhibit D attached hereto (the "Irrevocable Transfer Agent Instructions"), and any subsequent transfer agent, to issue certificates or, provided that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, cause the Transfer Agent to issue such certificates to the Buyer by electronic delivery at the applicable balance account at the Depository Trust Company (“DTC”) through its Deposit/Withdrawal at Custodian system to the applicable balance accounts at DTC, registered in the name of Buyer or its respective nominee(s), for the Common Shares into which the Preferred Shares are convertiblein such amounts as specified from time to time by Buyer to the Company upon conversion of the Preferred Shares. The Company represents and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5 will be given by the Company to the Transfer Agent, and any subsequent transfer agent with respect to the Common Shares, and that the Common Shares shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the other Transaction Documents. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5, that the Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

6.           CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

  The obligation of the Company hereunder to issue and sell the Preferred Shares to Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing Buyer with prior written notice thereof:

  (i)               Buyer shall have executed each of the Transaction Documents and delivered the same to the Company.

  (ii)             Buyer shall have delivered to the Company the Purchase Price for the Preferred Shares being purchased by Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company.

  (iii)            The representations and warranties of Buyer shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as of such specified date), and Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by Buyer at or prior to the Closing Date.

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  (iv)            No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

  (v)             The Buyer shall have delivered to Company such other documents relating to the transactions contemplated by this Agreement as the Company or its counsel may reasonably request.

7.           CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE.

The obligation of Buyer hereunder to purchase the Preferred Sharesat the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for Buyer's sole benefit and may be waived by Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

    (i)             The Company shall have duly executed and delivered to Buyer (1) each of the Transaction Documents (2) the Preferred Shares (allocated in such amounts as Buyer shall request), being purchased by Buyer at the Closing pursuant to this Agreement and (3) a copy of Irrevocable Instructions to the Transfer Agent in the form of Exhibit A attached hereto, which instructions shall have been acknowledged in writing by the Company’s transfer agent.  Notwithstanding anything else to the foregoing in this Agreement, Buyer hereby consents to delivery of the Preferred Shares within ten (10) business days after the Closing Date.

    (ii)            The Company shall have delivered to Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries in such entity's jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within forty-five (45) days of the Closing Date and, if applicable, qualification as a foreign corporation in good standing in each jurisdictions in which the Company conducts business.

    (iii)           The Company shall have delivered to Buyer a copy of the Articles of Incorporation, as amended.

    (v)            The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (1) the resolutions adopted by the Company's Board of Directors in a form reasonably acceptable to Buyer, (2) the Articles of Incorporation and (3) the Bylaws, each as in effect at the Closing, in the form attached hereto as Exhibit B.

    (vi)           The representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a s  pecific date, which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit C.

    (vii)          The Company shall have delivered to Buyer a letter from the Transfer Agent certifying the number of shares of Common Stock outstanding as of a date within five days of the Closing Date.

    (viii)         The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the Securities.

    (ix)           No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

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(x)            The Company shall have delivered to Buyer such other documents relating to the transactions contemplated by this Agreement as Buyer or its counsel may reasonably request.

8.            RIGHT OF FIRST REFUSAL.

Until one year following the Closing Date or until the Holder no longer holds any securities of the Company, whichever occurs first, the Buyer shall be given not less than five (5) business days prior written notice of any proposed sale by the Company of any shares of common or preferred stock (“Other Offering”), except in connection with the Excepted Issuances (as defined below).  If Buyer elects to exercise its rights pursuant to this Section 8, the Buyer shall have the right during the five (5) business days following receipt of the notice to purchase up to all of such offered common or preferred stock in accordance with the terms and conditions set forth in the notice of sale.  In the event such terms and conditions are materially modified during the notice period, Buyers shall be given prompt notice of such material modification and shall have the right during the ten (10) business days following the notice of modification to exercise such right.  “Excepted Issuances” shall mean: (i) full or partial consideration in connection with a strategic synergistic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other entity, (ii) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital, (iii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to a stock option or incentive plan approved by the Company’s shareholders, (iv) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement on the terms in effect on the Closing Date, and (v) as a result of the conversion of any Preferred Shares issued pursuant to this Agreement.

9.            PIGGYBACK REGISTRATION RIGHTS.

For a period of twenty-four (24) months following the Closing Date, if the Company proposes to file a registration statement with respect to any class of its equity securities and included in such registration statement are securities held for the account of one or more holders of securities of the Company, but excluding any registration statements (i) on Form S-4 or S-8 (or any successor or substantially similar form), or of any employee stock option, stock purchase or compensation plan or of securities issued or issuable pursuant to any such plan, or a dividend reinvestment plan, (ii) otherwise relating to any employee, benefit plan or corporate reorganization or other transactions covered by Rule 145 promulgated under the 1933 Act, or (iii) on any registration form that does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the resale of the Conversion Shares), then the Company shall in each case give written notice of the proposed filing to Buyer at least twenty (20) business days before the anticipated filing date of the registration statement by the Company, which the Company notice must offer to Buyer the opportunity to have any or all of the Conversion Shares included in that registration statement. If Buyer wishes to have any of those Conversion Shares or any shares of Common Stock held by the Buyer registered under this Section 9(b), Buyer must so advise the Company in writing within ten (10) business days after the date of his receipt of that notice, specifying how many of the Conversion Shares it wishes to have so registered, and the Company shall include in that registration statement all Conversion Shares or shares of Common Stock that Buyer has requested be included therein subject to the provisions of the next sentence. Notwithstanding the foregoing, if the underwriter for the offering being registered shall determine and advise the Company in writing that marketing factors require a limitation in the number of securities that can be sold in the offering, then the Company will include in such registration the securities requested to be included pro rata among all holders with such piggyback rights on the basis of the number of securities requested to be included by such holders; provided that no shares of any executive officers of directors shall be included in such registration statement unless all of the Holder’s shares are included and provided, further that if any shares of any holders with piggyback rights are included then the Holder shall be entitled to register at least twenty-five percent (25%) of its Conversion Shares or shares of Common Stock.  In furtherance and not in limitation of the foregoing, the Buyer shall have no rights pursuant to this Article 9 at such time as all of the Buyer’s Conversion Shares may be sold without limitation pursuant to Rule 144 and without any requirements applicable to the Company such as current public information requirements.

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10.           MISCELLANEOUS.

  (a)             Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

  (b)             Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement.  This Agreement, to the extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic Delivery”), shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto, each other party hereto shall re-execute original forms hereof and deliver them in person to all other parties.  No party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense, except to the extent such defense related to lack of authenticity.

  (c)             Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

  (d)            Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

  (e)             Entire Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Buyer, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Buyer, and any amendment to this Agreement made in conformity with the provisions of this Section 8(e) shall be binding upon the Buyer and holders of Securities as applicable. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Securities then outstanding.

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  (f)              Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Energy Telecom, Inc.

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

St. Augustine, Florida 32084

with a copy (for informational purposes only) to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Telephone: (212) 930-9700

Facsimile: (212) 930-9725

Attention: James M. Turner, Esq.

If to the Transfer Agent:

Securities Transfer Corporation

2591 Dallas Parkway, Suite 102

Frisco, Texas 75034

Telephone: (972) 963-0012

Facsimile: (469) 633-0088

Attention: Marilyn Fox

If to Buyer:

Normandia Capital

c/o Gracin & Marlow, LLP

405 Lexington Avenue, 26th Floor

New York, New York 10174

Telephone: (212) 907-6457

Facsimile: (212) 208-4657

Attention: Leslie Marlow, Esq.

to its address and facsimile number set forth above, or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or

receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

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  (g)             Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Preferred Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyer. Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee shall be deemed to be Buyer hereunder with respect to such assigned rights.

  (h)             No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

  (i)              Survival. The representations and warranties of the Company and the Buyer contained in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 8 shall survive the Closing.

  (j)              Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as are reasonably necessary in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

  (k)             Indemnification. (i) In consideration of Buyer's execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees"), as incurred, from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party that is not an affiliate of such Indemnitee (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of  Buyer or holder of the Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents, provided, however, that such Indemnified Liabilities, shall in no event exceed the net proceeds received by the Company from the Buyer as a result of the sale of the Securities to the Buyer pursuant to this Agreement. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

 (ii)           Promptly after receipt by an Indemnitee under this Section 8(k) of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification in respect thereof is to be made against any indemnifying party under this Section 8(k), deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be selected by the Buyer. The Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that relates to such action or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified Liabilities or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 8(k), except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

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(iii)           The indemnification required by this Section 8(k) shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Liabilities are incurred.

(iv)           The indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.

  (l)              No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

  (m)            Remedies. Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law may prove to be inadequate relief to the Buyer. The Company therefore agrees that the Buyer shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

  (n)            Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever Buyer exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then Buyer may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

  (o)             Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyer hereunder or pursuant to any of the other Transaction Documents or the Buyer enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

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IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

COMPANY:
ENERGY TELECOM, INC.
By:
	Name: Thomas Rickards
	Title: Chief Executive Officer

[Signature Page to Securities

Purchase Agreement]

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IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed as of the date first written above.

BUYER:

NORMANDIA CAPITAL

By;  _________________________________

        Name:

        Title:

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EXHIBITS

Exhibit A	Certificate of Designation, Rights and Preferences of the Series A Convertible Preferred Stock
Exhibit B	Form of Secretary's Certificate
Exhibit C	Form of Officer's Certificate
Exhibit D	Form of Irrevocable Transfer Agent Instructions

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EX-31.01

EXHIBIT 31.01

CERTIFICATION

I, Thomas Rickards, certify that:

1. I have reviewed this annual report on Form 10-K 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: March 22, 2013

/s/ THOMAS RICKARDS

Thomas Rickards

Chief Executive Officer

EX-31.02

EXHIBIT 31.02

CERTIFICATION

I, Thomas Rickards, certify that:

1. I have reviewed this annual report on Form 10-K 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: March 22, 2013

/s/ THOMAS RICKARDS

Thomas Rickards

Principal Financial Officer

EX-32.01

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 Annual Report of Energy Telecom, Inc. on Form 10-K for the fiscal year ended December 31, 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 Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of operations of Energy Telecom, Inc.

	By:	/s/ THOMAS RICKARDS
Date: March 22, 2013	Name:	Thomas Rickards
	Title:	Chief Executive Officer and Principal Financial Officer

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Note 13 - Income Taxes: Summary of Tax Credit Carryforwards (Tables)

12 Months Ended

Dec. 31, 2012

Tables/Schedules

Summary of Tax Credit Carryforwards

	2012			2011
Net operating losses	$	426,000		$	524,000
Valuation allowance		(426,000	)		(524,000	)
Net deferred tax assets	$	-		$	-

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Note 14 - Subsequent Events: Series A Preferred stock (Details) (USD $)	0 Months Ended	12 Months Ended
	Mar. 11, 2013	Dec. 31, 2012	Feb. 11, 2013
Class A Common Stock exchanged for Series A Preferred Stock			79,874
Series A Preferred Stock issued in exchange for Class A Common Stock			277
Proceeds from sale of Series A convertible preferred stock	$ 152,000	$ 214,895

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Note 9 - 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 6 - Stockholder Notes Payable: Schedule of Related Party Transactions (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Stockholder notes payable	$ 13,486	$ 18,486
Interest Payable	38,566	33,441
Stockholders Note Payable and Interest	$ 52,052	$ 51,927

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

12 Months Ended

Dec. 31, 2012

Policies

Net Loss Per Common Share

Net Loss Per Common Share

The Company computes earnings per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Basic loss per share is computed by dividing the net loss attributable to the common stockholders (the numerator) by the weighted average number of shares of Class A 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 Class A common stock, such as stock options and warrants (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive.  Class B common stock is not convertible into the Company’s Class A common stock.  The effect of computing diluted loss per share is anti-dilutive and, as such, basic and diluted loss per share is the same for the years ended December 31, 2012 and 2011.

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

12 Months Ended

Dec. 31, 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 (3) and (4) are 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 generally recognized upon shipment.

Revenue recognized in the year ended December 31, 2012 relates to sales of product of $31,503 and royalties earned of $3,032.

Revenue recognized in the year ended December 31, 2011 included to sales of product which had previously been expensed and used as sample units of $950; therefore, there is no cost of goods associated with these sales.

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Note 13 - Income Taxes (Details) (USD $)	Dec. 31, 2012
Operating Loss Carryforwards	$ 1,885,000

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Note 3 - Significant Accounting Policies: Derivative Financial Instruments (Details) (USD $)	Dec. 31, 2012	Nov. 05, 2012
Derivative liability	$ 345,875	$ 351,005

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Note 6 - Stockholder Notes Payable: Schedule of Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2012

Tables/Schedules

Schedule of Related Party Transactions

	2012		2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		38,566		33,441
	$	52,052	$	51,927

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Note 13 - Income Taxes: Summary of Tax Credit Carryforwards (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Deferred Tax Assets, Operating Loss Carryforwards	$ 426,000	$ 524,000
Operating Loss Carryforwards, Valuation Allowance	$ (426,000)	$ (524,000)

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Note 7 - Stockholders' Equity (Details) (USD $)	0 Months Ended	12 Months Ended
	Mar. 11, 2013	Dec. 31, 2012	Dec. 31, 2011
Proceeds from sale of Series A convertible preferred stock	$ 152,000	$ 214,895
Common stock issued		349,790	329,958
Repurchase and cancelation of common stock			5,000
Common stock issuable for officer compensation		214,060	151,500
Class B common stock issued as officer compensation		300,000
Fair Value of Services Received in Exchange for Class A Shares Issued		115,419	68,557
Class A Common Stock
Common stock shares outstanding		8,884,415	7,432,748
Common stock shares issued		8,884,415	7,432,748
Common stock issued - Shares		960,000	910,732
Common stock issued		96	91
Repurchase and cancelation of common stock - Shares			667
Repurchase and cancelation of common stock			5,000
Common stock issuable for officer compensation - Shares		316,667	150,000
Common stock issuable for officer compensation		32	15
Common stock issued for services rendered - Shares		175,000	90,444
Class B Common Stock
Common stock shares outstanding		600,000	200,000
Common stock shares issued		600,000	200,000
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 3 - Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Notes

Note 3 - Significant Accounting Policies

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the 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.

Concentration of Credit Risks

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. 

Patents

The Company’s patents (U.S. 5,717,479, U.S. 6,012,812, U.S. 6,950,531, U.S. 7,133,532, 8,243,973 and other international patents) which describe the general means for delivering sound through disposable sound attenuating components, are capitalized at the original cost, if purchased, or at the carrying basis of the transferor if contributed by an entity under common control.  Patent costs are amortized using the straight-line method over their estimated period of benefit remaining.  The Company evaluates the recoverability of patents annually taking into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.  Costs of developing patents that are not specifically identifiable, that have indeterminate lives, or that are inherent in the continuation of the Company’s business are recognized as an expense when incurred.

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 (3) and (4) are 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 generally recognized upon shipment.

Revenue recognized in the year ended December 31, 2012 relates to sales of product of $31,503 and royalties earned of $3,032.

Revenue recognized in the year ended December 31, 2011 included to sales of product which had previously been expensed and used as sample units of $950; therefore, there is no cost of goods associated with these sales.

Accounts Receivable

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. At December 31, 2012 and 2011, the Company has deemed that no allowance for doubtful accounts was necessary.

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

The Company follows the fair value recognition provisions of Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) using the modified-prospective transition method. 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 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.

ASC 718-10 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the Company’s pro forma information required under ASC 718- 10 for the periods prior to fiscal 2006, the Company accounted for forfeitures as they occurred.

Research and Development

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”).  Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.  The Company did not incur research and development expenses for the years ended December 31, 2012 and 2011.

Derivative Financial Instruments

The Company accounts for derivative instruments in accordance with ASC 815, “Derivatives and Hedging”, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value.  Accounting for changes in the fair value of derivative instruments depends on whether the derivatives qualify as hedge relationships, and the types of relationships designated are based on the exposures hedged.  The Company's derivative financial instruments consist of reset provisions related to Series A Convertible preferred stock.  These embedded derivatives include certain conversion features and reset provisions. During the year ended December 31, 2012, upon issuance, therefore, the initial determined fair values of the reset provisions of $351,005 were reclassified from equity to liability. 

Income Taxes

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards.  A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.

There are no unrecognized tax benefits at December 31, 2012 and 20101 The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.  There are no accrued interests or penalties associated with any unrecognized tax benefits, nor were any interest expense recognized during the year.  The Company has determined it has no uncertain tax positions at December 31, 2012. Currently, the Company’s federal and state income tax returns for the years 2009-2011 remain open to inspection by the IRS and various state taxing authorities.  The Company believes that it has appropriate support for income tax positions taken in its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter.

Inventories

Inventories are valued at the lower of cost or market, using the first-in first-out cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analysis and assumptions including, but not limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded to cost of goods sold.

Net Loss Per Common Share

The Company computes earnings per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Basic loss per share is computed by dividing the net loss attributable to the common stockholders (the numerator) by the weighted average number of shares of Class A 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 Class A common stock, such as stock options and warrants (using the “treasury stock” method), unless their effect on net loss per share is anti-dilutive.  Class B common stock is not convertible into the Company’s Class A common stock.  The effect of computing diluted loss per share is anti-dilutive and, as such, basic and diluted loss per share is the same for the years ended December 31, 2012 and 2011.

Segment information

The Company has one operating segment.

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 5 - Derivative Liability: Fair value of the embedded derivative assumtions (Details) (USD $)	2 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Nov. 05, 2012
Fair Value Assumptions, Expected Dividend Rate	0.00%	0.00%
Fair Value Assumptions, Expected Volatility Rate		201.31%
Fair Value Assumptions, Risk Free Interest Rate		0.16%
Derivative liability	$ 345,875	$ 345,875	$ 351,005
Minimum
Fair Value Assumptions, Expected Volatility Rate	198.12%
Fair Value Assumptions, Risk Free Interest Rate	0.16%
Maximum
Fair Value Assumptions, Expected Volatility Rate	201.31%
Fair Value Assumptions, Risk Free Interest Rate	0.19%

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Note 3 - Significant Accounting Policies: Research and Development (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Research and Development

Research and Development

The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”).  Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.  The Company did not incur research and development expenses for the years ended December 31, 2012 and 2011.

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

12 Months Ended

Dec. 31, 2012

Policies

Share-based Compensation

Share-Based Compensation

The Company follows the fair value recognition provisions of Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) using the modified-prospective transition method. 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 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.

ASC 718-10 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In the Company’s pro forma information required under ASC 718- 10 for the periods prior to fiscal 2006, the Company accounted for forfeitures as they occurred.

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Note 5 - Derivative Liability (Details) (USD $)	12 Months Ended
	Dec. 31, 2012
Gain on change in fair value of derivative liabilities	$ 5,130

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Note 3 - Significant Accounting Policies: Derivative Financial Instruments (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Derivative Financial Instruments

Derivative Financial Instruments

The Company accounts for derivative instruments in accordance with ASC 815, “Derivatives and Hedging”, which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments embedded in other financial instruments or contracts and requires recognition of all derivatives on the balance sheet at fair value.  Accounting for changes in the fair value of derivative instruments depends on whether the derivatives qualify as hedge relationships, and the types of relationships designated are based on the exposures hedged.  The Company's derivative financial instruments consist of reset provisions related to Series A Convertible preferred stock.  These embedded derivatives include certain conversion features and reset provisions. During the year ended December 31, 2012, upon issuance, therefore, the initial determined fair values of the reset provisions of $351,005 were reclassified from equity to liability. 

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Note 3 - Significant Accounting Policies: Income Taxes (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Income Taxes

Income Taxes

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards.  A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.

There are no unrecognized tax benefits at December 31, 2012 and 20101 The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.  There are no accrued interests or penalties associated with any unrecognized tax benefits, nor were any interest expense recognized during the year.  The Company has determined it has no uncertain tax positions at December 31, 2012. Currently, the Company’s federal and state income tax returns for the years 2009-2011 remain open to inspection by the IRS and various state taxing authorities.  The Company believes that it has appropriate support for income tax positions taken in its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter.

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Note 2 - Liquidity

12 Months Ended

Dec. 31, 2012

Notes

Note 2 - Liquidity

NOTE 2 - LIQUIDITY

The Company incurred various non-recurring expenses in 2012 in connection with non-recurring engineering costs and patent expenses.  As of December 31, 2012, the Company had working capital of approximately $213,000.  In March 2013, the Company received an additional $152,000 from the purchase of additional shares of preferred stock (See Note 14- Subsequent Events).  As a result, the Company has sufficient capital resources to meet its projected cash flow requirements to conduct its proposed operations for at least the next 12 months.  However, there can be no assurance that additional non-recurring expenses may be incurred during 2013 or that the Company will be successful in completing its business development plan.

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Note 3 - Significant Accounting Policies: Inventories (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Inventories

Inventories

Inventories are valued at the lower of cost or market, using the first-in first-out cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analysis and assumptions including, but not limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded to cost of goods sold.

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Note 2 - Liquidity (Details) (USD $)	0 Months Ended	12 Months Ended
	Mar. 11, 2013	Dec. 31, 2012
Working capital		$ 213,000
Proceeds from sale of Series A convertible preferred stock	$ 152,000	$ 214,895

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Note 14 - Subsequent Events: Class A common stock (Details) (USD $)	0 Months Ended		12 Months Ended
	Mar. 06, 2013	Jan. 30, 2013	Dec. 31, 2012	Dec. 31, 2011
Common stock issued for services rendered	$ 7,500	$ 7,500	$ 115,419	$ 68,557

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CONDENSED BALANCE SHEETS (USD $)	Dec. 31, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash	$ 216,479	$ 138,712
Accounts receivable, net	20,882
Advances to suppliers	33,300
Inventory	18,420
Total current assets	289,081	138,712
Property and equipment, net	3,507	3,378
Total assets	292,588	142,090
CURRENT LIABILITIES
Accounts payable and accrued liabilities	62,570	40,481
Stockholder notes payable	13,486	18,486
Total current liabilities	76,056	58,967
Derivative liability	345,875
STOCKHOLDERS' (DEFICIT) EQUITY
Additional paid in capital	5,532,549	4,989,537
Accumulated deficit	(5,962,782)	(4,907,157)
Total stockholders' (deficit) equity	(129,343)	83,123
Total liabilities and stockholders' (deficit) equity	292,588	142,090
Common Stock - Class A
STOCKHOLDERS' (DEFICIT) EQUITY
Common stock	888	743
Common Stock - Class B
STOCKHOLDERS' (DEFICIT) EQUITY
Common stock	300,000
Preferred Stock - Series A
STOCKHOLDERS' (DEFICIT) EQUITY
Preferred Stock	$ 2

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Note 6 - Stockholder Notes Payable (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Related Party Transaction, Rate	10.00%
Interest expense	$ 5,125	$ 5,079

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CONDENSED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,055,625)	$ (459,373)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	1,513	693
Common stock issued for services rendered	115,419	68,557
Common stock issued or issuable for officer compensation	514,060	151,500
Change in fair value of derivative liability	(5,130)
Changes in operating assets and liabilities:
Increase in accounts receivable	(20,882)
Increase in inventory	(18,420)
Increase in advances to suppliers	(33,300)
Increase (decrease) in accounts payable and accrued liabilities	22,089	(11,195)
Net cash used in operating activities	(480,276)	(249,818)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,642)	(4,071)
Net cash used in investing activities	(1,642)	(4,071)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock	349,790	329,958
Proceeds from sale of Series A convertible preferred stock	214,895
Repurchase and cancellation of common stock		(5,000)
Repayments of shareholder loans	(5,000)	(20,000)
Net cash provided by financing activities	559,685	304,958
Net increase in cash	77,767	51,069
Cash beginning of period	138,712	87,643
Cash end of period	216,479	138,712
Supplemental disclosures of cash flow information:
Interest paid
Income taxes paid

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

12 Months Ended

Dec. 31, 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: Use of Estimates (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Use of Estimates

Use of Estimates

The preparation of the 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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Note 5 - Derivative Liability: Fair value of the embedded derivative assumtions (Tables)

12 Months Ended

Dec. 31, 2012

Tables/Schedules

Fair value of the embedded derivative assumtions

Dividend yield:	-0-	%
Volatility	198.12%  to 201.31	%
Risk free rate:	0.16% to 0.19	%

The initial fair value of the embedded debt derivative of $351,005 was reclassified from equity to liability at the date of inception.

The fair value of the described embedded derivative of $345,875 at December 31, 2012 was determined using the Binomial Lattice Model with the following assumptions:

Dividend yield:	-0-	%
Volatility	201.31	%
Risk free rate:	0.16	%

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Note 3 - Significant Accounting Policies: Patents (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Patents

Patents

The Company’s patents (U.S. 5,717,479, U.S. 6,012,812, U.S. 6,950,531, U.S. 7,133,532, 8,243,973 and other international patents) which describe the general means for delivering sound through disposable sound attenuating components, are capitalized at the original cost, if purchased, or at the carrying basis of the transferor if contributed by an entity under common control.  Patent costs are amortized using the straight-line method over their estimated period of benefit remaining.  The Company evaluates the recoverability of patents annually taking into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.  Costs of developing patents that are not specifically identifiable, that have indeterminate lives, or that are inherent in the continuation of the Company’s business are recognized as an expense when incurred.

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Note 1 - Nature of Operations and Basis of Presentation

12 Months Ended

Dec. 31, 2012

Notes

Note 1 - Nature of Operations and Basis of Presentation

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Energy Telecom, Inc. (the "Company") was incorporated under the laws of the State of Florida as The Energy Corp.  On April 24, 2004, the Company changed its name to Energy Telecom, Inc. The Company is an intellectual property exploitation company planning to provide patent protection to its manufacturing business partners so the Company 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 ("OTCBB") under the symbol “ENRG.OB”.  

During 2011, the Company transitioned from a development stage enterprise to an operating company.  The Company’s eyewear is being sold in the United States and Europe, and the Company is planning for sales to be made in Australia during 2013.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for annual financial statements and with Form 10-K and article 8 of the Regulation S-X of the United States Securities and Exchange Commission (“SEC”).

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CONDENSED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 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	8,884,415	7,432,748
Common stock shares outstanding	8,884,415	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 11 - Concentrations

12 Months Ended

Dec. 31, 2012

Notes

Note 11 - Concentrations

NOTE 11 — CONCENTRATIONS

The Company’s revenues earned from sale of products and services for the year ended December 31, 2012 and 2011 included an aggregate of 100% from one customer of the Company's total revenues.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Jun. 29, 2012	Mar. 19, 2013 Class A Common Stock	Mar. 19, 2013 Common Stock - Class B
Entity Registrant Name	ENERGY TELECOM, INC.
Document Type	10-K
Document Period End Date	Dec. 31, 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	FY
Entity Common Stock, Shares Outstanding			8,834,541	600,000
Entity Public Float		$ 2,562,699

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Note 12 - Dependency On Key Management

12 Months Ended

Dec. 31, 2012

Notes

Note 12 - Dependency On Key Management

NOTE 12 — 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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CONDENSED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Sales	$ 31,503	$ 950
Royalties	3,032
Total revenue	34,535	950
COST OF GOODS SOLD	30,248
Gross profit	4,287	950
Selling, general and administrative expenses	1,058,720	455,113
Depreciation	1,513	693
Total operating expenses:	1,060,233	455,806
Loss from operations	(1,055,946)	(454,856)
Interest income	316	562
Gain on change in fair value of derivative liabilities	5,130
Interest expense	(5,125)	(5,079)
Total other income (expense):	321	(4,517)
Net loss before provision for income taxes	(1,055,625)	(459,373)
Income tax (benefit)
NET LOSS	$ (1,055,625)	$ (459,373)
Net loss per common share, basic and diluted	$ (0.13)	$ (0.06)
Weighted average number of common shares outstanding, basic and diluted	8,359,469	7,109,592

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Note 6 - Stockholder Notes Payable

12 Months Ended

Dec. 31, 2012

Notes

Note 6 - Stockholder Notes Payable

NOTE 6 — STOCKHOLDER NOTES PAYABLE

The Company has received financing from the Company’s founder, Chief Executive Officer, President and majority stockholder (the “officer/director”). No formal repayment terms or arrangements exist. The stockholder loans bear interest of 10% per annum, compounding annually and are due on demand.

The following table summarizes stockholder loans payable as of December 31, 2012 and 2011:

	2012		2011
Loans payable, due on demand, interest at 10%	$	13,486	$	18,486
Accrued interest		38,566		33,441
	$	52,052	$	51,927

The Company recognized interest expense associated with the loans of $5,125 and $5,079 for the years ended December 31, 2012 and 2011, respectively.

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Note 5 - Derivative Liability

12 Months Ended

Dec. 31, 2012

Notes

Note 5 - Derivative Liability

NOTE 5 — DERIVATIVE LIABILITY

The Company identified embedded derivatives related to the Series A convertible preferred stock issued during year ended December 31, 2012.  These embedded derivatives included certain reset features.  The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Series A Convertible preferred stock and to adjust the fair value as of each subsequent balance sheet date.  At the inception of the Series A convertible Preferred stock, the Company determined a fair value of $351,005 of the embedded derivative.  The fair value of the embedded derivative was determined using the Binomial Lattice Model based on the following assumptions:  

Dividend yield:	-0-	%
Volatility	198.12%  to 201.31	%
Risk free rate:	0.16% to 0.19	%

The initial fair value of the embedded debt derivative of $351,005 was reclassified from equity to liability at the date of inception.

The fair value of the described embedded derivative of $345,875 at December 31, 2012 was determined using the Binomial Lattice Model with the following assumptions:

Dividend yield:	-0-	%
Volatility	201.31	%
Risk free rate:	0.16	%

At December 31, 2012, the Company adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating gain of $5,130 for the year ended December 31, 2012.

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Note 3 - Significant Accounting Policies: Concentration of Credit Risks (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Concentration of Credit Risks

Concentration of Credit Risks

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 13 - Income Taxes

12 Months Ended

Dec. 31, 2012

Notes

Note 13 - Income Taxes

NOTE 13 — INCOME TAXES

At December 31, 2012, the Company had accumulated taxable losses of approximately $1,885,000 available to offset future taxable income, if any, which begin to expire in 2026.

The actual provision for income taxes differs from the amount computed by applying the federal statutory rate to losses before income taxes at December 31, 2012 and 2011, as follows:

	2012			2011
Federal income taxes at statutory rate		(34	)%		(34	)%
State income tax, net of federal benefit		(3.6	)		(3.6	)
Permanent differences		22.4			22.4
Valuation allowance		15.2%			15.2%

The components of the net deferred tax asset (liability) at December 31, 2012 and 2011 are as follows:

	2012			2011
Net operating losses	$	426,000		$	524,000
Valuation allowance		(426,000	)		(524,000	)
Net deferred tax assets	$	-		$	-

The Company evaluates a variety of factors in determining the amount of the deferred income taxes to be recognized, including the Company’s earnings history. As of December 31, 2012 and 2011, the Company has fully reserved the value of its deferred tax assets as it cannot determine that the ultimate realization of those assets is more likely than not.

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Note 9 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Notes

Note 9 - Commitments and Contingencies

NOTE 9 — 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 7 - Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Notes

Note 7 - Stockholders' Equity

NOTE 7 — STOCKHOLDERS’ EQUITY

Preferred stock

During the year ended December 31, 2012, the Company designated 5,790 shares of authorized preferred stock as Series A Convertible Preferred Stock.

Each share of Series A Convertible Preferred Stock, par value of $0.001, has stated value of $100 per share, is nonvoting and is convertible into the Company's Class A common stock determined by dividing by the conversion price. The initial conversion price is $0.3468 subject to certain anti-dilutive (reset) provisions until the first anniversary of the issuance date.

Upon the occurrence of certain triggering events, the holder of the Series A Convertible Preferred Stock 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, the holder 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.

During the year ended December 31, 2012, the Company sold an aggregate of 2,150 shares of Series A Convertible Preferred Stock for net proceeds of $214,895.

Recapitalizations

On June 2, 2010, the Company filed amended articles of incorporation with the Secretary of the State of Florida to effect a 1:5 reverse split of its common stock, which amendment was effective as of June 28, 2010. All share and per share amounts contained in these audited financial statements have been adjusted to reflect the effects of the aforementioned stock splits in accordance with ASC 260.

As of December 31, 2012 and 2011, 8,884,415 and 7,432,748 shares of Class A common stock, respectively, and 600,000 and 200,000 shares of Class B common stock, respectively were issued and outstanding.

Private placements

During the year ended December 31, 2012 and 2011 the Company completed private placements of 960,000 and 910,732 shares of Class A common stock and has received proceeds totaling $349,790 and $329,958, respectively.

Shares Repurchased

During the year ended December 31, 2011, the Company re-acquired and canceled 667 shares of its Class A common stock for $5,000.

Shares Issued as Compensation

During the year ended December 31, 2012 and 2011, the Company issued 316,667 and 150,000 shares of Class A common stock as officer compensation with a fair value totaling $214,060 and $151,500, respectively.  In addition, during the year ended December 31, 2012, the Company issued 400,000 shares of Class B common stock with a fair value of $300,000.

Shares issued to consultants

During the year ended December 31, 2012 and 2011, the Company issued 175,000 and 90,444 shares of Class A common stock to consultants in exchange for services rendered with a fair value totaling $115,419 and $68,557, respectively.

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Note 8 - Share Based Compensation

12 Months Ended

Dec. 31, 2012

Notes

Note 8 - Share Based Compensation

NOTE 8 – SHARE BASED COMPENSATION

2012 Incentive Stock Option Plan

On December 21, 2012, the Company’s shareholders approved the 2012 Incentive Stock Option Plan (the “2012 Plan”). The 2012 Plan provides for the issuance of options and stock grants up to 4,000,000 shares of the Company’s common stock to officers, directors, employees and consultants of the Company. Under the terms of the 2012 Plan, the Company may issue Incentive Stock Options as defined by the Internal Revenue Code to employees of the Company only and nonstatutory options. The Board of Directors of the Company determines the exercise price, vesting and expiration period of the grants under the 2012 Plan. However, the Company shall not grant an Incentive Stock Option under the Plan to any employee if such grant would result in such employee holding the right to exercise for the first time in any one calendar year, under all Incentive Stock Options granted under the Plan or any other plan maintained by the Company, with respect to shares of Stock having an aggregate fair market value, determined as of the date of the Option is granted, in excess of $100,000. The exercise price of an Incentive Stock Option should not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more stockholder and 100% of fair value for a grantee who is not 10% stockholder.

The fair value of the common stock is determined based on quoted market price or in absence of such quoted market price, by the Board of Directors in good faith. Additionally, the vesting period of the grants under the 2012 Plan shall be immediate unless the Board determine and no Incentive Stock Option granted to a 10% holder shall be exercisable after five year, otherwise the and expiration period not more than ten years. The Company reserved 4,000,000 shares of its common stock for future issuance under the terms of the 2012 Plan.

As of December 31, 2012, there were no issued or outstanding options.

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Note 10 - Related Party Transactions

12 Months Ended

Dec. 31, 2012

Notes

Note 10 - Related Party Transactions

NOTE 10 — 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 year ended December 31, 2012 and 2011 was $28,500 and $26,000, respectively.

As discussed in Note 6, 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 3 - Significant Accounting Policies: Segment Information (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Segment Information

Segment information

The Company has one operating segment.

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Note 13 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate	(34.00%)	(34.00%)
Effective Income Tax Rate Reconciliation, State and Local Income Taxes	(3.60%)	(3.60%)
Effective Income Tax Rate Reconciliation, Other Adjustments	22.40%	22.40%
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance	15.20%	15.20%

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Note 1 - Nature of Operations and Basis of Presentation: Basis of Accounting, Policy (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Basis of Accounting, Policy

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for annual financial statements and with Form 10-K and article 8 of the Regulation S-X of the United States Securities and Exchange Commission (“SEC”).

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Note 3 - Significant Accounting Policies: Accounts Receivable (Policies)

12 Months Ended

Dec. 31, 2012

Policies

Accounts Receivable

Accounts Receivable

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change. At December 31, 2012 and 2011, the Company has deemed that no allowance for doubtful accounts was necessary.

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Note 10 - Related Party Transactions (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Monthly Operating Lease Related Party	$ 2,000
Operating Lease, Rent Expense	$ 28,500	$ 26,000

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Note 3 - Significant Accounting Policies: Revenue Recognition (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Sales	$ 31,503	$ 950
Royalties	$ 3,032

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CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) (USD $)	Series A Convertible Preferred Stock	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)		(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		17		115,402		115,419
Common stock issued for services rendered - Shares		175,000
Common stock issuable for officer compensation		32		214,028		214,060
Common stock issuable for officer compensation - Shares		316,667
Class B common stock issued as officer compensation			300,000			300,000
Class B common stock issued as officer compensation - Shares			400,000
Sale of Series A Convertible Preferred stock	2
Sale of Series A Convertible Preferred stock - Shares	2,150
Reclassify initial fair value of the anit-dilutive provisions of the Seris A Convertible Preferred stock				(351,005)		(351,005)
Net loss					(1,055,625)	(1,055,625)
Balance at Dec. 31, 2012	$ 2	$ 888	$ 300,000	$ 5,532,549	$ (5,962,782)	$ (129,343)
Balance - Shares at Dec. 31, 2012	2,150	8,884,415	600,000

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Note 4 - Financial Instruments

12 Months Ended

Dec. 31, 2012

Notes

Note 4 - Financial Instruments

NOTE 4 — FINANCIAL INSTRUMENTS

Fair Value Measurements

The Company measures and discloses the fair value of assets and liabilities required to be carried at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures.  ASC 820 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure.

ASC 825 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. ASC 825 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices for identical assets or liabilities in active markets to which we have access at the measurement date.

Level 2 -  Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the asset or liability.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

For the year ended December 31, 2012, the Company has determined that the only asset or liability measured at fair value is the derivative instrument related to an anti-dilution provision contained in Series A Convertible preferred stock which was issued during the year ended December 31, 2012 and valued using level 3 inputs.  The carrying amounts of the Company's other assets and liabilities approximate fair value as of December 31, 2012 and 2011.

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

12 Months Ended

Dec. 31, 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.

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Note 13 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)

12 Months Ended

Dec. 31, 2012

Tables/Schedules

Schedule of Effective Income Tax Rate Reconciliation

	2012			2011
Federal income taxes at statutory rate		(34	)%		(34	)%
State income tax, net of federal benefit		(3.6	)		(3.6	)
Permanent differences		22.4			22.4
Valuation allowance		15.2%			15.2%

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Note 14 - Subsequent Events

12 Months Ended

Dec. 31, 2012

Notes

Note 14 - Subsequent Events

NOTE 14 — SUBSEQUENT EVENTS

Class A common stock:

On January 30, 2013, the Company issued an aggregate of 15,000 shares of its Class A common stock to consultants for services rendered valued at $7,500.

On March 6, 2013, the Company issued an aggregate of 15,000 shares of its Class A common stock to consultants for services rendered valued at $7,500.

Series A Preferred stock:

On February 11, 2013, the Company entered into exchange agreements with investors pursuant to which the investors exchanged an aggregate of 79,874 shares of the Company’s Class A common stock for an aggregate of 277 shares of Series A Preferred Stock.

On March 11, 2013, the Company entered into a securities purchase agreement with an investor providing for the sale 1,520 shares of Series A Preferred Stock at a price of $100 per share for aggregate cash proceeds of $152,000.