UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ______________  FORM 10-Q ______________  xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended June 30, 2009  oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from ______________ to ______________  Commission File No. 000-25097  ______________  EClips Energy Technologies, Inc. (Exact name of small business issuer as specified in its charter) ______________  Florida65-0783722(State or other jurisdiction of
incorporation or organization)(I.R.S. Employer Identification No.)3900A 31st Street North, St. Petersburg, Florida33714(Address of principal executive offices)(Zip Code)  (Former name, former address, if changed since last report)  Tel:  (727) 525-5552(Issuers telephone number)  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 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes ( X ) No (   )  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  Large accelerated filer  (   )Non-accelerated filer (   )Accelerated filer (   )  (do not check if smaller reporting company)Smaller reporting company ( X )  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (   )  No ( X )   State the number of shares outstanding of each of the issuers classes of common equity, as of August 8, 2009: 479,857,315 shares of common stock.    1      TABLE OF CONTENTS   PagePart I.  Financial Information3Item 1.  Financial Statements.3Consolidated Balance Sheet for the periods ending
June 30, 2009 (unaudited) and December 31, 2008 (audited).3Consolidated Statements of Operations for the three and six month
periods ending June 30, 2009 (unaudited) and 2008 (unaudited).4Consolidated Statements of Cash Flows for the six month periods
ending June 30, 2009 (unaudited) and 2008 (unaudited).5Notes to Consolidated Financial Statements6Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations.22Item 3.  Quantitative and Qualitative Disclosures About Market Risk.25Item 4.  Controls and Procedures.25Item 4T.  Controls and Procedures.25Part II.  Other Information25Item 1.  Legal Proceedings.25Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.26Item 3.  Defaults Upon Senior Securities.26Item 4.  Submission of Matters to a Vote of Security Holders.26Item 5.  Other Information.26Item 6.  Exhibits26Signatures29  2       PART I - FINANCIAL INFORMATION   Item 1.    Financial Statements  EClips Energy Technologies, Inc and Subsidiaries As of June 30, 2009 (unaudited) and December 31, 2008 And for the Three and Six Months Ended June 30, 2009 (unaudited), 2008 (unaudited)    ECLIPS ENERGY TECHNOLOGIES, INC.CONSOLIDATED BALANCE SHEETSJune 30,December 31,20092008(unaudited)(audited)Current assetsCash$6,081$370Accounts receivable51,58340,974Inventory139,07199,650Prepaid expenses12,69925,964Other current assets34,73557,631Total current assets244,169224,589Property and equipment, net269,604293,207Other assetsDue from related party-782Long term deposits3,8503,850Intangible Assets, net885,150824,990Total Assets$1,402,773$1,347,418LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payable$427,224$88,618Accrued expenses408,789448,673Due to related party1,026-Total current liabilities837,039537,291Stockholders' EquityPreferred stock,  $.0001 par value; 100,000,000 authorizedSeries A, -0- shares issued--Series B, -0- shares issued-10Series C, -0- shares issued-10Series D, 1,500,000 shares issued150-Common stock; $.0001 par value; 750,000,000 sharesauthorized; 473,357,315 and 96,875,100 shares issuedand outstanding, respectively47,3369,688Paid-in capital23,758,48423,032,164Accumulated deficit(23,240,236)(22,231,745)Total stockholders' equity565,734810,127Total liabilities and Stockholders' Equity$1,402,773$1,347,418   The accompanying notes are an integral part of these financial statements.  3     ECLIPS ENERGY TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF OPERATIONFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008For the Three Months EndedFor the Six Months EndedJune 30,June 30,2009200820092008(unaudited)(unaudited)(unaudited)(unaudited)Net sales$113,126$137,511$199,726$223,305Cost of goods sold100,45658,303161,941118,848Gross profit12,67079,20837,785104,457Payroll expense497,551161,510662,429336,975Professional and consulting expense48,058205,538131,628384,267Research and development54,949105,794132,426215,295General and administrative expenses105,976146,607117,293246,936Impairment loss---3,264,000Total Operating Expenses706,534619,4491,043,7764,447,473Earnings (loss) from operations(693,864)(540,241)(1,005,991)(4,343,016)Other income (expense):Loss on disposal of property and equipment--(8,658)Interest income (expense), net(1,827)(489)(2,500)(1,563)Total other income (expense)(1,827)(489)(2,500)(10,221)Earnings (loss) before provisionfor income taxes(695,691)(540,730)(1,008,491)(4,353,237)Provision for income taxes----Net loss(695,691)(540,730)(1,008,491)(4,353,237)Preferred stock dividends----Net loss available to common shareholders$(695,691)$(540,730)$(1,008,491)$(4,353,237)Loss per common share, basic$(0.00)$(0.01)$(0.01)$(0.09)Weighted average common shares outstanding170,900,82652,525,554135,393,43648,785,290   The accompanying notes are an integral part of these financial statements.                   4     ECLIPS ENERGY TECHNOLOGIES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008June 30,20092008(unaudited)(unaudited)Cash flows from operating activities:Net loss$(1,008,491)$(4,353,237)Adjustments to  reconcile net  loss  to net cash used in operating activities:Depreciation & Amortization89,24035,504Impairment loss-3,264,000Loss on disposal of property and equipment-8,658Stock based consulting & compensation expense477,45714,000Stock based donation-22,800(Increase) decrease in:Accounts receivable(10,609)(28,953)Inventory(39,421)6,783Prepaid expenses and other assets(88,067)67,240Increase (decrease) in:Accounts payable338,60648,348Accrued expenses(38,858)47,068Total adjustments728,3483,485,448Net cash used in operating activities:(280,143)(867,789)Cash flows from investing activitiesPurchase of equipment(787)(39,340)Proceeds from disposal of property and equipment-26,171Investment in subsidiary-200,000Proceeds from loan receivable-1,688Net cash (used in) provided by investing activities(787)188,519Cash flows from financing activities:Proceeds from issuance of common stock286,641928,102Proceeds from loan payable-17,000Proceeds from line of credit-62,608Repayment of line of credit-(35,000)Repayment of loans payable to related parties-(67,000)Net cash provided by financing activities286,641905,710Net increase (decrease) in cash5,711226,440Cash, beginning of period37043,112Cash, end of period$6,081$269,552Supplemental disclosures of noncash investing and financing activities:Donation of common shares$-$22,800Contribution of capital for payment of consulting$-$8,000Equipment purchased by credit$-$17,491Conversion of debt to equity (preferred stock)$8,256$8,000Conversion of preferred stock to common stock$20$17,491Supplemental cash flow information:Cash paid for interest$3,964$1,670Cash paid for income taxes$-$- The accompanying notes are an integral part of these financial statements.   5    EClips Energy Technologies, Inc and Subsidiaries  Notes to Financial Statements (unaudited)  Three and Six Months Ended June 30, 2009 and 2008  1.   Significant Accounting Policies:  The following is a summary of the significant accounting policies and practices of EClips Energy Technologies, Inc., formerly known as World Energy Solutions, Inc. (the Company) which affects the accompanying financial statements.  Organization The Company, formerly known as Advanced 3-D Ultrasound Services, Inc. was incorporated on September 23, 1997.  Advanced 3D Ultrasound Services, Inc. merged with a private Florida corporation known as World Energy Solutions, Inc. effective August 17, 2005. Advanced 3D Ultrasound Services, Inc. remained as the surviving entity as the legal acquirer, and the Company also was the accounting acquirer.  On November 7, 2005, Advanced 3-D Ultrasound Services, Inc. changed its name to World Energy Solutions, Inc. (WESI).  On November 7, 2005, WESI merged with Professional Technical Systems, Inc. (PTS).  WESI remained as the surviving entity as the legal acquirer, while PTS was the accounting acquirer. On February 26, 2009, The Company changed its name to EClips Energy Technologies, Inc.  On October 11, 2006, the Company acquired Pure Air Technologies, Inc. (PATI), a subsidiary of UTEK Corporation in a tax-free stock for stock exchange.  The Company issued 100,000 shares of Series A convertible preferred stock to UTEK Corporation in exchange for 100% of the issued and outstanding shares of PATI, assignment of a worldwide exclusive technology license, a sponsored research agreement and $300,000 cash.  The 100,000 shares of preferred stock plus $202,500 of accrued dividends were converted into 8,437,500 shares of common stock on October 17, 2007.  (See note 2).  On September 28, 2007, the Company acquired Hydrogen Safe Technologies, Inc. (HSTI) in a tax free stock for stock exchange.  HSTI was incorporated in the State of Florida on September 20, 2007.  As consideration for the agreement, the Company issued 7,500,000 unregistered shares of common stock to UTEK Corporation in exchange for 100% of the issued and outstanding shares of HSTI, assignment of an exclusive technology license for the detection of hydrogen in vehicles, engines and / or water heaters using hydrogen and oxygen, prepaid consulting fees and $450,000 cash.  (See note 2).  World Energy Solutions, Limited was created during 2007 to serve as a platform for marketing the Companys products and developments in the UK and all European Union countries, when the time is right.  The entity does not have activity and has not been capitalized, and therefore, it is not consolidated. On June 10, 2008, the Company acquired Advanced Alternative Energy, Inc. (AAEI) in a tax free stock for stock exchange.  AAEI was incorporated in the State of Florida on May 20, 2008.   As consideration for the agreement, the Company issued 100,000 shares of Series B Convertible Preferred Stock to UTEK Corporation in exchange for 100% of the issued and outstanding shares of AAEI, assignment of an exclusive technology license for the production and preparation of mechanically and electrochemically stable electrodes and transition metal oxide catalysts; prepaid consulting fees and $200,000 cash.  The preferred shares and any accrued dividends were converted by UTEK. (See note 2). On September 26, 2008, the Company acquired H-Hybrid Technologies, Inc. (HHTI) in a tax-free stock for stock exchange.  HHTI was incorporated in the State of Florida on September 18, 2008.   As consideration for the agreement, the Company issued 100,000 shares of Series C Convertible Preferred Stock to UTEK Corporation and 5,000,000 unregistered common shares to Hydrogen Technology Application, Inc. (HTA)in exchange for 100% of the issued and outstanding shares of HHTI and assignment of an exclusive technology license for the use of three patents and one patent applied for but not yet issued.  The patents were acquired to complement and further assist our research and development efforts. The preferred shares and any accrued dividends were converted by UTEK. (See note 2).  Operations The Company manufactures and sells transient voltage surge suppressors and related products and commercial and residential energy-saving equipment and applications to distributors and customers throughout the United States.  Sales revenue in the accompanying financial statements is entirely from the sale of transient voltage surge suppressors and is recorded on the accrual method of accounting.  The Company is located in St. Petersburg, Florida.   6    Consolidating Entities The consolidated financial statements include the accounts of its wholly-owned subsidiaries: EClips Energy Technologies, Inc. Pure Air Technologies, Inc. (PATI) Hydrogen Safe Technologies, Inc. (HSTI) Advanced Alternative Energy, Inc. (AAEI) H-Hybrid Technologies, Inc. (HHTI)  Significant inter-company balances and transactions have been eliminated in consolidation.  World Energy Solutions, Limited was created during 2007 to serve as a platform for marketing the Companys products and developments in the UK and all European Union countries, when the time is right.  The entity does not have activity and has not been capitalized, and therefore, it is not consolidated.  Basis of Presentation In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three month period ended June 30, 2009 and 2008; (b) the financial position at June 30, 2009, and (c) cash flows for the three and six month periods ended June 30, 2009 and 2008.  The unaudited financial statement and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principals generally accepted in the United States of America have been omitted. The accompanying unaudited financial statements should be read in conjunction with the financial statements for the years ended December 31, 2008 and 2007 and notes thereto in the Companys annual report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission. Operating results for the three and six months ended June 30, 2009 and 2008 are not necessarily indicative of the results that may be expected for the entire year.  Comparative Statements Certain reclassifications may have been made for comparability of the statements presented.  Any reclassifications are considered immaterial and are applied on a consistent basis for comparison from period to period. The financial statements reflect the reclassification of the prior year impairment loss on the comparative statement of operations.  We note no effect to the prior year balance sheet as a result of this reclassification. The net loss and loss per common share also remain unchanged as originally reported.  Use of Estimates The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.  Industry Segment In accordance with SFAS 131 (as amended), Disclosures about Segments of an Enterprise and Related Information (as amended) a company is required to disclose selected financial information and other related information about its operating segments.  Operating segments are components of an enterprise that engage in separately identifiable business activities from the Companys main operations and for which separate financial information is maintained.  The Company considers its research and development to be a segment, as the research is for product lines separable from the Companys main line of business.  Research and development costs are a segregated line item on the statement of operations.  Fair Value of Financial Instruments The Companys balance sheets include the following financial instruments: cash, accounts receivable, inventory, accounts payable and accrued expenses. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.  Cash The majority of cash is maintained with a major financial institution in the United States.  Deposits with this bank may exceed the amount of insurance provided on such deposits.  Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk.  The Company considers all highly liquid investments purchased with an original maturity of six months or less to be cash equivalents.   7    Accounts Receivable Accounts receivable consist of amounts due for the delivery of finished good sales to customers.   Revenue is recognized when shipments are made to customers. The Company recognizes a sale when the product has been shipped and risk of loss has passed to the customer.  An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the Companys customer credit worthiness, and current economic trends.  Based on managements review of accounts receivable, no allowance for doubtful accounts was considered necessary.   Receivables are determined to be past due, based on payment terms of original invoices.  The Company does not typically charge interest on past due receivables.  Inventory Inventory is stated at the lower of average cost or market, using the first-in, first-out method, and includes costs of materials, labor and manufacturing overhead.   Inventory is comprised of raw materials, work-in-progress and finished goods.  Property and Equipment and Intangible Assets Equipment is stated at cost.  Depreciation is computed by the straight-line method over estimated useful lives (three to seven years for equipment, thirty-nine for leasehold improvements).   Capital leases are included as a component of property and equipment and amortization of assets under capital leases is included in depreciation expense.  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of equipment existed at December 31, 2008.  The Company has recorded intangible license for $988,660 related to acquisitions of patent rights and certain other intellectual property, secured from an unrelated company.  The Company valued these licenses based on the value of the stock issued, as the Company believes that this is the more reliable measurement.  The intellectual property consists primarily of patents and patent applications, which the Company has estimated has a useful life of ten to seventeen years.  The Company has capitalized website development costs per guidance of EITF 00-2, accounting for web site development costs.  The costs are being amortized over the estimated life of the website of three years.  In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets," long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When required impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  The Company recognized $0 and $3,264,000 of impairment losses for the six month periods ended June 30, 2009 and 2008, respectively.  Income taxes The Company accounts for income taxes under SFAS No. 109, Accounting for Income Taxes, which requires use of the liability method. SFAS No. 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. . Warranty Costs The Company provides product warranties for specific product lines and accrues for estimated future warranty costs in the period in which revenue is recognized. The Company has not experienced any significant warranty expense and considers the current reserves adequate.  Management reviews warranty expenses incurred on a periodic basis considers any required increase or decrease of the reserve.  The warranty reserve as of June 30, 2009 and December 31, 2008 was $5,227.  There has been no warranty expense recognized for the periods presented.  Freight Costs The Company includes freight-in costs in cost of goods sold. Total freight-in included in cost of goods sold for the years ended June 30, 2009 and 2008 was $1,614 and $3,345, respectively.   8    Advertising Expense The Company follows the policy of charging advertising and promotions to expense as incurred.  Advertising expense was $3,340 and $30,749 for the six months ended June 30, 2009 and 2008, respectively.  Research and Development In accordance with SFAS No. 2, Accounting for Research and Development Costs, the Company expenses research and development costs when incurred.  Indirect costs related to research and developments are allocated based on percentage usage to the research and development.  Capitalized research and development assets with alternative future uses are amortized to research and development expense over the estimated useful life of the asset.  Research and development costs were expensed, for the three and six months ended June 30, 2009 and 2008 in the amount of $54,949, $105,794, $132,426 and $215,295, respectively.  Earnings (loss) per common share Loss per share is based on the weighted average number of common shares outstanding during each period in accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share.  For the six month periods ended June 30:  20092008Net income (loss) per share basic and diluted:Net income(loss)$(1,008,491)$(4,353,237)Weighted average shares135,393,43648,785,290Net income (loss) per share$(0.01)$(0.09)  Potentially dilutive options and preferred stock conversion were not included in the computation of dilutive net earnings per share as their effect would have been anti-dilutive.  For the period ended June 30, 2009, a total of 85,589,078 options were excluded from the computation.  There were no dilutive common stock equivalents as of June 30, 2009.  Share Based Payments In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No. 123 (Revised 2004), Share-Based Payment (SFAS 123R). SFAS 123R requires all share-based payments to employees, including grants of employee stock options to be recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).  The Company had no additional common stock options or common stock equivalents granted for all periods presented and all compensation has been recognized for previous issuances.  The Company, at times, issues restricted stock to consultants for various services.  For these transactions the Company follows the guidance in EITF 96-18 "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring or in Conjunction with Selling Goods or Services".  Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete.   The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services.  Stock compensation, when issued, were issued to consultants for past services provided, accordingly, all shares issued are fully vested, and there is no unrecognized compensation associated with these transactions.  Stock based compensation was $603,657 and $14,000, for the six months ended June 30, 2009 and 2008, respectively.   2.  Mergers and acquisitions:  Pure Air Technologies, Inc. (PATI) On October 11, 2006, the Company acquired 100% of the issued and outstanding stock of Pure Air Technologies, Inc. (PATI), a subsidiary of UTEK Corporation in a tax free stock for stock exchange.  PATI was incorporated in the State of Florida on August 7, 2006 and had no prior accounting activity and no liabilities as of the date of the acquisition. The Company issued 100,000 shares of the Company Series A convertible preferred stock in exchange for $300,000 cash, $231,709 of prepaid sponsored research and license agreements, including a worldwide exclusive license in the field of air purification, for a technology designed to help eliminate organic and biological airborne organisms.   The Preferred Stock issued in the exchange is restricted and may only be resold pursuant to the requirements of the Securities Act of 1933.  The 100,000 shares of preferred stock plus $202,500 of accrued dividends were converted into 8,437,500 shares of common stock on October 17, 2007.  The intellectual rights related to the purchase of PATI were valued at $3,456,631 at the time of the acquisition. While the Company anticipates further development of the related technology, as of December 31, 2006, the technology had not yet been tested on the market nor had there been any related sales.  Estimation of future sales could not be determined as the technology is not yet ready to be introduced into the market place and knowledge of when or if the Company can fully develop the technology is not known.  In addition, the consideration of other similar technology entering the market prior to the Company cannot be  9    determined.  Based on the above factors, the Company concluded that the valuation of the intangible could not be fully supported and therefore as of December 31, 2006, the Company deemed the intellectual rights impaired and wrote them off during 2006.  Hydrogen Safe Technologies, Inc. (HSTI) On September 28, 2007, the Company acquired Hydrogen Safe Technologies, Inc. (HSTI) in a tax-free stock for stock exchange.  As consideration for the agreement, the Company issued 7,500,000 unregistered shares of common stock to UTEK Corporation in exchange for 100% of the issued and outstanding shares of HSTI, assignment of an exclusive technology license for the detection of hydrogen in vehicles, engines and / or water heaters using hydrogen and oxygen, prepaid consulting fees, related to a nine month consulting agreement, and $450,000 cash.  The acquisition of HSTI was considered to be a purchase of productive assets, per guidance of EITF 98-3, Determining Whether a Non-monetary Transaction Involves the Receipt of Productive Assets or of a Business as a result of the analysis of the inputs, processes and outputs and consideration of the total concentration of the fair value of the transferred assets to the acquisition.  Accordingly, no goodwill was recognized on the purchase.  The purchase price of $3,825,000 was based on the stock closing price on the date of acquisition.  The resulting intangible asset of $3,332,650 was analyzed and although the Company anticipates further development of the related technology, as of September 30, 2007, the technology had not yet been tested on the market nor had there been any related sales. Estimation of future sales could not be determined as the technology is not ready to be introduced into the market place and knowledge of when or if the Company can fully develop the technology is not known.  In addition, consideration of other similar technology entering the market prior to the Company cannot be determined.  Based on the above factors, the Company concluded that the capitalized value of the intangible could not be supported and therefore as of September 30, 2007, the Company deemed the intangible asset to be fully impaired and recognized the expense in 2007.  The HSTI license agreement has 3% royalties due on net sales of the licensed product which can be netted against required minimum annual royalties.  For the year 2008-2009, $5,000 minimum royalties are due and payable January 31, 2010; for years 2009-2010, the minimum royalty is $10,000; for years 2010-2011 the minimum royalty is $15,000; after 2011 the minimum annual royalties are $30,000.  All minimum royalties are due and payable on January 31, of the following calendar year.  The agreement can be terminated on thirty days notice if the company fails to pay any due and payable royalties and the license would revert back to the licensor and all royalties and payments would cease.  Advanced Alternative Energy, Inc. (AAEI) On June 10, 2008, the Company acquired Advanced Alternative Energy, Inc. (AAEI) in a tax free stock for stock exchange. AAEI was incorporated in the State of Florida on May 20, 2008.   As consideration for the agreement, the Company issued 100,000 shares of Series B Convertible Preferred Stock to UTEK Corporation in exchange for 100% of the issued and outstanding shares of AAEI, assignment of an exclusive technology license for the production and preparation of mechanically and electrochemically stable electrodes and transition metal oxide catalysts; prepaid consulting fees and $200,000 cash. The preferred shares may be converted by the holder at any time into common stock prior to the sixty month anniversary of the execution of the agreement into the value of $3,500,000 of common shares of the Company, based on the average of the five day closing price prior to the conversion.  At any time after six months and before the sixty month anniversary of the execution of the agreement, the Company will have the right, at its sole discretion, to repurchase at an agreed upon percentage value, any non-converted shares of the Series B Convertible Preferred Stock.  The shares may be repurchased within twelve months at 105%; within thirteen and twenty-four months at 110%; within twenty-five and thirty-six months at 115%; and at anytime after thirty-six months at 120% of the value of the original pro rata purchase price.  The convertible preferred shares have no voting rights.  The 100,000 shares of preferred stock were converted into 55,118,111 shares of common stock on May 7, 2009. The acquisition of AAEI was considered to be a purchase of productive assets, per guidance of EITF 98-3, Determining Whether a Non-monetary Transaction Involves the Receipt of Productive Assets or of a business as a result of the analysis of the inputs, processes and outputs and consideration of the fair value of the transferred assets to the acquisition.  Accordingly, no goodwill was recognized on the purchase.  Royalties will become due on a quarterly basis based upon the net sales of any of the licensed products sold from the technology license.  Royalties are to be paid within ninety days and are based on 3% of the net sales on the licensed products.  The royalty obligations will terminate on a country by country basis upon the expiration of the last to expire licensed patent covering the licensed product in each such country.  Twelve months after the first anniversary of the execution of the license agreement, minimum annual royalties become due.  The minimum royalty due for the second anniversary year of the executed agreement is $5,000; for the third anniversary is $10,000; for the fourth anniversary is $15,000 and for the fifth anniversary thereafter until the end of the license term is $30,000. AAEI will reimburse any patent costs incurred to maintain or control the patents related to the technology and licensed products.  10    The prepaid consulting expenses relate to technical consulting services to be provided related to the license. The consulting agreement was entered into by UTEK on the behalf of AAEI and per the agreement any additional consulting expenses will be the direct responsibility of UTEK. The purchase price of $3,500,000 was based on the agreed face value of the Series B Convertible Preferred Stock as of the date of acquisition.  The resulting intangible asset of $3,264,000 was analyzed and although the Company anticipates further development of the related technology, as of June 30, 2008, the technology had not yet been tested on the market nor had there been any related sales. Estimation of future sales could not be determined as the technology is not ready to be introduced into the market place and knowledge of when or if the Company can fully develop the technology is not known.  In addition, consideration of other similar technology entering the market prior to the Company cannot be determined.  Based on the above factors, the Company concluded that the valuation of the intangible could not be supported and therefore as of June 30, 2008, the Company deemed the intangible asset to be totally impaired and wrote it off. H-Hybrid Technologies, Inc. (HHTI) On September 26, 2008, the Company acquired H-Hybrid Technologies, Inc. (HHTI) in a tax-free stock for stock exchange.  HHTI was incorporated in the State of Florida on September 18, 2008.   As consideration for the agreement, the Company issued 100,000 shares of Series C Convertible Preferred Stock to UTEK Corporation and 5,000,000 unregistered common shares, restricted for twelve months after the effective date, to Hydrogen Technology Application, Inc. (HTA)in exchange for 100% of the issued and outstanding shares of HHTI and assignment of an exclusive technology license for the use of three patents and one patent applied for but not yet issued.  The patents were acquired to complement and further assist our research and development efforts. The acquisition of HHTI is considered to be a purchase of productive assets, per guidance of EITF 98-3, Determining Whether a Non-monetary Transaction Involves the Receipt of Productive Assets or of a Business as a result of the analysis of the inputs, processes and outputs and consideration of the total concentration of the fair value of the transferred assets to the acquisition.  Accordingly, no goodwill will be recognized on the purchase. The identifiable assets of HHTI include cash and assignment of an exclusive technology license for the use of three patents and one patent applied for but not yet issued.  The Series C Convertible Preferred Stock has no voting rights, no liquidation preferences and no dividend rights.  The holder may convert the Series C Convertible Preferred Stock at any time into common stock prior to the sixty-month anniversary of the execution of the agreement. The 100,000 shares of Series C Convertible Preferred Stock is convertible into $3,750,000 of our common shares, based on the average of the five-day closing price prior to the conversion.  At any time after six months and before the sixty month anniversary of the execution of the agreement, the Company will have the right, at its sole discretion, to repurchase at an agreed upon percentage value, any outstanding shares of the Series C Convertible Preferred Stock.  The outstanding shares of the Series C Convertible Preferred Stock shares may be repurchased within twelve months at 105% of the aforementioned conversion price; within thirteen and twenty-four months at 110% of the aforementioned conversion price; within twenty-five and thirty-six months at 115% of the aforementioned conversion price; and at any time after thirty-six months at a 120% of the aforementioned conversion price.  The convertible preferred shares have no voting rights.  The 100,000 shares of preferred stock were converted into 238,853,503 shares of common stock on June 29, 2009.  The valuation of the intangible assets purchased were based the number of shares, convertible at the time of agreement, at the fair market rate.  This amount was discounted, based on SEC Rule 144 limitations, and the historical trading volume and the size of the block relative to the Companys total number of common stock equivalent shares outstanding, management determined that the market would be unable to absorb the block at the calculated price and that it was appropriate to deduct a discount from that price to reflect the lack of liquidity. Utilizing dribble out methodology over various assumed periods, management developed a range of potential discounts to reflect the lack of liquidity of the subject shares.  Management believes a discount of 80% is appropriate given the facts and circumstances of this valuation. Thus, the resulting value for the consideration given for the assets acquired in this transaction, net of cash received in the transaction, is $818,000.  Royalties to HTA will become due on a bi-annual basis based upon the net sales of any of the licensed products sold from the technology license.  Royalties are to be paid within thirty days and are based on 3% of the net sales on the licensed products.  No minimum royalties shall be required for the first twelve months after the effective date of the agreement; however each succeeding twelve months after the effective date of the agreement minimum annual royalties become due.  The minimum royalty due for the second through the fifth (September 2010  2013) anniversary of the executed agreement is $20,000 and then thereafter the minimum royalty payment become $50,000 per year.  The minimum annual royalties are fully creditable against any actual earned royalties paid during the previous twelve month period.  The minimum royalties are not refundable in any part and if any payment becomes delinquent it shall bear interest at an annual rate of one and one-half (1.5) percentage points above the prime rate quoted on the last day of said period by a designated major financial institution.   11    3.  Inventory:  Inventory consists of the following at December 31: June 30, 2009December 31, 2008Raw materials$89,362$62,614Work-in-process--Finished goods35,29926,152Purchased finished goods27,46623,940$152,127112,706Less allowance for obsolescence(13,056)13,056$139,07199,650   4.  Other Current Assets:  During the year ended December 31, 2006, the Company loaned $30,000 to a consultant with an original maturity date of November 15, 2007.  The loan which accrues interest at 6% annum was converted to a demand note, with no maturity date .  As of June 30, 2009 and December 31, 2008, accrued interest was $4,735 and $3,837, respectively, and is included in other current assets.  Other current assets also include deferred consulting expense of $0 and $23,791 as of June 30, 2009 and December 31, 2008.   5.  Property and Equipment:  Property and equipment consist of the following at December 31: June 30,
2009December 31, 2008Autos and Trucks$43,544$43,544Furniture, Fixtures and Equipment381,567380,778Leasehold Improvements19,42319,423444,534443,745Accumulated Depreciation(174,930)(150,538)$269,604$293,207 Office equipment at June 30, 2009 and December 31, 2008 includes equipment acquired under a capital lease with a capitalized value of $16,073.  Related amortization included in accumulated depreciation was $16,073 at June 30, 2008 and December 31, 2008.  6.  Intangible Assets:  Other assets include license agreements in the total amount of $818,000.  The Company has worldwide exclusive licenses in the field of air purification, for technology designed to help eliminate organic and biological airborne organisms; and for the exclusive rights for surface acoustic wave hydrogen sensor technology, which includes the rights for use, sub-licensing and selling related licensed products; and a hydrogen technology application.  Licenses are being amortized over a life of 17 years.  Amortization expense was for the six months ended June 30, 2009 and 2008 was $20,450 and $5,010.  The Company has capitalized website development costs per guidance of EITF 00-2, accounting for web site development costs.  Total capitalized website development costs totaling $45,650 are reflected net of accumulated amortization of $18,210. The costs are being amortized over the estimated life of the website of three years.  Amortization expense related to the website development was $3,758, $2,083, $7,516 and $4,166 for the three and six month period ended June 30, 2009 and 2008, respectively.  For the six month period ended June 30, 2009 and 2008, the Company had written off $0 and $3,264,000, respectively of intangible assets (see note 2).  12    Intangible assets consisted of the following: June 30, 2009December
31, 2008License and patents$943,010$818,00010 - 17 yearWebsite Development45,65045,6503 year988,660863,650Accumulated Amortization(103,510)(38,660)$885,150$824,990   As of June 30, 2009 future amortization charges of intangible assets are as follows:  December 31,Amount2009$       98,120201092,596201189,154201289,154201389,154Thereafter426,972$     885,150   7.   Lease Commitments:  The Company maintains two facilities: its main office which houses the corporate and manufacturing facilities and a second unit used for research and development within the same industrial complex and has two separate leases related to these facilities. The main office lease has a term expiring on September 30, 2009.  During the term of the lease the Company is required to maintain comprehensive public liability insurance, including property damage for the benefit of the Company and the lessor.  The research and development lease expires on October 14, 2009 and the payment of its rent is guaranteed by the Company's President. The lease requires the Company to maintain comprehensive general liability insurance with minimum limits of $1,000,000 combined single limit coverage of bodily injury, property damage or combination thereof.  The lessor shall be listed as an additional insured on this policy.  As of June 30, 2009, the minimum rental payments due under these operating leases are as follows:  December 31,Amount2009$7,9342010-2011-2012-2013-Thereafter-$7,934           Total rent expense on these leases was $33,331 for the six months ended June 30, 2009.  8.  Related Party Transactions:  The Company leases their corporate office facility from their Chief Operation Officer and Director.  The lease expires in October 2009.  The total rent expense related to this lease was $33,331 for the six months ended June 30, 2009 and 2008.  The Company has a month to month consulting agreement for investor services with a Director of the Company.  As of June 30, 2009 the company had expensed approximately $30,000 for these services.  During 2008, the Company entered into an agreement with UTEK for services to be rendered related to comparative analysis of intellectual property developments.  As payment for these services the company issued 1,923,077 unregistered common shares which were valued at the fair market value of the common shares at the date of agreement and recorded as a prepayment for the services to be rendered.  For the year ended December 31, 2008, the full value of $250,000 had been recognized as expense.   13    In 2008, the Company entered into an employment agreement with their Chief Operating Officer.  The agreement provides a base salary of $10,000 per month and other Company benefits as defined within the Companys employee handbook.  The agreement does not have an expiration date.  In 2009 the Company entered into an employment agreement with their Chief Executive Officer.  The agreement provided an annual salary and 600,000 shares of common stock, immediately vested.  The stock was valued at the fair market value at the date of issuance, resulting in stock-based compensation expense of $13,200.  The Company entered into a two year consulting agreement on April 7, 2008 for consulting services to be rendered in the area of design, manufacturing, sales marketing and distribution of surge protection.  As compensation, the consultant is to be paid $65,000 annually as base compensation and various defined levels of commission percentages will be paid based on the type of sales generated.  The consultant will be reimbursed for any approved job related expenses and will report directly to the Chief Operation Officer.  9.   Concentrations of Credit Risk:  The Company sells its products to customers on an open credit basis.  The Company's trade accounts receivable are due from such customers and are generally uncollateralized.  During the six months ended June 30, 2009 and 2008, one customer accounted for approximately 14% of Company sales.  10.  Income Taxes:  The provision for federal and state income taxes for the years ended June 30 is as follows:  20092008Current$-$-Deferred--Total Provision for Income Taxes$-$-  Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company's deferred tax assets and liabilities as of December 31 are as follows:  20092008Deferred tax assets:Net operating loss carry forwards$7,168,200$6,381,700Other7,00013,300Total deferred tax assets$7,175,200$6,395,000Deferred tax liabilities:Book basis of property and equipment in excess of tax basis$19,000$11,200Total deferred tax liabilities$15,000$11,200Net deferred tax asset before valuation allowance$7,156,200$6,363,300Valuation allowance(7,156,200)(6,363,300)Net deferred tax asset$-$-  The Company has recorded a 100% valuation allowance against the net deferred tax asset at June 30, 2009 and 2008 due to the uncertainty of its ultimate realization. As time passes, management will be able to better assess the amount of tax benefit it will realize from using the net deferred tax asset resulting from the loss carry forwards. The valuation allowance increased $372,200 and $406,200 in the six month periods ended June 30, 2009 and 2008, respectively.  At December 31, 2008, the Company has available unused federal net operating losses of approximately $18,100,000 that may be used against future taxable income and if not utilized, will expire by the end of 2026.   14    Income taxes for the six month periods ended June 30, 2009 and 2008 differ from the amounts computed by applying the effective income tax rate of 34.0% to income taxes as a result of the following:  20092008Expected provision (benefit)$(376,200)$(1,480,100)Effect of:State income taxes net of federal benefits(33,300)(38,300)Non-deductible (income) expense37,3001,120,900Other, net0(8,700)Change in valuation allowances372,200406,200$-$-  11.  Stock Transactions:  Sale of Shares - Regulation S  The Company has commenced an offering of its common stock pursuant to and in reliance upon the exemption from registration provided by Securities and Exchange Commission Regulation S, promulgated under the Securities Act of 1933, as amended.  The Company has authorized for sale up to sixty million (60,000,000) shares of its restricted common stock (the Shares) in the Regulation S offering (the Offering).  The Shares are available for sale only to third parties who are not U.S. persons (as defined in Rule 902 of Regulation S).  The Company has engaged three separate entities to serve as its distribution managers for the Offering.  The Company and the distribution managers have engaged two separate entities to serve as the escrow agent.  The escrow agent will hold funds paid by buyers and disburse Company stock certificates to buyers who qualify as non-U.S. persons in a Regulation S placement and whose offers to purchase Shares are accepted by the Company.  The shares sold will be offered on the lower of the closing bid price for ECET (previously WESI) stock as quoted on the NASDAQ Bulletin Board on the date prior to the trade date or the closing price of said shares minus an original offering discount of 15%.  The Company will receive 27% of the proceeds from each accepted offer and the balance will be paid to the Distribution Manager (72%) and the Escrow Agent (1%).  Sale of Shares  During the six months ended June 30, 2009, the Company sold and issued 18,993,300 shares of common stock for $286,641 cash, for the six months ended June 30, 2008, the Company sold shares of common stock for $928,102 cash.  Service Shares and Agreements  During the six months ended June 30, 2009 and 2008, the Company issued shares of common stock for various consulting and other services, in payment of work performed valued at approximately $603,657 and $14,000, respectively  .  On January 8, 2008, the Company donated 100,000 shares of stock to an organization.  The stock was valued at the stock closing price on the date of the donation which was $0.228 resulting in a total expense of $22,800.  Issuance of Preferred Shares  On February 13, 2009 the Company sold 1,500,000 shares of the restricted Preferred Stock (with 500 votes per share) to Benjamin C. Croxton, the Companys Chief Executive Officer. The Company exchanged the shares for an assignment of accrued vacation pay and back salary in the amount of $8,256.50 due to Mr. Croxton.  The issuance of the restricted Preferred Stock and the consideration received by the Company were approved by the Board of Directors at a meeting on February 10, 2009. The shares of restricted Preferred Stock were issued in a private transaction pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933. The shares of restricted Preferred Stock have 750,000,000 shareholder votes which when combined with Mr. Croxtons common stock holdings equates to 87.9% of the total combined shareholder votes of 858,138,831 for both the issued and outstanding common stock and Preferred Stock.   15    Acquisition  Pure Air Technologies, Inc.  On October 11, 2006, The Company acquired 100% of the issued and outstanding stock of Pure Air Technologies, Inc. (PATI), a subsidiary of UTEK Corporation in a tax free stock for stock exchange.  The Company issued 100,000 shares of the Company Series A convertible preferred stock in exchange for $300,000 cash, $293,369 of prepaid sponsored research and license agreements, including a world wide exclusive license in the field of air purification, for a technology designed to help eliminate organic and biological airborne organisms.  At any time after one year, at the election of UTEK, the convertible preferred stock could convert into $4,050,000 of restricted common stock of the Company, based on the previous ten day average closing bid price on the date of conversion.  With a minimum of at least ten cents ($0.10) per share; thereby limiting the maximum number of restricted common shares to be received upon conversion to 40,500,000.  During the twelve month period in which UTEK was holding the preferred stock, the Company accrued interest at an annual rate of 5%, compounded quarterly, which was payable in cash or common shares of the Company.  On October 11, 2007, UTEK Corporation converted all of the 100,000 Series A convertible preferred shares that were issued with the acquisition of Pure Air Technologies, Inc.  In addition, accrued dividends in the amount of $202,500 were converted.  A total of 8,437,500 Common Shares of the Company were issued for the conversions.  Acquisition  Hydrogen Safe Technologies, Inc.  On September 28, 2007, the Company acquired Hydrogen Safe Technologies, Inc. (HSTI) in a tax-free stock for stock exchange.  As consideration for the agreement, the Company issued 7,500,000 unregistered shares of common stock to UTEK Corporation in exchange for 100% of the issued and outstanding shares of HSTI, assignment of an exclusive technology license for the detection of hydrogen in vehicles, engines and / or water heaters using hydrogen and oxygen, prepaid consulting fees, related to a nine month consulting agreement, and $450,000 cash.  Acquisition  Advanced Alternative Energy, Inc.  On June 10, 2008, the Company acquired Advanced Alternative Energy, Inc. (AAEI) in a tax free stock for stock exchange.  AAEI was incorporated in the State of Florida on May 20, 2008.   As consideration for the agreement, the Company issued 100,000 shares of Series B Convertible Preferred Stock to UTEK Corporation in exchange for 100% of the issued and outstanding shares of AAEI, assignment of an exclusive technology license for the production and preparation of mechanically and electrochemically stable electrodes and transition metal oxide catalysts; prepaid consulting fees, for a technical consulting agreement related to the license, and $200,000 cash. The preferred shares may be converted by the holder at any time into common stock prior to the sixty month anniversary of the execution of the agreement into the value of $3,500,000 of common shares of the Company, based on the average of the five day closing price prior to the conversion.  At any time after six months and before the sixty month anniversary of the execution of the agreement, the Company will have the right, at its sole discretion, to repurchase at an agreed upon percentage value, any non-converted shares of the Series B Convertible Preferred Stock.  The shares may be repurchased within twelve months at 105% of the original pro rata purchase price; within thirteen and twenty-four months at 110% of the original pro rata purchase price; within twenty-five and thirty-six months at 115% of the original pro rata purchase price; and at any time after thirty-six months at 120% of the value of the original pro rata purchase price.  The convertible preferred shares have no voting rights.  The 100,000 shares of preferred stock were converted into 55,118,111 shares of common stock on May 7, 2009. The acquisition of AAEI was considered to be a purchase of productive assets, per guidance of EITF 98-3, Determining Whether a Non-monetary Transaction Involves the Receipt of Productive Assets or of a Business as a result of the analysis of the inputs, processes and outputs and consideration of the total concentration of the fair value of the transferred assets to the acquisition.  Accordingly, no goodwill was recognized on the purchase.  The intellectual rights were valued at $3,264,000 at the time of the acquisition.  While the Company anticipates further development of the related technology, as of June 30, 2008, the technology had not yet been tested on the market nor had there been any related sales. Estimation of future sales could not be determined as the technology is not ready to be introduced into the market place and knowledge of when or if the Company can fully develop the technology is not known.  In addition, consideration of other similar technology entering the market prior to the Company cannot be determined.  Based on the above factors, the Company concluded that the valuation of the intangible could not be supported and therefore as of June 30, 2008, the Company deemed the intangible asset to be impaired and wrote it off.   16    Acquisition  H-Hybrid Technologies, Inc.  On September 26, 2008, the Company acquired H-Hybrid Technologies, Inc. (HHTI) in a tax-free stock for stock exchange.  HHTI was incorporated in the State of Florida on September 18, 2008.   As consideration for the agreement, the Company issued 100,000 shares of Series C Convertible Preferred Stock to UTEK Corporation and 5,000,000 unregistered common shares to Hydrogen Technology Application, Inc. (HTA)in exchange for 100% of the issued and outstanding shares of HHTI and assignment of an exclusive technology license for the use of three patents and one patent applied for but not yet issued.  The acquisition of HHTI is considered to be a purchase of productive assets, per guidance of EITF 98-3, Determining Whether a Non-monetary Transaction Involves the Receipt of Productive Assets or of a Business as a result of the analysis of the inputs, processes and outputs and consideration of the total concentration of the fair value of the transferred assets to the acquisition.  Accordingly, no goodwill will be recognized on the purchase. The identifiable assets of HHTI include cash and assignment of an exclusive technology license for the use of three patents and one patent applied for but not yet issued.  The Series C Convertible Preferred Stock has no voting rights, no liquidation preferences and no dividend rights.  The holder may convert the Series C Convertible Preferred Stock at any time into common stock prior to the sixty-month anniversary of the execution of the agreement. The 100,000 shares of Series C Convertible Preferred Stock is convertible into $3,750,000 of our common shares, based on the average of the five-day closing price prior to the conversion.  At any time after six months and before the sixty month anniversary of the execution of the agreement, the Company will have the right, at its sole discretion, to repurchase at an agreed upon percentage value, any outstanding shares of the Series C Convertible Preferred Stock.  The outstanding shares of the Series C Convertible Preferred Stock shares may be repurchased within twelve months at 105% of the aforementioned conversion price; within thirteen and twenty-four months at 110% of the aforementioned conversion price; within twenty-five and thirty-six months at 115% of the aforementioned conversion price; and at any time after thirty-six months at a 120% of the aforementioned conversion price.  The 100,000 shares of preferred stock were converted into 238,853,503 shares of common stock on June 29, 2009.  The valuation of the intangible assets purchased were based the number of shares, convertible at the time of agreement, at the fair market rate.  This amount was discounted, based on SEC Rule 144 limitations, and the historical trading volume and the size of the block relative to the Companys total number of common stock equivalent shares outstanding, management determined that the market would be unable to absorb the block at the calculated price and that it was appropriate to deduct a discount from that price to reflect the lack of liquidity. Utilizing dribble out methodology over various assumed periods, management developed a range of potential discounts to reflect the lack of liquidity of the subject shares.  Management believes a discount of 80% is appropriate given the facts and circumstances of this valuation. Thus, the resulting value for the consideration given for the assets acquired in this transaction, net of cash received in the transaction, is $818,000.  Royalties will become due to HTA on a bi-annual basis based upon the net sales of any of the licensed products sold from the technology license.  Royalties are to be paid within thirty days and are based on 3% of the net sales on the licensed products.  No minimum royalties shall be required for the first twelve months after the effective date of the agreement; however each succeeding twelve months after the effective date of the agreement minimum annual royalties become due.  The minimum royalty due for the second through the fifth (September 2010  2013) anniversary of the executed agreement is $20,000 and then thereafter the minimum royalty payment becomes $50,000 per year.  The minimum annual royalties are fully creditable against any actual earned royalties paid during the previous twelve month period.  The minimum royalties are not refundable in any part and if any payment becomes delinquent it shall bear interest at an annual rate of one and one-half (1.5) percentage points above the prime rate quoted on the last day of said period by a designated major financial institution.  Stock Options  In February 2007, the company issued 650,000 stock options to a director of the company for consulting services valued at approximately $182,836.  The expense was recognized for the year ended December 31, 2007.  During the years ended December 31, 2008 and 2007, the Company issued rights to purchase stock in the amount of 1,074,000 and 1,250,000 shares, respectively. The exercise price ranges from $0.10 to $0.50 per share and the options can be exercised for a period of three years.   17    Employee Stock Options  On September 18, 2008, the Board of Directors for the Company approved a Stock Grant and Option Plan (the 2008 SGOP) that provides for the issuance of up to 20 million shares of the Companys common stock to officers, directors, employees and consultants who render bona fide services to the Company.  In connection with approval of the Stock Plan, the Board of Directors for the Company also has approved the filing of a registration statement with the Securities and Exchange Commission on Form S-8, on November 26, 2008, to facilitate registration of the 20 million shares of common stock allocated for ultimate distribution by the Stock Plan.  On March 25, 2009, the Company filed another registration statement with the Securities and Exchange Commission on Form S-8 to facilitate registration of an additonal 20 million shares of common stock allocated for ultimate distribution by the Stock Plan.  The purpose of the EClips Energy Technologies, Inc. 2008 SGOP, as amended, is to offer selected employees, directors and consultants an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, to encourage such selected persons to remain in the employ of the Company, and to attract new employees with outstanding qualifications. The Plan seeks to achieve this purpose by providing for Awards in the form of Registered Shares, Restricted Shares and Options (which may constitute Incentive Stock Options or Non-statutory Stock Options) as well as the direct award or sale of Shares of the Companys Common Stock. Awards may be granted under this Plan in reliance upon federal and state securities law exemptions.  12.  Commitment and Contingencies:  Going concern:  As reflected in the Statement of Operations, the Company has had recurring losses and negative cash flows from operations. These factors are an indication that that the Company may not be able to continue as a going concern.  To continue as a going concern, the Company will need to raise additional capital, borrow funds, or generate more revenues from current product sales and new product sales associated with the business plan implementation.  If current cash flow is not sufficient to cover planned operations for the next twelve months, management believes it can raise additional capital from private placements, borrow funds from its officers, and delay certain expenditures to continue as a going concern during the next year.  Legal matters:  From time to time the Company may be a party to litigation matters involving claims against the Company.  During the first quarter of 2009, a suit has been brought against the company by a former employee regarding a cancelled employment agreement.  The Company believes it has a strong defense in all significant matters of the case.  However, this matter may result in an adverse judgment or award, or the Company may choose to settle the matter, due to the associated costs and risk of continuing.  The Company believes it is not possible to determine whether a loss will be incurred, or to estimate any potential losses, that would be material to the financial statements.  Based on current information, management believes that the resolution of matters currently pending will not have a material adverse impact on the financial condition or cash flows of the Company.  13.  Recent Accounting Pronouncements:  The Financial Accounting Standards Board and other entities issued new or modifications to, or interpretations of, existing accounting guidance during the current and recent periods. The Company has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Companys reported financial position or operations in the near term.  Current Adoption of New Accounting Pronouncements  In May 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 165, Subsequent Events, which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued.  It requires the disclosure of the date through which an entity has evaluated subsequent events. SFAS No. 165 is effective for interim and annual reporting periods ending after June 15, 2009.  We have adopted the new disclosure requirements in our consolidated financial statements.  In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts  an interpretation of FASB Statement No. 60.  This statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation.  SFAS No. 163 also clarifies how SFAS No. 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities to increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises.  SFAS No. 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprises risk-management activities of the insurance enterprise be effective for the first period (including interim periods) beginning after issuance of SFAS No. 163.  Except for those disclosures, earlier application is not permitted.  The  18    Company has assessed the impact of SFAS No. 163 on its financial position and results of operations and determined it to have no effect on the operations or financial condition.  In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (the GAAP hierarchy). SFAS 162 will become effective 60 days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Companys adoption of SFAS 162 did not have a material effect on our results of operations and financial condition.  In March 2008, the Financial Accounting Standards Board issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities.  SFAS No. 161 requires additional disclosures related to the use of derivative instruments, the accounting for derivatives and the financial statement impact of derivatives.  SFAS No. 161 is effective for fiscal years beginning after November 15, 2008.  The adoption of SFAS No. 161 did not impact the Company's financial statements.  In December 2007, the FASB issued SFAS No. 160; Noncontrolling Interest in Consolidated Financial Statements, and amendment of ARB 51, which changes the accounting and reporting for minority interest.  Minority interest will be recharacterized as noncontrolling interest and will be reported as component of equity separate from the parent's equity, and purchases or sales of equity interests that do not result in change in control will be accounted for as equity transactions.  In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the date of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings.  SFAS No. 160 is effective for the Company beginning January 1, 2009 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively.  The adoption of SFAS 160 had no impact on the Companys balance sheet or results of operation.  In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years, with early adoption permitted.  Effective January 1, 2008, the Company did not elect the fair value option for any instruments.  In December 2007, the FASB issues SFAS No. 141(R), Business Combinations, which replaces SFAS No. 141, Business Combinations, which among other things, establishes principles and requirements for how an acquirer entity recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed (including intangibles) and any non-controlling interests in the acquired entity. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. SFAS 141 has not had an impact on the Companys financial position, results of operations or cash flows.  In April 2009, the FASB issued FSP SFAS No. 107-1 and Accounting Principles Board (APB) No. 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP SFAS No. 107-1). FSP SFAS No. 107-1 amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments to require fair value of financial instrument disclosure in interim financial statements and amends APB No. 28, Interim Financial Reporting, to require those disclosures in all interim financial statements. The provisions of FSP SFAS No. 107-1 are effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company did not elect to early adopt FSP SFAS No. 107-1; the adoption of EITF No. 07-5 did not have a material effect on the Companys results of operations or financial condition.  In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142). The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008.  The adoption of FSP FAS 142-3 has had no impact on its results of operations or financial condition.  In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (FSP 157-3), to clarify the application of the provisions of SFAS 157 in an inactive market and how an entity would determine fair value in an inactive market. FSP 157-3 was effective upon issuance and applies to the Companys current financial statements. The application of the provisions of FSP 157-3 did not affect the Companys results of operations or financial condition.   19    In April 2009, the FASB issued FSP SFAS No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. Under FSP SFAS No. 157-4, transactions or quoted prices may not accurately reflect fair value if an entity determines that there has been a significant decrease in the volume and level of activity for the asset or the liability in relation to the normal market activity for the asset or liability (or similar assets or liabilities). In addition, if there is evidence that the transaction for the asset or liability is not orderly; the entity shall place little, if any weight on that transaction price as an indicator of fair value. FSP SFAS No. 157-4 is effective for periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009 subject to the early adoption of FSP SFAS No. 115-2 and SFAS No. 124-2. The Company did not have a material impact on its Financial Statements.  In May 2008, the FASB issued FSP Accounting Principles Board (APB) 14-1 Accounting for Convertible Debt instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB 14-1). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuers non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. As we do not have convertible debt, the adoption of FSP APB 14-1 has had no effect on our results of operations and financial condition  In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (FSP EITF 03-6-1), which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. FSP EITF 03-6-1 is effective retrospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP EITF 03-6-1 did not materially impact the Companys financial condition and results of operations. In June 2008, the FASB issued EITF No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own Stock, effective for financial statements issued for fiscal periods and interim periods beginning after December 15, 2008. EITF No.07-5 provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entitys own stock. The adoption of EITF No. 07-5 did not have a material effect on the Companys results of operations or financial condition.  Future Adoption of New Accounting Pronouncements  On July 1, 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification TM (Codification) and The Hierarchy of Generally Accepted Accounting Principles- a replacement of FASB Statement No. 162", which will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by non governmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company is currently evaluating the impact of SFAS No. 168 on the Companys financial statements.  In December 2008, the FASB issued FSP SFAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets. FSP SFAS 132(R)-1 requires an employer to provide certain disclosures about the assets held by its defined benefit pension or other postretirement plans. The required disclosures include the investment policies and strategies of the plans, the fair value of the major categories of plan assets, the inputs and valuation techniques used to develop fair value measurements and a description of significant concentrations of risk in plan assets. FSP SFAS 132(R)-1 is effective for fiscal years ending after December 15, 2009. The Company does not expect the adoption of FSP SFAS 132(R)-1 to have a material impact on its Financial Statements.  In April 2009, the FASB issued FSP SFAS No. 115-2 and SFAS No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP SFAS No. 115-2). FSP SFAS No. 115-2 provides new guidance on the recognition and presentation of other-than-temporary impairments (OTTI) for fixed maturity securities that are classified as available-for-sale and held-to-maturity if management does not intend to sell the impaired security and it is more likely than not it will not be required to sell the impaired security before the recovery of its amortized cost basis. The Company does not have investments in fixed maturity securities and, accordingly, expects no impact from adoption of this pronouncement.  Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on our present or future financial statements.  14.  Subsequent Events:  The Company entered into a Regulation S distribution agreement on January 14, 2009 which replaced the Regulation S distribution agreement entered into on November 29, 2008.  The total of up to 20,000,000 shares of restricted common stock to be offered remained the same.  The shares sold will be offered on the lower of the closing bid price for the Companys stock as  20    quoted on the NASDAQ Bulletin Board on the date prior to the trade date or the closing price of said shares minus an original offering discount of 15%.  The agreement terminates on December 31, 2009 unless extended in writing by both parties.  The agreement may also be terminated at any time with 21 days written notice by the Company.  During the first quarter of 2009, the Company has been named in a legal action by a former employee.  See note 12, Legal Matters for a discussion of this event.  On July 28, 2009, the Board of Directors of the Company executed a Written Consent To Action Without A Meeting which contained resolution approving a reverse split of the Companys common stock by a ratio of one (1) share for each one hundred fifty (150) shares issued and outstanding (1-for-150 reverse), with an effective date of August 21, 2009.  As of the date of this filing, the Financial Industry Regulatory Authority (FINRA) has not accepted the proposed reverse stock split; therefore, the shares stated in this filing do not reflect the results of the proposed reverse stock split.      21    Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operation or Plan of Operation.  Cautionary Notice Regarding Forward Looking Statements  The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.  We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This filing contains a number of forward-looking statements which reflect managements current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words believe, expect, intend, anticipate, estimate, may, variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.  Readers should not place undue reliance on these forward-looking statements, which are based on managements current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.  The following are factors that could cause actual results or events to differ materially from those anticipated, and include but are not limited to: general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the costs and effects of legal proceedings.    For example, a few of the uncertainties that could affect the accuracy of forward-looking statements include: · An abrupt economic change resulting in an unexpected downturn in demand; · Governmental restrictions or excessive taxes on our products; · Over-abundance of companies supplying energy conserving products and services; · Economic resources to support the retail promotion of new products and services; · Expansion plans, access to potential clients, and advances in technology; and · Lack of working capital that could hinder the promotion and distribution of products and services to a broader based business and retail population.   Introduction  EClips Energy Technologies, Inc. (referred to as the Company, ECET, or in the first person notations of we, us, and our) began operations in 1984 under the corporate name of Professional Technical Systems, Inc. (PTS). PTS merged with WESI in November 2005 (the November 2005 Merger) with WESI being the legal acquirer but PTS being the accounting acquirer and subsequently changed business name to EClips Energy Technology, Inc.  The Company manufactures and sells transient voltage surge suppressors and related products and commercial and residential energy-saving equipment and applications to distributors and customers throughout the United States.  Although this activity is expected to continue, the Company plans to implement a new business model to market a multi-product package to commercial, industrial and residential facilities in order to lower their overall cost of electric, gas and water of these facilities.  The Company plans to market its package both by direct sales as well as a Shared Revenue Program (SRP) where the Company pays for the entire installation cost of the product package in return for payments of a percentage of the savings realized by the facilities using the product package.  This new business model is expected to increase revenues and profits for the Company.  The Company also intends to aggressively develop and market its H2O technology and its pure air technology.   22     Selected Historical DataJune 30,
2009June 30,  2008Revenue$199,726$223,305Total Operating Expenses1,043,7764,447,473Income (Loss) From Operations(1,005,991)(4,343,016)Other Income (Expense)(2,500)(10,221)Benefit (Provision For Income Taxes)--Net Loss(1,008,491)(4,353,237)Net Income (Loss) Per Share Of Common Stock(0.01)(0.05)   Results of Operations  For the three and six months ended June 30, 2009 and 2008  Revenues  Total product sales were $113,126, $137,511, $199,726, and $223,305 for the three and six months ended June 30, 2009 and 2008, respectively.  The Company has had decreased sales, due to decrease in product orders, believed to be from the decrease in housing construction and other general economic conditions.  Gross profit on sales has deteriorated in the comparative three month periods, due to increased costs and the reduced production cycle has increased the direct labor and overhead burdens, negatively affecting the gross margins.  Operating Expenses  Our operating expenses for the three months ended June 30, 2009 was $706,531 and $619,449, respectively.  The increase of approximately $87,000 in the three month period ended June 30, 2009 is a direct result in approximately $459,000 of non-cash, stock-based compensation greater than the comparative period. Excluding the stock-based compensation, there would have been a decrease in costs of approximately $225,000.  Our operating expenses for the six months ended June 30, 2009 and 2008 was $1,043,776 and $4,447,473, respectively.  The 2008 expense included the non-cash impairment loss charge of $3,264,000.  If the impairment loss is excluded from the June 30, 2008 operating expenses, the operating expenses for both six month periods would be comparable.  We expect significant increases in future consulting, salary and research and development expenses as a result of the development and launch of our new product offering (the Pure Air solution).  Net Loss  Net losses incurred in all periods presented have been primarily due to the operating costs.  These expenses resulted in the net losses in the amount of $695,691, $540,730, $1,008,491and $4,343,016 for the three and six months end June 30, 2009 and 2008 respectively.  The variances in the year over year net loss was due primarily from operating expenses, as described above.  At this time, normal costs of   public filing will continue, which requires significant expenditures for professional expense, and it is not known when significant revenues will occur to off-set these expenses.  Additionally, in efforts to find alternative credit, the Company has had the necessity to issue common stock in payment of critical services.   The costs incurred may not be indicative of the costs, had conventional payment methods been available.   Liquidity and Capital Resources  The cash used in operating activities for the three and six months ended June 30, 2009 was less than the cash used in the same period for 2008 by approximately $587,000.  Gross profit from sales reduced from prior year comparative financials.  General and administrative expenses and operating expenses, excluding non-cash charges of impairment and stock-based compensation, remained reasonably consistent.  We do not believe our working capital is sufficient to implement the full spectrum of our planned, new energy-saving business model.  Operations in 2008 and most of 2007 have been funded in large part through the sale of common stock and such funding will need to continue in order to allow us to implement our new business model.  The Company has been successful in acquiring certain services through consulting agreements that are funded in large part through the issuance of common stock as noted above.  23    However, the Company currently is offering its stock through a private placement.  The Company plans to raise additional capital through the sale of common stock.  The proceeds from the sale will be used to fund research and development consulting and professional fees, new job installs, other expenses and for working capital.  Subsequent Events  The Company entered into a Regulation S distribution agreement on January 14, 2009 which replaced the Regulation S distribution agreement entered into on November 29, 2008.  The total of up to 20,000,000 shares of restricted common stock to be offered remained the same.  The shares sold will be offered on the lower of the closing bid price for the Companys stock as quoted on the NASDAQ Bulletin Board on the date prior to the trade date or the closing price of said shares minus an original offering discount of 15%.  The agreement terminates on December 31, 2009 unless extended in writing by both parties.  The agreement may also be terminated at any time with 21 days written notice by the Company.  During the first quarter of 2009, the Company has been named in a legal action by a former employee.  See note 12, Legal Matters for a discussion of this event.  On July 28, 2009, the Board of Directors of the Company executed a Written Consent To Action Without A Meeting which contained a resolution approving a reverse split of the Companys common stock by a ratio of one (1) share for each one hundred fifty (150) shares issued and outstanding (1-for-150 reverse), with an effective date of August 21, 2009.  As of the date of this filing, the Financial Industry Regulatory Authority (FINRA) has not accepted the proposed reverse stock split; therefore, the shares stated in this filing do not reflect the results of the proposed reverse stock split.  Recent Accounting Pronouncements  The Financial Accounting Standards Board and other standard-setting bodies issued new or modifications to, or interpretations of, existing accounting standards during the year. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporations reported financial position or operations in the near term.  These recently issued pronouncements have been addressed in the footnotes to the financial statements.  Critical Accounting Policies  The results of operations are based on preparation of financial statements in conformity with accounting principles generally accepted in the United States.  The preparation of financial statements requires management to select accounting policies for critical accounting areas as well as estimates and assumptions that affect the amounts reported in the financial statements.  The Companys accounting policies are more fully described in Note 1 to Notes of Financial Statements found in the Companys annual financial statements filed with Form 10-K.  We have identified the following accounting policy and related judgment as critical to understanding the results of our operations.  The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.  The Company issues restricted stock to consultants for various services.  For these transactions the Company follows the guidance in EITF 96-18 "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring or in Conjunction with Selling Goods or Services".  Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete.  In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets," long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When required impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  SFAS No. 109, Accounting for Income Taxes requires that deferred tax assets be evaluated for future realization and reduced by a valuation allowance to the extent we believe a portion will not be realized.  We consider many factors when assessing the  24    likelihood of future realization of our deferred tax assets including our recent cumulative earnings experience, expectations of future taxable income, the carry-forward periods available to us for tax reporting purposes and other relevant factors.  At December 31, 2008, our net deferred tax assets are comprised principally of net operating loss carry forwards (NOLs).  Classification of deferred tax assets between current and long-term categories is based on the expected timing of realization, and the valuation allowance is allocated on a prorate basis.  We have reflected a valuation allowance of 100%, which resulted in an income tax benefit of zero.  The range of possible judgments relating to the valuation of our deferred tax asset is very wide.  If we had concluded that the weight of available evidence supported a decision that substantially all of our deferred tax assets may be realized, we would have a substantial income tax benefit in our statement of operations.  Significant judgment is required in making this assessment, and it is very difficult to predict when, if ever, our assessment may conclude our deferred tax assets is realizable.   Off-Balance Sheet Arrangements  We have no off-balance sheet arrangements.   Item 3.Quantitative and Qualitative Disclosures About Market Risk.  We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.   Item 4.Controls and Procedures.Item 4T.Controls and Procedures.  (a)  Evaluation of disclosure controls and procedures  The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Companys internal control over financial reporting is a process designed under the supervision of the Companys Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Companys financial statements for external purposes in accordance with U.S. generally accepted accounting principles.  Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of June 30, 2009. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of such period are not effective due to the Companys limited internal resources and lack of ability to have multiple levels of transaction review.  Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.  The Companys disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.However, the Companys management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  (b) Changes in Internal Controls.  The Companys management, including the Chief Executive Officer, Director, and Chief Financial Officer (Principal Accounting and Financial Officer), confirm that there was no change in the Companys internal control over financial reporting during the quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.   PART II - OTHER INFORMATION   Item 1.      Legal Proceedings.  From time to time the Company may be a party to litigation matters involving claims against the Company.  In the first quarter of 2009, a suit has been brought against the company by a former employee regarding a terminated employment agreement.  The Company believes it has a strong defense in all significant matters of the case.  However, this matter may result in an adverse  25    judgment or award, or the Company may choose to settle the matter, due to the associated costs and risk of continuing.  The Company believes it is not possible to determine whether a loss will be incurred, or to estimate any potential losses, that would be material to the financial statements.  Based on current information, management believes that the resolution of matters currently pending will not have a material adverse impact on the financial condition or cash flows of the Company.   Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds.  During the three month period ending June 30, 2009, the Company issued unregistered shares of its common stock as set forth in the table below.  DateNameTotal Dollar
AmountPrice
per ShareTotal Number of Shares05/25/09Thomas Runzo$--$--400,000  All sales of shares of common stock identified in the table above were made pursuant to Section 4(2) of the 1933 Act.  The proceeds of the sale of these securities are to provide operating capital and development costs.  On February 13, 2009, the Company sold 1,500,000 shares of its restricted Series D Preferred Stock (the Preferred Stock) to our Chief Executive Officer, Benjamin C. Croxton. The aggregate offering price for the shares was $8,256.50.  The issuance of the restricted Preferred Stock and the consideration received by the Company were approved by the Board of Directors at a meeting on February 10, 2009. The shares of restricted Preferred Stock were issued in a private transaction pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933.  On May 25, 2009, the Company issued 400,000 shares of its common stock to Thomas Runzo for past services rendered that related to website design, etc.   Item 3.      Defaults Upon Senior Securities.  None    Item 4.     Submission of Matters to a Vote of Security Holders.  No matter was submitted during the quarter ending June 30, 2009, covered by this report to a vote of our shareholders, through the solicitation of proxies or otherwise.  Item 5.      Other Information.  None   Item 6.      Exhibits.  Exhibit Number Location and Description Reference   (a) Reports of Independent Certified Accountants Filed Herewith  (b) Financial Statements Filed Herewith  (c) Exhibits required by Item 601, Regulation S-K:  (2.0) Plan of purchase, sale, reorganization, arrangement, liquidation, or succession  (2.1) Agreement and Plan of Merger Between See Exhibit Key Registrant and World Energy Solutions, Inc  (2.2) Agreement and Plan of Merger Between See Exhibit Key Registrant and Professional Technical Systems, Inc.  (3.0)    Articles of incorporation and by-laws  (3.1) Initial Articles of Incorporation filed See Exhibit Key  26    November 23, 1998.  (3.2) Amended and Restated Articles of Incorporation See Exhibit Key Filed March 17, 2009.  (3.3) By-Laws filed November 23, 1998. See Exhibit Key  (4.0) Instruments defining the rights of security holders, including indentures  (4.1) Specimen Share Certificate for Class A Convertible Preferred Stock See Exhibit Key  (4.2) Specimen Certificate for Class B Convertible Preferred Stock See Exhibit Key  (4.3) Specimen Certificate for Class C Convertible Preferred Stock See Exhibit Key  (4.4) Specimen Certificate for Class D Convertible Preferred Stock See Exhibit Key  (4.5) EClips Energy Technologies, Inc. Stock Grant and Option Plan 2008, as amended See Exhibit Key  (10.0) Material Contracts  (10.1) Strategic Alliance Agreement Between See Exhibit Key the Company and UTEK Corporation.  (10.2) Employment Agreement with Benjamin Croxton See Exhibit Key dated January 31, 2006.  (10.3) Employment Agreement with Mike Prentice See Exhibit Key dated January 31, 2006.  (10.4) Agreement and Plan of Acquisition with UTEK See Exhibit Key Corporation, dated October 11, 2006.  (10.5) Agreement and Plan of Acquisition with UTEK See Exhibit Key Corporation, dated September 28, 2007.  (10.6) Agreement and Plan of Acquisition with UTEK See Exhibit Key Corporation, dated June 11, 2008.  (11.0) Statement re: Computation of Per Share Earnings Note 1 to Financial Statements  (14.0) Code of Ethics See Exhibit Key  (16.0) Letter on changes in certifying accountant None  (18.0) Letter on change in accounting principles None  (31.0) Certification pursuant to 18 U.S.C. Section 1350, Filed Herewith as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  (32.0) Certification pursuant to 18 U.S.C. Section 1350, Filed Herewith as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (99.0) Additional exhibits None   27    (d) Reports on Form 8-K  During the six month period ending June 30, 2009, the Company filed the following Form 8Ks:
January 22, 2009
Item 5.02 Departure of Certain Officers
January 29, 2009
Item 5.02 Appointment of Certain Officers
February 13, 2009
Item 5.02 Departure of Certain Directors
Item 5.02 Election of Directors
Item 5.03 Amendments to Articles of Incorporation
February 19, 2009
Item 3.02 Unregistered Sales of Equity Securities
Item 5.01 Changes in control of Registrant
February 26, 2009
Item 5.03 Amendments to Articles of Incorporation (name change)
April 15, 2009
Item 4.01 Changes in Registrants Certifying Accountant
April 21, 2009
Item 8.01 Other Events   Exhibit Key   2.1 Incorporated by reference to the Company's Form 8-K filed with the Securities and Exchange Commission on August 19, 2005.  2.2 Incorporated by reference to the Company's Form 8-K filed with the Securities and Exchange Commission on November 14, 2005.  3.1 Incorporated by reference to the Companys Form 10SB 12G filed with the Securities and Exchange Commission on November 23, 1998.  3.2 Incorporated by reference to the Company's Form S-8 filed with the Securities and Exchange Commission on March 25, 2009.  3.3 Incorporated by reference to the Companys Form 10SB 12G filed with the Securities and Exchange Commission on November 23, 1998.  4.1 Incorporated by reference to the Companys Form 10KSB filed with the Securities and Exchange Commission on April 2, 2007.  4.2 Incorporated by reference to the Companys Form S-8 filed with the Securities and Exchange Commission on November 26, 2008.  4.3 Incorporated by reference to the Companys Form S-8 filed with the Securities and Exchange Commission on November 26, 2008.  4.4 Incorporated by reference to the Company's Form S-8 filed with the Securities and Exchange Commission on March 25, 2009.  4.5 Incorporated by reference to the Company's Form S-8 filed with the Securities and Exchange Commission on March 25, 2009.  10.1 Incorporated by reference to the Company's Form 8-K filed with the Securities and Exchange Commission on September 13, 2005.  10.2 Incorporated by reference to the Companys Form S-8 filed with the Securities and Exchange Commission on January 31, 2006.  10.3 Incorporated by reference to the Companys Form S-8 filed with the Securities and Exchange Commission on January 31, 2006.  10.4 Incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on October 17, 2006.  10.5 Incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on October 5, 2007.  28     10.6 Incorporated by reference to the Companys Form 8-K filed with the Securities and Exchange Commission on June 18, 2008.  14.1 Incorporated by reference to the Companys Form 10KSB filed with the Securities and Exchange Commission on April 2, 2007.       SIGNATURES  In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.   ECLIPS ENERGY TECHNOLOGIES, INC.   Date: August 14, 2009 By:  /s/: BENJAMIN C. CROXTON  BENJAMIN C. CROXTON, Chief Executive Officer Chief Financial Officer, Director      29