EDGAR 10-K Filing

Company CIK: 1043894
Filing Year: 2022
Filename: 1043894_10-K_2022_0001099910-22-000074.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS.
The Company developed and manufactured the Voraxial Separator and currently manufactures and sells the V-Inline Separator, a unique separation technology that efficiently separates large volumes of liquid/liquid, liquid/solids or liquid/liquid/solids fluid mixtures with distinct specific gravities. Current and potential commercial applications and markets for the V-Inline Separator include mining, utilities, manufacturing, utilities, waste-to-energy among other industries.
On March 13, 2017, we entered into a Technology Purchase Agreement with Schlumberger Technology Corporation, a Texas corporation, Schlumberger Canada Limited, a Canadian entity, and Schlumberger B.V., an entity organized under the laws of the Netherlands (collectively, “Schlumberger”) pursuant to which we sold our intellectual property, substantially consisting of the Voraxial patents, marks, software and copyrights, to Schlumberger in consideration of $4,000,000. As part of the agreement, Schlumberger granted us a non-exclusive, non-transferable, worldwide, royalty-free licenses (the “Grant Back Licenses”), to make, use, sell, offer for sale, and import products and processes embodying the Voraxial intellectual property outside the oil and gas market. Under the terms of the agreement, we can no longer use the tradename Voraxial and we subsequently branded the technology licensed to us as the “V-Inline”. Our management believes that the Grant Back Licenses can potentially provide additional revenues through the sale of V-Inline Separators outside the oil and gas industry, including, but not limited to mining, utilities, sewage and industrial wastewater. In 2021 our customer successfully commissioned a wastewater system at a nuclear facility comprised of multiple V-Inline Separators to separate solids and oil from their wastewater stream. The system is being used to process and separate oil and solids from a flow of about 100 gallons per minute. The System includes different technologies with the heart of the system being comprised of two V-Inline 2000 Separators working in parallel with a third V-Inline Separator being utilized to further dewater the reject lines from the System. Management believes there are many opportunities similar to this installation available for the V-Inline Separator not only in the utilities industry but other industries as well including those previously mentioned.
The V-Inline Separator is a continuous flow turbo machine that generates a strong centrifugal force, a vortex, capable of separating light and heavy liquids, such as oil and water, or any other combination of liquids and solids at extremely high flow rates. As the fluid passes through the machine, the V-Inline Separator accomplishes this separation through the creation of a vortex. In liquid/liquid and liquid/solid mixtures, this vortex causes the heavier compounds to gravitate to the outside of the flow and the lighter elements to move to the center where an inner core is formed. The liquid stream processed by the machine is divided into separate streams of heavier and lighter liquids and solids. As a result of this process, separation is achieved.
The benefits of the V-Inline Separator include:
- High volume / small footprint
- No Pressure drop requirement
- High G force
- Treats a wide range of flows, even slugging flows
- Handles fluctuation in flow rates without any adjustments
- Handles fluctuation in contaminates without any adjustments
- Separation of 2 or 3 components simultaneously
- Non-clogging - open rotor assembly
- Low maintenance with ease of operation and installation
- Can operate dry
- Since there is no pressure drop, there is very little wear caused by sand
The V-Inline Separator is a self-contained, non-clogging device that can be powered by an electric motor, diesel engine or by hydraulic power generation. Further, its scalability allows it to be utilized in a variety of industries and to process various amounts of liquid. The following are the various sizes and the corresponding capacity range:
Model Number
Diameter Size
Capacity Range Gallons
Per Minute
V1000
1 inch
3-5
V2000
2 inches
20-70
V4000
4 inches
100-500
V8000
8 inches
1,000-3,500
While our net revenues in 2021 have not rebounded from the pre-pandemic period, we remain firm in our belief that the need for effective and cost efficient wastewater treatment and separation technology is global in scale. Moreover, virtually every industry requires some type of separation process either during the manufacturing process, prior to treatment or discharge of wastewater into the environment, for general clean up, or emergency response capability. Separation processes, however, are largely unknown to the average consumer. These processes are deeply integrated in almost all industrial processes from oil to wastewater to manufacturing. Management believes that the separation technology has applications in most, if not all major separation industries. The unique characteristics of the technology allow it to be utilized either as a stand-alone unit or within an existing system to provide a more efficient and cost effective way to handle the separation needs of the customer. We believe the separation technology can result in a cost savings and other benefits to the customer. These benefits result in and include:
● A reduction in water and energy usage,
● Requires no pressure drop to perform separation,
● Less space needed to implement the V-Inline Separator, the V-Inline Separator weights less than some competing technologies,
● A reduction time to process and separate the fluids, allowing the customer to be more efficient,
● Creation of more efficient and faster process to treat water to increase the overall productivity of the end-user,
● Fewer employees needed to operate the system, and
● Reduction of ongoing maintenance and servicing costs.
We believe that this separation technology is a unique front-end solution for the separation industry that can offer increased productivity while reducing the physical space and energy required to operate the unit. These advantages translate into the potential for substantial operating cost efficiencies that would increase the profitability of the solution’s end user. The unique characteristic to conduct separation without a pressure loss allows the unit to be installed in locations other technologies cannot. For instance, another separation technology called a hydrocyclone requires a significant pressure loss to perform separation.
Although we have strong beliefs in the potential of the technology, we do not have the funds to successfully market the technology. As such, we have focused our efforts on finding a potential merger or acquisition candidate. During this period we have also marketed our manufacturing capabilities to local South Florida companies.
Manufacturing
We manufacture and assemble our products at our Fort Lauderdale, Florida facilities. The materials needed to manufacture the components of the products we sell, including the separation technology, have been provided by leading companies in the precision equipment industry. We do not have any long term contracts with any supplier. We do not anticipate any shortage of component parts. We maintain a limited inventory of finished parts until we receive a customer order. Most of our inventory is comprised of raw materials and finished Separator components that can be used for future sales.
Marketing
During 2020 and 2021, we limited our marketing and advertising due to COVID-19 and the downturn in the oil and gas markets and lack of available working capital. Although the oil and gas markets have improved, we do not have sufficient funds to market the technology. We anticipate increasing spending on marketing efforts, such as tradeshows, when, and if, our cash flow and market conditions improve. From June 2017 through June 2020, we primarily focused our marketing
resources to develop a strong rapport with Schlumberger, which included scaling up our manufacturing capabilities. In addition, we started to pursue projects in industries outside of the oil and gas market, and primarily marketed our products by developing relationships within the separation markets. Our marketing efforts were compromised as we anticipated using the revenues from the Schlumberger Supply Agreement to invest in new applications and industries for the V-Inline Separator unit sales. However, sales from Schlumberger were lower than management anticipated and the Supply Agreement has expired.
We have shifted our near term focus to market our machining capabilities to companies located in South Florida to help stabilize cash flow. During 2022, the Company does not currently have plans to present at any tradeshows.
Regulation
Our operations are subject to extensive and frequently changing federal, state, and local laws and substantial regulation by government agencies, including the United States Environmental Protection Agency (EPA), the United States Occupational Safety and Health administration (OSHA) and the Federal Aviation Administration (FAA). Among other matters, these agencies regulate the operation, handling, transportation and disposal of hazardous materials used by us during the normal course of our operations, govern the health and safety of our employees and certain standards and licensing requirements for our aerospace components that we contract manufacture. We are subject to significant compliance burden from this extensive regulatory framework, which may substantially increase our operational costs.
We believe that we have been and are in compliance with environmental requirements and believe that we have no liabilities under environmental requirements. Further, we have not spent any funds specifically on compliance with environmental laws. However, some risk of environmental liability is inherent in the nature of our business, and we might incur substantial costs to meet current or more stringent compliance, cleanup, or other obligations pursuant to environmental requirements in the future. This could result in a material adverse effect to our results of operations and financial condition.
Product Liability
Our business exposes us to possible claims of personal injury, death or property damage, which may result from the failure, or malfunction of any component or subassembly manufactured or assembled by us. However, until we start shipping the V-Inline Separator again, we do not plan to have product liability insurance. Any product liability claim made against us may have a material adverse effect on our business, financial condition or results of operations in light of our poor financial condition, losses and limited revenues. We also maintain general insurance coverage.
Competition
We are subject to competition from other manufacturing facilities who have greater manufacturing capacity, which allows them to utilize economy of scale to reduce cost. We are also subject to competition from a number of companies who have greater experience, research abilities, engineering capability and financial resources than we have to market and sell separation technology. Although we believe the separation technology offers applications which accomplish better or similar results on a more cost-effective basis than existing products, other products have, in some instances, attained greater market and regulatory acceptance.
Human Capital
As of the date of this report we have five employees, including Mr. John A. DiBella, our sole executive officer, one individual who provides administrative and support services to us and three individuals who are involved in the manufacturing, shipping and installation, if required, of our products. All of our employees work from our principal offices in Fort Lauderdale, Florida, other than Mr. DiBella who works from time to time remotely from his home. All of our employees are full-time and none are covered by collective bargaining agreements. Our non-executive employees have been employed “at will” by our company from 5 years to 15 years.
Our executive officer receives an annual salary and may receive bonuses at the discretion of the board of directors. Information regarding Mr. DiBella’s compensation appear later in this report. All of our employees receive health insurance and one week paid leave. Our employees are compensated based on their responsibilities as such, some are hourly while others are salaried. Our hourly employees may also receive overtime pay. At the discretion of our management, the non-executive employees may receive bonus paid either at the end of the year or after completion of certain projects.
Our History
The Company was incorporated in Idaho on October 19, 1964 under the name Idaho Silver, Inc. In June 1996 we changed our corporate name to Enviro Voraxial Technology, Inc. and in June 2017 we changed our corporate name to Enviro Technologies, Inc. On August 20, 2020, the Company’s shareholders approved a change of domicile of the Company from Idaho to Florida. On December 28, 2020, the Company received the file stamped Certificate of Domestication and Articles of Incorporation from the Secretary of State of Florida, which was effective on December 18, 2020, thereby completing the change in domicile from Idaho to Florida. In connection with the change in domicile from Idaho to Florida, the Company’s name changed to “Enviro Technologies U.S., Inc.”
Additional Information
We file annual and quarterly reports on Forms 10-K and 10-Q, current reports on Form 8-K and other information with the Securities and Exchange Commission (“SEC” or the “Commission”). The Commission also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.
Other information about the Company can be found on our website www.evtn.com. Reference in this document to that website address does not constitute incorporation by reference of the information contained on the website.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS.
Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.
FINANCIAL RISKS
Our independent auditors have raised substantial doubt about our ability to continue as a going concern.
Our consolidated financial statements have been prepared assuming we will continue as a going concern. At December 31, 2021 we have a working capital deficit of $1,160,325 and an accumulated deficit of $16,636,521. While our revenues increased approximately 34% in 2021 from 2020, for 2021 we reported a net loss of $714,092. In addition, we used $499,511 in net cash in our operations during 2021. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our ability to generate revenues or profitable operations in the future is not assured.
Since entering into the Grant Back License in June 2017, we have generated limited revenues under the terms of this agreement, nor are there any guarantees that we will be able to generate any meaningful revenues in the future. Our ability to generate future revenues will depend on a number of factors, many of which are beyond our control, including competitive efforts and general economic trends. In addition, we reported a net loss of approximately $714,092 for 2021. There are no assurances we will be able to continue to generate revenues or report profitable operations in the future.
If our revenues do not increase substantially, we do not have sufficient funds to pay our operating expenses.
At December 31, 2021 we had $11,740 of cash and a working capital deficit of $1,160,325. We used $499,511 in net cash in our operations in 2021. We do not have any external sources of liquidity. Although we believe our revenues will increase in 2022 from 2021, mainly initially due to machining work for local South Florida customers, there are no assurances this is correct or that any increase in our revenues in 2022 will be sufficient to pay our operating expenses. In an effort to conserve our cash resources to sustain our operations until such time as the economy begins returning to pre-Covid-19 pandemic activity levels, we reduced employee hours, accrued a portion of management’s salary and have begun marketing our machining capabilities to local manufacturers. Our management has also begun exploring possible opportunities for the Company involving mergers, acquisitions or other business combination transactions in an effort to diversify our business. There are no assurances, however, that these efforts will be sufficient to permit us to pay our operating expenses. In that event, our ability to continue as a going concern is in jeopardy. Furthermore, our PPP Loan in the aggregate principal amount of $111,971 matures on May 4, 2022. While we believe our company has used the entire PPP Loan amount for qualifying expenses and we applied for forgiveness of the PPP Loan in accordance with the terms of the CARES Act, there are no assurances that the PPP Loan will be forgiven. We do not have available working capital to satisfy the PPP Loan in the event it becomes due and payable.
We have been limited by insufficient capital, and we may continue to be so limited.
In the past, we have lacked the required capital to market the V-Inline Separator. Our inability to raise the funding or to otherwise finance our capital needs could adversely affect our financial condition and our results of operations, and could prevent us from implementing our business plan. We may seek to raise capital through public and private equity offerings, debt financing or collaboration, and strategic alliances. Such financing may not be available when we need it or may not be available on terms that are favorable to us. If we raise additional capital through the sale of our equity securities, your ownership interest will be diluted and the terms of the financing may adversely affect your holdings or rights as a stockholder. If we fail to raise additional funds when needed, or do not have sufficient cash flows from sales, we may be required to scale back or cease operations, sell or liquidate our assets and possibly seek bankruptcy protection.
BUSINESS RISKS
We currently rely on a limited number of customers and the Grant Back License for our revenues.
Revenues from two customers accounted for approximately 54% and 22% of total revenues, respectively, during 2021 and revenues from two customers accounted for approximately 20% and 10% of total revenues, respectively, during 2020. As of December 31, 2021, two customers represented 52% and 38%, of total accounts receivables. As of December 31, 2020, three customers represented 68%, 17% and 15%, respectively, of total accounts receivables. We do not have any contracts with minimum guaranteed orders with these customers. Furthermore, we currently rely on the Grant Back License. If these customers fail to order additional products or we are unable to attract new customers or we do not comply with the terms of the Grant Back License, it could have an adverse effect on our financial condition and results of operations.
Our market is subject to intense competition. If we are unable to compete effectively, our product may be rendered non-competitive or obsolete.
We are engaged in a segment of the water filtration industry that is highly competitive and rapidly changing. Many large companies, academic institutions, governmental agencies, and other public and private research organizations are pursuing the development of technology that can be used for the same purposes as the V-Inline Separator. We face, and expect to continue to face, intense and increasing competition, as new products enter the market and advanced technologies become available. We believe that a significant number of products are currently under development and will become available in the future that may address the water filtration segment of the market. If other products are successfully developed, it may be better received by the market or introduced before the V-Inline Separator. Our competitors' products may be more effective, or more effectively marketed and sold, than any of our products. Many of our competitors have
significantly greater financial, technical and human resources than we have and may be better equipped to discover, develop, manufacture and commercialize products; and more extensive experience in marketing water treatment products. Competitive products may render the V-Inline Separator obsolete or noncompetitive.
We are dependent on key personnel.
We are dependent upon the availability and the continued performance of the services of John A. DiBella, our Chief Executive Officer. We are not a party to any employment agreement with him. The loss of the services of Mr. DiBella could have a material adverse effect on us.
RISKS RELATED TO OUR COMMON STOCK
We have material weaknesses in our disclosure controls and our internal control over financial reporting. If we fail to remediate any material weaknesses or if we fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Historically we have reported material weaknesses in our disclosure controls and internal control over financial reporting. As required by the rules and regulations of the SEC, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. Based on this assessment, and as described later is this report, our management concluded that as of December 31, 2021, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP as a result of material weaknesses. Our failure to remediate the material weaknesses or the identification of additional material weaknesses in the future could adversely affect our ability to report financial information, including our filing of quarterly or annual reports with the SEC on a timely and accurate basis. Moreover, our failure to remediate the material weaknesses identified above or the identification of additional material weaknesses could prohibit us from producing timely and accurate financial statements, which may adversely affect the market price of shares of our common stock.
We do not know whether an active, liquid and orderly trading market will develop for our common stock and as a result it may be difficult for you to sell your shares of our common stock.
Our common stock is quoted on the Pink tier of the OTC Markets and is thinly traded. An active trading market in our common stock may never develop or, if developed, sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into business combinations with other companies by using our shares of common stock as consideration. The market price of our common stock may be volatile, and you could lose all or part of your investment.
Because our stock currently trades below $5.00 per share and is quoted on the Pink tier of the OTC Markets, our stock is considered a "penny stock" which can adversely affect its liquidity.
As the trading price of our common stock is less than $5.00 per share, our common stock is considered a "penny stock," and trading in our common stock is subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser's written consent prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a "penny stock," including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks.
These requirements severely limit the liquidity of our common stock in the secondary market because few brokers or dealers are likely to undertake these compliance activities. Purchasers of our common stock may find it difficult to resell the shares in the secondary market.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES.
In December 2018, the Company entered into a three year lease for an office and manufacturing facility located at 821 NW 57 Place, Fort Lauderdale, FL 33309. The lease has a one-time renewal option for three years, which was exercised in October 2021. The Company has the option to terminate the lease with three months’ notice. The lease is for approximately 9,000 square feet of executive and manufacturing space, at $4,839 per month, which includes common area maintenance, taxes and insurance.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS.
Please see Note H to the notes to consolidated financial statements appears later in this report for a discussion of the pending or threatened litigation involving the Company.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock is quoted on the Pink tier of OTC Markets under the symbol “EVTN”.
The last sale price of our common stock as reported on the Pink tier of the OTC Markets on April 5, 2022, was $0.069 per share. As of April 5, 2022, there were approximately 791 record owners of our common stock.
Dividends
We have not paid a cash dividend on the common stock since current management joined our company in 1996. The payment of dividends may be made at the discretion of our board of directors and will depend upon, among other things, our operations, our capital requirements and our overall financial condition. As of the date of this report, we have no intention to declare dividends.
Recent Sales of Unregistered Securities
Except for those unregistered securities previously disclosed in reports filed with the Commission during the period covered by this report, we have not sold any securities without registration under the Securities Act of 1933, as amended, during the period covered by this report.
Issuer Purchase of Equity Securities
None.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA.
RESERVED.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion of our financial condition and results of operations for 2021 and 2020 and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Cautionary Statement Regarding Forward Looking Information, Item 1A. Business and Item 1A. Risk Factors in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
Overview
The Covid-19 pandemic has hurt our operations significantly. Prior to the Covid-19 pandemic, we experienced significant revenue growth in 2019 mainly through the sale of Voraxial Separator and V-Inline Separators. However, 2020 and 2021 proved to be an extremely challenging and disappointing period due to the Covid-19 pandemic. In 2021, our revenues were mainly derived from machining projects for local South Florida customers and auxiliary parts for the Voraxial and V-Inline Separator. The drop in capital expenditures from the overall market, both from the oil industry and industries outside of oil and gas, coupled with the lack of a sales and marketing budget, hindered sales opportunities for the V-Inline Separator. Customer inquiries decreased significantly as well during this period due to a drop in capital expenditures. The Supply Agreement we signed with Schlumberger in June 2017 as part of the Technology Purchase Agreement expired in 2020. As we did not generate significant revenues from this agreement, we did not pursue an extension of such agreement under its initial terms. However, we may continue to work together on a project by project basis with Cameron Solutions, Inc. until such time a new agreement is reached, if at all. As we have reduced our marketing budget for the V-Inline Separator, we have shifted our near term focus on machining work to help stabilize our cash flow.
We believe there is a market for the V-Inline Separator in the mining, utilities, sewage and industrial wastewater industries, among others. We intend to continue to seek opportunities for the V-Inline Separator through our rights under our Grant Back License. We have branded our licensed products as the V-Inline Separator. In 2021, we commissioned a wastewater system at a nuclear facility that consisted of multiple V-Inline Separators to separate solids and oil from their wastewater stream. The system is being used to process and separate oil and solids from a flow of about 100 gallons per minute. The system includes different technologies with the heart of the system being comprised of two V-Inline 2000 Separators working in parallel with a third V-Inline Separator being utilized to further dewater the reject lines from the System.
Going Concern
For 2021 we reported a net loss of $714,092. At December 31, 2021, we had cash on hand of $11,740, a working capital deficit of $1,160,325 and an accumulated deficit of $16,636,521. The report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2021 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our working capital deficit, accumulated deficit and negative cash flows from operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to raise capital, develop a source of revenues, report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
Results of Operations
Revenues
Revenues for 2021 increased by approximately 34% from 2020. Although our revenues increased from 2020, our revenues are down significantly from the higher historical revenues we earned in the last fiscal year prior to Covid-19. The decrease in revenues as compared to historical revenues reflect the harsh economic climate we faced in 2021 due to Covid-19 pandemic and the liquidity issues limiting our sales and marketing budget we continue to experience since the start of Covid-19 pandemic. Although we achieved significant revenue growth in 2019 from the sale of Voraxial Separator to the oil industry and the sale of a wastewater system that included multiple V-Inline Separators to a nuclear facility, the damage experienced from the 2020 and 2021 pandemic may hinder our ability to generate sales and increase revenues quickly. We expect that our revenues in 2022 from machine manufacturing will continue to increase and we expect that sales of Voraxial and V-Inline Separators will begin to rebound. However, it may take longer than expected for business related to the V-Inline Separator to resume normal sales cycle. Accordingly, at this time we are unable to predict the ultimate impact to our revenues in 2022.
Cost of goods
Cost of goods sold decreased approximately 20% in 2021 from 2020, and reflects the change in the margins of the items sold during this period. Our cost of goods sold as a percentage of revenues decreased to approximately 36% in 2021 from approximately 60% in 2020 as a result of the higher margin revenues we earned with the sale of auxiliary parts for the Voraxial and V-Inline Separators projects we completed as compared to the lower margin products manufactured in 2020, including the manufacturing of face shields. Further, in 2020 we experience inventory impairment as a result of extra face shields we have in inventory. Our cost of goods continues to be reviewed by management in effort to obtain the best available pricing while maintaining high quality standards.
Costs and expenses
Total costs and expenses decreased by approximately 21% for 2021 as compared to 2020. The decrease was due to decrease in payroll expense, professional fees and decreases in selling, general and administrative expenses.
Selling, general and administrative expenses
Selling, general and administrative expenses decreased by 28% for 2021 as compared to 2020. We continue to reduce our expenses. We experienced decreases in our insurance expense of approximately $5,100 mainly from the termination of employee health insurance and D&O insurance and a decrease in legal and professional fees of approximately $38,500 as a result of an effort to reduce expenditures.
Payroll Expenses
Payroll expense in 2021 decreased by approximately 16% as compared to 2020. The decrease in payroll expense was due to a higher utilization and absorption of labor cost into cost of goods sold as compared to 2020 and a reduction in payroll hours.
Professional Fees
Professional fees decreased by approximately 23% for 2021 from 2020. The decrease was primarily due to a decrease in advisory and consulting services as a result of our cost cutting measure to conserve cash. A reduction in such fees may have a negative effect on future sales opportunities. Additionally, legal fees decreased by approximately $40,000 and were partially offset by legal expenses for advancement of intellectual property claims.
Interest Expense
Interest expense, which represents interest we pay on an equipment note payable, increased approximately 43% in 2021 from 2020 as a result of the sale of our CNC equipment and the fees associated with early termination.
Liquidity and Capital Resources
At December 31, 2021, cash was $11,740 as compared to $336,564 at December 31, 2020. Working capital deficit at December 31, 2021 was $1,160,325 as compared to a working capital deficit at December 31, 2020 of $750,481. At December 31, 2021, we had an accumulated deficit of $16,636,521. Our current assets decreased by 69% at December 31, 2021 as compared to December 31, 2020, which reflects decreases in our cash and cash equivalents and prepaid expenses which were offset by an increase in accounts receivable. Our current liabilities increased 7% at December 31, 2021 as compared to December 31, 2020, which is primarily attributable to an increase accrued expense-related party and Loans Payable - current portion as a result of the SBA loans and PPP loans we received. We expect that such loans will be forgiven but we cannot provide any assurances. Increases were offset by decrease in equipment loans that was fully paid.
We do not have any external sources of liquidity and have been dependent upon the funds we received under the SBA and PPP loans and advances from our chief executive officer and directors, and limited customer’s revenues to provide working capital for our company. We do not have any commitment for capital expenditures. We anticipate we will need approximately $1 million to operate the business over the next twelve months. Our ability to generate future revenues, generate sufficient cash flow to pay our operating expenses and report profitable operations in future periods will depend on a number of factors, many of which are beyond our control. If we fail to achieve profitability on a quarterly or annual basis, or to raise additional funds when needed, or do not have sufficient cash flows from sales, we may be required to scale back or cease operations, sell or liquidate our assets and possibly seek bankruptcy protection.
On January 5, 2022, John A. DiBella, the Company’s chief executive officer, advanced the Company $30,000 pursuant to the terms of a 4% unsecured promissory note. The note is payable on December 31, 2022 and accrues interest at a rate of 4% per annum. In addition, from February 15, 2022 through April 7, 2022, Mr. DiBella has advanced the Company an additional $29,000 under the same terms as the note.
On April 12, 2022, Ray Veldman, member of the Company’s Board of Directors, advanced the Company $20,000 pursuant to the terms of a 4% unsecured promissory note. The note is payable on December 31, 2022 and accrues interest at a rate of 4% per annum.
Summary of cash flows
The following table summarizes our cash flows:
Year Ended December 31,
Cash flow data:
Cash used in operating activities
$ (499,511)
$ (541,249)
Cash provided by (used in) investing activities
$ 275,000
$ (8,228)
Cash (used in) provided by financing activities
$ (100,313)
$ 211,197
Net cash used in operating activities in 2021 was primarily attributable to net loss and the gain on the forgiveness of PPP loan and interest , offset in part by increases in accounts payable, accrued expenses and accrued expenses - related party.
Net cash used in operating activities in 2020 was primarily attributable to net loss and a decrease in accounts payable and accrued expenses, offset in part by a decrease in accounts receivable and an increase in accrued expenses - related party. Decrease in accounts receivable are a result of some parts we manufactured and shipped in 2020 in fulfillment of orders we received in 2019. Decreases in deposit from customer is primarily attributable to deposit recognized as revenues as a result of the shipment of the wastewater system to the utility company.
Net cash used in investing activities in 2021 was attributable to the sale of our manufacturing equipment we purchased in 2017. Net cash used in investing activities in 2020 was primarily attributable to an increase in manufacturing equipment we purchased for machining projects we pursued.
Net cash used in financing activities during each of 2021 and 2020 was primarily attributable to the repayment of the equipment note payable and loan payable issuance for the PPP and EIDL loans we received for the Covid-19 pandemic.
Looking Forward
As a result of the uncertainties facing our company as discussed elsewhere in this report, we are unable to predict the overall impact in 2022 and beyond on our company at this time. Our loss of revenues will materially impact our liquidity, and we do not expect to be able to access the capital markets for additional working capital in the near future. Our senior management will continue to monitor our situation on a daily basis, however, we expect that these factors and others we have yet to experience will materially adversely impact our company, its business and operations for the foreseeable future. Our management has also begun exploring possible opportunities for the Company involving mergers, acquisitions or other business combination transactions in an effort to diversify our business. We are not currently a party to any agreement or understandings with any third parties, and there are no assurances even if our management locates an opportunity which it believes will be in the best interests of our shareholders what we will ever consummate such a transaction. Accordingly, investors should not place undue reliance on these efforts.
Our ability to generate future revenues, generate sufficient cash flow to pay our operating expenses and report profitable operations in future periods will depend on a number of factors, many of which are beyond our control. Our independent auditors have included in their audit report an explanatory paragraph that states that our working capital deficits and accumulated deficit raises substantial doubt about our ability to continue as a going concern. If we fail to achieve profitability on a quarterly or annual basis, or to raise additional funds when needed, or do not have sufficient cash flows from sales, we may be required to scale back or cease operations, sell or liquidate our assets and possibly seek bankruptcy protection. As a result of the above, there is substantial doubt about the ability of the Company to continue as a going concern and the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.
Critical Accounting Estimates
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note C of the Notes to Consolidated Financial Statements appearing later in this report describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.
A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.
Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our consolidated financial statements are fairly stated in accordance with U.S. GAAP, and present a meaningful presentation of our financial condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements:
Accounts Receivable
Accounts receivable are presented net of an allowance for doubtful accounts. The company maintains allowances for doubtful accounts for estimated losses. The company reviews the accounts receivable on a periodic basis and makes general and specific allowance when there is a doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s historical payment history, and its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collections.
Inventory
Inventory primarily consists of components, including raw material and finished parts for the V-Inline Separator and face shields and is priced at lower of cost or net realizable value. Net realizable value is defined as sales price less cost of completion, disposable and transportation. Provisions have been made to reduce excess or obsolete inventories to their net realizable value.
Income Taxes
The Company accounts for income taxes under ASC 740-10-25. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB, the AICPA and the SEC, did not, or are not believed by management, to have a material impact on the Company's present or future financial statements.
Off Balance Sheet Arrangements
As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
This information is not required by smaller reporting company.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTING DATA.
The financial statements required by this report are included, commencing on.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
The Company’s management, under the supervision and with the participation of the Company's Chief Executive Officer who also serves as our Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of December 31, 2021. Based upon that evaluation at the end of the period covered by this annual report our Chief Executive Officer concluded that our disclosure controls and procedures were not effective to ensure that the information relating to our company, required to be disclosed in our SEC Reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communications to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021 based on the 2013 criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls. Based on this assessment, our Chief Executive Officer who also serves as our Chief Financial Officer has concluded that as of December 31, 2021, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP as a result of material weaknesses. A “material weakness” is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of our annual or interim financial statement will not be presented or detected by our employees. The specific material weaknesses that management identified in our internal controls as of December 31, 2021 that persist are as follows:
● we did not have adequate staffing resources to provide appropriate segregation of duties;
● we did not have a sufficient number of adequately trained technical accounting personnel to support multiple level of review in the financial close process;
● we did not have personnel with sufficient experience with U.S. GAAP; and
● we did not have adequate personnel to document, timely review and support all transactions.
These listed material weaknesses in our internal control over financial reporting are legacy issues dating back many years. In order to remediate these material weaknesses in our internal control over financial reporting, we will need to:
● create a position to segregate duties consistent with control objectives and will increase our personnel resources; and
● hire experienced independent third parties or consultants to provide additional expert advice as needed.
We made efforts to improve these weaknesses in our internal control over financial reporting results by focusing on upgrading our internal accounting processes and managing the daily accounting responsibilities, maintaining the new accounting software and modifying the inventory system we implemented in the past to manage inventory and having
duplicity in reviewing our accounting records by retaining an outside CPA to review our financials on a quarterly and annual basis. We believe these steps have helped and will continue to further mitigate issues that may arise from a limited staff. In 2022 we plan to further improve our financial controls. Until such time, however, as we remediate the material weaknesses in our internal control over financial reporting, there is a likelihood that our financial statements in future periods may contain errors which will require a restatement.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer who also serves as our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors 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 benefits 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. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION.
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Directors and executive officers
The following sets forth the names and ages of our officers and directors.
Name
Age
Position
John A. DiBella
Chief Executive Officer, President, Chief Financial Officer and Director
Raynard Veldman
Director
John A. DiBella has served as a member of the board of directors since August 2006 and Chief Executive Officer and Chief Financial Officer since November 2011. From 2000 through January 2002 Mr. DiBella provided consulting services to our Company. In January 2002 we hired him to serve as a Vice President and Director of Business Development, and thereafter prior to be named Chief Executive Officer Mr. DiBella served as our Chief Operating Officer. Mr. DiBella co-founded and served as President of PBCM, a financial management company located in New Jersey from 1997 to 1999. Prior to co-founding PBCM, Mr. DiBella worked for Donaldson, Lufkin and Jenrette, a NYSE member firm. Mr. DiBella’s operational experience with our company were factors considered by our board of directors in concluding that he should be serving as a director of our company.
Raynard Veldman has served as a director of the Company since August 2014. Since 2014, Mr. Veldman has operated Veldman Consulting Corporation which provides consulting services, commission sales, and has made investments in the oil and gas and chemical industries where he is an active participant in the businesses. He served as vice president for Magnablend, Inc., a custom chemical blending and manufacturing company from February 2012 to July 2014. From April 2001 through February 2012 he served as business and product manager for Weatherford, Inc. in their Engineered Chemistry Division. He has over 30 years of experience in the domestic and international oil and gas industry. Mr. Veldman has a M.S. in Chemical Engineering from the University of Houston and a B.S. in Chemical Engineering from the University of Texas. He has also periodically served as a consultant to the Company since 2009. Mr. Veldman’s professional background as an engineer and his professional experience in the oil and gas industry were factors considered by our board of directors in concluding that he should be serving as a director of our company.
There are no family relationships between any of the executive officers and directors.
Board of Directors
Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified. If any director resigns, dies or is otherwise unable to serve out his or her term, or if the Board increases the number of directors, the Board may fill any vacancy by a vote of a majority of the directors then in office, although less than a quorum exists. A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor. Vacancies occurring by reason of the removal of directors without cause may only be filled by vote of the stockholders.
Board leadership structure and board’s role in risk oversight
The board of directors is comprised of one member of our management and one independent director. Given the size of our company, our Board believes the current leadership structure is appropriate for our company. As our company grows, we expect to expand our board of directors through the appointment of independent directors.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day management of the risks we face and have responsibility for the oversight of risk management in their dual roles as directors.
Committees of the board of directors; stockholder nominations; audit committee financial expert
We have not established any committees comprised of members of our board of directors, including an Audit Committee, a Compensation Committee or a Nominating Committee, or any committee performing similar functions. The functions of those committees are being undertaken by our board of directors as a whole.
We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our board of directors established a process for identifying and evaluating director nominees, nor do we have a policy regarding director diversity. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our board of directors. While there have been no nominations of additional directors proposed by our shareholders, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board.
None of our directors is an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or board of directors who:
● understands generally accepted accounting principles and financial statements;
● is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves;
● has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements;
● understands internal controls over financial reporting; and
● understands audit committee functions.
Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our board of directors.
Code of Ethics
During the year ended December 31, 2003 we adopted a code of ethics. The code of ethics was filed with the Company’s Form 10-KSB annual report for the year ended December 31, 2003. The code of ethics may be obtained by contacting the Company’s executive offices. The code applies to our officers and directors. The code provides written standards that are designed to deter wrongdoing and promote: (i) honest and ethical conduct; (ii) full, fair, accurate, timely and understandable disclosure; (iii) compliance with applicable laws and regulations; (iv) promote reporting of internal violations of the code; and (v) accountability for the adherence to the code.
Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us under Rule 16a-3(d) of the Securities Exchange Act during the year ended December 31, 2021 and Forms 5 and amendments thereto furnished to us with respect to the year ended December 31, 2021, as well as any written representation from a reporting person that no Form 5 is required, we are not aware that any officer, director or 10% or greater stockholder failed to file on a timely basis, as disclosed in the aforementioned Forms, reports required by Section 16(a) of the Exchange Act of during the year ended December 31, 2021.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION.
The following table summarizes all compensation recorded by us in the past two years for:
●
our principal executive officer or other individual serving in a similar capacity;
●
our two most highly compensated named executive officers at December 31, 2021 whose annual compensation exceeded $100,000; and
●
up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2021.
For definitional purposes, these individuals are sometimes referred to as the “named executive officers.”
Summary Compensation Table
Name and principal position Year Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
No equity
incentive
plan
compensation
($)
Non-qualified
deferred
compensation
earnings
($)
All
other
compensation
($)(1)
Total
($)
John A. DiBella, 210,000 - - - - - 25,936 235,936
President, Chief Executive Officer and Chief Financial Officer 210,000 - - - - - 23,034 233,034
(1) Represents healthcare benefits.
Outstanding Equity Awards at December 31, 2021
There are no outstanding equity awards held by our named executive officers at December 31, 2021.
How Mr. DiBella’s Compensation is Determined
We are not a party to an employment agreement with Mr. DiBella. His compensation is determined by the board of directors of which he is one of the two members. Effective for 2021 and 2020, the Company incurred salary expenses for Mr. DiBella of $210,000 and $210,000, respectively. For 2021 and 2020, the Company paid Mr. DiBella $151,250 and $156,650, respectively, of salary and accrued salary have been paid. Of the $151,250 paid to Mr. DiBella in 2021, $26,250 was paid in cash and $125.000 was a reduction of his accrued salary for conversion into 500,000 shares of common stock of the company. Effective December 30, 2021, Mr. DiBella converted $125,000 of his accrued salary (the “Conversion Amount”) into 500,000 restricted shares of common stock of the Company in full satisfaction of the Conversion Amount. Of the $156,650 paid to Mr. DiBella in 2020, $81,650 was a reduction of his accrued salary in payment for the exercise of options, including some options of the Company’s employees and a related party. The unpaid accrued salary balances as of December 31, 2021 and 2020, are $723,065 and $664,315, respectively. The timing of the payment of any of the accrued but unpaid compensation due Mr. DiBella may be determined by the board of directors at any time. In addition, Mr. DiBella’s compensation may be changed at any time by the board of directors.
Consulting Fees Paid to Mr. Veldman
In addition to his compensation for serving as a member of the Company’s board of directors set forth below, since July 1, 2017, the Company has paid Mr. Veldman a fee of $2,500 per month for consulting services. For 2021 and 2020, he received consulting fees of $30,000 and $30,000, respectively. Effective December 30, 2021, Mr. Veldman converted $30,000 of outstanding consulting fees into 120,000 shares of restricted common stock of the Company in full satisfaction of $30,000 of accrued consulting fees. The unpaid consulting fees and board of director’s fees balances as of December 31, 2021 and 2020, are $54,500 and $42,500, respectively. The timing of the payment of any of the accrued but unpaid due Mr. Veldman may be determined by the board of directors at any time.
Director Compensation
Our board compensation plan effective for non-management directors consists of a $1,000 monthly cash payment. In addition, board members may be reimbursed for out-of-pocket expenses related to participation in board and committee meetings. No reimbursable payments were made during 2021. The table below provides information concerning the compensation paid in 2021 to our non-management director for his services as a member of our board of directors 2021. The information in the following table excludes the consulting fees paid to Mr. Veldman as described earlier in this section.
Fees earned or
paid in
Stock
awards
Option
awards
Non-equity incentive
Plan compensation
Nonqualified deferred
compensation
earnings
All other compensation Total
Name Year cash ($) ($) ($) ($) ($) ($) ($)
Raynard Veldman $ 12,000 - - - - - $ 12,000

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
At April 5, 2022, we had 5,570,125 shares of our common stock issued and outstanding. The following table sets forth information regarding the beneficial ownership of our common stock as of that date by:
● each person known by us to be the beneficial owner of more than 5% of our common stock;
● each of our directors;
● each of our named executive officers; and
● our named executive officers and directors as a group.
Unless specified below, the business address of each shareholder is c/o 821 NW 57 Place, Fort Lauderdale, FL 33309. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.
Name of Beneficial Owner No. of Shares Beneficially Owned % of Class
John A. DiBella (1) 1,626,462 29.2 %
Raynard Veldman 539,144 9.7 %
All officers and directors as a group (two persons) 2,165,606 38.9 %
Adele DiBella 609,550 10.9 %
(1) The number of shares of common stock beneficially owned by Mr. DiBella includes 15,000 shares held by his minor children.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth securities authorized for issuance under any equity compensation plans approved by our shareholders as well as any equity compensation plans not approved by our shareholders as of December 31, 2021.
Plan category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
Weighted average exercise price of outstanding options, warrants and rights ($)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column
Plans approved by our shareholders
n/a
n/a
Plans not approved by shareholders
10,000
0.10
n/a

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During 2021 and 2020, Raynard Veldman, a member of the Company’s board of directors, received total consulting fees of $30,000 and $30,000, respectively, in addition to fees for serving on the board of directors. The Company currently pays Mr. Veldman $2,500 per month for consulting services. Effective December 30, 2021 the Mr. Veldman converted $30,000 of outstanding consulting fees into 120,000 shares of restricted common stock in full satisfaction of the $30,000 of outstanding consulting fees. During 2020, Mr. Veldman reduced his accrued expense by $10,000 to exercise his options.
Director Independence
The Company has one independent director, Raynard Veldman. Mr. Veldman is considered “independent” as defined under Rule 5605 of the Nasdaq Marketplace Rules.
PART IV

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The following table shows the fees that were billed for the audit and other services provided by Liggett & Webb, P.A. for 2021 and 2020.
Audit Fees $ 32,000 $ 32,000
Audit-Related Fees - -
Tax Fees - -
All Other Fees - -
Total $ 32,000 $ 32,000
Audit Fees - This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
Audit-Related Fees - This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.
Tax Fees - This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees - This category consists of fees for other miscellaneous items.
Our board of directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of the Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting. The audit and tax fees paid to the auditors with respect to 2021 were pre-approved by the board of directors.

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL DATA SCHEDULES.
Incorporated by Reference
Filed or
No.
Exhibit Description
Form
Date Filed
Exhibit
Number
Furnished
Herewith
Agreement and Plan of Reorganization
11/03/99
3(i)
Articles of Incorporation
11/03/99
3(i)
3(ii)
Bylaws
10-K
3/01/21
3(II)
3(iii)
Articles of Amendment to the Articles of Incorporation
8-K
11/13/17
3.2
3(iv)
Articles of Amendment to the Articles of Incorporation
8-K
9/9/20
3(iv)
3(v)
Statement of Domestication filed in the State of Idaho
8-K
12/28/20
3(iv)
3(vi)
Certificate of Domestication and Articles of Incorporation filed in the State of Florida
8-K
12/28/20
3(v)
10.1
Technology Purchase Agreement between Schlumberger Technology Corporation, Schlumberger Canada Limited, and Schlumberger B.V. And Enviro Voraxial Technology, Inc. and Florida Precision Aerospace, Inc. dated as of March 13, 2017(1)
8-K
03/15/17
10.1
10.2
Business Lease Agreement dated December 14, 2018
04/01/19
10.2
10.3
Promissory Note dated May 4, 2020 between Florida Precision Aerospace, Inc. and Bank of America
8-K
5/14/20
10.1
10.4
Loan Authorization and Agreement dated June 23, 2020
10-Q
8/14/20
10.2
10.5
Bill of Sale and Intellectual Property Agreement and Grant Back License Agreement June 8, 2017
10-K
3/01/21
10.5
10.6
First Amendment to Business Lease Agreement dated October 28, 2021
Filed
10.7
John A. DiBella Conversion Agreement dated December 30, 2021
8-K
1/07/22
10.1
10.8
Raynard Veldman Conversion Agreement dated December 30, 2021
8-K
1/07/22
10.2
10.9
Form of Promissory Note dated January 5, 2022
8-K
1/07/22
10.3
Code of Ethics
10-K
04/15/04
Subsidiaries of the Registrant
11/03/99
31.1
Rule 13a-14(a)/15d-4(a) Certification of Chief Executive Officer
Filed
31.2
Rule 13a-14(a)/15d-4(a) Certification of Chief Financial Officer
Filed
32.1
Section 1350 Certification of Chief Executive Officer, Chief Financial Officer, principal executive officer and principal financial and accounting officer
Filed
101.INS
XBRL Instance Document
Filed
101.SCH
XBRL Taxonomy Extension Schema Document
Filed
101.CAL
XBRL Taxonomy Calculation Linkbase Document
Filed
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
Filed
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
Filed
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
Filed
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
(1)
Exhibits and/or Schedules have been omitted. The Company hereby agrees to furnish to the Staff of the Securities and Exchange Commission upon request any omitted information.