Energenx 10QSB 2006 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended September 30, 2006

OR

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

For the transition period from _________________ to _________________

Commission file number 000-50739

ENERGENX, INC.

(Exact name of small business issuer as specified in its charter)

NEVADA	20-1044677
(State or other jurisdiction of incorporation	(I.R.S. Employer
or organization)	Identification No.)

6200 E. Commerce Loop, Post Falls, Idaho 83854

(Address of principal executive offices)

(208) 665-5553

(Issuer’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES xNO o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES oNO  x 

At November 10, 2006, the issuer had outstanding the indicated number of shares of common stock: 27,497,276.

Transitional Small Business Disclosure FormatYES ࿶NO x

ENERGENX, INC.

INDEX

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Balance Sheets as of September 30, 2006 (unaudited)
	and December 31, 2005 (audited)	3
	Statements of Operations (unaudited) for the three months and
	nine months ended September 30, 2006 and 2005	4
	Statements of Cash Flows (unaudited) for the nine
	months ended September 30, 2006 and 2005	5
	Condensed Notes to Financial Statements	6
Item 2.	Management’s Discussion and Analysis or Plan of Operations	11
Item 3.	Controls and Procedures	15
PART II.	OTHER INFORMATION	15
Item 6.	Exhibits	15

2

ENERGENX, INC.

(A Development Stage Company)

BALANCE SHEETS

	September 30			December 31
	2006			2005
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	13,263		$	169,451
Inventory		11,078			3,595
Notes receivable		11,983			12,203
Prepaid expense		46,288			6,924
Total Current Assets		82,612			192,173
PROPERTY AND EQUIPMENT, NET		20,103			19,673
OTHER ASSETS
License, net of accumulated amortization		63,400			68,800
Patents, net of accumulated amortization		38,887			42,574
Total Other Assets		102,287			111,374
TOTAL ASSETS	$	205,002		$	323,220
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	5,025		$	4,124
Deposit on License		5,000
Interest payable		2,674			2,674
Interest payable - related parties		2,607			2,607
Payroll taxes payable		35,781			9,445
Notes payable		1,660			1,660
Accrued payroll		60,700			36,350
Total Current Liabilities		113,447			56,860
COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 5,000,000 shares authorized,
no shares issued or outstanding		-			-
Common stock, $0.001 par value; 55,000,000 shares authorized,
27,497,276 and 27,097,276 shares issued and oustanding,
respectively		27,497			27,097
Additional paid-in capital		2,175,717			1,976,117
Deficit accumulated during development stage		(2,111,659	)		(1,736,854	)
Total Stockholders' Equity		91,555			266,360
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	205,002		$	323,220

See accompanying condensed notes to interim financial statements.

3

ENERGENX, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

													From
													September 29,
													1999
	Three Months Ended						Nine Months Ended						(Inception) to
	September 30,						September 30,						September 30,
	2006			2005			2006			2005			2006
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
REVENUES	$	-		$	-					$	$		$	-
OPERATING EXPENSES
Amortization and depreciation		5,016			4,877			15,479			14,652			106,682
Board of directors fees		-			-			-			-			60,000
Consulting		2,000			-			4,500			27,500			316,029
General and administrative		19,052			8,381			49,946			44,732			189,085
Legal and accounting		13,691			11,975			34,669			58,449			141,289
License and fees		1,372			2,246			-			-			109,770
Marketing		-			-			-			-			19,464
Rent		7,200			6,600			21,000			19,800			180,868
Research and development		44,914			55,608			151,519			150,761			369,852
Salaries and benefits		35,372			34,522			95,556			106,524			585,044
Travel		-			-			-			-			1,580
TOTAL OPERATING EXPENSES		128,617			121,963			374,915			422,418			2,079,663
LOSS FROM OPERATIONS		(128,617	)		(121,963	)		(374,915	)		(422,418	)		(2,079,663	)
OTHER INCOME (EXPENSES)
Interest income		-			40						107			161
Interest expense		-			-			110			-			(34,877	)
Loss on disposal of asset		-			-			-			-			(1,709	)
Gain on forgiveness of debt		-			-			-			-			4,319
TOTAL OTHER INCOME (EXPENSES)		-			40			110			107			(32,106	)
LOSS BEFORE TAXES		(128,617	)		(121,923	)		(374,805	)		(422,311	)		(2,111,769	)
INCOME TAXES		-			-			-			-			-
NET LOSS	$	(128,617	)	$	(121,923	)	$	(374,805	)	$	(422,311	)	$	(2,111,769	)
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED	$	nil		$	nil		$	nil		$	nil
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES
OUTSTANDING, BASIC AND DILUTED		27,497,276			26,730,243			27,497,276			26,708,305

See accompanying condensed notes to interim financial statements.

4

ENERGENX, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,						From September 29,1999 (Inception) to September 30,
	2006			2005			2006
	(unaudited)			(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(374,805	)	$	(422,311	)	$	(2,111,658	)
Stock issued for directors fees		-			-			50,000
Stock issued for consulting fees		-			-			110,000
Stock issued for services		-			-			55,366
Stock issued for licensing fees		-			-			100,000
Stock issued for payment of interest		-			-			8,300
Gain on debt forgiveness		-			-			(4,319	)
Loss on disposal of asset		-			-			1,806
Amortization and depreciation		15,479			14,652			106,686
Adjustments to reconcile net (loss) to net cash								-
provided (used) by operating activities:								-
Decrease (increase) in note receivable		220			3,391			(11,984	)
Decrease (increase) in accounts receivable		-			-			-
Decrease (increase) in prepaids		(39,364	)		20,035			(46,288	)
Decrease in deposits		-			-			-
Increase (decrease) in interest payable		-			-			5,282
Increase (decrease) in accounts payable		901			(5,107	)		9,339
Increase (decrease) in deposit on license		5,000			-			5,000
Increase (decrease) in accrued payroll		24,350			14,876			60,700
Increase (decrease) in payroll taxes payable		26,335			3,152			35,780
Increase (decrease) in inventory		(7,483	)		(3,503	)		(11,078	)
Net cash used by operating activities		(349,367	)		(374,815	)		(1,637,068	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for patent		(1,450	)		-			(68,501	)
Cash paid for equipment purchased		(5,371	)		(1,267	)		(44,733	)
Cash paid for leasehold improvements		-			-			(4,599	)
Net cash used by investing activities		(6,821	)		(1,267	)		(119,833	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash paid for stock offering costs		-			-			(62,130	)
Merger and recapitalization costs		-			-			(4,300	)
Proceeds from issuance of convertible debt		-			-			60,010
Proceeds from notes payable		-			-			199,610
Payment of notes payable		-			-			(109,882	)
Proceeds from sale of common stock and options		200,000			-			1,686,306
Net cash provided by financing activities		200,000			-			1,769,614
Change in cash		(156,188	)		(376,082	)		13,263
Cash, beginning of period		169,451			413,015			-
Cash, end of period	$	13,263		$	36,933		$	13,263
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	-		$	-		$	15,255
Income taxes paid	$	-		$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for equipment	$	-		$	-		$	3,612
Common stock issued for debt	$	-		$	-		$	198,060
Common stock issued for technology license	$	-		$	-		$	58,000

See accompanying condensed notes to interim financial statements.

5

ENERGENX, INC.

(A Development Stage Company)

CONDENSED NOTES TO FINANCIAL STATEMENTS

September 30, 2006

NOTE 1 – BASIS OF PRESENTATION

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B as promulgated by the Securities and Exchange Commission (“SEC”).  Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements.  These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2005.  In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.  Operating results for the nine month period ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006.

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period.  Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Company’s financial position and results of operations.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Energenx, Inc. is presented to assist in understanding the Company’s financial statements.  The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.

Concentration of Credit Risk

The Company maintains its cash in one commercial account at a major financial institution.  

Estimates

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

6

ENERGENX, INC.

(A Development Stage Company)

CONDENSED NOTES TO FINANCIAL STATEMENTS

Going Concern

As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $2,111,659 through September 30, 2006 and has a history of recurring losses.  The Company is currently putting technology in place which will, if successful, mitigate these factors which raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.  Management has developed technology that if proven will result in a marketable product. Management intends to seek additional capital from new equity securities offerings that will provide funds needed to increase liquidity, fund internal growth and fully implement its business plan.

Management believes $1,000,000 is needed to finance the plan of operation for at least the next twelve months. The timing and amount of capital requirements will depend on a number of factors, including demand for products and services and the availability of opportunities for international expansion through affiliations and other business relationships.  

Research and Development

Research and development expenses are charged to operations as incurred. The cost of intellectual property purchased from others that is immediately marketable or that has an alternative future use is capitalized and amortized as intangible assets. Capitalized costs are amortized using the straight-line method over the estimated economic life, typically 10 years, of the related asset. The Company periodically reviews its capitalized patent costs to assess recoverability based on the projected undiscounted cash flows from operations. Impairments are recognized in operating results when a permanent diminution in value occurs.  Research and development expenses for the nine months ended September 30, 2006 and 2005 were $151,519 and $150,769, respectively. Salaries for those employees directly involved in research and development are included in research and development expense.

Accounting Pronouncements

In March 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 156, “Accounting for Servicing of Financial Assets—an amendment of FASB Statement No. 140.” This statement requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in any of the following situations: a transfer of the servicer’s financial assets that meets the requirements for sale accounting; a transfer of the servicer’s financial assets to a qualifying special-purpose entity in a guaranteed mortgage securitization in which the transferor retains all of the resulting securities and classifies them as either available-for-sale securities or trading securities; or an acquisition or assumption of an obligation to service a financial asset that does not relate to financial assets of the servicer or its consolidated affiliates. The statement also requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable and permits an entity to choose either the amortization or fair value method for subsequent measurement of each class of servicing assets and liabilities. The statement further permits, at its initial adoption, a one-time reclassification of available for sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available for sale securities under Statement 115, provided that the available for sale securities are identified in some manner as offsetting the entity’s exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value and requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities. This statement is effective for fiscal years beginning after September 15, 2006, with early adoption permitted as of the beginning of an entity’s fiscal year. Management believes the adoption of this statement will have no impact on the Company’s financial condition or results of operations.

7

ENERGENX, INC.

(A Development Stage Company)

CONDENSED NOTES TO FINANCIAL STATEMENTS

In February 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial Instruments, an Amendment of FASB Standards No. 133 and 140” (hereinafter “SFAS No. 155”). This statement established the accounting for certain derivatives embedded in other instruments. It simplifies accounting for certain hybrid financial instruments by permitting fair value remeasurement for any hybrid instrument that contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133 as well as eliminating a restriction on the passive derivative instruments that a qualifying special-purpose entity (“SPE”) may hold under SFAS No. 140. This statement allows a public entity to irrevocably elect to initially and subsequently measure a hybrid instrument that would be required to be separated into a host contract and derivative in its entirety at fair value (with changes in fair value recognized in earnings) so long as that instrument is not designated as a hedging instrument pursuant to the statement. SFAS No. 140 previously prohibited a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for fiscal years beginning after September 15, 2006, with early adoption permitted as of the beginning of an entity’s fiscal year. Management believes the adoption of this statement will have no impact on the Company’s financial condition or results of operations.

NOTE 3 – PREPAID EXPENSES

Prepaid expenses at September 30, 2006 includes the prepayment of a commercial lease and an alarm system monitoring fees.  See Note 7.

During the year ended December 31, 2004, the Company purchased a security system. The cost of the system included a prepayment of the related monitoring services, totaling $638.   At September 30, 2006, $88 was remaining in the contract.

During the nine months ended September 30, 2006, The Company renewed its office space lease for two years and prepaid the entire amount of the lease, $57,600.  The Company began expensing this amount in April.

8

ENERGENX, INC.

(A Development Stage Company)

CONDENSED NOTES TO FINANCIAL STATEMENTS

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost.  Major additions and improvements are capitalized.  Minor replacements, maintenance and repairs that do not increase the useful lives of the assets are expensed as incurred.  Depreciation of property and equipment is calculated using the straight-line method over the expected useful lives of the assets of 5 to 7 years. Depreciation expense for the nine months ended September 30, 2006 and 2005 was $15,479 and $14,652

Following is a summary of property, equipment, leasehold improvement, and accumulated depreciation:

	September 30,			September 30,
	2006			2005
Machinery	$	34,085		$	18,811
Office Furniture and Equipment		13,896			12,919
Leasehold Improvements		3,158			3,158
		51,139			34,888
Less Accumulated Depreciation		(31,036	)		(24,721	)
Net Property and Equipment	$	20,103		$	10,167

NOTE 5 – PATENTS

Costs relating to the development and approval of patents, other than research and development costs which are expensed, are capitalized and amortized using the straight-line method over ten years.  The Company’s patents relate to the creation of an EMF permanent electromagnetic motor generator.

The following is a summary of the costs of patents and patents pending:

	Cost		Accumulated Amortization		Net Amount
Balance, December 31, 2004	$	68,500	$	19,076	$	49,424
2005 Activity				6,850		-
Balance, December 31, 2005		68,500		25,926		42,574
2006 Activity		1,450		5,138
Balance September 30, 2006	$	69,951	$	31,064	$	38,887

9

ENERGENX, INC.

(A Development Stage Company)

CONDENSED NOTES TO FINANCIAL STATEMENTS

NOTE 6 – RELATED PARTY TRANSACTIONS

During the years ended December 31, 2002, the Company loaned to two of its officers a total of $4,900.  At the time the Company was not paying the salaries.  Because the transactions occurred while the Company was still private, it was not subject to the Sarbanes-Oxley Act of 2002, and therefore, was not prohibited.  During the quarter ended September 30, 2005 the officers repaid these loans.

During the period ended September 30, 2006 and years ended December 31, 2005 and 2004, the Company paid expenses on behalf of Bedini Electronics, Inc., a company privately owned by two officers of Energenx. At the same time, Bedini Electronics, Inc. paid some of the expenses of the Company. This was done as the two companies shared joint office space and split certain expenses. The net amount owing from Bedini Electronics at December 31, 2005 is $10,176. In April 2005, the Company loaned Bedini Electronics $4,000 in cash for operations. This related loan, which bears interest of 6%, is payable in monthly installments of $352. At September 30, 2006, the unpaid loan balance from Bedini Electronics included in notes receivable - related parties is $11,983.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Leases

On March 31, 2004, the Company entered into a new two-year lease for office space.  In lieu of a security deposit, the Company in 2004 prepaid the entire amount of the lease, $52,800. The Company expensed this amount over 24 months, at a rate of $2,200 per month.

On March 13, 2006, the Company entered into a new two-year lease for office space.  In lieu of a security deposit, the Company prepaid the entire amount of the lease, $57,600. The Company will expense this amount over 24 months at a rate of $2,400 per month.  The Company began expensing this amount in April.

NOTE 8 – COMMON STOCK

During the three months ended March 31, 2006, the Company issued 400,000 of Common Stock at $0.50 per share for cash of $200,000.  These shares were issued under an existing subscription agreement as part of a Stock Subscription plan and committment for a total of $1,500,000 for 3,000,000 shares.  As of September 30, 2006, this Commitment had $1,100,000 remaining for a future commitment of 2,200,000 shares of common stock.

Subsequent to September 30, 2006 the Company received additional monies under the agreement. See Note 9.

NOTE 9 – SUBSEQUENT EVENTS

On November 10, 2006, the Company received $600,000 under the agreement in Note 8 and issued 1,200,000 shares. As of November 10, 2006, the commitment had $500,000 remaining for a future commitment of 1,000,000 shares.

10

Item 2.Management’s Discussion and Analysis or Plan of Operations

THIS QUARTERLY REPORT ON FORM 10-QSB 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. ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACTS, INCLUDED IN OR INCORPORATED BY REFERENCE INTO THIS FORM 10-Q ARE FORWARD-LOOKING STATEMENTS. IN ADDITION, WHEN USED IN THIS DOCUMENT, THE WORDS “ANTICIPATE,” “ESTIMATE,” “PROJECT,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS INCLUDING AMONG OTHERS, THE RISK THAT OUR PRODUCT DEVELOPMENT PROGRAMS WILL NOT PROVE SUCCESSFUL, THAT WE WILL NOT BE ABLE TO OBTAIN FINANCING TO COMPLETE ANY FUTURE PRODUCT DEVELOPMENT, THAT OUR PRODUCTS WILL NOT PROVE COMPETITVE IN THE MARKETS. THESE RISKS AND OTHERS ARE MORE FULLY DESCRIBED IN OUR REPORT ON THIS FORM 10-QSB AND IN OUR OTHER PUBLIC FILINGS, INCLUDING OUR FORM 10-KSB. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE ANTICIPATED, ESTIMATED OR PROJECTED. ALTHOUGH WE BELIEVE THAT THE EXPECTATIONS INCLUDED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CANNOT GIVE ANY ASSURANCES THAT THESE EXPECTATIONS WILL PROVE TO BE CORRECT. WE UNDERTAKE NO OBLIGATION TO PUBLICLY RELEASE THE RESULT OF ANY REVISIONS TO SUCH FORWARD-LOOKING STATEMENTS THAT MAY BE MADE TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

The following discussion and analysis should be read in conjunction with our financial statements and the notes thereto appearing in Part I, Item 1.

A.General.

Since commencement of operations in 1999, our efforts have been principally devoted to research and development activities, including the development of an efficient energy generation system and battery chargers, recruiting management personnel and advisors, and raising capital.

Our current business strategy is to concentrate our financial resources primarily on the further development of our Potential Battery Charger technology and our Battery Charge Control Unit for application with solar and wind systems. In addition to the battery charger programs, we plan to continue to undertake research and development on our electromagnetic motor/generator battery system.

11

B.Product Research and Development Plans

Our current plan of operation for the next 12 months primarily involves meeting any demand for Potential Battery Charger hybrid modules from GTG Corp., with whom we have an Exclusive Technology License Agreement, and, assuming availability of sufficient capital resources, research and development activities on energy generation and battery charger prototypes.

Concerning the battery chargers, product research will continue on improving the efficiency of the Potential Battery Charger. We will continue our development of variations of the Potential Battery Charger for specific markets to accommodate 12-volt, 24-volt, 36-volt and 48-volt applications with a wide range of capacity requirements. In January 2006 we delivered a 36 volt variation of our Potential Battery Charger to GTG Corp. for Underwriters Laboratories or UL assessment and testing. On October 25, 2006, GTG Corp. received notice that the engineering investigation of the 36 volt Potential Battery Charger had been completed by UL. However, before the Potential Battery Charger receives full UL certification and it can be shipped with the UL mark affixed, UL must do an initial production inspection at GTG Corp.’s designated manufacturing location.

We may generate revenues pursuant to our Exclusive Technology License Agreement with GTG Corp. if they order Potential Battery Charger hybrid modules. We did not receive any orders from GTG Corp. during the third quarter of 2006. We cannot assure you that GTG Corp. will order any Potential hybrid modules from us in 2006 or ever, that licensed battery charger products will ever reach the market giving rise to royalty payments or that additional revenues from patent licensing will be generated.

Concerning the further development of our electromagnetic motor/generator battery system, given sufficient capital resources, we intend to improve the current system and design larger scale systems that may allow us to generate larger amounts of energy that can be utilized to charge multiple banks of batteries. No such research and development on the electromagnetic motor/generator battery system was undertaken during the third quarter of 2006.

Utilizing the same basic battery charging technology as that used with the Potential Battery Charger, in August 2006 Energenx built and began field testing a prototype of a Battery Charge Control Unit for use with residential solar and wind powered electric systems. The Charge Control System is a 12 and 24 volt variation of the Potential Battery Charger that uses digital circuitry to monitor and switch between two banks of batteries. In addition to exhibiting many of the advantages associated with the Potential Battery Charger, the system appears to be able to deliver more of the available energy from the source (the solar panels or wind turbine generator) to the batteries. This results in an increase of performance in such systems when solar or wind conditions are less then optimal.

Energenx plans to build further prototypes of the Battery Charge Control Unit and test them for application with solar and wind systems. Since the same principles are applicable for larger systems, the product spectrum could subsequently be extended into those areas. Energenx expects to develop an array of products, covering this market from small units to very large units of industrial scale. The intent is to provide the market with systems with higher efficiency than existing on the market today, resulting in a higher energy output from the same primary energy source.

12

Upon the successful conclusion of field testing of the Charge Control System, Energenx intends to seek to license out this technology for the manufacturing and sales of the Charge Control units in the United States, Canada, and Mexico. Energenx plans to work with such licensee to finalize the development of a Charge Control System, as well as assisting such licensee in industrializing the product line, and obtaining UL certification for the system.

While we have no plans to relocate our current research facility within the next twelve months, equipment purchases will be necessary if we receive orders for the Potential hybrid module from GTG Corp. Such equipment would include test equipment, oscilloscopes, analyzers, soldiering stations, and packaging equipment. Depending on the availability of capital and the volume of future orders from GTG Corp., such equipment purchases are anticipated to be in the range of $100,000 for the next twelve months. Also depending on the availability of capital and the volume of orders from GTG Corp., we may hire up to three more employees if we receive orders from GTG Corp. We did not make any significant equipment purchases or hire any new employees in the three month period ending September 30, 2006. We intend to contract out the bulk of the manufacturing of the Potential hybrid modules, with final testing, potting and packaging of the hybrid modules to be done in house.

Our actual research and development and related activities may vary significantly from current plans depending on numerous factors, including changes in the costs of such activities from current estimates, the results of our research and development programs, technological advances, determinations as to commercial viability and the status of competitive products. The focus and direction of our operations will also be dependent on the establishment of our collaborative arrangement with other companies, the availability of financing and other factors. We expect our development costs to increase asour battery charger systems development programs enter the later stages of development.

C.Liquidity and Capital Resources.

As of September 30, 2006, we had $13,263 in cash and cash equivalents and negative working capital of $30,835 as compared to $169,451in cash and cash equivalents and $135,313 in working capital at December 31, 2005. We do not have any available lines of credit. Since inception we have financed our operations from private placements of equity securities and loans from shareholders.

Net cash used in operating activities during the nine months ended September 30, 2006 was $349,368 resulting in a net loss of $374,815.

Marvin Redenius, a director of Energenx, signed a subscription agreement on September 30, 2005 pursuant to which he agreed to purchase 3,000,000 shares of common stock from Energenx for $1,500,000. Until recently, we had received only $400,000 pursuant to this subscription and had issued 800,000 shares of common stock to this investor, including $200,000 received in the first quarter of 2006. On November 10, 2006, we received another payment of $600,000 from Marvin Redenius pursuant to his subscription. As a result of this investment, Mr. Redenius will be issued an additional 1,200,000 shares of common stock and will hold 6,800,000 shares of our common stock. There is currently an outstanding $500,000 subscription receivable. Upon completion of the purchase of the remainder of the 500,000 shares pursuant to the subscription agreement, Marvin Redenius will hold 7,800,000 shares of common stock.  Given the substantial delays we have experienced in receiving the subscription funds from this investor do not know when we will receive the remaining subscription receivable, if ever.

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Our current real estate lease is on a two year renewal basis. We plan to finance our needs principally from the following:

· our existing capital resources and interest earned on that capital;

· up front licensing fees pursuant to future license agreements;

· revenues from purchase of Potential modules by GTG Corp., if any;

· royalty income, if any, from product sales by GTG Corp.;

· from collection of our outstanding subscription receivable; and

· through future private placement financing.

As mentioned above, we may generate revenue from GTG Corp. if they order Potential hybrid modules under our license agreement. We cannot at this time assure you that those orders will occur or that revenues will be generated in fiscal year 2006, if at all.

With the receipt of additional funds from Marvin Redenius, we believe that we have sufficient capital resources to finance our plan of operation at least through the third quarter of 2007. However, this is a forward-looking statement, and there may be changes that could consume available resources before the end of the third quarter of 2007. Our long term capital requirements and the adequacy of our available funds will depend on many factors, including our reporting company costs, patent costs for filing, prosecuting, maintaining and defending our patent rights, among others.

We are pursuing potential equity financing that may generate additional capital for us, including the subscription receivable from an investor signed on September 30, 2005. We will need to raise additional capital or generate additional revenue to complete our development of product variations on our Potential Battery Charger, our Battery Charge Control Unit and our hybrid electromagnetic motor/generator product candidate. We cannot assure you that we will generate sufficient additional capital or revenues, if any, to fund our operations beyond the third quarter of 2007, that any future equity financings will be successful, or that other potential financings through bank borrowings, debt or equity offerings, or otherwise, will be available on acceptable terms or at all. If we are unable to raise additional capital prior to the end of the third quarter of 2007 we will have to curtail operations or cease operations altogether.

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Critical Accounting Policies and Estimates.

This discussion and analysis of our financial condition and results of operations are based on our financial statements that have been prepared under accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. We have disclosed all significant accounting policies in note 2 to the financial statements included in our Form 10-KSB. Our critical accounting policies are:

Research and development costs: Research and development costs are expensed as incurred. Beginning with the financial statements for the quarter ending September 30, 2005 we have included certain salary and benefit expenses in the research and development line item.

Item 3.Controls and Procedures.

Evaluation of disclosure controls and procedures.

Our management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-QSB. Based on that evaluation, our CEO and CFO have concluded that these disclosure controls and procedures were sufficiently effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in United States Securities and Exchange Commission rules and forms.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting 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 system are met and cannot detect all deviations. 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 or deviations, if any, within the company, have been detected. While we believe that our disclosure controls and procedures have been effective, in light of the foregoing, we intend to continue to examine and refine our disclosure control and procedures to monitor ongoing developments in this area.

PART II  – OTHER INFORMATION

Item 6.Exhibits

(a)	Exhibits
31.1	Certification of Principal Executive Officer pursuant to rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbannes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbannes-Oxley Act of 2002.
32.1	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbannes-Oxley Act of 2002.
32.2	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbannes-Oxley Act of 2002.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, Energenx has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 10, 2006.

ENERGENX, INC.
By:	Gary A. Bedini
	Gary A. Bedini
	President and Chief Executive Officer

By:	Rick M. Street
	Rick M. Street
	Chief Financial Officer, Secretary, and Treasurer (Principal Financial and Accounting Officer)

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